Project Proposal

Project Title:
Credit and business support for housing and economic development

Recipient Organisation
Address, Telephone Number
World Vision Bosnia and Herzegovina World Vision Canada
Zvornicka 9 6630 Turner Valley Road
71000 Sarajevo Mississauga, ON L5N 2S4
Bosnia-Herzegovina Canada
Tel:+387-33-660 426 Tel: +1-905-821-3033
Fax: +387-33-652 403 Fax: +1-905-821-1825
Email: Sue_Birchmore@wvi.org Email: Phil_Chester@worldvision.ca

Contact person and title

World Vision Canada: Phil Chester, Regional Programmes Director
World Vision Bosnia and Herzegovina: Sue Birchmore, National Director

Amount requested from SIDA: XXXXXXXXX EUR

World Vision matching contribution: XXXXXXX EUR
Duration 4 Years

1. Overall organizationalorganisational experience

World Vision has been operational in Bosnia and Herzegovina since February 1994 assisting the vulnerable
population such as displaced persons, refugees, Roma, children and people with disabilities. With its outstanding
project experience in the past 8 years, World Vision Bosnia and Herzegovina (WVBiH) has responded to
specific community needs through integrated community programmes, including return, reconstruction,
economic development, micro-credit, child-focused, education and civil society activities. Approximately 5,000
returns of refugees and displaced persons as well as 15,000 children have been supported through WVBiH’s
activities. In addition, WVBiH has assisted such groups as Housing Cooperative, Farmers’ Co-operatives,
Parent-Teacher Associations, and Associations of people with disabilities in their establishment and/or
strengthening.
The organisation has successfully implemented and financially managed over 100 grants/contracts with over 80
million Euro from a number of multilateral and bilateral donors, including the EC, ECHO, IFAD, UNHCR,
UNICEF and UNDP as well as the governments of the US, Canada, the UK, Sweden, Finland, Japan,
Switzerland and the Netherlands. World Vision BiH’s total budget for FY 2003 was approximately 10.2 million
USD. WVBiH has its field offices in Sarajevo, Zenica, Tuzla and Banja Luka with 1701 staff members, of which
87 are expatriates.

Please see attached WVBiH project list in Annex 1 and Annual report in Annex 2 for a fuller summary of World
Vision’s work in Bosnia and Herzegovina.

EKI: World Vision International (WVI), Bosnia has supported micro credit activities since February 1996, when
it opened its first office in Zenica. Since then it has opened seven additional micro credit branches: in Tuzla
(February 1996), Doboj (February 1998), Sarajevo (March 1998), Bijeljina (June 1999), Mostar (December
1999), Bugojno (June 2000) and Brcko (June 2001). EKI has satellite offices in Trebinje, Laktasi, Prnjavor,
Derventa, Zvornik, Gradacac, Zivinice, Maglaj and Visegrad. Loan sizes range from 1,000 to 25,000 KM. In
April 1999 the World Vision programme became the Economic Credit Institution (EKI) although it was not until
February 2001 that EKI was registered as a local micro credit organisation (MCO). It has been supported by
international organisations and local financing institutions: SIDA, The World Bank, CIDA, LOIN, UNHCR,
USDA, USAID, EU, UNDP, KFW, and FINNIDA. The programme has disbursed over 29,000 loans to date,
worth 115 million KM, and currently EKI has over 11,100 active loans.

1 05 November, 2003
Problem Statement
There is a number of reasons behind making the decision to return: security situation; opportunities for
children to get a decent education; provision and access to public, health care and other services;
availability of work; recovering and repairing homes. Each is significant and is being addressed
through number of reforms currently in process in Bosnia and Herzegovina. However, the last two
mostly affect life of individual families and thus are crucial for making the decision (not) to return.

According to the information on the implementation of Annex VII of the General Framework Agreement
for Peace by Ministry of Human Rights and Refugees, there are still 613,700 refugees accommodated
outside of BiH. UNHCR estimates that some 850,000 refugees and displaced persons, of which
300,000 were minorities, have returned to their homes in Bosnia and Herzegovina since the Dayton
Agreement was signed.

The basic requirement for a refugee family to return is housing. Although international donors have
spent well over €600 million to date on repairing war-damaged houses and infrastructure, for the last
few years the housing funding gap has been increasingly widening. While returns have risen steadily
since 1999, the availability of funds to support this movement has declined just as steadily.
Most of these potential returnees require either partial or complete reconstruction of their houses. The
problem is that donor funds are limited and in many of the return areas itthere is unlikely to be any
more funding. Donor funds have been primarily used to ‘open up areas of minority return’ and to
target the poorest and it was hoped that return after this would be spontaneous or funded from other
sources. Furthermore, they are only targeted at people who had houses in 1990. Since many people
have grown up and formed families since this period, there is a whole group of people who are
potentially excluded from the return programmes.

A further complication is that in order to achieve sustainable return the social and economic
environment needs to be conducive to long term return. In particular, the lack of economic
opportunities as well as the need for stronger community structures mean that minority returnees will
struggle to view their return, and particularly that of the economically active households, as a
permanent process.

