Bosnia and Herzegovina turns Islamic finance hub of the Balkans region


People feed pigeons next to an Ottoman-style fountain in Bascarsija Square, in Sarajevo, Bosnia. A favourable regulatory framework and political support, particularly advocated by Bakir Izetbegovic, current chairman of the presidency of Bosnia and Herzegovina, have accelerated the development of the Islamic finance sector in the country.

An upcoming event to be held this Saturday, September 29, in Bosnia and Herzegovina’s capital Sarajevo sheds light on the widely underreported growth of Islamic finance in the Balkans. The prestigious 8th Global Islamic Finance Awards will be staged on this day in this city and will bestow honours in more than 50 award categories for outstanding individuals, including “Islamic Banker of the Year” and “Islamic Finance Personality of the Year,” and for institutions in international Islamic banking and finance. Among the attendees will be a large number of banking and finance institutions from the Middle East, particularly from Gulf Cooperation Council member states.

The event highlights the rapid development Islamic finance has experienced in Bosnia and Herzegovina over the past two decades.  After time for recovery from the disastrous Bosnian War in the 1990s – which was part of the breakup of Yugoslavia and led to a severe repression of Muslims in the region – the country at the turn of the millennium began re-establishing itself as a Muslim-majority state, one of the very few in Europe, and today has a share of about 51% of its 3.5mn-population that follows the Islamic faith.

Simultaneously, Islamic finance came into gear in the central Balkans nation. Bosnia and Herzegovina’s first and so far only fully-fledged Islamic bank, Bosna Bank International (BBI), was launched in the year 2000 with support from the Islamic Development Bank. The bank’s portfolio today comprises retail and corporate banking services, as well as banking solutions for the large Bosnian-Muslim diaspora many members of which were displaced during the Bosnian War, and for the nation’s lively sector of small-and-medium-sized enterprises and entrepreneurs.

A favourable regulatory framework and political support, particularly advocated by Bakir Izetbegovic, current chairman of the presidency of Bosnia and Herzegovina, accelerated the development of the Islamic finance sector.  BBI in 2016 together with the stock exchange in Sarajevo initiated the first Shariah-compliant stock index and is continuously seeking or extending cooperation with Islamic finance institutions in countries such as Turkey, Malaysia or from the Middle East. 

By 2017, Islamic finance assets in the country grew to around 18% of total banking assets. In another important development, Bosnia and Herzegovina has set a focus on education and training in Islamic finance.The University of Sarajevo, in partnership with the School of Economics and Business Sarajevo, UK-based University of Bolton and BBI, set up a Center for Islamic Economics, Banking and Finance, which is offering Islamic banking master classes, well-attended by students from the region, namely from the other two Muslim-majority nations Kosovo and Albania.

In addition to that, BBI is sponsoring a considerable number of events and public education programmes for Islamic finance, including the above mentioned award and various business clubs and forums on the Shariah-compliant finance sector and the growing halal industry in the country.According to Sofiza Azmi, chairperson of the awards committee of the Global Islamic Finance Awards, Bosnia and Herzegovina has reached “a level-playing field in enabling the Islamic finance industry to further grow as a competitive national financial sector” and has seen “the prominent rise of Sarajevo as a hub for ethical finance in the South-eastern Europe region.”

Amer Bukvic, BBI’s CEO, indicates that the development will continue. “The influence of Islamic finance is increasing steadily in Bosnia and Herzegovina and now plays a significant role in the promotion of foreign direct investment, with Sarajevo serving as a centre for the industry in the region,” he noted.

Sources and photo-credits: Gulf Times