December 18 (SeeNews) - Bosnia needs to improve the efficiency of its judiciary and education, and to facilitate the establishment of startups, in order to back the development of small and medium-sized enterprises (SMEs), the local unit of ProCredit Bank said.
The inefficiency of the judiciary in terms of slow resolution of claims, the provision of legal security to the business and in the protection of property rights are one of the key reasons for the unfavourable investment climate in Bosnia, ProCredit BiH said in a recent survey posted on its website.
The inadequate school system that is not adapted to the needs of the SME sector causes a lack of qualified labour force, ProCredit BiH said.
"We have clients who face difficulties in finding adequate staff. Therefore, a dual system of education could be an alternative that allows students to acquire both practical and theoretical knowledge."
Start-ups are not adequately recognised by the state or by financial institutions as there are no consultations, favourable funds for those who are just starting a business, while the banks do not recognise the opportunities offered by startups and maintain a rather conservative approach, given the increased risks of financing such firms, ProCredit BiH said.
On the other hand, the bank said it notices an increase of investments in the SME sector. Domestic employers invest significant resources to meet the minimum criteria leading to the establishment of businesses, better regulation of the employee-employer relationship, improvement of production processes, and proper settlement of tax liabilities.
A particularly interesting example of growth in the SME sector is the wood industry, which recorded a 6.9% annual rise in exports in the first nine months of 2018 to 1.032 billion marka, ProCredit said.
The bank expects the number of SMEs in Bosnia to rise by about 3% next year, while the share of industry in the country's gross domestic product (GDP) will remain unchanged at 60%.