A recent report by the Economist suggests that refugees are returning home and many that stay away
do so not because of fear or difficulties in getting their property back but for lack of economic
opportunities. This is confirmed by the findings of WV’s Housing Verification and Monitoring program.
That is especially true for the eastern part of Bosnia and Herzegovina. Minority return is often
unsustainable as the returnees lack a sustainable source of income. The majority of the returnee
families have only been provided with reconstruction and limited income generation assistance, which
does not address their long-term economic needs. In addition to that, returnees do not have access to
jobs, especially young individuals which present large part of productive population group, and lack the
capital, training and access to credit to establish their own enterprises. Throughout the country,
indigenous populations, displaced persons and returnees all struggle to make ends meet. Moreover,
employment laws in both entities discriminate against returnees by giving priority to demobilised
soldiers, war invalids and the families of fallen soldiers – classes of persons that, by definition, exclude
those from the “other side”.

As stated in the SAS report, there is a tangible demand for housing and housing loans from a
population with limited economic means and opportunities. Loans are needed for reconstruction of
war-damaged houses, as well as for expansion, maintenance of the existing properties and
construction of new houses. In the other hand, through the implementation of the pilot project, WV has
learnt that access to housing loans rather then loan terms is often a larger obstacle for population from
low-income rural communities. The current banking industry in Bosnia and Herzegovina is still too
conservative and a few credit lines that were set up have tended to discriminate against rural
communities. The major obstacles for the banks include the lack of liquid collateral, the fact that rural
communities do not have historical relationship with the banks as well as potentially high costs of
reaching this population. At present, banks do not have specific programs for the nearest future to
address the housing needs in low-income rural areas.
The situation with the housing in rural communities has been further exacerbated with the decrease of
reconstruction assistance from international donors. As a result, large part of the population’s housing
needs may remain unserved in future years.

2 05 November, 2003
Impact Statement
The micro economic loans component of the project will provide target families who have returned to
Bosnia and Herzegovina with access to training, business advice, grants, credits, market and financial
institutions linkages in order to enable them to establish long term sustainable enterprises in their
communities. Beside this, the project will continue to support clients/beneficiaries from the current
SIDA funded Project for Economic Support to Minority Returnees to the Eastern RS with advanced
training, market linkages, advice on law regulation and stimulation for businesses. The establishment
of a diverse range of well planned and supported enterprises and expansion of SMEs in this area will
provide employment and sustainable income for the returnees and thereby provide a vital contribution
to their sustainable return. On the basis of a participatory approach, returnees will be supported to
identify concrete enterprise opportunities in their communities, with perception on ecology
repercussions. Selected clients/beneficiaries and beneficiary groups will be assisted to develop full
business plans and will be provided with specific, relevant training to enable them to establish a new
enterprise or new department in an existing enterprise. On the basis of this they will receive a loan and
ongoing support to run their enterprise. Following the successful investment of the loan, successful
repayment and business sustainability clients/beneficiaries will be provided with a small grant depend
on type of business for the further development of their enterprise. Once when they are established,
special attention will be paid on forming preconditions for long term development prosperity. This
means strong networking with the market, establishing a fruitful relationship with credit provider EKI
(Ekonomsko Kreditna Institucija) and regional development agencies SERDA, REDRIN and BREDA.
The inclusion of members of the resident communities in Eastern Bosnia and Herzegovina will make a
significant contribution for the economic well being of these communities and lay the foundations for
future co-operation and re-integration.

The generally low level of economic activity in the Eastern RS compounds this situation. The poor
conditions of the resident Serb population as well as inter-ethnic hostility and are obstacles to re-
integration. World Vision will carefully approach this problem, facilitating networking of partners from
different ethnic groups toward the same goal of supporting economic development.

On the housing component of the project, World Vision and EKI are committed to creating a Housing
Credit Branch within EKI (HCB) targeting low-income rural communities. Although the main focus, in
the initial period, will be on providing returnee communities with access to credit to repair and upgrade
their homes, the products, that EKInew housing institution will offer, will not be limited exclusively for
the returnee population. World Vision intends to continue to support the return process through the
disbursement of the housing loan initiative in the new areas. However, all inhabitants of the target
communities will be eligible to apply for the loans without regard to their return status. Assessment
results have shown the existence of a wide range of different client categories and World Vision is
planning to introduce additional products, as suggested by the SAS consultants, that will take into
account both vulnerability of each category (return status, economic potential, housing needs, etc.)
and the interest of the wider community and the less vulnerable residents.
The primary target group will be those rural households who can not access loans from banks for
housing, but are able to repay the loans.

Goal
To support the development of a more normal market economy through the delivery of credit and
business services which support business and households in rural areas

Purpose:
1. To provide low-income rural communities in Bosnia and Herzegovina with permanent access to housing
loans through establishment of sustainable Housing credit branch within EKI,
2. To provide rural communities in Bosnia and Herzegovina with the conditions for long term economic
development through establishment of small and medium scale enterprises and increased level of
environmentally friendly usage of naturale and human resources.

3 05 November, 2003
Project Locations:
World Vision has assessed areas suitable for this program and intends to initially work in following
municipalities;

Project Activity Project Region / Municipality

1. Disbursement of housing loans to
low income rural families
2. Economic support through loans,
grants and training
Doboj, Modrica, Vukosavlje and Samac (Northern RS)
Eastern Bosnia and Herzegovina focusing on Area
Development Program target municipalities (Olovo,
Sokolac and Han Pijesak)

The indicative division of areas between the 2 project components has been made according to the
assessment conducted by each project component individually. However, World Vision intends to
implement both project components oin the whole project target area considering primarily clients’
needs, potentials and opportunities for sustainable human development, avoiding loan disbursement
without feasible developmental potentials. Throughout the project implementation, World Vision will
explore opportunities for further expansion of the project to other areas, taking into account availability
of funds and compliance of new areas with community selection criteria.

