Support to Development of
Women Entrepreneurship in
Montenegro
- Regulatory Framework for
Establishment of the
the Trust Fund for Women -
1
Uvodna napomena:
Istraživanje “Podrška razvoju ženskog preduzetništva u Crnoj Gori - Regulacioni okvir za
osnivanje Obrtnog fonda za žene” urađeno je u septembru 2011. godine u okviru Programa
rodne ravnopravnosti IPA 2010. Program se sprovodi u partnerstvu između Delegacije Evropske
Unije u Crnoj Gori, Ministarstva za ljudska I manjinska prava Crne Gore I Programa Ujedinjenih
nacija za razvoj (UNDP), kancelarija u Crnoj Gori.
Studiju je, za potrebe Programa, uradila Mila Ioncheva, konsultantkinja UNDP.
2
Contents
1. Executive Summary ……………………………………………………………………………………………………… 4
2. Legal Framework …………………………………………………………………………………………………………. 5
2.1.International Resources ……………………………………………………………………………………………… 5
2.1.1 UN Standards ……………………………………………………………………………………………………… 5
2.1.2 EU Standards ………………………………………………………………………………………………………. 6
2.2.National Legislation …………………………………………………………………………………………………… 11
2.3.Best Practices in EU and the countries in the region …………………………………………………. 12
2.3.1. Integra Foundation – the Slovakian MFI experience …………………………………………….. 13
2.3.2. Microcredit Organization Women for Women - Bosnia-Herzegovina …………………… 19
3. The Trust Fund for Women in Montenegro ……………………………………………………………………… 30
3.1. Overview ……………………………………………………………………………………………………………………. 30
3.2. Legal Status and Structure …………………………………………………………………………………………. 30
3.3. Competences and Types of Credit ……………………………………………………………………………… 31
3.4. Selection Criteria and Guarantees ……………………………………………………………………………… 33
3.5. Procedures, Managing Credit Portfolio, and Sustainability ………………………………………….33
3.6. Monitoring and Evaluation, Reporting, Auditing ……………………………………………………….. 34
4. Recommendations and Conclusions ………………………………………………………………………………… 36
5. Annexes …………………………………………………………………………………………………………………………… 37
3
1. Executive Summary
In Montenegro women are highly qualified and labor market participation of women is on the
rise, yet in decision making position both in public and private sector women are largely
outnumbered by men. 39.5% of all employees in Montenegro are women, however only 7.2%
are performing managerial tasks. Despite the fact that women represent 50% of the human
capital and half of the labor force in Montenegro, women’s economic potential and
opportunities have been particularly restricted - only 8% of the women are owners/co-owners
of their homes, 6% are car owners, and 1% is business or company owners. Furthermore, only a
very limited number of women have the opportunity to take out a bank loan and start their
own business due to the fact they have neither the incentives nor the real estate to guarantee
the loan.
To remedy this situation a specific financial mechanisms entitled Trust Fund for Women (TFW)
has been devised having as an objective to provide support and guidance for female
entrepreneurs under affordable financial arrangements. This unique financial mechanism will
give the women in Montenegro access to loans under special conditions while at the same time
presenting a successful financial model for the banking system. Female entrepreneurs will
benefit from both financial and technical assistance in order to develop, enhance and increase
their sustainable business ideas. These measures will lead towards the strengthening of their
capacities to play an active role in economic development of the country. TFW has been
envisaged as an affordable, low interest rate fund for women starting up their own businesses
that will ensure an individual approach to clients and on-going consultations in regard to the
running of a business.
The specific objective of TFW is to allow more female micro-entrepreneurs or self-employed
women in Montenegro to access microcredits, as well as training and support activities, in
order to further develop or create their own business. In the long run, the TFW will result in an
increased number of women in business and a more gender-sensitive and flexible approach
from financial institutions. It will also enable economic development and provide employment
incentives to women and will eventually improve the status of women as reflected in economic
advancement and empowerment.
The existing national legal framework fully supports the establishment of the TFW as do the
relevant European standards, regulation, and the good practices both in the European Union
(Integra Foundation, Slovakia) and the neighbouring countries (Microcredit Organization
Women For Women, Bosnia and Herzegovina) . The project is also in compliance with the
international standards on elimination of gender inequality in the economic realm and in
particular the Millennium Development Goals (MDG) 1 poverty reduction and 3 promotion of
gender equality and empowerment of women.
4
2. Legal Framework
2.1 International Resources
Achieving gender equality and women’s empowerment is a globally-agreed goal that is
enshrined in the international and regional agreements and conventions from the Beijing
Declaration and Platform for Action to the UN Convention on Elimination of all Forms of
Discrimination against Women with a growing range of internationally agreed targets and
indicators to frame related efforts at the national level. The Millennium Declaration and its
development goals, in particular MDG 1 and 3, focus on key priorities reduction and gender
equality and have been further translated into more comprehensive agendas outlining the
correlation between poverty reduction and women’s economic empowerment.
2.1.1 UN Standards
The Universal Declaration on Human Rights1 (1948), article 22 establishes that both men and
women are entitled to “the economic, social and cultural rights indispensable for dignity and
the free development of personality.”
The International Covenant on Economic, Social and Cultural Rights2 (1966) recognizes “the
right to work, which includes the right of everyone to the opportunity to gain his living by work
which he freely chooses or accepts” and requires the States in order to achieve the full
realization of this right to undertake “technical and vocational guidance and training
programmes, policies and techniques to achieve steady economic, social and cultural
development and full and productive employment under conditions safeguarding fundamental
political and economic freedoms to the individual”.
The Convention on the Elimination of All Forms of Discrimination against Women 3 (CEDAW)
(1979) article 11 on elimination of discrimination in the field of employment and art. 13 (b) on
elimination of discrimination in the area of economic life “(b) The right to bank loans,
mortgages and other forms of financial credit;” (MNE is a party to CEDAW since 23 October
2006, but has not yet submitted a periodic report on its implementation)
The Beijing Declaration and Platform for Action4 (1995); article 16 stipulates that economic
growth can only be achieved through “the involvement of women in economic and social
development, equal opportunities and the full and equal participation of women and men as
1
The full text of the Universal Declaration of Human Rights can be found at http://www.un.org/en/documents/udhr/
For the text of the International Covenant on Economic, Social, and Cultural Rights please see
http://www2.ohchr.org/english/law/cescr.htm
3
The text of the Convention on the Elimination of All Forms of Discrimination against Women can be found at
http://www.un.org/womenwatch/daw/cedaw/
4
For more information on the Fourth World Conference on Women and the Beijing Declaration and Platform for Action see
http://www.un.org/womenwatch/daw/beijing/platform/
2
5
agents and beneficiaries of people-centered sustainable development”. Furthermore, article 26
perceives the promotion of “women’s economic independence, including employment” as
means of eradication of the persistent and increasing burden of poverty on women and
requires “ensuring equal access for all women, including those in rural areas, as vital
development agents, to productive resources, opportunities and public services”.
Among the eight Millennium Development Goals set out in the United Nations Millennium
Declaration5 (2000 - 2015) goal 3 “Promote gender equality and empower women” and goal 1
“Eradicate extreme poverty and hunger” are particularly pertinent to the objective of economic
empowerment of women and girls and promoting sustainable economic development.
The Human Development Report (HDR) for Montenegro6 (2005) emphasizes the issue of
gender inequality and points out that: “Although the number of high-educated man and women
is in balance in Montenegro, number of women in the politics, decision making positions and
public life is very low, even when compared with the region.” In the same line, the 2009 HDR for
Montenegro highlights that the issue of women’s economic vulnerability persists: “Poverty is
relatively high in the north of the country, where high unemployment, rather high illiteracy,
especially among the elderly and women, and low income levels contribute to high poverty
rates.” The HDR determines the Human Development Index which in addition to the level of
income and the rate of economic growth takes into account factors such as health and
education. The Human Development Index for Montenegro is 0.769, which gives the country a
rank of 49 out of 169 countries with comparable data and places it above the regional average.
Furthermore, HDR uses Gender Inequality Index7 (a composite index measuring loss in
achievements in three dimensions of human development—reproductive health,
empowerment, and labor market, due to inequality between genders) to measure gender
inequality in each country.
5
The complete text of the United Nations Millennium Declaration, adopted by the General Assembly resolution A/55/2 can be
found at http://www.un.org/millennium/declaration/ares552e.htm
6
The most recent edition of the UNDP Human Development Report for Montenegro (2009) entitled Montenegro: Society for All
is available at http://hdr.undp.org/en/reports/national/europethecis/montenegro/name,9073,en.html
7
Gender Inequality Index Graph above was designed for the purposes of the Human Development Report, UNDP. For more
information please see www.hdr.undp.org/
6
Although HDR provides information some of indices related to gender inequality, the Gender
Inequality Index for Montenegro remains undetermined:
Indicator
Value
Maternal mortality ration (deaths of women per 100,000 live births)
14
Population with at least secondary education, female/male ratio
0.987
Adolescent fertility rate (women aged 15-19 years) (births per 1,000 women aged 15-19) 14.7
Labor force participation rate, female/male ratio (ration of female to male shares)
n.a.
Gender Inequality Index, value
n.a.
Shares in parliament, female-male ratio
0.125
Maternal mortality ration (new estimates) (deaths of women per 100,000 live births)
15
Gender Inequality Index (updated)
n.a.
7
2.1.2 EU Standards
The European Union has enacted series of obligatory regulations, directives, and decisions, as
well as resolutions and recommendation seeking to eliminate gender inequality and promote
economic empowerment of women. Significant part of the EU gender equality legislation
focuses on ensuring equal labor opportunities and working conditions for women and men:
-
-
-
The Council Directive 75/117/EEC8, 10 February 1975 on the equal payment of men and
women;
The Council Directive 76/207/EEC9, 9 February 1976 on equal access to employment,
professional training, advancement at work and working conditions;
The Council Directive 86/613/EEC10, 11 December 1986 on equal treatment of men and
women in agriculture, those who are self-employed; and in support of maternity laws
that protect women;
Directive 2002/73/EC11 of the European Parliament and of the Council of 23 September
2002 amending Council Directive 76/207/EEC on the implementation of the principle of
equal treatment for men and women as regards access to employment, vocational
training and promotion, and working conditions;
The Council Directive 2004/113/EC12 of 13 December 2004 implementing the principle
of equal treatment between men and women in the access to and supply of goods and
services.
Another cluster of legislative measures has as an objective to enable women to exercise their
economic rights through establishing equal treatment in the social realm:
-
-
The Council Directive 86/378/EEC13, 24 July 1986 on equal access of men and women to
social security;
The Council Directive 92/85/EEC14, 19 October 1992 on the protection of pregnant
women at work and on their access to maternity leave;
The Council Directive 96/34/EEC15, (19/6/96) on time-off for child-care;
8
The Council Directive 75/117/EEC from 10 February 1975 is available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31975L0117:EN:HTML
9
The Council Directive 76/207/EEC from9 February 1976 is available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31976L0207:EN:HTML
10
The Council Directive 86/613/EEC, 11 December 1986 is available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31986L0613:EN:HTML
11 Directive 2002/73/EC of the European Parliament and of the Council of 23 September 2002 can be found at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32002L0073:EN:HTML
12 The Council Directive 2004/113/EC of 13 December 2004 is available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32004L0113:EN:HTML
13
The Council Directive 86/378/EEC, 24 July 1986 is available at http://eurlex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&numdoc=386L0378&model=guichett&lg=en
14
The Council Directive 92/85/EEC, 19 October 1992 is available at http://eurlex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=31992L0085&model=guichett
15 The Council Directive 96/34/EEC, (19/6/96) is available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:1996:145:0004:0009:EN:PDF
8
-
The Council Directive 96/97/EC16 of 20 December 1996 amending Directive 86/378/EEC
on the implementation of the principle of equal treatment for men and women in
occupational social security schemes.
Among the recent gender equality policies adopted by the EU is the Strategy for Equality
