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News from 2021-02-18 / KfW Development Bank

Bosnia: Microloans to improve energy efficiency

Mann an einer Werkbank
The Bosnian entrepreneur Alessandro Marjanovic from the small town of Prijedor.

KfW supports businesses in the Balkan countries with microloans for energy-efficient refurbishment. The microloans help to save electricity and thus costs, as well as to reduce greenhouse gas emissions. The loans are financed by the EU's REEP Plus programme, in which KfW is participating with EUR 50 million.

The Bosnian entrepreneur Alessandro Marjanovic from the small town of Prijedor in the northwest of the country had found suitable premises for the start-up of his business, but they were in a neglected state. Marjanovic had originally worked in the field of aluminium construction, but then discovered a niche in the production of mosquito nets. He approached the local office of the microcredit foundation MCF Partner from Tuzla and asked for support. His savings were sufficient to buy the necessary machines, but not for the renovation of the hall. For this he received a microloan of 5,000 Marka, the equivalent of about EUR 2,500, as well as a grant of the equivalent of EUR 250 from EU funds of the REEP Plus programme.

"I had heard about the microcredit foundation from the media and through advertisements," explains Alessandro Marjanovic. "With their support, I replaced the windows in my factory." The windows now meet current insulation standards. The entrepreneur also used his own funds to pay for improved thermal insulation of the walls. As a result, less heating is needed in winter, and in summer there is almost no need for air conditioning or fans. Marjanovic estimates that he saves 80 per cent of energy in summer and 60 per cent in winter. He can invest the saved costs entirely in his business.

"The investments in renewable energies supported with our and EU funds not only enable savings in electricity consumption and thus reduce costs for small businesses, but are also climate-friendly," says KfW department director Bianca Clausen. "In addition, they very tangibly improve people's working and living conditions."

MCF Partner's microloans in Bosnia Herzegovina are financed by KfW, which is investing a total of EUR 50 million in this sub-project of the Regional Energy Efficiency Programme (REEP). The EU REEP Plus programme, which comes under the umbrella of the Western Balkan Investment Framework (WBIF), is funded by the European Bank for Reconstruction and Development (EBRD), the Energy Community Secretariat (EnCS), bilateral donors and KfW. It comprises four components; in addition to the promotion of political exchange and interim financing, these are loans for the private sector and for public administration. KfW is active in the latter two areas. So far KfW has promoted 597 projects under REEP. This has saved energy to the tune of 51,000 MWh per year. Greenhouse gas emissions of 15,000 tonnes per year are thus avoided.