World Vision has selected these areas as those where substantial return movement has occurred
during the past 3-4 years, enabled by various returns and reconstruction programs by the International
Community, and where significant number of homes for the return population have been repaired.
However, according to World Vision's assessments the key conditions to sustain these returns as well
as to promote further returns still need to be further developed.

World Vision has around 750 minority returnee families with house repair in Northern and Eastern
Republika Srpska (RS) municipalities during the last 5 years. Also, various donors provided funds to
World Vision for supporting 35% of these returnees in their attempt to generate income and create
livelihood in their communities. The remaining 65% families could not be assisted due to lack of funds.
Currently, World Vision is present in the program target locations and has established strong links with
the communities.
Details on World Vision's experience in these areas are given in Annex 3 and in summary as follows:

Eastern RS: Integrated return and reconstruction projects to support more than 280 families. Further a
farmers’ cooperative, and parent - teacher associations were established and supported, jobs and
income generation opportunities created.

Northern RS: Integrated return and reconstruction projects to support more than 475 families.
Community based housing credit program to assist returnees in 4 local communities. Repair of Water
and electricity supply network to benefit more than 170 returnee families. Supported returnees in
advocacy, refurbished a school, building the capacity of a association of disableds persons,
development of agricultural associations in partnership with EKI, and assistance to "Bosnian Woman
Initiative"

2 Proposed Interventions

2.1 OVERALL APPROACH

World Vision has developed this project with the ultimate aim to contribute in creating the conditions
that will support and encourage returnees alongside their neighborsneighbours to participate in the
sustainable development and the wider reintegration of their communities, within the framework of a
community development based approach. This can only be achieved by creating an environment with
long lasting and self-sustainable systems and increased income generation opportunities.
World Vision proposes an integrated area development programme approach to the above objectives
as described below. This approach has been developed over the last six years through the design and
implementation of several major programs, including an economic development and housing credit
programs supported by SIDA, a rural infrastructure development program supported by IFAD, and
integrated return programs supported by a range of donors.
The main elements of the program are:

4 05 November, 2003
- establish a sustainable housing credit department within EKI that will provide low-income rural
families with permanent access to housing loans
- through partnership with EKI, establish a loan committee for the disbursements of grants and
loans for the establishment or expansion of small business activities
- support the existing Housing co-operative to transform into a community-based
organizationorganisation that will be also involved in non-housing activities.

Drawing on our experience in working in the proposed municipalities and through the co-operation with
local partners (NGOs, authorities and institutions), World Vision will carry out the following
interventions:

2.1. 1. Establishing of Housing credit branch/Executive Summary

World Vision in 2002 and 2003 piloted a community based housing project for returnees in the Doboj
area of BiH to show that rural returnee communities could borrow and repay housing loans. The pilot
project was designed as a community owned and managed housing project. During the project
implementation, World Vision facilitated the process in which the 4 communities worked together and
formed a housing co-operative. Although, much work has been done with the communities, it is
unclear whether tThe housing co-operative, although successful within its given circumstances and
with limited portfolio, hasdoes not have the capacity to scale up to the kind ofbecome a sustainable
institution needed to provide housing credit to a wider clientele in the longer term. EKI has well-
established capacity, and can build on this to extend to housing credit with low risk. As a result World
Vision and EKI have rethought their strategy and therefore therefore proposed, instead of creating a
separate financial institution, to create a separate branch within EKI’s existing structures, which will
operate as a housing credit department.
For more detailed information about this component of the project, please refer to the HCB Business
plan that is attached as Annex 4.

2.1.2 Economic Support/Executive Summary

For the implementation of this element of the project, World Vision will partner with EKI (Ekonomska
Kreditna Institucija). EKI is the largest micro credit program in BiH. Strategically, EKI plans to be a
significant credit provider in some of the proposed municipalities, as some of these areas do not yet
have adequate access to micro-credit, and this project would complement its plans for the area.
However, iIn Sokolac and Doboj EKI has established a sustainable structure already.

World Vision believes that return can only take place if it is supported through economic development,
community development and shelter reconstruction activities. This project component will complement
projects funded by all donors that address these other needs.

This project component will provide rural families with access to business advice, grants and credits in
order to enable them to establish sustainable businesses in their communities. The establishment of a
diverse range of well planned and supported businesses in these communities will provide the
foundation for sustainable income for the returnees and thereby provide a vital contribution to their
sustainable return. On the basis of a participatory approach, returnees will be supported to identify
concrete business opportunities in their communities. Selected beneficiaries will be assisted to
develop full business plans and will be provided with specific, relevant training to enable them to run
these businesses. On the basis of this they will receive a loan and ongoing support to establish their
enterprise. The project will provide collateral for the loan, thus enabling beneficiaries who would not
normally be eligible for credit to obtain a loan at market rates. Following the successful repayment of
the loan, these beneficiaries will be provided with a small grant for the further development of their
business. By providing assistance in the form of loans, the beneficiaries will have the additional
benefits of establishing a credit history and long term links to World Vision’s credit provider EKI
(Ekonomska Kreditna Institucija). The inclusion of members of the resident communities will make a
significant contribution for the economic well being of these communities and lay the foundations for
future co-operation and re-integration.
Full project proposal with its respective Appendixes for this component of the project is attached as an
Annex 5.

