Analysts say that microcredit in Bosnia is still on solid ground despite the global economic recession. Defaults in loans have increased, but the banks there have enough resources to make it out of the recession.
From this AFP article hosted at Google News, reporter Sabina Niksic visited some of the banks in Bosnia.
In the Sarajevo suburb of Lukavica, women gather once a month at one of them, the Mikra agency, to collect money which repays their loans.
Mikra uses different models of lending to the poor, including the so-called village banking model where loans are granted to groups of people in which peer pressure and collective responsibility helps ensure payments are made.
Loans can grow only if the initial debt is paid off.
"In Lukavica, we have 270 clients, but only three or four have difficulties repaying loans," Mikra's Vedran Zametica told AFP.
But the global economic crisis is having an effect on this sector, which since 1996 registered a steady default rate of less than 1.0 percent.
"The trend of growth of portfolios at risk started at the end of 2008," Nejra Nalic, the director of Mi-Bospo micro-credit foundation, told AFP.
"Since October last year until the end of May 2009, the percentage of our portfolio at risk has grown by 100 percent," said Nalic.
However, experts say micro-credit remains one of the healthiest segments of Bosnia's economy
During crises, micro-credit remains the only hope for people like Nagorka Govedarica who at the end of Bosnia's 1992-1995 war was a widow struggling to raise five children on a meager school teacher's salary.
Today, in her house near Sarajevo, Govedarica runs a private day-care centre for 60 children in which two of her daughters work thanks to a micro-credit loan.
"All I had was a good business idea and this house, I was not eligible for a bank loan, but I borrowed from Mikra," Govedarica told AFP.
Govedarica has outgrown micro-finance and is now also borrowing from banks, but her experience with Mikra has taught her not to take more than she can repay.