Up From The Rubble, by Kerry A. Dolan
Friday, April 1, 2005
Can $2,000 loans help revive a war-torn economy? Entrepreneurs in Bosnia and Herzegovina are putting microfinance to the test.
The economy of Bosnia and Herzegovina remains shaky-20% of the population live below the poverty line and unemployment is at an estimated 20%. But since 1996 per capita GDP has tripled to $1,500. “Microcredit groups have had a significant role in Bosnia and Herzegovina in the postwar period, increasing income levels, reducing poverty, developing businesses and stimulating employment,” says Kemal Kozaric, governor of the country’s central bank.
Microfinance has also helped in war-ravaged Afghanistan. An arm of the government and the World Bank set up a program two years ago that is similar to one in Bosnia. Lacking the alternative of a functioning bank system, 85,000 Afghans have borrowed money or set up savings accounts with 12 microfinance groups. Average loan size is a minuscule $155. The default rate is 1%.
Story found here.