5 05 November, 2003
2.1.3 Support to the transformation of the existing Housing Co-operative
The Housing Co-operative achieved the objectives of the pilot project. However, it operates in a limited
geographical area and with a limited portfolio, and lacks capacities to become a carrier of the housing
initiative and to expand it further throughout the region. For this to happen, more large investments
would need to be made for the Co-operative to sufficiently develop. In addition to those restrictions,
the legal framework has limitations for making the Co-operative a long-term solution for providing
access to housing loans.

Within the new project the Housing Co-operative will maintain its role in pre-screening housing loans
clients from the four pilot project local communities. Co-operation between the Co-operative and EKI’s
housing branch will incorporate the Co-operative’s support in establishing good relations between the
Housing branch and new target communities by sharing experiences, best practices and lessons
learnt through the pilot project. For their services (pre-screening, monitoring, providing support, etc.)
the Co-operative will be paid a fee of 1.500KM a month during the four-year project implementation. In
addition to this, it will be given a grant of up to 5.000KM that will support the Co-operative’s
transformation into a sustainable legal entity by the end of the project implementation.

WVB will take a step-by-step approach in carefully resolving the issue of securing the up-to-date
disbursed loans and supporting EKI in integrating it into the new housing loan funds.

2.2 Methodology
2.2.1 Housing credit component
Low-income rural population groups are risky clients even for limited number of banks present in this
area which do not provide loan conditions for this type of clientele. World Vision believes it has
developed an appropriate methodology to address needs of this population.

The methodology World Vision will use in this project will rely on the one developed through the pilot
project funded by SIDA. The new approach will combine the highstrong community presence and
involvement, with the efficiency of working through EKI’s management and systems. This will help get
the best out of both worlds – professionalism and proficiency offered by EKI on one side, and WV’s
community based approach on the other side. This approach stems from a soundcomplete
understanding of a community’s hierarchy of value, using wealth ranking techniques and workshops
requiring community involvement. Additionally, the overall approach will focus on mitigating the risk of
losses at the front end by means of a thorough and laborlabour-intensive pre-selection, guiding, and
referencing process. WV believes that this will improve the efficiency of the methodology for approving
loans, and speed up the loan disbursement process.

The HCB will use EKI’s loan servicing system, thus ensuring adequate loan delinquency management,
monitoring and reporting.
More detailed information about the Loan methodology is available in Annex 4 – HCB Business plan.

The purpose of the World Vision “Principles and Standards for Capacity Building” is to provide a
conceptual framework and set of ideal goals for how we go about working with local
organizationsorganisations and communities in supporting communal sustainable development.
For more information, please refer to Annex 6 - Local Capacity Building - Principles and Standards.

6 05 November, 2003
2.2.2 Economic support component
World Vision believes that economic development must take place on the basis of an inclusive,
participatory process that involves as many sections of the target community as possible, returnees,
and residents with particularly efforts to involve women and young people. Eproposed enterprises
establishment and expansion will be consideredexamined with perceptiondue consideration ofn
ecologicaly repercussions. Considering the agricultural background of the target area, beside
agricultural producers support will be directed both to agricultural producers and to non-agricultural
businesses that are makproviding support to citizens and assuring a functional producers-processors-
consumers triangle producers-processors-consumers. As there is conjoint dependenceing between
farmers and the food processing industry, both will be supported to contribute to agricultural
development in the target region. The multi-year Pproject duration and loan conditions contribute to
the competitive operation and long term expansion. Wherever possible (depending on micro location
and business type) oneeach enterprise will be connected with moreseveral potential buyers, therefore
will being in a position to choose the most acceptable buyer, who offers a better price, and co-
operation conditions. In order to increase project effectiveness and funds efficiency, the loan fund and
guarantee-grant will be used twice during project implementation.

During the project implementation World Vision and EKI will disburse loans to returnees and residents.
According to our preassumptions, based on experience gained under the existing SIDA funded
project, the total amount of money disbursed will be 1.900,000 KM. Beside loans, successful clients
will be granted with 600,000KM in total for business expansionending.

LThe loan fund and guarantee-grant fund will work as follows:

At the beginning of the first year, WV will transfer on EKI’s account all loan fund 700.000KM and the
wholeall grant - guarantee fund 600,000KM (See Annex 7, Budget).

EKI and World Vision will disburse 1.300,000KM during first two years of the project implementation.

In the third year, repayments will be used for new disbursements of 600,000KM.

At the beginning of the fourth year, or earlier if a client/beneficiary has repaid the loan, EKI will start to
re-transfer the guarantee-grant fund to World Vision and then seek to receive from World Vision any
loans that it has written off and which have been guaranteed by the guarantee-grant fund. RThe repaid
guarantee-grant fund will now be used to pay grants to the clients/beneficiaries who successfully
invested the loan, repaid at least half of the loan on time and have a business in sustainable operation.
The Ggrant is to be used only for business development. TFor those who havewill not repaid the loan
by the end of the project, the grant will be lent oin a special deposit account to pickupcollect at
successful repayment.
(For more details on grants delivery please see Annex 5 Economic Support Project Component – Full
Proposal, Page 5; Paragraph: Activities).