between Women and Men (2010-2015)17. The Strategy emphasized on the economic rights
and opportunities for women and indicates that: women’s employment rate is lower than
men’s; women earn less than men; women are significantly underrepresented in positions
requiring economic and political decision making. In addition, the Strategy discusses the risks of
women’s poverty; and gender-based violence.
To encourage entrepreneurship and in recognition of the central role of the small and mediumsized enterprises (SMEs) in the European economy the Commission adopted in 2008 The Small
Business Act for Europe18 which for the first time establishes a comprehensive SME policy
framework. The Act builds upon the Think small First Principle and seeks to promote the SMEs
growth through a set of 10 principles which should guide the design and implementation of EU
and national policies. It seeks to improve administrative and legal environment, and thus allows
enterprises to show their potential. The Act pays particular attention to women entrepreneurs
by indicating that the EU and the Member States should encourage “future entrepreneurs
better, in particular by fostering entrepreneurial interest and talent, particularly among young
people and women19”. The 10 principles are as follows:
- Create an environment in which experiments and family business can thrive;
- Honest entrepreneurs who have faced bankruptcy get a second chance;
- Design rules according to Think Small First Principe;
- Make public administration responsive;
- Adopt public policy tool to SME needs – participation in public procurement and use of
state aid possibilities;
- Facilitate access to finance and develop legal and business environment supportive to
timely payments in commercial transactions;
- Help SME to benefit from the Single Market;
- Promote upgrading of skills;
- Enable SME to turn environment challenges into opportunities;
- Encourage and support SME to benefit from the growth of markets.
16
The Council Directive 96/97/EC of 20 December 1996 is available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31996L0097:EN:HTML
17
The text of the European Strategy for Equality between Women and Men (2010-2015) is available at
http://europa.eu/legislation_summaries/employment_and_social_policy/equality_between_men_and_women/em0037_en.ht
m
18
The full text of the Small Business Act for Europe is available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0394:FIN:en:PDF
19
Small Business Act for Europe, European Commission, 2008
9
The Small Business Act also envisages some innovative initiatives designed to boost the growth
of SMEs across Europe. In first place the Act sets out to encourage entrepreneurship among
women by creating the European Network of Mentors for Women Entrepreneurs (to be
launched in 2011). Another valuable initiative was the launching in 2009 of the European
Network of Female Entrepreneurship Ambassadors. The Network connects 270 entrepreneurs
coming from 22 European countries. In order to encourage women to consider running small
businesses the Act favors exchanging good practices and experiences between Member States.
In this respect, one of the major challenges women entrepreneurs are facing is access to
finance and difficulty finding investors. Specific measures, both legislative and soft measures
(better information and business training) are needed to help women obtain funding for business
ventures.
Furthermore, an expert group report entitled Regulation of Microcredit in Europe20, mandated
by the European Commission and published in 2007 makes the following recommendations:
-Allow landing by non-banks;
- Avoid setting interest rate caps too low;
- Ensure minimum legislative standards for non-banks and
- Create favorable environment for micro enterprises.
Finally, a Study on promotion of women investors and entrepreneurs21 undertaken by the
European Commission in 2008 contains review of the new policies and actions as well as
recommendations to promote women’s entrepreneurship. The Study outlines three types of
obstacles:
-
Contextual obstacles – educational choices, traditional views and stereotypes about
women and business;
Economic obstacles –innovation sector requiring investments and women being
perceived as less credible than men;
Soft obstacles – lack of access to technical, scientific, and business networks, lack of
business training, role models, and skills.
The European Commission has opened women’s entrepreneurship portal to encourage
exchange of practices among member states.
20
21
Expert Group Report The Regulation of Microcredit in Europe, April 2007
Evaluation on policy: Promotion of Women Innovators and Entrepreneurship, July 2008, European Commission
10
2.2 National Legislation and Policies
The Constitution of Montenegro22 (2007) Article 18 stipulates that “The state shall guarantee
the equality of women and men and shall develop the policy of equal opportunities.”
Furthermore, Article 8 of the Constitution prohibits any direct or indirect discrimination and
introduces special measures (positive actions) to eliminate inequality, including gender
inequality - “special measures aimed at creating the conditions for the exercise of national,
gender and overall equality and protection of persons who are in an unequal position on any
grounds shall not be considered discrimination”.
The Law on Gender Equality23 (2007) further develops the mechanisms for achieving gender
equality and establishes a governmental gender focal point – the Ministry for Protection of
Human and Minority Rights. The Law elaborates gender and special measures for balanced
representation and equal opportunities, and distinguishes between positive measures,
encouraging and programme measures. Article 7(3) determines equal opportunities as “the
absence of all barriers to economic, political, social, cultural and other fields of social life on the
basis of sex and thus ensuring the full implementation of human rights and freedoms of women
and men”. The Law also determines the application scope of the positive measures. Article 17
specifies that “positive measures may be undertaken in the fields of education, employment,
labor, health, social care, public or political activity, and other fields of social life where reasons
stated in Article 16 of this Law are given for their introduction.”
The legislative measures seeking to achieve gender equality are translated into policies through
the Action Plan for Achievement of Gender Equality24 (2008-2012). One of the main areas of
concern which corresponds to a specific strategic goal in the Action plan is: 4.5 Equal access of
women and men to economic resources and creation of equal opportunities in its usage”. The
Action Plan sets as an objective to decrease unemployment, and promote education and
training aimed at increasing the opportunities for employment of women and men in sectors
where they are less represented. Among the incentives to encourage women’s entrepreneurship
are initiatives: Goal 4.5.3 “The opportunity to grant favorable loans for start up business, longer
grace period, and longer time frame of repayment will be considered, as well as to try finding a
way of refinancing the interest rates”, as well as “Start up funds for development of women’s
entrepreneurship will be established”, creating of “an incubator of women’s entrepreneurship”,
and providing training of women entrepreneurs (management, marketing, finance, and legal
advice).
Despite the fact that Montenegro has not adopted specific microfinance legislation, the Law on
Investment and Development Fund25 (2009) Article 2 encourages “support for micro, small,
22
The full text of the Constitution of Montenegro can be found at
http://www.comparativeconstitutionsproject.org/files/Montenegro_2007.pdf
23
The complete text of the Law on Gender Equality in Montenegro is available at
http://www.legislationline.org/documents/id/3922
24
The complete text of the Action Plan for Achievement of Gender Equality (2008-2012) can be found at
http://www.undp.org.me/si/projects/Gender%20Programme/docs/National%20Action%20Plan%20for%20GE.pdf
25
The text of the Law on Investment and Development Fund and Fund’s Credit Policy are available at www.irfcg.me
11
and medium-sized enterprises and entrepreneurs”. The Investment and Development fund is
the main institution in Montenegro to deal with SMEs. Furthermore, the Credit Policy ( 2010)
adopted by the Investment and Development Fund is most appropriate to accommodate the
needs of women-entrepreneurs and has already developed a credit line that grant microcredit
loans exclusively to business women.
2.3. Best practices in the EU and the countries in the region
The number of women who are self-employed in Europe is much smaller than that of men and
the number of women entrepreneurs with employees is even smaller. Microcredit has proven
across the globe to be an effective tool for engaging and assisting women to take their first
steps into self-employment. The large majority of women entrepreneurs (87%) across Europe
have started their enterprises using micro-credits.
The European Commission defines microcredit as a loan under € 25,000 to support the
development of self-employment and microenterprises. It has a double impact: a/ economic
impact as it allows the creation of income generating activities and b/ social impact as it
contributes to the social inclusion and therefore to the financial inclusion of individuals.
Although microfinance institutions (MFI) contribute largely to the economic empowerment of
women in the EU, most of the EU countries (except for France and Romania) have not adopted
specific national Micro-finance legislation. MFIs are regulated under the laws governing them –
respectively banks and non-banks. Many MFIs operate on grants while legislators provide tax
incentives for investment in MFI.
EU banking directives do not relate to credit alone and therefore do not have a direct
impact on microcredit. For the bank model, the factor determining whether an institution
falls under the scope of EU banking legislation is the right to take deposits. However, in some
countries, national legislation restricts lending to banks only.
For non-bank MFIs the crucial question is whether existing legislation is suitable for operations.
The absence of prudential regulation and supervision in itself poses no binding constraint on
the development of microcredit, rather the contrary. The challenge most non-bank MFIs
encounter is the scarcity of funding sources available.
Formal regulation can address the risks of failure of MFIs, the loss of investors’ money, and
other market risks. However, even a minimal regulatory regime can be prohibitive for some
MFIs. A self-regulatory approach could be a reasonable compromise.
Apart from regulatory constraints, cost factors play a decisive role for microcredit. In the bank
model high handling costs can make the provision of microcredit unprofitable. Non-bank MFIs
are characterized by a high degree of grant-dependency. However, from a national perspective
funding can be more reasonable for the state because the costs for job-creation via selfemployment are lower than the costs of unemployment benefits.
12
In Europe many MFIs cannot operate profitably enough to pay the market price for a large
portion of their funding without eating away their capital. In this case, states interfere with tax
incentives or additional funding sources for investment in microfinance to solve the issue.
Public support schemes have proved to be an important complementary tool for microcredit.
Guarantee schemes have to be based on confidence in their capital base. Thus, some EU
countries have set up rules on the managerial capacity of guarantee schemes and on the extent
of their commitments, their liquidity and their solvency. Such a legal and prudential framework
is often in line with banking laws or other specific legislation.
It is generally considered that the cooperation between banks and MFIs could be a win-win
situation as banks could profit from cost reduction and could learn from MFIs, while the MFIs
could learn about professional banking standards in order to reach higher sustainability levels.
2.3.1. Integra Foundation – the Slovakian MFI experience
Legal Framework for Microfinance institutions in Slovakia
In Slovakia Banking Act No. 483/2001 regulates banking and other financial activities including
providing loans, credits, guarantees etc. In addition to this Act, Slovakia has enacted a number
of regulations related to financial services in general, and the MFIs in particular such as:
- the Measure of the NBS No. 2/2003 which provides the legal framework for Loan and
Guarantee Register of legal entities, which is managed under the National Bank of Slovakia;
- the State Aid Law No. 231/1999;
- the Foreign Exchange Law No. 202/1995;
- the Law No 323/1992 on Notary Order and the Ministry of Justice Ordinance No. 607/2002 on
the Notary Central Liens Register Commercial Loan Register of all entities and persons;
- Law No 747/2004 – supervision of the financial market;
- the Commercial Code No 513/1991
- the Income Tax Act No. 595/2003, etc.
Despite the extensive legal framework regulating the financial activities, in Slovakia there is no
special law on micro-credits. Thus the self-regulating MFIs sector in Slovakia means freedom for
the microcredit providers on one hand, and on the other - running the risk of discrepancies in
defining the key micro-financing terms. Furthermore, default rates do not seem to be available,
although close management of default rates is critical to any player seeking to benefit from
JEREMIE programme. All measures, regulations and steps seeking to improve the business
environment for SMEs are relevant for MFIs e.g. minimizing administrative obstacles and
systematic reduction of administrative burden, simplifying administrative procedures for
starting up a business, reducing administrative demands, shortening and simplifying procedures
for obtaining of support for SMEs, decreasing total employer costs for the workforce,
simplifying administrative procedures of paying contributions by employers, expanding
