| Europe
for BiH No 5, November 1998: page 1
| page 2 | page 3
| page 4
In this issue:
Housing
finance
Repairing houses and introducing
a new product on the banking market
The international
community, and the European Commission in particular, have put a lot
of effort into rebuilding houses destroyed during the 1992-1995 war
in Bosnia. But there are simply not enough grants to go around to
deal with the extensive war damage. In the Federation alone half of
the houses were damaged and six percent of those were destroyed
completely (in the Republika Srpska, 24% and 5% respectively).
Given the enormity of
the damage it is simply impossible to provide financial support to
all the affected families in the form of housing grants and so other
sustainable solutions need to be found, in the form of credits. But
that is easier said than done in a country which only trusts cash
and has no faith whatsoever in the banking system. People are so
unwilling to put their money in banks and especially those in the
state owned sector that the banks have hardly any money. A
private banking sector is emerging but it is very young and
unstable. As banks in Bosnia-Herzegovina have traditionally not
financed house-building and repair, neither do they have staff
experienced in the subject.
It is against this
backdrop that the European Commission has joined forces with the
Kreditanstalt fur Wiederaufbau to set up a housing finance programme.
KFW is highly experienced in this field as it was created in order
to administer the funds from the Marshall Plan for the
reconstruction of the German economy after the Second World
War.Today, apart from its domestic activities, KFW also supports
more than 1,600 projects in developing countries.
The housing loan
programme has a double objective : to improve housing supply and at
the same time to establish a sustainable financing system for
housing construction in BiH. KFW has set up a revolving fund which
has been endowed by the Commission with ECU 15 million. The funds
are channelled in the form of loans to families who want to rebuild,
extend or improve their homes.
Training loan officers
Given the limited
experience of Bosnian banks in housing finance, and in order to
limit the default risk, KFW consultants help the selected commercial
banks establish housing loan departments and train loan officers.
Thus the lending activities, including the screening of application
forms, are closely monitored. Demand for the loans has been great.
No less than 760 requests for credit have arrived since early June
of this year after the first Credit Agreements were signed between
KFW and the local banks. 280 of these loan applications have already
been approved and largely disbursed. Further 445 requests are
currently being processed and only 35 loans had to be rejected.
Families can borrow between 2,500 and 35,000 DEM, at an interest
rate of between eight and 10 percent over periods going up to a
maximum of 12 years.
So what are the
criteria? Firstly, the beneficiary must be a citizen of
Bosnia-Herzegovina, resident in Bosnia or abroad and intending to
return. He must show a valid property title and have a sufficient
monthly revenue. "These conditions may seem simple enough, but
not necessarily in Bosnia," said Leon Macioszek, KfW Head of
Office in Sarajevo. "To prove that you are a houseowner can be
very difficult in a context where half of the population had to
leave their homes. And to have a sufficient monthly revenue, that is
up to now only the case for a limited part of the population that I
would call middle class. It is nevertheless our intention to
simplify application procedures and to lower the banks'
requirements. Thus, we intend to extend the target group", he
stressed.
The Bogilovic family
in Sarajevo falls under the "middle class" category, which
is eligible for a housing credit set up by the KFW. Mr Bogilovic is
the coach of the Sarajevo football team. His wife is a commercial
representative for Sarajevotextil. Their house, located in the
Blekin Potok neighbourhood (former front line) was seriously damaged
by more than 30 shells. They were forced to occupy an empty
apartment, that the Serb landlord today wants back.
In 1996 the family
started to repair the damage with their own money. They got a credit
of 15,000 DM to complete the work and today they are paying back 250
DM a month, which comes to one third of the monthly salary of Mr
Bogilovic, over a seven-year period. They have only recently
reoccupied their home.
"We will have
reached our objective when our programme which today remains
limited to certain regions of Bosnia-Herzegoinva covers the whole
country and we will have established the housing credit facility in
Bosnian banks," explained Leon Macioszek.
The credit programme
complements the housing reconstruction projects carried out with the
help of grants from European Commission-financed non-governmental
organisations. To cite one example, KfW is working in close
collaboration with the German NGO "Help" in Gorazde. This
organisation, like most NGOs, rebuilds the houses of people who come
under the category "vulnerable people". The NGO then
provides the KFW with a list of families who do not fall under this
"vulnerable people" category because they have a revenue.
Those families are then informed of the possibilities of securing
loans to carry out the repair work.