Beside the fact that beneficiaries’ repayments during project implementation shouldwill be sufficient
bothas well as for loans disbursements aands same as for grants;, however, some disproportion may
occur. EKI is willing to use their usualits regular funds to coverreconcile mentionedthis risk.

At the end of the project the remaining loan capital will continue to revolve in the target area in the
Eastern and Northern Bosnia and Herzegovina, but under normal EKI conditions. By this time, project
clients still requiring further loans to expand their businesses should be able to graduate to normal EKI
loans.

An agreement to lend to a client is dependent on an analysis of the business. EKI will use its standard
assessment tools to make an assessment of the business and the client based on the 4 C’s - Criteria,
Character, Capacity and Collateral. The recommendations of the Economic Development Team
member and the submission of a business plan will compliement the assessment by the applicant.

2.3 Expected Impacts / Results

By the end of the project, the following results will be achieved:

2.3.1 Housing Institution component

7 05 November, 2003
Under this project a separate legal entity, that will be founded by World Vision and managed by EKI, is
expected to achieve the following goals:
1. DELIVERY OF A LOW COST HOUSING PRODUCT TO OVER 1300 HOUSEHOLDS: HCB
will be based on the pilot project to provide access and deliver a low cost housing credit
product that combines both the advantages of a community based delivery mechanism with
the efficiencies of working through EKI management and systems.
2. SUSTAINABILITY GOAL: The product pricing will be set such that with sufficient capital and
using the efficiency gains of operating within EKI, HCB will be operationally self sufficient
within 3 years. (Danko, Sadina).
3. INSTITUTIONAL GOAL: The board to combine the professionalism of EKI with the community
participation that the pilot project has developed. (not sure if this is relevant anymore; suggest
to either delete this part or re-formulate it (Richard, Sue?)
4. LEGAL STATUS: The creation of a legal status that both allows A structure and capacity will
be permanently established within EKI for the operation of a housing credit delivery
mechanism and the accessing of additional capital not sure if this is relevant anymore;
suggest to either delete this part or re-formulate it (Richard, Sue?) [How about what I’ve suggested here, taking
parts from the original points 3 & 4? Sue.]

2.3.2 Economic Support

FThe following outcomes are expected to be achieved within this project component:
1. The target rural communities have identified priorities/opportunities for the economic development
of their community.
2. Selected beneficiaries have gained the technical and management skills to establish and develop
small and medium scale sustainable enterprises.
3. Small and medium scale enterprises established and supported to create basic preconditions for
long-term development and employment by the end of the project.
4. The circle of farmers-food processors-consumers supported and food processing industry
sustained in target region.

This project component will provide help to families who want to return, families who have returned
and residents, with access to employment opportunities with local employers, and start-up business
advice, grants and credits in order to enable them to expand existing businesses or establish new
sustainable enterprises in their communities. The establishment and expansion of a diverse range of
well planned and supported enterprises in these communities will provide the foundation for
sustainable income for the returnees, and thereby provide a vital contribution to their sustainable
return. It will also serve to stabilizestabilise the economy in the region and promote its spontaneous
growth, such that the region is more self-sufficient in the provision of goods and services, and there is
a natural impetus in the growth of its economy.

This project will initially link beneficiaries with existing businesses that can provide employment
according to their professional skills. To locate available work in return for a project investment can be
a rapid route to gaining employment, especially for those people who have always been employed full-
time rather than those from the self-employed or entrepreneurial communities. The inclusion of
members of the resident communities will make a significant contribution to the economic well being of
these communities and lay the foundations for future co-operation and re-integration.

It is expected that the project will contribute to strengthening the community not only economically but
alsos well socially, as it will facilitate (re)establishment of contacts/links between different ethnic
groups’ members and those links will be based on their economic interdependency.

This project may also contribute towards a stimulation of response from the state, credit institutions
and international organizationsorganisations with financial support that will create new job places, and
to increase the region's socio-economical wealth.

All this will contribute to a wider impact resulting in:

 Reduction of emigration of young educated people to third countries.
 Increased economic activities for women and improve their position in society
 Building of multiethnic life through the support of businesses with mixed ethnic groups,
 Establishment of a healthy society and psychological stability within the communities.

8 05 November, 2003
At the end of the project, the loan principal will be owned by World Vision and loaned to EKI as an
extension of the current loan contract, which is renewable every five years. EKI will remain active in
the Eastern and Northern RS and continue providing loans to project businesses or new starts
according to normal EKI conditions, and hence the capacity of EKI will increase. EKI will assume all
risks for these loans.

2.3.3 Transformation of Housing Co-operative

The Housing Co-operative achieved the objectives of the pilot project. However, it operates in a limited
geographical area and with a limited portfolio, and lacks capacities to become a carrier of the housing
initiative and to expand it further throughout the region. For this to happen, more large investments
would need to be made for the Co-operative to sufficiently develop. In addition to those restrictions,
the legal framework has limitations for making the Co-operative a long-term solution for providing
access to housing loans.
Within the new project the Housing Co-operative will maintain its role in monitoring repayment of loans
disbursed during the pilot project and pre-screening housing loan clients from the four pilot project
local communities. Co-operation between the Co-operative and EKI’s housing branch will incorporate
the Co-operative’s support in establishing good relations between the Housing branch and new target
communities by sharing experiences, best practices and lessons learnt through the pilot project. For
their services (pre-screening, monitoring, providing technical support, etc.) the Co-operative will be
paid a fee of 1.500KM a month during the four-year project implementation. In addition to this, it will be
given a grant of up to 5.000KM that will support the Co-operative’s transformation into a sustainable
legal entity by the end of the project implementation.