possibilities for providing guarantees and collaterals, decreasing the interest rate, speeding-up
the justice systems, strengthening creditor rights, regulation of bankruptcy law, etc.
13
Integra Foundation
Against this legal background Integra Foundation in Slovakia has established itself as one of the
lead MFIs to provide a broad range of business support services that are tailor-made to the
specific needs of women entrepreneurs.
Integra’s Profile
Integra was found in 1995 in Slovakia as a Micro enterprise development (MED) for women at
risk programs are now active in Slovakia, Romania, Bulgaria and Serbia. Main challenge is
financial self-sustainability in a regulated and formal market, while sustaining a focus on at-risk
groups and business start-ups. Its current legal status is non-governmental organization.
Integra’s main funding sources are: grants, loans, shareholder capital. Integra provides loans,
training and consulting for its clients, mostly women. Its investment types include donations,
guarantees, capacity building grants, equity investments, loans in US$, etc. Integra’s main
partners are:
a/ Integra Ventures26 USA – relationship Network Affiliation
b/ Rabobank27, the Netherlands - Funding
Integra and Corporate Social Responsibility
A European Commission Report entitled Mainstreaming Corporate Social Responsibility (CSR)
amongst SMEs28 describes Integra Foundation, Slovakia as a microfinance organization that
promotes corporate social responsibility and marketplace ethics as a way to strengthen civil
society, democracy and the free market economy. It offers tools to help SMEs on specific
corporate social responsibility issues such as developing a code of ethics, implementing social
auditing or defining a corporate philanthropy strategy, and also supports concrete projects with
individual SMEs.
According to the European Commission “Integra Foundation puts a strong emphasis on
supporting pilot projects with SMEs. In the experience of Integra Foundation, the
26
Integra Ventures USA- is an organization that encourages small and medium enterprises in Central and Eastern Europe and
Eurasia by providing business training seminars, one-on-one mentoring, and counsel on marketing, sales, inventory
management, and finance http://www.integrausa.org/
27
Rabobank Foundation, Netherlands is a Microfinance Funder. Its main objective is to improve the living standards of groups
of people that have no access to finance and to support the socio-economic development of groups. This is put into practice
both in the form of financial assistance and in the form of technical assistance. More information on Rabobank Foundation can
be found at: www.rabobankfoundation.nl
28
More information on the European Commission Project Mainstreaming CSR amongst SMEs can be found at
http://ec.europa.eu/csrforsmes
14
demonstration effect of such projects is one of the activities with the highest impact for a
greater uptake of CSR among SMEs – and is more effective than seminars, conferences or even
the internet. Having a maximum impact on SMEs is a key challenge for Integra Foundation, in a
Member State where awareness about CSR is relatively low. Present in several countries of
Central and Eastern Europe through its agencies or partners (Romania, Serbia, Bulgaria, and
Russia), Integra Foundation helps to demonstrate the link between CSR and the reduction of
corruption, trafficking and exploitative employment. In so doing, it also provides a good
example of how the content of CSR can be adapted to make it relevant to the particular needs
and priorities of each national and/or cultural context.”
Fostering Gender Equality Initiative
Since 1995 Integra Foundation in Slovakia focuses on Support to social enterprises, mostly
SMEs, development of micro-enterprises for women; and promotion of investment in SMEs.
Integra Slovakia implements a project which is part of the Integra initiative (implemented in 8
countries) entitled Fostering Gender Equality - Meeting the Entrepreneurship and
Microfinance Challenge. The project targets women who face social disadvantages, for
example, unemployed women or heads of single households.
The project focuses on assisting women to become self-employed while encouraging them to
create new jobs. In Slovakia 900 women have participated in this programme and have received
training on micro-financing, nevertheless only 300 out of them have started their own
businesses. Integra also provides micro-credits up to 3,000 euro in addition to supporting their
customers in gaining access to other resources and mentoring, advising them on market
accessing, creating commercial opportunities and increasing sales etc. Integra relies on tailormade services and in-person contacts with their customers.
As a result of the implementation of Fostering Gender Equality Initiative Integra outlines the
following lessons learned:
 Product selection – it is crucial to choose a product or service that has the capacity to
become financially sustainable.
 Innovative approach - it is equally important that the clients add something new to the
market;
 Efficient advisory services - open forum for exchanging opinions and share experiences;
gender awareness – both women entrepreneurs and the general public should be
informed of the gender-oriented and socially inclusive role of the women’s SMEs. In this
respect ensuring visibility through the media is paramount.
The MikroFond Programme
Another women-oriented project implemented by Integra is the MikroFond Programme which
focuses on lending providing micro-credits exclusively to women. 8 women staff members are
involved in this programme, assisted by volunteers on occasions of special events, etc. Integra’s
15
target group is women at risk determined as single mothers, divorcees with young children,
refugee women, women who are victims of domestic violence, women with alcoholic or
chronically unemployed partners, women who are not able to re-enter the work force after
maternity leave, women with disabilities, and women from ethnic (mainly Roma) minorities.
Integra’s main objective in qualitative terms is to help women at risk by “providing
opportunities to women who are economically and socially at risk to improve their livelihood by
starting and growing their own businesses”, as well as “to have an impact on their lives and
their families and, consequently, contribute to the development of local communities in which
those clients operate29”. In quantitative terms Integra’s objective for a 3-year period between
2004 and 2006 was to train 420 women; to lend 180 micro loans (an additional sum of $372 000
was allowed for the micro loans); to create 120 new enterprises and create 240 new jobs.
Integra’s MikroFond program applies three basic strategic interventions:
a/ business skills training and mentoring;
b/ micro credit, as well as soft commercial loans and social investment funds in addition to
grants and
c/ market access.
Integra’s clients are trained in groups of 20 women in different cities around the country. After
the training they are invited to submit a business plan that, if viable, qualifies them for a small
loan of up to USD $2000.
The MikroFond programme has six stages of implementation:
Step 1 Decide on a location for training and lending cycle;
Step 2 Market the program in this location with the help of local government labor offices and
NGOs;
Step 3 Interview potential training candidates, select a group and conduct the training;
Step 4 Receive and evaluate the business plan and if viable, issue a micro loan, payable over the
next 2 years;
Step 5 Initiate regular mentoring and support group meetings for each client;
Step 6 Design and offer a potential Market Access opportunity for the client.
The main challenges faced by Integra while implementing their strategy were:
 Lower demand (than expected) for this type of services among the target group –high
risk aversion;
 Low level of economic development in some areas of Slovakia;
 Wide range of services offered by the bank sector (scaling-down);
 Restructuring the NGO sector in Slovakia (financial vacuum which occurred after major
international donor agencies left the country);
 Consolidation process within the Integra Foundation as a young organization.
29
Integra’s objective determined by Ms. Milena Uhlikova, Integra’s project coordinator at a Seminar of Women’s
Entrepreneurship and Social Innovation, Ljubljana, Slovenia, December 2003;
http://www.oecd.org/dataoecd/26/33/26385257.pdf
16
Despite the difficulties encountered by Integra in the implementation of MikroFond
Programme, the project has achieved the anticipated results for different stages of the
development of the program. Nevertheless, the project coordinator specifies that Integra had
to adjust the original projection (in terms of the number of clients, number of loans etc.) after
the first two years of the project implementation. In addition, Integra’s original plan
encompassed both business as and social dimensions; however for the first two years Integra
has focused mostly on monitoring business impact; and only in 2004 they have put in place a
system for monitoring both business and social impact of their programme.
Since Integra’s project has been carried out in several stages (determined primarily by the
reporting periods to the major private funds donors), the anticipated results had to be adjusted
for the next reporting period based on the results achieved in the previous reporting period. As
a result of going through this revision process during the first few years after the launch of the
Mikrofond project, Integra has become more realistic in setting its expectations and
subsequently more successful in achieving the set-up goals after the second year of project
implementation.
The MikroFond Programme was financed through various funds:
• Self-financed: during the initial stage and for loan fund;
• Public funds: during the initial stage, and for launching the project (especially the training
process and support services);
• Private funds: during the later stages, sustaining the core program (training, loans, basic
support services), launching innovative programs (market access – including developing
capacity in consulting, launching a store, wholesale, selling in retail networks, and developing a
new brand).
The cumulative financing of the programme for the period 1999 – 2002 was 237,188 EURO
from private funds, 63,283 EURO from public funds, and 200,000 EURO from self-financing.
These financing sources were identified through targeting possible donors on the basis of
market research, using previously established links and contacts, developing long-term
partnerships with the donor agencies, and Monitoring calls for proposals from major
foundations and multilateral agencies. During the financing process Integra has relied on longterm partnerships, development of supportive relationships with the donor agencies, and
alignment of expectations and objectives on both sides. Nevertheless, the constraints related to
the financing process involved:
• Approval and disbursement of funds on annual basis which created tensions in financial
management and had a negative impact on the planning process for the core Mikrofond
program;
• Donors have their own “agenda”, which is more, different donors have different agendas
which they pursue in discord with the project’s priorities. As a result, the internal pressures
within the organization increased.
• Donors are reluctant to invest in the loan fund which constitutes another major challenge for
a micro credit organization.
17
Despite the substantial setbacks, Integra has seen a significant social impact of its Mikrofond
Programms: 360 women received business training; 109 micro loans were disbursed for a total
of over $225 000, and 137 new jobs were created for the duration of the project. In addition,
Integra perceives its Mikrofond Programme as a long-term initiative which has already been
replicated in Romania, Bulgaria, and Serbia.
Lessons Learned from the Mikrofond Programme:
The assessment of the Mikrofond Programme includes both successful practices and difficulties.
Among the successes Integra outlines the following:
• Providing training, which has been part of the program design since its beginning, proved to
be very important for successful launch / expansion of businesses;
• By offering complex services (initial and follow-up training, loans, business development
strategies, etc.) the programme has targeted more clients, and was able to meet those clients’
needs on a larger scale;
• After 5 years of running the program Integra remains determined to continue serving its main
target group - women at risk.
Among the major difficulties Integra points out:
•Operating in the type of market which exists for this kind of services in Slovakia (small in
individual locations and the locations dispersed throughout the country) requires a lot of
resources and travelling;
• High emphasis on social impact, which has been part of Integra’s mission from the very
beginning, required a lot of efforts and trade-off between the mission and the financial selfsustainability.
As an advice to similar microfinance projects to be launched in Central and Easter Europe,
Integra recommends:
• To seek a strong technical assistance support locally (try to “piece together” the needed
expertise from partial expertise of different people);
• To define clearly the guidelines for procedures and operations from the very beginning (“the
sooner the better”);
• To put more effort into developing methods for screening potential clients;
• To invest even more in the staff training before launching the program or at its beginning;
• To increase staff’s expertise in market access and
• To hire skilled managers and loan officers.
As for efficient ways to raise awareness and increasing visibility, Integra recommends
networking events such as seminars, workshops, and conferences; and publication in
newsletters, and media coverage.
Financial and Performance Data for Integra Foundation, Slovakia30:
30
For more information on Financial and Performance Data for Integra Foundation, please check Annex IV.
18
Institutional Characteristics – Integra Foundation31
1999
2000
2001



