Title page 1

Contents 8

Foreword 4

Acknowledgements 6

Reader's guide 13

Acronyms and abbreviations 17

Executive summary 21

Bosnia and Herzegovina: SME definition and data coverage 23

Bosnia and Herzegovina: SME sector overview 27

1. Assessment findings by policy dimension 36

2. Creating an enabling environment for SMEs and entrepreneurs 112

2.1. Promoting an SME-friendly policy and institutional design 113

2.1.1. Reinforcing regulatory, institutional and policy frameworks for SME lifecycle support 113

2.1.2. Securing systematic, comprehensive and transparent dialogue between policymakers and SMEs 116

2.2. Levelling the playing field for SMEs 118

2.2.1. Tackling informality for a more competitive business environment 119

2.2.2. Protecting and monitoring fair market competition 121

2.2.3. Providing efficient judicial and out-of-court dispute resolution mechanisms 124

2.3. Facilitating access to finance for SMEs' operations and growth 126

2.3.1. Facilitating bank lending to SMEs 127

2.3.2. Providing alternatives to bank finance 130

2.3.3. Providing direct financial support to SMEs' operations and growth 133

2.4. Providing services essential to SMEs' operations and growth 138

2.4.1. Foundational SME business support services 139

2.4.2. Support services for SMEs' expansion and growth 141

References 146

3. Fostering SME sustainability and resilience 158

3.1. Harnessing SME agility to navigate global market trends 159

3.1.1. Smoothing SME pathways to a green economy 159

3.1.2. Boosting SME competitiveness in sustainable value chains 163

3.2. Building robust mechanisms for SMEs to prevent and manage crises 167

3.2.1. Enhancing crisis-resilient strategies to prevent SME bankruptcies 168

3.2.2. Increasing SME recovery capacity and second-chance opportunities 170

3.3. Enabling SMEs by providing them with access to sustainable financing solutions 173

3.3.1. Supporting SMEs in an evolving sustainable finance framework 173

3.3.2. Increasing SME access to sustainable (bank and alternative) financing 175

3.4. Strengthening SME support systems and networks for sustainable growth 178

3.4.1. Scaling up public non-financial support for SMEs in a green and resilient economy 178

3.4.2. Exploiting the power of networks for the sustainable growth of SMEs 181

3.5. Accelerating research and innovation to future-proof SMEs 184

3.5.1. Advancing strategic innovation for a green and resilient economy 185

3.5.2. Capitalising on knowledge networks for driving SME innovation 187

Annex 3.A. SME network definition 192

References 193

4. Supporting the digital transformation of SMEs 203

4.1. Strengthening SME readiness for the digital transformation 204

4.1.1. Strengthening policy and financial support for SME digital transformation 204

4.1.2. Assessing the digital maturity of SMEs in Bosnia and Herzegovina 210

4.1.3. Enhancing digital skills and capacities 213

4.2. Increasing SME productivity through digitalisation 218

4.2.1. Leveraging the use of e-commerce and online platforms to drive SME growth 219

4.2.2. Fostering digital innovation and collaboration for SME productivity 221

4.3. Establishing a trustworthy and safe business environment 227

4.3.1. Adapting data protection to evolving digital threats 228

4.3.2. Strengthening SME cybersecurity resilience 230

4.4. Supporting sustainable uptake of advanced technologies 235

4.4.1. Encouraging SME adoption of artificial intelligence and emerging technologies 235

4.4.2. Promoting a sustainable digital transformation 240

References 245

5. Harnessing human and social capital for SME development in Bosnia and Herzegovina 255

5.1. Building foundational human capital for SME competitiveness 256

5.1.1. Fostering entrepreneurial skills and mindsets through education 256

5.1.2. Bridging the divide between education and training systems and SMEs 260

5.2. Developing SME workforce knowledge and skills 266

5.2.1. Understanding and anticipating skills needs 267

5.2.2. Addressing skills needs of SMEs through adult education 270

5.2.3. Upskilling to support the adoption and use of artificial intelligence 274

5.2.4. Improving talent availability by empowering women entrepreneurs 276

5.3. Strengthening social capital by advancing social entrepreneurship 282

5.3.1. Mapping the social enterprise landscape 282

5.3.2. Creating an enabling environment for social enterprises 284

References 289

Annex A. Methodology 302

Annex B. Western Balkans Business Survey - Navigating the Digital and Green Transition 309