BiH
Elections '98
EU conditions aid to Dayton
compliance
The European
Commission welcomes the fact that the elections in
Bosnia-Herzegovina (BiH) were held in a peaceful and orderly manner.
The EU contributed ECU 5 million to the Organisation for Security
and Co-operation in Europe (OSCE) for the organisation and
monitoring of these elections, of which ECU 80,000 were used to set
up the election's media centre. The EC will work together with the
new, legitimate and democratically elected leaders of BiH, to
further help the country in its reconstruction efforts and along the
path to a democratic multi-ethnic state. European Union (EU) Foreign
Affairs Commissioner Hans van den Broek recalled that "all
candidates confirmed their unconditional commitment to the Dayton
Peace Agreement (DPA) before the elections and the full respect of
this commitment will be the prerequisite for the continuation of EU
assistance and financial support."
On September 28th,
the Ambassadors to Bosnia and Herzegovina of the EU troika
Austria, Germany, Britain and the European Commission said in a
press conference that the 15- nation union would cooperate with all
elected officials who were ready to support the Dayton Peace
Accords. The British Ambassador to Bosnia Graham Hand said the EU
expected the new nationalist president of Bosnia's Serb Republic
Nikola Poplasen to respect the country's peace process if he wanted
EU financial aid to continue. " He knows that in return for aid
we have a very simple agenda. We wish to see minority returns,
multi-ethnic policing, economic reforms, privatisation and adoption
of property laws" Hand said.
Customs
Joint Federation/RS action
against fraud criminals
The most
encouraging development in the customs field in BiH is the increased
will by both Entity Customs Administrations to co-operate in the
fight against customs fraud. Customs officers from one Entity now
visit their counterparts in the other Entity on a twice-weekly basis
to exchange intelligence information.
As a direct
consequence of this increased communication, three trucks were
recently seized in Republika Srpska on behalf of Federation Customs
authorities. At the end of September, Federation customs officers
detained nine trucks at a BiH border crossing point in Federation
territory. The trucks, carrying goods declared as destined for the
Republika Srpska, had already been jointly identified by the Entity
Customs Administrations as being involved in smuggling activities
through falsely declaring the final destination of consignments and
avoiding the payment of required customs taxes.
Most recently during
the second week of October, a joint Federation/Republika Srpska
operation, supported by the Customs and Fiscal Assistance Office (CAFAO)
programme, has resulted in the seizure of 28 trucks and the
detainment of 29 persons, identified as involved, over a longer
period, in large scale, organised, commercial customs fraud. This
successful operation is expected to effectively end this form of
systematic crime, which would have cost BiH close to 100 million DM
in annual customs duties and sales taxes if it had continued
unhindered. This major step forward in co-operation between the
Entities has also proven to the local authorities that they are in
fact capable of taking successful action against criminals. This in
turn, should raise optimism and confidence within the Customs
Administrations themselves, leading to even better co-operation and
results in the future.
These successes are
largely due to the work of the CAFAO programme which is funded by
the European Commission. The most important aspect in BiH's fight
against customs fraud is the introduction of customs enforcement
capacities in the Federation and Republika Srpska Customs
Administrations. The CAFAO programme is currently assisting both
Customs Administrations to establish Customs Enforcement Sections,
comprising Anti-Smuggling, Investigation and Intelligence Units.
Most recently customs enforcement officers from the Federation and
Republika Srpska visited HM Customs and Excise in the UK to see how
this Customs Service carries out effective customs enforcement and
fraud prevention activities.
The CAFAO programme
estimates that approximately 100 - 200 million DM worth of revenue
is lost annually due to customs fraud in BiH. Such fraud includes
smuggling, falsely declared values of goods, misdescription of
goods, false certificates of origin and so on. However the
increasing sophistication of the Customs Administrations, thanks in
part to the success of the comprehensive training programme
delivered by the CAFAO programme to customs officers in both
Entities, is already severely diminishing the avenues available to
avoid customs procedures and payment of taxes.
- European Commission Representation
Office to BiH
- Union Bank Building, 4th floor
- Dubrovacka 6
- Sarajevo - Bosnia and Herzegovina
- Tel +387 71 666 036
- Fax + 387 71 666 037
The European Union on the Internet: http://europa.eu.int/comm/external_relations/index.htm
This publication is available in
English and Bosnian (Latin and Cyrillic alphabets). If you are
interested in receiving this newsletter, please fax your request to
Mediaplan in Sarajevo (fax: +387 71 206 542) or Strat&Com in
Brussels (fax: +32 2 649 18 85).
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