Total assets
Gross loan portfolio
Total equity
1999



2000
2001
Total assets
Gross loan portfolio
Total equity
2.3.2. The Microfinance Sector in Bosnia-Herzegovina
The microfinance sector in Bosnia and Herzegovina developed rapidly after 1997 as a result of
important support of the World Bank Local Initiative Projects which sought the development of
financially sound microcredit programmes later transformed into independent microfinance
institutions (MFIs), located throughout the country. Since the mid 2000s, the sector began to
grow very rapidly, boosted by the arrival of foreign investments and debt financing from local
commercial banks. In 2005 about 50 MFIs, most of which of a very modest size, were able to
help more than 110,000 customers with a portfolio of approximately 213 million Euros32. In
2009, the microfinance sector asset base in BiH represented 6.6% of total commercial bank
assets and the number of borrowers amounted at almost 400,000 people33. However, the 2008
economic crisis has increased indebtedness, which resulted in high default rates, a decline in
portfolio size and negative returns in a market that was, 2 years ago, one of the leading
destinations for foreign investors. Thus, in 2008 the loan portfolio in BiH reached level of 1
billion BAM, and the number of active loans rose to 400,000. In 2009 the portfolio quality in BiH
began to decline rapidly, more and more customers began to deal with problems in repayment
of their loans. In comparison to 2008, in 2009 the loan portfolio declined by 22% or for 200
million BAM34, and the number of active clients has declined by 14%, or 55,000. Nevertheless,
the microfinance sector in BiH is still considered very professional since most institutions have
adopted good practices in terms of financial sustainability and transparency.
The largest MFIs in Bosnia and Herzegovina
31
The Financial and Performance Data for Integra Foundation, Slovakia is provided by MIX Market – Microfinance Information
eXchange - http://www.mixmarket.org/mfi/integra/data
32
European Microfinance Network - http://www.european-microfinance.org/index2_en.php
33 According to the Microfinance Database MIX Market - www.mixmarket.org/
34
Bosnian Convertible Mark – it is pledged to EURO in ratio 1 EURO=1.95 BAM.
19
MFI
EKI
LIDER
LOKmicro
MI-BOSPO
MIKRA
Mikro ALDI
MIKROFIN
Partner
PRIZMA
SINERGIJA
Sunrise
Women for
Women
TOTAL
Status
as of
Dec. 2008
MCF
MCF
MCF
MCF
MCF
MCF
MCC
MCF
MCF
MCC
MCF
MCF
GLP in
mil.KM
# of Active
Borrowers
159.9
9.0
89.0
56.6
29.6
5.7
189.4
156.1
49.2
36.2
64.2
11.5
44, 459
4,849
26,986
30,565
12,403
3,100
51,508
51,982
29,310
9,707
23,175
9,235
856.4
297,279
% Growth
in
Borrowers
58%
12%
134%
57%
7%
-14%
79%
57%
40%
53%
34%
40%
% Growth
in GLP
102%
44%
191%
74%
88%
53%
123%
99%
133%
91%
76%
85%
% of
Women
Borrowers
38%
40%
43%
100%
100%
78%
35%
43%
83%
34%
38%
100%
Debt to
Equity
Ratio
4.2
0.8
8.8
3.1
1.9
1.3
3.8
4.1
2.1
4.7
3.8
1.6
To this result contributes the passing of a new Microfinance Law In 2006 in both parts of Bosnia
and Herzegovina (the Federation of Bosnia and Herzegovina and the Serbian Republic of
Bosnia). The law stipulates the conditions for transformation of microcredit organizations
(MCOs) into nonprofit microcredit foundations (MCF) or for-profit microcredit companies
(MCCs) which can be Limited Liability Company (LLC) or a Joint Stock Company (JSC).
The Microfinance law establishes different conditions in each entity. In the Federation,
microcredit organizations first need to transform into foundations. The minimum capital
requirements for foundations is 50,000 KM or 25,000 EUR and the maximum loan amount is
10,000 KM or 5,000 EUR. MFIs that provided higher loans than this maximum threshold had to
reduce their maximum loan size when they register as foundations. After becoming
foundations, MFIs can choose to become for-profit microcredit companies. The MCC status
enables institutions to open their capital structure to investors. MCCs also face higher capital
requirements of 500,000 KM or 250,000 EUR and higher maximum loan amount of 50,000 KM
or 25,000 EUR.
In Republic of Srpska, MFIs can directly register as microcredit companies and be subject to the
higher capital and maximum loan size requirements (same as outlined for the Federation).
However, the for-profit entities are subjected to taxation. Neither microcredit foundations nor
companies are allowed to take deposits.
Regulatory and supervisory authority, responsibilities - For MCOs from the Federation, the
Ministry of Social Policy, Displaced Persons and Refugees performs monitoring, except for
prudential regulation. Rules and reporting requirements are set by the Ministry in the Republic
of Srpska in BiH, yet in the Federation no reporting is required. The Banking Agencies of the
Federation and the Republic of Srpska are responsible for regulation and supervision of banks,
including issuing licenses, setting performance standards, reporting requirements and criteria
for risk management.
20
Entry Requirements
Minimum capital requirement For MCOs, the initial capital must be reported in the application
for a license, but there are no established criteria. For banks, the minimum capital required is
KM 15m (USD 7.9m).
Legal Status All institutions have to be legal entities enrolled in the Court Register.
Incorporation The MCO statute must contain information about the management and
leadership bodies and the use of funds. Banks are required to submit a founding contract,
information about board, management and shareholders and financial data.
Restrictions on Business Activities and Definition of Permissible Activities
MCOs may provide microloans to "marginalized categories" and provide other related services
such as consulting. First loans should not exceed USD 2.600, consecutive loans USD 15.800 and
the term must not be longer than 36 months. MCOs in the Federation are also permitted to use
their assets (incl. loan portfolio) as security against their borrowing. Banks may provide loans,
mobilize deposits and conduct a range of other financial activities.
Establishment of branches MCOs based outside the Federation may establish branches in the
Republic of Srpska with the approval of the Ministry and vice versa. Banks in a similar situation
may open representative offices with the permission of the Banking Agency.
Ownership and Corporate Governance
Banks require a minimum net capital of 12% of their risk-weighted assets, half of which should
consist of core capital. For MCOs there is no such requirement.
Requirements with regard to ownership MCOs in both the Federation and RS require three
natural persons as founders, with MCOs in RS requiring one extra legal person. Banks require at
least two owners, with changes in voting rights over set percentages necessitating the approval
of the Banking Agency.
Governance MCOs do not need to have a general assembly, but must at least have a
management body, which has the authority to decide on mergers with other MCOs or
bankruptcy.
Auditing There are no auditing requirements for MCOs.
Banks are subject to both internal and external audits. The internal auditor reports directly to
the Audit Board. The Banking Agency has the authority to appoint an external auditor.
Limitations on insider lending/lending to connected parties/risk concentration
Banks must offer related persons the same terms as are available for non-related persons.
A limit exists of 40% of core capital to a single borrower or group of borrowers or 5% if
unsecured. Collateral quality requirements come into play when lending exceeds 25% of
core capital. Total credit risk exposure is restricted to 300% of core capital, with a maximum
deposit size from single sources of 20% of total daily deposits.
Requirements regarding investments
Several restrictions exist for banks. They may not own more than 49% of a non-financial
entity and are forbidden from investing in certain businesses. Banks may also not invest
more than 5% (individually) or 20% (in total) of their core capital in legal entities without
authorization from the Agency. The absolute limits for investments in non-financial entities
are 10% of core capital (25% in total), and, for financial entities, these figures are 15% and
50%.
21
Microcredit Organization Women for Women International, Sarajevo (BiH)
Women for Women (BiH) has as a mission to provide tools and resources needed for moving
from crisis and poverty into civil society which promotes and protects peace, stability and
sustainability to women-victims of war, violence and other conflict. Women for Women (BiH)
determines the purpose of its microcredit programme as "provision of financial services to
women for starting up and developing their businesses and helping them to increase their
income, improve their living condition and by doing so to reduce poverty in the community35".
Women for Women (BiH) Profile
Micro-crediting activities have started in 1997 within the framework of the international
organization Women for Women International. The goal of the microcredit programme is “to
provide financial help to women-victims of the war and violence, and after they go through
education programs help them start their business activities and earn additional income
needed for improvement of the living conditions”. Upon adoption of the Law on microcredit
organization, conditions to separate microcredit activities and register as an independent legal
subject were created. Thus, the microcredit organization entitle Women for Women (Bih) was
registered as an independent legal entity in 200136.
Women for Women’s37 main funding sources are grants and loans; while their main product is
providing microloans for women. Women for Women International provides the following
loans:



Group Loans: amount of loan: from 500 to 3.000 KM; loan term: 3 - 18 months; loan
collateral: solidarity group;
Individual loans: amount of loan: 2.000 - 20.000 KM; loan term: 3 - 18 months; loan
collateral: co-signers, bill of exchange;
Stimulation loans: amount of loan: 300 - 600 KM; loan term: 3 - 6 months; loan
collateral: guarantee by a group.
WWI’s investment types include: loans in local currency; donations; capacity building grants;
and loans in US$. WWI’s main partners are AMFI-BiH38 and MFC39 for network affiliation.
35
36
http://www.womenforwomen.org/global-initiatives-helping-women/help-women-bosnia-herzegovina.php
For more information on MCO Women for Women International visit their website at www.womenforwomen.org
37
An Independent Audit Report for Women for Women International for 2009 performed by Deloitte can be found
at http://www.mixmarket.org/sites/default/files/Women_for_Women_AFS_09.pdf
38
AMFI is an Association established in BiH. Its mission is to is to alleviate poverty and unemployment through stimulation and
sustaining an enhanced private sector development in BiH by facilitating capacity building of its members thus enhancing the
ability of the MFIs, including their management and staff, to cope with the challenges of the sector and to continue to initiate
and sustain the economic development of their clients. In addition it is the mission of AMFI to participate actively in the
national and regional microfinance industry and to promote the active role of its member MFIs in the economic development of
BiH and Southeast Europe with the aim to alleviate poverty. For more information on AMFI, please visit www.amfi.ba/eng/
22
Target Group
WFW (BiH) offers loans exclusively to women and provides affordable microcredit loans that
help women restart their lives in ways that are independent, productive, and secure. The target
group of clients is women with relatively low levels of income who use microcredit loans to
implement their business ideas for self-financing and self-employment. These activities are
funded primarily through microcredit lending and investment income and loans from financial
institutions.
Microcredit Loans Receivable40
WFW records loans receivable when the loan funds are disbursed. An allowance for loan losses
is estimated and recorded based on WFW’s historical bad debt experience and management’s
judgment. Interest income is recognized on the accrual basis using the effective yield method
and interest is accrued until the loan is deemed uncollectible and written off. A loan becomes
overdue when a scheduled payment is missed. The allowance for doubtful loans receivable is
evaluated by management at year-end based on historical experience and specifically identified
questionable receivables.
As of 31 December 2011 microcredit loan receivable for the Women for Women International
(to which WFW- BiH is affiliated) consists of the following and are due within one year:
Microcredit loans receivable
Less: Allowance for Loan Losses
Microcredit Loans Receivable, Net
Bad debt expense for 2010 was
$2,941,812
$(1,825,786)
$1,116, 026
$1,864,952
Microcredit Lending Grants
WFW receives grants from governments and foundations in exchange for services. WFW
receives grants that provide that a portion of the funds shall be available for the Microcredit
Lending Programme’s revolving loans and operating expenses. The terms of some of the grants
include the possibility that granting agencies may request the repayment of all or a portion of
the grant. Revenue is recognized when operating expenses are incurred and when the granting
agency notifies WFW that the agency does not expect WFW to pay the money back.
Functional Allocation of Expenses
As of 31 December 2010 Women for Women (BiH) had the following major programmes:
 Microcredit Lending Programme – provides small loans to women in BiH. WFW (BiH)
lends to women individual borrowers or to solidarity groups of women, usually 3 to 10
39
MFC is a leading membership-based resource centre in Central and Eastern Europe. It is based in Poland. MFC’s mission is to
contribute to poverty reduction and human potential development by promoting a socially oriented and sustainable
microfinance sector that provides adequate financial services to an increasing number of poor families and microentrepreneurs. MFC fulfills its mission by providing high quality services and building long-term relationships with the
microfinance community. For more information on MFC please visit: www.mfc.org.pl
40
Information available at Women for Women International Consolidated Financial Statements for the year ended in 31
December 2010 - http://www.womenforwomen.org/assets/files/WFWI-2010-12-AUDIT-Final.pdf
23