Table 1. Definition of micro, small and medium-sized enterprises in Bosnia and Herzegovina 23

Table 2. Core statistical sources for the SME sector overview, Bosnia and Herzegovina 24

Table 3. Statistical data coverage by thematic area, Bosnia and Herzegovina 25

Table 4. Sectoral profile of MSMEs in Bosnia and Herzegovina, 2024, selected sectors 30

Table 5. Key indicators of the MSME sector in Bosnia and Herzegovina, 2024 levels and 2021-2024 growth 31

Table 1.1. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 1, Sub-dimension 1.1 39

Table 1.2. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 1, Sub-dimension 1.2 41

Table 1.3. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 2, Sub-dimension 2.1 43

Table 1.4. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 2, Sub-dimension 2.2 45

Table 1.5. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 2, Sub-dimension 2.3 45

Table 1.6. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 3, Sub-dimension 3.1 47

Table 1.7. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 3, Sub-dimension 3.2 49

Table 1.8. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 3, Sub-dimension 3.3 50

Table 1.9. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 4, Sub-dimension 4.1 53

Table 1.10. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 4, Sub-dimension 4.2 54

Table 1.11. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 4, Sub-dimension 4.3 55

Table 1.12. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 4, Sub-dimension 4.4 57

Table 1.13. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 5a, Sub-dimension 5a.1 61

Table 1.14. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 5a, Sub-dimension 5a.2 62

Table 1.15. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 5b 64

Table 1.16. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 6, Sub-dimension 6.1 67

Table 1.17. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 6, Sub-dimension 6.2 69

Table 1.18. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 6, Sub-dimension 6.3 70

Table 1.19. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendation for Dimension 7, Sub-dimension 7.1 72

Table 1.20. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendation for Dimension 7, Sub-dimension 7.2 74

Table 1.21. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendation for Dimension 7, Sub-dimension 7.3 75

Table 1.22. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 8a 78

Table 1.23. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendation for Dimension 8b, Sub-dimension 8b.1 81

Table 1.24. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendation for Dimension 8b, Sub-dimension 8b.3 82

Table 1.25. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendation for Dimension 8b, Sub-dimension 8b.4 83

Table 1.26. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 9, Sub-dimension 9.1 85

Table 1.27. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 9, Sub-dimension 9.2 88

Table 1.28. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendations for Dimension 10, Sub-dimensions... 92

Table 1.29. Bosnia and Herzegovina's implementation of the SME Policy Index's 2022 recommendation for Dimension 10, Sub-dimension 10.3 94

Table 2.1. List of main credit guarantee schemes supporting SME access to bank finance in Bosnia and Herzegovina, 2026 129

Table 2.2. List of programmes supporting the development of private equity and venture capital in Bosnia and Herzegovina, 2026 132

Table 2.3. Overview of main active programmes providing targeted funding to SMEs in Bosnia and Herzegovina, 2026 135

Table 3.1. Bosnia and Herzegovina's strategic and policy frameworks for SME greening 161

Table 3.2. SME-focussed green incentive programmes in Bosnia and Herzegovina, 2023-2025 175

Table 4.1. Bosnia and Herzegovina's strategic policy frameworks for SME digitalisation and digital transformation 206

Table 4.2. Overview of Bosnia and Herzegovina's financial instruments for SME digital transformation 208

Table 4.3. Bosnia and Herzegovina's strategic policy frameworks on SMEs' uptake of emerging technologies 237

Table 5.1. Frameworks covering entrepreneurial learning in Bosnia and Herzegovina 257

Table 5.2. APOSO's framework for the progression of entrepreneurship skills in Bosnia and Herzegovina 258

Table 5.3. Legal and regulatory frameworks governing dual vocational education and training in Bosnia and Herzegovina 262

Table 5.4. Policy frameworks guiding skills intelligence in Bosnia and Herzegovina 268

Table 5.5. Selecting training programmes for skills with the green transition in Bosnia and Herzegovina 273

Table 5.6. Selected upskilling programmes for artificial intelligence in Bosnia and Herzegovina 274

Table 5.7. Strategic frameworks supporting women's entrepreneurship in Bosnia and Herzegovina 276

