The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) have provided new financing to Sparkasse Bank to help small and medium-sized enterprises (SMEs) in Bosnia and Herzegovina to invest in digital transformation.

The EBRD has financed an €8m loan that Sparkasse Bank will on-lend to local SME clients.

The funds will be utilised to support small firms in their investment in the automation and digitalisation of business procedures to enhance productivity, operational efficiency, and resilience.

SMEs will be given the capability to apply for funds to make investments in hardware and software for various digital transformation projects covering production, internal processes, and services.

EBRD Bosnia and Herzegovina head Manuela Naessl said: “Digital tools bring many benefits for firms; they reduce costs, facilitate communication, help small firms integrate into global markets, and so on.

“However, despite the numerous benefits and opportunities that digital technologies bring, many SMEs – and smaller firms, in particular – continue to lag in their adoption.

“This is why we work together with the EU and our partner banks in Bosnia and Herzegovina to provide well-structured financing and encourage SMEs to invest in digitalisation.”

The new financing is aimed at not only driving the digital transformation of SMEs but also making them more competitive in EU markets.

Besides, the proceeds will help SMEs to be compliant with the standards needed by EU Directives.

SMEs will also gain from EU-funded grant incentives worth up to 15% of the total loan amount, said EBRD.

Sparkasse Bank management board president Amir Softić said: “Through the credit line, we realise two strategic goals that are woven into Sparkasse Bank’s business model: to actively strengthen the economy of Bosnia and Herzegovina, primarily by supporting the sustainable development of SMEs, which generate almost 70 per cent of business activity and jobs, and to encourage partnerships on positive solutions for the economic and social development of communities.”

The credit line is extended as part of the joint EBRD-EU Go Digital in Bosnia and Herzegovina programme.

In line with the programme, the EBRD has secured €40m in loans, while the EU secured grants of €9m for incentive payments, advisory services, and technical assistance.