members who act as cosigners for each other’s loans. Interest and service fees are
computed at a flat interest rate of 15% of the original loan amount and are repaid in
equal amount over the life of the loan. A payment plan is scheduled for an average of 1
year. WFW (BiH) meets with the borrowers on a monthly basis to collect the loan
repayments.
Media, communication, and outreach programme – creates allies and advocates for
socially excluded women in BiH. The programme provides updates on situations and
events in the society and on personal stories of marginalized women. The programme
seeks to raise awareness on about the challenges women face in rebuilding their lives,
families, and communities in the aftermath of the war.
The sponsorship programme – links women around the world with women survivors of
war. Each sponsor contributes $27 per month, a portion of which is given to her
“sponsored sister” as a direct aid and supports her participation in the 1-year rights
awareness education and job skills training programme. Sponsors also send letters, thus
providing emotional support to women in post-war situations.
Lessons Learned from the microfinance experience in BiH:
1. Women for Women (BiH) outlines four major lessons:
a/ to mitigate the damages occurring as a result of the unstable economic environment, MFW
(BiH) has resolved to match their clients with buyers, especially when it comes to working with
milk, vegetable, or other cooperatives, in order to generate a guaranteed market for clients’
products;
b/ to rebuild shattered trust WFW (BiH) encourages women of different ethnicities to form
solidarity groups as a way to begin building trust and invest considerable effort into the
relationship between clients and loan officers;
c/ to better understand the needs of their clients WFW (BiH) encourages its loan officers to
develop strong relationships with clients. WFW treats their women-clients with respect and
provide them with as much information as possible about how to conduct their incomegenerating activity, the market, and other issues. This atmosphere of respect and trust is also
conducive to encouraging prompt loan repayment;
d/ to prevent delinquency WFW (BiH) prefers to focus on prevention, rather than dealing with
missed payments. One such preventive measure is forbidding partnerships between clients in
the same solidarity group, because if the business fails, there are three or fewer members left
to cover the missing payments. Similarly, WFW discourages family members from being in the
same group, or even the same lending center, because family members tend not to put
pressure on each other to make their payments should problems arise41.
2. Working with registered organizations – the MFI partners – have proven to be very
successful as such organizations understand the legal implications of default to the
provisions of their contract. These organizations therefore work hard in adhering to
contract provisions and maintaining professionalism.
41
Rebuilding Communities with Microcredit in Bosnia and Herzegovina, Seida Saric, Director of Women for Women
International - Bosnia and Herzegovina, Critical Half, Annual Journal of Women for Women International, 2004,
http://www.womenforwomen.org/news-women-for-women/assets/files/critical-half/CHJournalv2.pdf
24
3. Through provision of credit and improved agricultural technologies to farmers, the
programme has contributed to increased household incomes. WFW (BiH) assessment
indicates that profits from the microcredit programme contribute between 20% and
80% of household income for over 90% of the women and therefore improved their
livelihood.
4. To keep a track record of information related to the overall loans to credit programme
partners (other microfinance institutions), amounts disbursed, their repayments
(principal and interest), and net amounts outstanding. This template will be very useful
to other credit programs in tracking loans to its credit program partners.
5. After the meltdown of the microcredit activities in BiH in 2009 both micro-credit
organizations (MCOs) and their clients have learned some valuable lessons. MCO are
now much more careful in selection of clients, and credit activities (which since 2009
have been reduced by 40% i.e. from the amount of 1 billion and 60 million in 2008 to
641 million of loan disbursed in 2009). On the other hand, people are much more aware
of potential risks that are present on the credit market, and much more cautious in
decision whether to raise a loan or not, and whether to be guarantor or not on other
people's loans.
Financial and Performance Data for Microcredit Organization Women for Women (BiH)42
Institutional Characteristics – Women for Women International
2007
2008
2009
2010
2011

2007



Total assets
2008
2009
2010
2011
Total assets
Gross loan portfolio
Total equity
Women for Women’s Other Activities in Bosnia and Herzegovina
42
For more comprehensive information on financial and performance data for Microcredit Organization Women for Women,
Bosnia and Herzegovina please check Annex V.
25
In addition to the microfinance services, WFWI’s activities in Bosnia and Herzegovina include
direct financial aid, rights awareness classes, job-skills training and emotional support. One-year
program was developed for Bosnia and Herzegovina’s special challenges and demands, includes
training that helps women earn an income and support themselves, through:
Greenhouse management — to show women how to successfully grow, cultivate and earn an
income through vegetable sales
Access to finances — to give women access to microcredit loans and savings through a
separate facet of the Women for Women International-Bosnia and Herzegovina program
Other courses include:





Dairy production
Beekeeping
Berry cultivation
Medicinal herb collection
Elderly and child care
Since 1994 Women for Women International has initiated various programmes in Bosnia and
Herzegovina and has helped more than 29,000 women in 60 communities in the country.
Women for Women (BiH) reports that:




70% of their programmes’ participants improved their emotional well-being;
96% of the participants leave the programme with knowledge of their legal rights;
95% of the participants and graduates are actively participating in key household decisions;
More than half of graduates are currently saving income to invest in their future.
PARTNERSHIP: Women in Bosnia and Herzegovina, Working “Hand in Hand”
Kate Spade, New York and Women for Women International launched a two-year exclusive
partnership in 2009 called Hand in Hand, designed to expand job opportunities for women in
Bosnia and Herzegovina and other countries where WfWI works. In 2009, 250 women in Bosnia
and Herzegovina were employed by the Kate Spade Hand in Hand partnership, knitting colorful
scarves, mittens, hats, and dog sweaters for Kate Spade’s holiday line.
WFWI’s one-year progamme involves the following phases43:
43
The one-year programme implemented by Women for Women International is comprehensively described on the
organization’s website: http://www.womenforwomen.org/programs-supporting-women/programs-for-helping-women.php
26
WWI’s one-year programme focuses on developing job skills in women and receiving business
training so they can earn a living. Likewise, WWI’s programme contributes to the women’s
rights awareness by making women realize their rights and how to fight for those rights in their
homes, communities and nations.
Equipped with job-skills training and basic business education, along with an awareness of their
rights, women go on to become leaders in their communities, inspiring other women to follow
in their steps. These two elements appear throughout WfWI's programming and help generate
the programs' key outcomes:




Women sustain an income: Income and asset management
Women are well: Awareness, protection and prevention
Women are decision-makers: Family and community decision-making
Women have social networks and safety nets: Solidarity for support and protection
27
When these four key outcomes are met, women experience lasting change and are positioned
to be active citizens i.e. women engage socially, civically and economically for the betterment
of their families and community. As active citizens, woman can become leaders of community
and contribute to peaceful and stable societies.
WWI’s programmes are organized in three stages as women increase their access to resources
and knowledge:
a/ Creating Awareness: Improving women's access to knowledge about their value and the
importance of women's rights and societal roles.
b/ Promoting Behavior Change: Encouraging a woman's willingness to actively make decisions
in her family and community, apply knowledge to maintain physical and psychological wellness,
to form or join women's and community groups and take advantage of economic opportunities.
c/ Enabling Action: Providing opportunities to develop personal and group plans for action to
allow women to become active citizens individually and in solidarity with other women. In
addition, women are provided with support and access to essential services such as microcredit
loans, legal assistance, cooperative and employment opportunities and social networks.
Major Challenges and Remedies to Counteract Them
Women for Women International defines the following major challenges in their work to foster
the economic empowerment of women44:


Cultural and social barriers – traditional attitudes and social inequities may prevent
women from gaining economic stability, for example: women's work is viewed as less
valuable than men's; women's work is often unpaid or under-paid; women often cannot
control assets, property and their incomes. Therefore, WFWI has designed its
programme in such a way that it helps in creating awareness about the value of
women's work both inside and outside the home, developing skills for household
management and promoting women's productivity for economic self-sufficiency.
Lack of Money Management Knowledge - Managing finances is an unknown concept to
many of the women around the globe. Some may have never handled money before
entering the WfWI programme. Therefore, WFW introduces the concept of savings, and
how saving money can help women reach their goals. WFWI works on creating
awareness about the different types of income (employment, self-employment,
cooperative groups and enterprises) and expenses, and how to manage planned and
unplanned events, as well as developing and managing household budgets and savings,
introduces concepts on how to save effectively, and the various methods of savings
44
The three major challenges for women’s economic stability encountered by WFWI are described in detail at:
http://www.womenforwomen.org/programs-supporting-women/economic-stability-for-women.php
28