WVB will take a step-by-step approach in carefully resolving the issue of securing the up-to-date
disbursed loans and supporting EKI in integrating it into the new housing loan funds.

2.4 Sustainability
There are several aspects to sustainability in the context of rehabilitation and development programs
in BiH. Firstly, there is the sustainability of return for the families assisted through this and previous
programs. Secondly - and essentially for sustainability of return for individual families - there is the
sustainability of the communities to which they return. Thirdly, there is the sustainability of capacities
and institutions, which will continue to promote and support the return of other families in the future.

Thus far, WV has promoted the sustainability of individual returns and of return communities mainly
through its self-help methodology, through the capacity building and empowerment of beneficiary
groups, and through Job Creation and Income Generation activities within the scope of the integrated
return program. In the longer term and the wider Bosnian context, WV promotes sustainability through
complementary economic development and civil society programs which will continue beyond the life
of integrated return programs.

2.4.1 Sustainability – Housing Institution

Efforts by World Vision to support the establishment and development of local institutions are moving
beyond the supply of inputs and practical interventions. They now draw on a broader approach
emphasizingemphasising participation of stakeholders, strengthening civil society through creating
partnerships built on shared vision and trust. It is widely recognizedrecognised in the international
NGO community that sustainable development institutions must include the capacity to address these
areas. World Vision continues to address local needs with capacity development projects;, all
programs now seek to accomplish all or a combination of these and community-strengthening
components.

9 05 November, 2003
The Housing Credit Branch will be formed and able to continue functioning without World Vision’s
support after the end of the project implementation. Throughout the project duration World Vision and
EKI will provide attention and support for strengthening of organizationalorganisational capacity.
Participants will be trained in special skills to improve their professional and social performance.

2.4.2 Sustainability - Economic Support

The aim of the project is that new and expanded businesses will be financially viable, generating
sufficient profit margin for sustainability. In addition, opportunities have been identified for further
development of successful businesses through local resources. Local banks are currently already
involved in supporting developing trading enterprises and appear to have a firm basis for continued
and sustainable growth. Although they are currently reluctant to provide support to new enterprises,
businesses supported by the project will have established their credit-worthiness and will be in a better
position to access funding from banks. The establishment of well-managed small businesses will
encourage micro-credit lenders to give continued support to the growing business community.
Through its continued presence in the project region, EKI will provide access to long term credit
opportunities for all potential clients in project region.

The combination of training, advice and financial input to businesses will ensure that sound business
plans and structures are in place to continue successful operation. Local ownership will be ensured by
the active participation of beneficiaries from the assessment stage onwards.

This project will create a lasting impact by creating sustainable local businesses that provide
employment opportunities for communities in the target municipalities. The Economic Advisor will have
put people in contact with other financial institutions and market links. Therefore, activities will be
targeted according to an interconnected market based (rather than inputs based) approach, with
assistance targeted to businesses and associations which can generate maximum employment and
economic advantage for the target community. The inclusion of both, returnees and residents will allow
for the best use of all skills and resources available within the community as a whole and support
reintegration.

Lasting impact project will be achieved with creating preconditions for long term development prosper
for all enterprises by:
- Educating the employer and employees
- Networking with markets
- Networking with financial institutions
- Creating a recognizedrecognised name
- Connecting with Regional Economic Development Agency (SERDA, REDRIN, and
BREDA) for further networking.

WV BH will continue to work with these communities in their struggle to establish right relationship
applying the Area Development Program (ADP) ADP model. WV successfully applies ADP area
Development Program (ADP) in many parts of the world in order to address effectively
impoverishment effectively, tension and lack of empowerment in marginaliszed and vulnerable
communities. The ADP model assumes the long-term presence of WV within the target area (at least 6
years) with provision of opportunities to communities for transformational development.
Transformational development is a qualitative and quantitative, external and internal process that
makes a positive impact on the physical/material and social well-being of individuals and communities
and provides conditions for social inclusion and sustainability.

Through its continued presence in the Eastern and Northern Bosnia and Herzegovina, EKI will offer
everyone the opportunity to use its services and will thus provide access to long term credit institutions
in the Eastern RS.

Continued returns to the area currently receiving maximum encouragement from all the authorities in
BiH will support sustainability of small enterprises that are serving the growing community.

2.5 Monitoring and Evaluation Plan

Monitoring

10 05 November, 2003
Throughout the project duration, the Project Management will be responsible for overall monitoring
and supervision of the project implementation. They will regularly visit the field office to monitor
financial and operational issues, and provide necessary advice. Furthermore, WV seeks to continually
evaluate and improve its performance by intentionally accumulating “Lessons Learned” and
formulating “Best Practices”.

World Vision Canada, which has its own specialists in economic and community-based development,
will provide an additional level of monitoring, carrying out annual project visits and tracking project
reports.

Evaluation
For the internal/external1 evaluation of the program, WV will use a project-level evaluation divided in
three components:
 Context evaluation
 Implementation assessment
 Output evaluation
It is important not only to assess the short- and long-term outcomes of the program but also to
understand the environment in which the program operates and the processes involved in its
development.