Table 5.8. Frameworks governing social enterprises in Bosnia and Herzegovina 285

Boxes 11

Box 1.1. Spotlight: Out-of-court financial restructuring in Republika Srpska 44

Box 1.2. Spotlight: The BizReg digital pilot in Sarajevo and Travnik 54

Box 1.3. Spotlight: Multiannual programming and budget execution for SME support in the Federation of Bosnia and Herzegovina 60

Box 1.4. Spotlight: Support for green certification by the Foreign Trade Chamber of Bosnia and Herzegovina 87

Box 1.5. Women4Cyber BiH: A practical cybersecurity guide for SMEs 98

Box 2.1. Good practice example: Incentivising early-stage finance - Romania's Law on Angel Investing 138

Box 2.2. Good practice example: Strengthening private BSSs through voucher schemes in Flanders (Belgium) 145

Box 3.1. Spotlight: Assisting SME decarbonisation - the Energy Transition Network in Industry project in Bosnia and Herzegovina 165

Box 3.2. Good practice example: Aligning budgets with climate goals - learning from the experience in Korea 167

Box 3.3. Spotlight: Bosnia and Herzegovina's Responsible Business Hub 179

Box 3.4. Spotlight: Supporting SME greening through Energy Efficiency Networks 182

Box 3.5. Good practice example: Supporting SMEs' green and digital transformation - Austria's KMU.DIGITAL and GREEN 184

Box 3.6. Spotlight: Building SME knowledge networks in the digital-green nexus in Bosnia and Herzegovina 189

Box 3.7. Good practice example: Supporting cutting-edge climate research and innovation in German SMEs 190

Box 4.1. Spotlight: Bit Alliance - Strengthening Bosnia and Herzegovina's IT ecosystem 216

Box 4.2. Good practice example: Supporting employer-led skills development through co-ordinated training incentives in Latvia 218

Box 4.3. Spotlight: InnDigitSME - Fostering innovation and digital connectivity of SMEs in Bosnia and Herzegovina 223

Box 4.4. Good practice example: Operationalising harmonised e-commerce rules through the E-commerce Centre in Denmark 226

Box 4.5. Good practice example: Strengthening SME-research linkages through Innovation Vouchers in Ireland 227

Box 4.6. Spotlight: Women4Cyber BiH - A practical cybersecurity guide for SMEs 232

Box 4.7. Good practice example: Supporting SME data protection compliance through cybersecurity support in the United States 234

Box 4.8. Good practice example: Building SME cybersecurity capacity through KMU.Digital in Austria 235

Box 4.9. Spotlight: AI Forward by the Innovation Center Banja Luka - Strengthening SME capacity for AI 238

Box 4.10. Good practice example: European Union - Scaling SME access to emerging technologies through the European Digital Innovation... 243

Box 4.11. Good practice example: Linking digitalisation and eco-efficiency for SMEs through co-ordinated incentives in Germany 244

Box 5.1. Empowering girl students in STEM fields: The "STEM - Schools of the Future" initiative 260

Box 5.2. Spotlight: Sarajevo Canton's Draft Law on Dual Education 263

Box 5.3. Good practice example: Scaffold - A card game for competence-based learning design 265

Box 5.4. Spotlight: Understanding the training needs of companies in key economic sectors in Bosnia and Herzegovina 269

Box 5.5. Spotlight: "Engage, inspire, empower - Women in Business": Advancing women's entrepreneurship in Bosnia and Herzegovina 279

Box 5.6. Good practice example: Encouraging adult learning for employed workers through Austria's Bildungskonto 281

Box 5.7. Good practice example: AgrifoodTEF - Sector-specific artificial intelligence testing and training for agriculture 282

Box 5.8. Spotlight: Illustrating the diversity of missions by social enterprises in Bosnia and Herzegovina 284

Box 5.9. Good practice example: Using financial incentives to promote formalisation - Lessons from EU member states 288

Table A A.1. Changes to the weights of thematic blocks 306

Table A A.2. Clusters and constituent policy dimensions 307

Table A B.1. SME target population in Western Balkans and Türkiye, 2025 309

Table A B.2. Western Balkans Business Survey: Navigating the Digital and Green Transition - Sections and subsections 310

Table A B.3. SME respondent sample in the Western Balkans and Türkiye, 2025 311