available, and adjusting or remaining within a budget. Acquiring better understanding of
the basics, women can examine different income-generating opportunities that may suit
their needs and circumstances and begin to set personal income- generating goals;
Exclusion from Economies - women's ability to earn a sustained income is severely
limited by cultural norms and lack of opportunity in the countries where WFWI works –
which explains why women represent nearly 70% of the world's poor. Nevertheless,
when women earn an income, society benefits in multiple ways. Women reinvest 90%
of their income in their families and communities, according to the World Bank. Women
are more likely to repay their loans and women are more likely to use their profits to
help the poor and hire other women to work for them.
The 2009 Annual Report45 of Women for Women (BiH) reveals the following data related to
their microcredit programme:
PROGRAM INCEPTION
1994
Number of women served in 2009
3,979
Cumulative number of women served
25,592
(through 2009)
2009 microfinance portfolio
$9,625,651
Number of microfinance clients in 2009
9,013
Cumulative number of microfinance clients
26,687
(through 2009)
2009 repayment rate
96.3%
Total number of full-time employees (2009)
124
2009 PROGRAM IMPACT:
Percent reporting change in income
33%
Percent reporting change in health status
12%
Percent reporting change in knowledge and
64%
awareness of rights
Percent reporting change in active community 15%
Involvement
USE OF SPONSORSHIP FUNDS:*
Number of Graduates (2009)
2,924
Food
14%
Clothes
8%
Housing
43%
Medicine
7%
Income Generation
6%
School/School Fees
5%
Other
23%
45
The Women for Women International Annual Report for 2009 can be found online at:
http://www.womenforwomen.org/sponsor-a-woman/assets/files/WfWI_2009_Annual_Report.FINAL.pdf
29
3 The Trust Fund for Women in Montenegro
3.1 Overview
In Montenegro a number of factors including the enacted legal framework, outlined in Section
2.2; the ongoing EU accession; the human capital, and the existing experience in providing
financial services to women-entrepreneurs, among others, provide unique opportunity to
promote women’s economic rights and improve the status of women.
The Trust Fund for Women is a multi-donor initiative dedicated to supporting high-impact
business proposals that contribute to creating and extending of women’s economic
opportunities at local level. The Fund is launched with the initial contribution of $100,000 euro
from the government of Montenegro and will further seek to increase this fund through
cooperation with public and private partners. TFW has been envisaged as an affordable, low
interest financing for women starting up their own businesses or financing for existing small
businesses managed by women by taking into account on one hand the gender approach to the
business proposals and on the other individual approach to clients and on-going trainings and
consultations aiming at acquiring business management skills or increasing women’s business
capacity.
The overall objective of this project is to create the Trust Fund for Women (TFW) as a financial
instrument which will support women’s entrepreneurship and will encourage women’s SMEs.
The outcome of this project is to increase women’s economic opportunities and social
inclusion, and ultimately to encourage employment and economic growth.
The specific goals of the TFW are:
a. to approve loans as an incentives for the establishment and development of women-led
small and medium-sized enterprises at local level and
b. to provide support to the grantees – through training, assessment and capacity building.
TFW will finance women’s business projects, including women’s start-ups or existing SMEs
managed by women. The selection of the business projects to be financed by the Fund will be
made on the basis of annual Call for Proposals.
3.2 Legal Status and Structure
The TFW is conceived as an integral part of the Investment and Development Fund of
Montenegro, i.e. a legal entity under the Montenegro legislation, and as such will be in
compliance with the Law on Investment and Development Fund (2009) and all relevant
regulations, policies, and procedures of the IDF. In addition, to better reflect the multiple
partnerships as a result of which the Fund has been created, a joint Steering Committee will
oversee the work of the TWF and will provide guiding instructions on its management. The
Steering Committee will comprise representatives from the Ministry for Economic
Development, Ministry of Finance, Directorate for Development of Small and Medium Sized
30
Enterprises, the Ministry for Human and Minority Rights, the local governments and UNDP
Montenegro. The TFW will seek to extend its partnerships with the private sector - banks, the
Chamber of Commerce, the Union of Employers domestic and international donors, as well as
with the civil society organizations - Non-governmental organizations, trade union, academic
and scientific institutions, and media.
Tentative Structure of the Trust Fund for Women in Montenegro:
Civil society
NGOs, trade
unions,
academia,
media
Private
Sector
Chamber of
Commerce,
donors, banks,
the Union of
Employers
Government of Montenegro
Steering Committee
Representatives from the UNDP Montenegro, Ministry for Economic
Development, Ministry of Finance, Directorate for Development of
Small and Medium Sized Enterprises, the Ministry for Human and
Minority Rights, and the local governments
Board of Directors of the Investment
and Development Fund of Montenegro
Executive Director of the Investment
and Development Fund of Montenegro
Trust Fund for Women in Montenegro
3.3 Competences and Types of Credit
As part of the IDF, the TFW should be in compliance with IDF’s Credit Policy from April 2010
which establishes the principles, outlines the credit products and acceptable guarantees. Thus,
in accordance with the Law on IDF among the principles which guide the Credit Policy of IDF is
to “Approve credits and issue guarantees that a/Provide incentives for establishment and
development of SMEs; b/ Finance projects of local, regional and national importance; c/
Encourage employment; d/ activities that provide support for economic development”. In
addition, the IDF credit policy especially focuses on permanent improving the employment and
financing of projects from less developed areas, as well as portfolio diversification, in order to
reduce the level of risk.
31
In terms of credits for women directly financed by the TFW the following credit lines should be
considered:
A. Credit line for direct financing of investment projects of existing women-managed SMEs:
- Users: legal entities – women’s SMEs and women-entrepreneurs;
- Max amount of credit: 10,000 euro;
- Repayment period: 5 years (including grace-period of 12 months);
- Interest rate: 5% annually;
- Securing the loan: mortgage, bank note;
- Purpose of the loan: for current assets max 40% of the loan, the remaining part is for fixed
assets.
B. Credit line for direct financing of investment of women’s start-ups
Users: legal entities – women-entrepreneurs;
- Max amount of credit: 5,000 euro;
- Repayment period: 3 years (including grace-period of 6 months);
- Interest rate: 4% annually;
- Securing the loan: mortgage, bank note, fiduciary;
- Purpose of the loan: financing of the entrepreneurial ventures that need smaller amounts of
financing.
C. Microcredit for financing entrepreneurs and SMEs in cooperation with local governments:
- Users: Women entrepreneurs and SMEs;
- Goal: to open micro funds on local levels for financing the women entrepreneurs and SMEs;
- Max amount of the credit: 10,000.00 €;
- Interest rate: max 5% annually;
- Repayment period: max 5 years (including a max 12 months grace period);
- Securing the loan: bank notes, mortgage, fiduciary, securities;
- Prioritized projects: to be defined with local governments;
- Intended use – financing of the entrepreneurial ventures that need smaller amounts of
financing.
D. Credits for women -agriculture producers for buying agriculture equipment. This credit line
should be developed and implemented in cooperation with the Ministry of Agriculture on the
basis of cooperation agreement:
- Users: women agriculture producers or women’s cooperatives of agricultural producers;
- Purpose: buying agricultural equipment;
- Max amount of credit: 10,000.00 €;
- Interest rate: 2% annually;
- Repayment period: max 5 years (including possible grace period of 12 monts);
- Securing the loan: the equipment bought, mortgage, bank notes;
- Prioritizes projects: to be defined with Ministry of Agriculture.
It should be emphasized that all of the proposed here credit lines focusing on improving women
economic opportunities do not constitute gender-based discrimination but are in full
32
compliance with the positive actions as determined by the relevant legislation in Montenegro,
including the Constitution (2007) and the Law on Gender Equality (2007)
3.4 Call for Proposals and Selection Criteria
The business projects to be financed by the TFW will be made on the basis of annual Call for
Proposals. The specific purpose of the Call will be to give an opportunity to the selected
business projects to benefit from the favorable financing terms of the Fund. However, the
overall objective of the Call for Proposal is to encourage a wide range of women entrepreneurs
to develop sound, efficient, and sustainable business projects which have a potential to evolve
into women-led enterprises. Furthermore, the Call will also strengthen the public-private sector
cooperation by mobilizing resources for achieving of mutually beneficial outcome.
The applicants will be required to submit a details business proposal along with a list of
additional documents such as certificate of incorporation, tax documentation (certificate by the
Tax authorities that the applicant does not own tax money), bank documentation which prove
the financial status of the applicant/ the business bank account (where appropriate), audit
reports for the last 2 years, and other additional documentation.
3.5 Procedures, Guarantees, Managing Credit Portfolio, and Sustainability
Procedures
It is the IDF policy to use different sources of information (the client, bank, Central Bank,
Pension Fund, Health Fund, SMEDD, Public Revenue Service, accounting agencies, etc.) in order
to evaluate the credit potential of the credit applicant, by realistic analysis of his current
market share – the portfolio with minimum risk involved will be created. IDF is not profit
oriented, but it operates according to the principle of self-sustainability; therefore, when
defining the level of interest rates and fees, the following facts are considered: 1. target groups
that use the credits/guarantees; 2. the need to lower the costs of financial reasources; 3. the
need to motivate banks for cooperation in investment-credit activities; 4. covering the costs of
relevant IDF's department operations. With respect to reserves for potential credit losses the
IDF is guided by the Resolution on minimal standards for managing the credit risks in banks in
Montenegro ("Official Gazette of Montenegro, No. 60/08 dated 9 October 2008)
Furthermore, according to the IDF’s policies “entrepreneurs and SMEs cannot be users of
several credits or guarantees at the same time, except for credits with bank's guarantees. This
principle also refers to entities connected with credit beneficiaries (SMEs and entrepreneurs)”.
Thus, TFW should be in compliance with this policy and not allow multiple credits per
entrepreneur or women’s small SME unless there are bank guarantees involved.
With respect to dealing with bad debt, the TFW’s policies concur with those of IDF and include
the following principles:
- Intention to detect the problem as soon as possible and make the plan of activities;
33
-
Following procedures and instructions in the process of evaluation of each
credit/guarantee application;
Quality provision of credit/guarantee and taking additional security in the process of
reprogramming;
Control and monitoring the credit portfolio;
Communication with clients on a daily basis;
Bad debt reserves in accordance with the IDF's policy;
Team work on solving potential problems.
The IDF Credit Policy envisages both direct financing of SMEs and credit lines realized in
cooperation with banks and banks guarantees as credit guarantees of IDF. With the regard to
TFW the latter strategy is worth considering in view of TFW’s strategy to extend its partnership
with private investors, including banks. The IDF Credit Policy defines credit lines realized in
cooperation with bans as “mechanism where the banks guarantee to the Fund the return of
each credit. Continuation of realization of this arrangement involves signing agreements on
cooperation with banks as well as their motivation to participate in this project. Motivation of
the banks is possible by the time deposits and - up to a certain level - participation in interest.”
Guarantees
TFW’s guarantees should be in full compliance with the IDF Credit Policy, the Law on IDF and
the relevant legislation in Montenegro. Depending on the type of credit line approved and in
line with the established IDF Credit policy, the applicants will be required to provide credit
guarantees including: mortgage, fiduciary, bank note, equipment, or guarantees by third
parties;
Incentives policy
In terms of business incentives, TFW needs to be in line with IDF’s incentives police while
adding a gender perspective to the adopted terms and conditions:
-Women’s business projects in the northern municipalities;
- Entrepreneurs employing more than 3 to 5 women as new employees for the duration of the
repayment period;
- Export oriented companies managed by women (over 50% of revenues are made on foreign
markets);
- Innovative products/services designed and implemented by women.
TFW’s incentives policy will consist of decreasing the interest rate by 1% annually, extending
the repayment period up to 1 year and the grace period up to 6 months. However, only one of
the listed incentives may be used per grant proposal.
3.6 Support, Monitoring and Evaluation, Reporting, Auditing
Providing ongoing advice and consultation along with training to the selected applicants is crucial
for achieving the Fund’s objective. Courses and training in business management, accounting, and
marketing should be provided to the selected applicants to ensure the building and increasing of
34
their business capacity. Apart from financing the business proposal, the “added value” contribution
of the TFW is the investment in the human capital which will be reflected in increasing the business
skills and capacity of women entrepreneurs in Montenegro.
To ensure effective implementation of the business proposal, the selected applicants will be
required to submit Implementation Reports containing comprehensive set of progress indicators
every 3 months for the duration of the financing of the business proposal, and in cases where
delays or specific implementation problems are detected, the applicants will be required to work
with the IDF consultants towards finding prompt and effective solutions. In addition, the selected
applicants will be required to submit annual progress reports which will be review by the Steering
Committee. Monitoring and reporting, along with the financing and business training, is an essential
pillar for the outcome of each business project and the impact of the TFW.
In terms of auditing, the selected business proposals need to submit to IDF and the Steering
Committee annual audit reports signed by independent auditor. In addition and in accordance with
the Law on IDF and its Credit Policy the TFW as functional part of IDF should report to the Central
Bank about its credit guarantee activities.
35
4. Recommendations
A number of recommendations and lessons learned can be outlined featuring various
perspectives of the Fund creation from establishing a favorable environment, to managing the
credit portfolio, and providing support for women entrepreneurs.
Recommendations related to day-to-day functioning of the Fund:
- Thorough research of the grant applicants to spot viable microenterprises and
determination of their loan needs and capacity; the grant proposals should be specific,
measurable, containing time-bound goals and targets to monitor implementation,
impact and to ensure accountability;
- Communication with clients on a daily basis;
- On-going control and monitoring the credit portfolio;
- Team work on solving potential problems;
- detect the problem as soon as possible and make the plan of activities to solve them;
- Compliance with the principle of portfolio diversification to reduce the level of risk.
Recommendations related to building enabling business environment:
- Develop supportive policy frameworks for inclusive entrepreneurship and viable
microenterprises;
- Create an environment that promotes microenterprises through simplified business
regulation, income bridges out of unemployment/inactivity and access to small-scale
finance;
- Encourage women’s visibility in the media; the influence of media on female
entrepreneurship should be further explored
- Establish locally available networking opportunities since most women’s
microenterprises are locally focused; networks ensure mentoring, provision of role
models, technical assistance and training.
- Create a database of the innovative business activities and keep on the radar innovative
ideas that have the potential to promote inclusive entrepreneurship and support small
business creation in local economies;
- Develop the existing initiatives for women’s entrepreneurship into full-fledged national
strategies for women’s enterprise.
- Initiate an active networking policy that brings more women into self-employment while
taking into account the good practices and lessons learned.
Gender specific recommendations:
- Be aware of the different needs of women entrepreneurs and integrate those needs in
offering a loan products tailored to accommodate them including among others
employment of specialized/ female staff to provide consultation and management;
- Ensure transparency in statistics of gender-specific data and make gender aggregated
date available for banks, public loan schemes, and other microfinance providers.
- Take into account of the specific challenges that women entrepreneurs face . Make a
distinction between gender-aware and gender-neutral approach.
36
5.Annexes
Annex I UN Standards
1.
2.
3.
4.
The Universal Declaration on Human Rights (1948);
The International Covenant on Economic, Social and Cultural Rights (1966);
The Declaration on the Elimination of Discrimination against Women (1967);
The Convention on the Elimination of All Forms of Discrimination against Women
(CEDAW) (1979);
5. The Optional Protocol for the Convention on the Elimination of All Forms of
Discrimination against Women (1999);
6. The Beijing Declaration and Platform for Action (1995);
7. The United Nations Millennium Declaration (2000 – 2015)
37
Annex II European Standards and Regulations
1. The Amsterdam Treaty (1997);
2. EU Roadmap for equality between women and men 2006-2010;
3. The Council Directive 75/117/EEC, 10 February 1975 on the equal payment of men and
women;
4. The Council Directive 76/207/EEC, 9 February 1976 on equal access to employment,
professional training, advancement at work and working conditions;
5. The Council Directive 86/613/EEC, 11 December 1986 on equal treatment of men and
women in agriculture, those who are self-employed; and in support of maternity laws that
protect women;
6. Directive 2002/73/EC of the European Parliament and of the Council of 23 September 2002
amending Council Directive 76/207/EEC on the implementation of the principle of equal
treatment for men and women as regards access to employment, vocational training and
promotion, and working conditions;
7. The Council Directive 2004/113/EC of 13 December 2004 implementing the principle of
equal treatment between men and women in the access to and supply of goods and
services;
8. The Council Decision 95/593/EC, 22 December 1995 on mid-term action to provide equal
opportunities to women and men;
9. The Council Decision 2001/51/EC which starts the program related to the Framework
Strategy on Gender Equality 2001-2005);
10. Decision No 1554/2005/EC of the European Parliament and of the Council of 7 September
2005 amending Council Decision 2001/51/EC establishing a programme relating to the
Community framework strategy on gender equality and Decision No 848/2004/EC
establishing a Community action programme to promote organizations active at European
level in the field of equality between men and women;
11. The Council Recommendation 84/635/EEC, 13 December 1984 on the support of women;
12. The Council Resolution, 27 March 1995 on equal participation of women and men in the
decision making process;
13. EU Regulation of Microcredit in Europe;
14. Small and Medium Business Act for Europe;
15. Built on the Small Business Act;
16. EU Strategy for Equality between Women and Men (2010-2015)
17. The Regulations of Microcredit I Europe (2007), Expert Group Report, mandated by the
European Commission
18. Study on Promotion of Women Investors and Entrepreneurs (2008), mandated by the
European Commission.
38
Annex III National Legislation and Policies
1.
2.
3.
4.
5.
6.
7.
8.
The Constitution of Montenegro (2007);
The Law on Gender Equality (2007);
The Law on Business Organizations;
The Law on Investment and Development Fund (2009);
The National Action Plan for Achievement of Gender Equality (2008-2012);
The National Program of Integration of Montenegro to the EU;
The National Strategy for Sustainable Development;
The National Strategy of Employment and Development of Human Resources for the
period 2007-2011;
9. The Strategy for Development and Poverty Reduction;
10. Strategy for development of Small and Medium Enterprises (2011-2015).
39
Annex IV Financial and Performance Data for Integra Foundation, Slovakia provided by MIX
Market – Microfinance Information eXchange
1999
Data per year
2000
2001
As of date
1999-12-31
2000-12-31
2001-12-31
Currency
USD
USD
USD
10,524
12,132
13,713
—
—
—
3
3
5
Total assets
Total assets
Offices
Number, including head office
Personnel
Total number of staff members

