Raiffeisen Leasing d o o Sarajevo

MIGA has issued €9.5 million in guarantees to Raiffeisen Zentralbank Österreich AG (RZB) of Austria covering its €10 million shareholder loan to Raiffeisen Leasing d.o.o. Sarajevo (RLBH) of Bosnia and Herzegovina. The guarantee is for five years, and covers the risks of transfer restriction and expropriation of funds.

This is the third in a series of MIGA-guaranteed projects with RZB’s subsidiary leasing company in Bosnia and Herzegovina. The new investment will help the leasing company continue its remarkable growth trajectory—in 2004 RLBH worked with close to 300 customers and gained 13 percent market share after only one year in operation. With the new funding, the company plans to diversify its asset base, broadening its leasing portfolio beyond vehicles to heavy machinery and equipment.

Bosnia and Herzegovina has registered high growth rates recently, with economic growth driven largely by increased domestic and foreign investment in heavy industry and strong export growth. However, smaller local companies continue to have a hard time getting in on these new—and growing—economic opportunities. They may lack the credit history to borrow funds or the financial wherewithal to purchase the capital equipment needed to add production capacity. Leasing is seen as a viable option for such firms, but the leasing market in Bosnia and Herzegovina remains in its early stages. This new round of RLBH expansion, financed by RZB’s loan, will open up more opportunities for manufacturers and exporters, particularly small and medium-size companies.

MIGA’s participation in the project is aligned with several agency priorities: encouraging investment in post-conflict nations, and improving access to financing options for local SMEs. The project also addresses one of the World Bank Group’s strategic development goals for Bosnia and Herzegovina—the promotion of sustainable private sector-led growth.