Microcredit Organizations and Savings Mobilization in Bosnia and Herzegovina: An Assessment for USAID

This study aims to answer the following questions:

• Does a demand for deposit services exists within the markets served by microcredit organizations (MCOs)?
• Are the MCOs are interested in pursuing such a solution to long-term sustainability?
• If they were to transform deposit taking organizations, how should such a transformation be implemented?

The paper discusses:

• Level of interest from MCOs;
• Market demand;
• The role of banks;
• Savings mobilization as a strategy for sustainability.

The study finds that:

• MCOs would like to have the ability to accept deposits;
• There is a demand for savings products in the rural and economically disadvantaged population;
• Banks are unlikely to serve those needs.

The paper recommends that:

• MCOs should become stronger financially and diversify their activities;
• They should tap into the informal market;
• MCOs that transform into deposit-taking organizations should receive long-term technical assistance;
• Donors should provide such assistance.

The paper concludes by examining the impact of MCOs turning into deposit-taking organizations:

• MCOs will begin to capture savings that are not currently in the financial system;
• These additional resources will expand MCOs' liquidity for lending;
• A major segment of the population will have access to a more formal form of savings;
• It will encourage entrepreneurship and economic growth.