Financing Structure
1999
As of date
Capital/asset ratio
2000
2001
1999-12-31
2000-12-31
2001-12-31
39.92%
39.12%
36.99%
1.50
1.56
1.70
—
—
—
—
—
—
49.17%
36.21%
61.53%
Total Equity / Total Assets
Debt to equity ratio
Total Liabilities / Total Equity
Deposits to loans
Deposits / Gross Loan Portfolio
Deposits to total assets
Deposits / Total Assets
Gross loan portfolio to total assets
Gross Loan Portfolio / Total Assets

Outreach
40
1999
2000
2001
As of date
1999-1231
2000-1231
2001-1231
Currency
USD
USD
USD
—
—
—
8
26
19
—
—
—
—
—
—
5,174
4,393
8,438
1,130
3,101
3,147
—
—
—
—
—
—
—
—
—
—
—
—
+ Number of active borrowers
Number of borrowers with loans outstanding
+ Gender
Female
—
Percent of women borrowers
Number of active women borrowers / Number of
Active Borrowers
Number of loans outstanding
Number of loans outstanding
+ Gross loan portfolio
Gross Loan Portfolio
+ Delinquency
One month or more
Average loan balance per borrower
—
Gross Loan Portfolio / Number of Active Borrowers
Average loan balance per borrower / GNI per capita
Average Loan Balance per Borrower / GNI per
Capita
Average outstanding balance
Gross Loan Portfolio / Number of Loans
Outstanding
Average outstanding balance / GNI per capita
Average Outstanding Balance / GNI per Capita
41
1999
2000
2001
0
0
0
—
—
—
—
—
—
Number of depositors
Number of depositors with any type of deposit
account
Number of deposit accounts
Number of all deposit accounts
+ Deposits
Total value of all deposit accounts
+ Products (deposits)
+ Retail deposits
—
—
—
—
Voluntary deposits
—
0
0
0
—
—
—
—
—
—
—
—
—
—
—
—
1999
2000
2001
Average deposit balance per depositor
Deposits / Number of Depositors
Average deposit balance per depositor / GNI per capita
Average Deposit Balance per Depositor / GNI per
Capita
Average deposit account balance
Deposits / Number of Deposit Accounts
Average deposit account balance / GNI per capita
Average Deposit Account Balance / GNI per Capita

Overall Financial Performance
As of date
1999-1231
2000-1231
2001-1231
Currency
USD
USD
USD
Return on assets
—
-29.93%
-51.52%
42
1999
2000
2001
(Net Operating Income - Taxes) / Average Total
Assets
Return on equity
—
-75.78%
-135.63%
23.33%
25.58%
14.50%
(Net Operating Income - Taxes) / Average Total
Equity
Operational self sufficiency
Financial Revenue / (Financial Expense + Net
Impairment Loss + Operating Expense)

Revenues
1999
2000
2001
As of date
1999-1231
2000-1231
2001-1231
Currency
USD
USD
USD
—
10.26%
8.74%
-328.64%
-290.87%
-589.45%
—
—
—
—
—
—
2000
2001
Financial revenue/ assets
Financial Revenue / Average Total Assets
Profit margin
Net Operating Income / Financial Revenue
Yield on gross portfolio (nominal)
Financial Revenue from Loan Portfolio / Average
Gross Loan Portfolio
Yield on gross portfolio (real)
(Yield on Gross Portfolio (nominal) - Inflation
Rate) / (1 + Inflation Rate)

Expenses
1999
As of date
1999-
2000-12-
2001-12-
43
1999
Currency
2000
2001
12-31
31
31
USD
USD
USD
—
40.11%
60.26%
—
2.19%
2.43%
—
0.00%
10.70%
—
37.92%
47.14%
—
—
—
—
—
—
Total expense/ assets
(Financial Expense + Net Impairment Loss +
Operating Expense) / Average Total Assets
Financial expense/ assets
Financial Expense / Average Total Assets
Provision for loan impairment/ assets
Impairment Losses on Loans / Average Total Assets
Operating expense/ assets
Operating Expense / Average Total Assets
Personnel expense/ assets
Personnel Expense / Average Total Assets
Administrative expense/ assets
Administrative Expense / Average Total Assets

Efficiency
1999
2000
2001
As of date
1999-1231
2000-1231
2001-1231
Currency
USD
USD
USD
—
89.80%
94.94%
—
—
—
Operating expense/ loan portfolio
Operating Expense / Average Gross Loan Portfolio
Personnel expense/ loan portfolio
Personnel Expense / Average Gross Loan Portfolio
44
Average salary/ GNI per capita
1999
2000
2001
—
—
—
—
—
—
—
—
—
1999
2000
2001
Average Personnel Expense / GNI per capita
Cost per borrower
Operating Expense / Average Number of Active
Borrowers
Cost per loan
Operating Expense / Average Number of Loans
Outstanding

Productivity
As of date
1999-1231
2000-1231
2001-1231
—
—
—
—
—
—
—
—
—
—
—
—
0
0
0
—
—
—
Borrowers per staff member
Number of Active Borrowers / Number of
Personnel
Loans per staff member
Number of Loans Outstanding / Number of
Personnel
Borrowers per loan officer
Number of Active Borrowers / Number of Loan
Officers
Loans per loan officer
Number of Loans Outstanding / Number of Loan
Officers
Depositors per staff member
Number of Depositors / Number of Personnel
Deposit accounts per staff member
45
1999
2000
2001
—
—
—
Number of Deposit Accounts / Number of
Personnel
Personnel allocation ratio
Number of Loan Officers / Number of Personnel