Mid-term evaluation (Who, when, how, why…)

It will cover three periods:

Component Period Responsible Means of verification

parties
Context evaluation Start of implementation Program Context evaluation reports
Interim Manager
End of program Project
Coordinators
Implementation Interim Program Interim report
assessments End of program Manager Final report
Project
Coordinators
External
consultant
Output evaluation Start of implementation Program Interim report
Interim Manager Final report
End of program Project
Coordinators
External
Consultant

One purpose of World Vision's internal monitoring system is to document Lessons Learned and Best
Practices. This enables the organizationorganisation to use experience gained from one project to
improve subsequent projects.

Within the project period World Vision will provide regular monitoring of the project and clients through
regular project visits. Monitoring will be reported towards objectives, measured by objectively verifiable
indicators, throughout the duration of the project. In this way, qualitative adjustments can be made
during implementation, resulting in improved performance. Additionally, World Vision seeks to
continually evaluate and improve its performance by intentionally accumulating “Lessons Learned” and
formulating “Best Practices”. Monitoring and evaluation tools and methods for the collection and
analysis of the progress of this project are Participatory Assessment (PRA); surveys; Logical
1
"The consultant will be external to the project; however, if a suitably qualified and experienced staff member from another part
of World Vision is available, this option may be used."

11 05 November, 2003
Framework analysis; cost-effectiveness analysis; strengths, weaknesses, opportunities and constrains
(SWOC) analysis; program visits; visual presentation for feedback.

EKI will monitor loan performance and follow up any late payments. This is supported by the
organization’sorganisation’s network of 4853 loan officers (Sadina to update) and by its
specializedspecialised loan tracking system (E-Merge).

EKI will maintain a portfolio at risk over 30 days max 5% and loan loss ratio 2%. (Sadina to update)

3 Management Plan

3.1 World Vision Management Support

World Vision Canada, the legal applicant for this proposal, is to assure contractual agreements are
adhered to and will assist the WVBiH office in resolving issues of a legal nature that may impede
implementation and progress of the project.

World Vision Canada will also review and provide support to the project of a technical nature. This
support will be of two types: field visits: one or two visits per year from a staff from World Vision
Canada; project review, feedback and follow up: regular review of project reports with the objective of
providing quality feedback that will, in turn, assist the NO to achieve stated results for this project.

As a worldwide partnership with 18,000 staff in over 100 entities, World Vision provides multiple layers
of programmatic, technical, and financial and audit support to its field offices throughout the world.
World Vision BiH’s head office in Sarajevo has overall responsibility for program implementation
(programmatic, financial, and partner/member relations). World Vision operates a
decentralizeddecentralised structure in BiH with four site offices Sarajevo, Tuzla, Banja Luka and
Zenica. Each site office has a Team Leader and an accountant, and project staff operate from the site
office nearest to project areas, ensuring a strong presence on the ground and close local supervision.
The site offices are supervised and supported by the following head office functional departments:

 The National Director has overall responsibility and supervises the Team Leaders of the site
offices.
 The Project Management Team ensures contractual obligations are met and acts as the interface
with donors.
 The Finance department provides overall financial management and oversight of accountants in
project site offices.
 The Human Resources and Administration departments manage supporting functions such as
personnel administration and vehicle fleet maintenance.

Key team members proposed for implementation of the project are:

12 05 November, 2003
 Title Function
Program Manager Overall program management, in charge for budget and reporting, ensure
coordination and cooperation between different institutions
Project Coordinators Assist Project Manager in overall coordination, implementation and supervision
for Economic and of the project and ensure team coordination, efficient partnership with EKI,
Housing credit Housing Credit Branch and local communities/organizationsorganisations
components
Community worker Will be in charge of maintaining daily contact with the target communities and
will provide support to HCB Loan officers in community
mobilizationmobilisation, setting up of community loan committees and in
capacity building of community members and Loan officers.
HCB Loan officers Make an assessment of client/beneficiaries recommended by the selected local
community representatives. HCB and WV will, through WV/HCB loan
committees, jointly agree through consensus, on suitable loan beneficiary/client
from those presented to HCB by the community board. During the payback
period, HCB Loan Officers will monitor the payments and confirm the full
repayment of the loan.
Economic Provide support to the project clients/beneficiaries in the development and
Development team implementation of their business plans, the establishment of viable market
links, networking, ongoing advice and specific training.
EKI Executive Maintain regular contact with Program Manager to ensure coordination and
Director cooperation between WV and EKI. Provide managerial, IT, operational and
finance management support to HCB.
EKI Operations Manage both housing and business support portfolio. Coordinate with Project
Manager Co-ordinators in capacity building of beneficiaries and HCB staff, and
development of HCB.
EKI Loan officers Make an assessment of client/beneficiaries recommended by the member of
Economic Development Team. EKI and WV will, through joint WV/EKI loan
committees, jointly agree through consensus, on suitable loan beneficiary/client
from those presented to EKI by the WV Team. During the payback period, EKI
Loan Officers will monitor the payments and confirm the full repayment of the
loan.

Please see Annex 9 for an organigram and Annex 10 for a complete staff list, job descriptions and
resumes.

3.2 Administrative and Financial Management

World Vision BiH adheres to policies, controls, and procedures that are currently operational in over
100 countries. It has a team of experienced administration officers and accountants who are familiar
with World Vision’s internal standards and major donor standards including USAID, EU, SIDA etc.
Both narrative and financial reports are prepared for submission to the donor offices as required, and
monthly financial reports are reviewed by Grant Finance Managers at World Vision BiH Head Office.
Both administrative and financial officers regularly visit field offices to provide review and training, and
closely monitor financial and operational issues and developments in projects.