Risk and Liquidity
1999
2000
2001
As of date
1999-1231
2000-1231
2001-1231
Currency
USD
USD
USD
21.85%
70.58%
37.30%
—
—
—
—
0.00%
0.00%
—
0.00%
0.00%
0.00%
0.00%
43.94%
—
—
—
Portfolio at risk > 30 days
Outstanding balance, portfolio overdue > 30 Days +
renegotiated portfolio / Gross Loan Portfolio
Portfolio at risk > 90 days
Outstanding balance, portfolio overdue > 90 Days +
renegotiated portfolio / Gross Loan Portfolio
Write-off ratio
Value of loans written-off / Average Gross Loan
Portfolio
Loan loss rate
(Write-offs - Value of Loans Recovered) / Average
Gross Loan Portfolio
Risk coverage
Impairment Loss Allowance / PAR > 30 Days
Non-earning liquid assets as a % of total assets
Cash and banks / Total Assets
46
Annex V Financial and Performance Data for Microcredit Organization Women for Women,
Bosnia and Herzegovina, provided by MIX Market – Microfinance Information eXchange
2011Interim Data
2007
2008
2009
2010
Monthly, quarterly, or
other non-annual data
As of date
2007-1231
2008-1231
2009-1231
2010-1231
2011-0331
2011-0630
Currency
USD
USD
USD
USD
USD
USD
9,190,026
13,018,646
9,227,610
5,076,221
4,318,158
4,182,711
6
13
12
2
9
9
50
77
71
54
54
59
—
—
—
45
—
—
Total assets
Total
assets
Offices
Number,
including
head office
+ Personnel
Total
number of
staff
members
+ Gender
Female
—
Financing Structure
As of date
200712-31
200812-31
2009-1231
201012-31
201103-31
201106-30
39.19%
28.70%
34.89%
40.62%
47.72%
49.71%
1.55
2.48
1.87
1.46
1.10
1.01
Capital/asset ratio
Total Equity / Total
Assets
Debt to equity ratio
47
Total Liabilities /
Total Equity
Deposits to loans
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
94.42%
93.23%
104.63%
82.24%
91.56%
94.25%
Deposits / Gross
Loan Portfolio
Deposits to total
assets
Deposits / Total
Assets
Gross loan portfolio
to total assets
Gross Loan
Portfolio / Total
Assets
Outreach
As of date
2007-1231
2008-1231
2009-1231
2010-1231
2011-0331
2011-0630
Currency
USD
USD
USD
USD
USD
USD
9,235
10,720
8,979
4,840
4,203
3,920
+ Number of
active
borrowers
Number of
borrowers
with loans
outstanding
+ Methodology
Individual
—
—
—
3,873
—
—
—
Solidarity group
—
—
—
5,106
—
—
—
Village banking
shg
—
—
—
0
—
—
—
48
+ Gender
Male
—
—
—
—
0
—
—
Female
—
9,235
10,720
8,979
4,840
—
—
Legal entity
—
—
—
—
0
—
—
+ Retail loans
—
—
10,720
8,979
—
—
—
+ Household
financing
—
—
1,537
1,263
—
—
—
Consumption
—
—
744
—
—
—
—
Household
other
—
—
793
1,263
—
—
—
Microenterpris
e
—
—
9,183
7,716
—
—
—
External
customers
—
—
10,720
—
4,840
—
—
Management
and staff
—
—
—
—
0
—
—
Urban
—
—
3,216
2,694
2,520
—
—
Rural
—
—
7,504
6,285
2,320
—
—
100.00%
100.00%
100.00%
100.00%
—
—
+ Products
(credit)
+ Relationship
+ Location
Percent of
women
borrowers
49
Number of
active women
borrowers /
Number of
Active
Borrowers
+ Number of
loans
outstanding
9,235
10,971
9,007
4,862
4,211
3,924
Number of
loans
outstanding
+ Delinquency
Less than one
month
—
0
10,727
7,987
4,262
—
—
+ One month or
more
—
—
—
—
—
—
—
From one to
three months
—
0
244
255
240
—
—
+ More than
three months
—
—
—
—
—
—
—
From three to
six months
—
0
241
238
284
—
—
+ More than six
months
—
—
—
—
—
—
—
From six to
twelve months
—
0
79
527
76
—
—
One year or
more
—
0
0
0
0
—
—
Renegotiated
loans
—
0
0
0
0
—
—
50
+ Location
Urban
—
—
—
2,702
2,542
—
—
Rural
—
—
—
6,305
2,320
—
—
Loans to
corporations
—
—
—
—
3,185
—
—
Loans to
financial
institutions
—
—
—
—
0
—
—
Loans to
governments
—
—
—
—
0
—
—
+ Retail loans
—
—
10,971
9,007
1,677
—
—
+ Household
financing
—
—
—
1,263
1,677
—
—
Consumption
—
—
—
—
0
—
—
Education
—
—
—
—
0
—
—
Mortgage
housing
—
—
—
—
0
—
—
Household
other
—
—
—
1,263
1,677
—
—
Microenterpris
e
—
—
—
7,744
0
—
—
—
—
10,971
—
4,862
—
—
+ Products
(credit)
+ Relationship
External
customers
51
Management
and staff
—
—
—
—
0
—
—
Individual
—
—
1,628
3,873
2,399
—
—
Solidarity group
—
—
9,092
5,134
2,463
—
—
Village banking
shg
—
—
—
0
0
—
—
Male
—
—
—
—
0
—
—
Female
—
—
10,971
9,007
4,862
—
—
Legal entity
—
—
—
—
0
—
—
8,677,58
3
12,137,93
4
9,654,58
5
4,174,50
8
3,953,72
7
3,942,30
1
+ Methodology
+ Gender
+ Gross loan
portfolio
Gross Loan
Portfolio
+ Delinquency
Less than one
month
—
8,552,85
7
11,614,65
4
8,497,08
2
3,506,35
3
3,487,77
8
3,624,65
0
+ One month or
more
—
124,726
—
1,158,55
0
565,686
394,144
252,689
From one to
three months
—
43,608
256,644
231,016
207,556
—
—
+ More than
three months
—
—
—
—
—
—
—
From three to
six months
—
0
258,759
276,416
358,129
—
—
52
+ More than six
months
—
—
—
—
—
—
—
From six to
twelve months
—
81,118
7,877
650,070
102,468
—
—
One year or
more
—
0
0
0
0
—
—
Renegotiated
loans
—
0
0
0
0
71,805
64,962
Loans to
corporations
—
—
—
—
2,289,37
7
—
—
Loans to
financial
institutions
—
—
—
—
0
—
—
Loans to
governments
—
—
—
—
0
—
—
+ Retail loans
—
—
12,137,93
4
9,654,58
5
1,885,13
0
—
—
+ Household
financing
—
—
2,973,117
3,137,26
5
1,885,13
0
—
—
Consumption
—
—
510,789
—
0
—
—
Education
—
—
—
—
0
—
—
Mortgage
housing
—
—
—
—
0
—
—
Household
other
—
—
2,462,328
3,137,26
5
1,885,13
0
—
—
+ Products
(credit)
53
Microenterpris
e
—
—
9,164,817
6,517,32
0
0
—
—
Individual
—
—
3,127,173
6,055,61
8
2,667,52
9
—
—
Solidarity group
—
—
9,010,761
3,598,96
6
1,506,97
9
—
—
Village banking
shg
—
—
—
0
0
—
—
Urban
—
—
3,641,381
2,896,37
5
2,170,74
4
—
—
Rural
—
—
8,496,553
6,758,20
9
2,003,76
4
—
—
—
—
—
—
—
—
—
External
customers
—
—
12,137,93
4
—
4,174,50
8
—
—
Management
and staff
—
—
—
—
0
—
—
Male
—
—
—
—
0
—
—
Female
—
—
12,137,93
4
9,654,58
5
4,174,50
8
—
—
Legal entity
—
—
—
—
0
—
—
+ Methodology
+ Location
+ Risk
Nonperforming
+ Relationship
+ Gender
54
Average loan
balance per
borrower
Gross Loan
Portfolio /
Number of
Active
Borrowers
940
1,132
1,075
863
941
1,006
24.86%
25.11%
22.88%
18.55%
—
21.63%
940
1,106
1,072
859
939
1,005
24.86%
24.53%
22.81%
18.46%
—
21.61%
0
0
0
0
0
—
Average loan
balance per
borrower / GNI
per capita
Average Loan
Balance per
Borrower /
GNI per
Capita
Average
outstanding
balance
Gross Loan
Portfolio /
Number of
Loans
Outstanding
Average
outstanding
balance / GNI
per capita
Average
Outstanding
Balance /
GNI per
Capita
+ Number of
depositors
Number of
55
depositors
with any type
of deposit
account
+ Products
(deposits)
+ Retail
deposits
—
—
0
0
—
—
—
Voluntary
deposits
—
—
0
0
—
—
—
Compulsory
deposits
—
—
0
0
—
—
—
0
0
0
0
0
—
+ Number of
deposit
accounts
Number of all
deposit
accounts
+ Products
(deposits)
Deposits from
corporations
—
—
—
—
0
—
—
Deposits from
financial
institutions
—
—
—
—
0
—
—
Deposits from
governments
—
—
—
—
0
—
—
+ Retail
deposits
—
—
0
0
0
—
—
+ Voluntary
deposits
—
—
0
0
0
—
—
56
Demand
deposits
—
—
—
—
0
—
—
Time deposits
—
—
—
—
0
—
—
Compulsory
deposits
—
—
0
0
0
—
—
0
0
0
0
0
0
+ Deposits
Total value of
all deposit
accounts
+ Products
(deposits)
Deposits from
corporations
—
—
—
—
0
—
—
Deposits from
financial
institutions
—
—
—
—
0
—
—
Deposits from
governments
—
—
—
—
0
—
—
+ Retail
deposits
—
0
0
0
0
—
—
+ Voluntary
deposits
—
0
0
0
0
—
—
Demand
deposits
—
0
—
—
0
—
—
Time deposits
—
0
—
—
0
—
—
Compulsory
deposits
—
0
0
0
0
—
—
—
—
—
—
—
—
Average
57
deposit
balance per
depositor
Deposits /
Number of
Depositors
Average
deposit
balance per
depositor /
GNI per capita
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Average
Deposit
Balance per
Depositor /
GNI per
Capita
Average
deposit
account
balance
Deposits /
Number of
Deposit
Accounts
Average
deposit
account
balance / GNI
per capita
Average
Deposit
Account
Balance /
GNI per
Capita
Overall Financial Performance
58
As of date
2007-1231
2008-1231
200912-31
201012-31
201103-31
201106-30
Currency
USD
USD
USD
USD
USD
USD
4.91%
3.21%
-5.71%
13.87%
10.14%
-3.45%
11.30%
9.71%
18.26%
36.78%
23.19%
-7.07%
124.02%
112.00%
82.66%
65.21%
73.55%
86.40%
As of date
200712-31
200812-31
200912-31
201012-31
201103-31
201106-30
Currency
USD
USD
USD
USD
USD
USD
25.35%
29.95%
27.22%
25.99%
28.20%
21.88%
19.37%
10.72%
-20.98%
-53.35%
-35.96%
-15.75%
27.24%
31.45%
27.40%
25.23%
24.65%
18.29%
Return on assets
(Net Operating Income
- Taxes) / Average
Total Assets
Return on equity
(Net Operating Income
- Taxes) / Average
Total Equity
Operational self
sufficiency
Financial Revenue /
(Financial Expense +
Net Impairment Loss +
Operating Expense)
Revenues
Financial revenue/ assets
Financial Revenue /
Average Total Assets
Profit margin
Net Operating Income /
Financial Revenue
Yield on gross portfolio
(nominal)
Financial Revenue
from Loan Portfolio /
59
Average Gross Loan
Portfolio
Yield on gross portfolio
(real)
25.36%
22.39%
27.88%
22.63%
As of date
200712-31
200812-31
200912-31
Currency
USD
USD
20.44%
(Yield on Gross
Portfolio (nominal) Inflation Rate) / (1 +
Inflation Rate)
—
15.83%
201012-31
201103-31
201106-30
USD
USD
USD
USD
26.74%
32.93%
39.86%
38.34%
25.32%
4.05%
5.99%
5.50%
4.85%
3.85%
2.87%
1.94%
5.65%
12.54%
13.61%
5.82%
0.10%
14.45%
15.11%
14.90%
21.39%
28.67%
22.35%
10.40%
10.92%
8.31%
14.56%
17.62%
15.29%
Expenses
Total expense/ assets
(Financial Expense + Net
Impairment Loss +
Operating Expense) /
Average Total Assets
Financial expense/ assets
Financial Expense /
Average Total Assets
Provision for loan
impairment/ assets
Impairment Losses on
Loans / Average Total
Assets
Operating expense/ assets
Operating Expense /
Average Total Assets
Personnel expense/ assets
Personnel Expense /
Average Total Assets
60
Administrative expense/
assets
4.06%
4.19%
6.59%
6.83%
11.05%
7.05%
Administrative Expense /
Average Total Assets
Efficiency
As of date
200712-31
200812-31
200912-31
201012-31
201103-31
201106-30
Currency
USD
USD
USD
USD
USD
USD
15.70%
16.12%
15.21%
21.61%
32.78%
24.06%
11.29%
11.65%
8.48%
14.71%
20.14%
16.47%
4.35
4.23
2.66
3.35
—
2.47
133
168
168
206
—
234
131
166
166
206
298
234
Operating expense/ loan
portfolio
Operating Expense /
Average Gross Loan
Portfolio
Personnel expense/ loan
portfolio
Personnel Expense /
Average Gross Loan
Portfolio
Average salary/ GNI per
capita
Average Personnel
Expense / GNI per
capita
Cost per borrower
Operating Expense /
Average Number of
Active Borrowers
Cost per loan
Operating Expense /
Average Number of
Loans Outstanding
61
Productivity
As of date
200712-31
200812-31
200912-31
201012-31
201103-31
201106-30
185
139
126
90
78
66
185
142
127
90
78
67
280
214
209
161
140
109
280
219
209
162
140
109
0
0
0
0
0
—
0
0
0
0
0
—
66.00%
64.94%
60.56%
55.56%
55.56%
61.02%
Borrowers per staff
member
Number of Active
Borrowers / Number of
Personnel
Loans per staff member
Number of Loans
Outstanding / Number
of Personnel
Borrowers per loan
officer
Number of Active
Borrowers / Number of
Loan Officers
Loans per loan officer
Number of Loans
Outstanding / Number
of Loan Officers
Depositors per staff
member
Number of Depositors
/ Number of Personnel
Deposit accounts per
staff member
Number of Deposit
Accounts / Number of
Personnel
Personnel allocation
ratio
Number of Loan
62
Officers / Number of
Personnel
Risk and Liquidity
As of date
200712-31
200812-31
200912-31
201012-31
201103-31
201106-30
Currency
USD
USD
USD
USD
USD
USD
1.44%
4.31%
11.99%
16.01%
1.82%
1.65%
0.93%
2.20%
9.60%
11.03%
1.82%
1.65%
1.87%
2.41%
6.33%
24.28%
26.59%
42.44%
1.56%
2.30%
6.15%
22.78%
26.59%
42.44%
105.43%
94.03%
108.46%
84.62%
543.75%
386.81%
Portfolio at risk > 30
days
Outstanding balance,
portfolio overdue >
30 Days +
renegotiated portfolio
/ Gross Loan
Portfolio
Portfolio at risk > 90
days
Outstanding balance,
portfolio overdue >
90 Days +
renegotiated portfolio
/ Gross Loan
Portfolio
Write-off ratio
Value of loans
written-off / Average
Gross Loan Portfolio
Loan loss rate
(Write-offs - Value of
Loans Recovered) /
Average Gross Loan
Portfolio
Risk coverage
Impairment Loss
Allowance / PAR >
63
30 Days
Non-earning liquid
assets as a % of total
assets
4.51%
9.12%
7.45%
24.76%
14.55%
9.25%
Cash and banks /
Total Assets
64