World Vision operates a multi-layered financial management system designed to increase

accountability at all levels: it uses SunSystems accounting software which includes a standard chart of
accounts, and expanded account coding to increase accountability and flexibility in the preparation of
multiple financial reports. World Vision adheres to its Field Financial Manual, as well as an in-country
Finance & Administration Manual (available upon request) providing strict guidelines and policies to
ensure proper control, documentation, classification, record-keeping and reporting on all financial and
administrative functions. In addition, both administrative and financial officers regularly visit project
offices to provide review and training, and closely monitor financial and operational issues and
developments in projects.

3.3 Management of project components

World Vision and EKI will work in partnership for the implementation of both project components.
MoUs for both components of the project have beenwill be drawn up and will be signed by both

13 05 November, 2003
organizationsorganisations and HCB (for Housing credit component) upon beginning of the project
implementation.

EKI is the largest micro credit program in BIH with over 141.000 clients and a portfolio of
13.519.000.00000.000,00 US$. It has had significant experience of loans to returnees in whole
country, and has a client repayment rate of about 99,58%.. (Sadina to review and update, if
necessary) Strategically it would like to be a significant credit provider in Eastern RS and this project
would complement its plans for the area. Started as part of WV, EKI registered as a local micro credit
organizationorganisation in March 2001, thus becoming one of the leading independent micro-credit
institutions in BiH. WV implements its substrata micro-enterprise activities through EKI, and retains
ownership of the funds, being part of the Board of Directors. EKI's policy is to be client-focused,
flexible, transparent and accessible to low-income, vulnerable population and returnees. By giving
support to small local businesses to expand, to create new jobs and stability in a challenging post-
conflict transitional environment, EKI creates a "bridge to economic freedom".

3.3.1 Division of roles and responsibilities between World Vision and EKI:
Both components of the project will be implemented in partnership by World Vision and EKI. The
Program Manager for this project will be located in the Tuzla Site office and will provide overall
management of the project and ensure smooth coordination and cooperation between different
institutions involved in the project implementation. Management and implementation of the economic
development aspects will be provided by the Project Coordinator from the World Vision Sarajevo Site
Office. The Project Coordinator for the Housing credit component of the project will be based in the
Tuzla Site Office and will be in charge of facilitating community involvement, supporting creation of
right relations between the target communities and HCB, building HCB’s community development
skills that will ensure sustainability of the initially set relations. His/her responsibility will be to co-
ordinate between identifying and meeting HCB’s needs for capacity building.

EKI will provide managerial, IT, operational and finance management support to HCB. EKI Operations
manager will manage both housing and business support portfolio and co-operate with Project Co-
ordinators in capacity building of beneficiaries and HCB staff, as well as in institution building.
The Program Manager will ensure close co-operation with EKI's Executive Director and with the World
Vision ADP/site offices.
These site offices will implement the project together with EKI as shown in the following table:

Project region World Vision Office EKI Office

1. Sokolac and Han Pijesak
(Eastern RS – BiH)
2. Modrica, Vukosavlje, Doboj,
Samac (Northern RS)
Sarajevo Site Office Sarajevo branch office
Tuzla Site Office Gracanica or GradacacTuzla and
Doboj EKI Housing Credit branch
offices (Sadina, Danko to check and
update)

World Vision’s Middle East and Eastern Europe Regional Office in CyprusVienna will provide legal
support, government representation, and financial backstopping where needed.

Gender focus
World Vision proactively encourages the participation of women with men both in project activities and
in its own employment structures. The National Director, Grant Finance Manager, Program Officer and
onea Project Coordinator proposed for this project are women, as is the Director of EKI. The terms of
EKI’s loan agreement with World Vision require at least 33% of loans or jobs created to be for women,
and EKI consistently achieves or exceeds this.

4 Financial Plan

The total budget for this project is XXXXXX EUR. Of this World Vision is requesting from SIDA a total
of XXXXXX EUR. World Vision has also succeeded in securing co-funding from World Vision partner

14 05 November, 2003
offices, in order to be able to ensure a more sustainable approach to the project and World Vision’s
support to it. The total requested match amount is XXXXXX EUR, and this will flow into World Vision
support costs.

Please find a budget breakdown for the SIDA requested funding attached in the Annex 7 - Budget.

5 Implementation Schedule
The project duration will run for 4 years. Detailed activities with timing for each project component are
shown in the Gantt charts created for each component (please see Annex 4 – HCB Business Plan;
Appendix 6 and Annex 5 – Economic Support Component; Appendix 3) and Logframes, also created
for each component (please see Annex 4 – HCB Business Plan; Appendix 7 and Annex 5 – Economic
Support Component; Appendix4).

Activity / Quarter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
1 – Economic Support Phase I + II
Project Preparation
Train and Support Businesses
Provide Loans
Convert Collateral to Grants
2 – Establishing of Housing Credit
institutionbranch
Community MobilizationMobilisation
Registering the Housing institution
[Do we still need this? Sue]
Institutional Development (HCB
Board, Govt structure)
Facilitating HCB-community
relations
Capacity Building of
HCB/Community
Monitoring/reporting
3 – Transformation of Housing
Co-operative
Supporting the HC in the trans.
Process
Monitoring/reporting

15 05 November, 2003