Following several years of relatively stable economic growth, Bosnia and Herzegovina’s economic performance has significantly deteriorated, in part because of the global economic crisis, but also because of the generally slow pace of transitional reforms. An unfriendly business and investment climate, inefficient government spending and an erosion of public confidence have also discouraged entrepreneurial activity. After a negative GDP growth rate in 2009 and its slight improvement in 2010 and 2011, economic recovery stalled. The average unemployment rate, according to the ILO, had reached 28% in 2012, while official government unemployment figures exceeded 44.5%. Based on available data for 2011, relative poverty in BiH is 17.9%, thus every sixth household is considered poor, while estimates show that the share of the population at risk of poverty has reached 48%. Social exclusion remains a serious problem, with growing inequalities in income, education and health, and with over 50% of the population being socially excluded in some way.

BiH’s rural areas represent some 80% of the country’s territory and the 60% of the population (per OECD categorisation) living there are particularly vulnerable to prevailing poverty and social exclusion. According to official statistics, 80% of the poor live in rural areas, where there are few non-agricultural employment opportunities, a weak physical infrastructure, limited access to markets and social services, and minimal business development and financial services. Moreover, unemployment levels in rural areas are considerable and can be 40% higher than in urban centres such as Sarajevo, Banja Luka, Mostar, Zenica and Tuzla. Wages are also 25% lower, while the estimated GDP per capita is less than half the value of that in urban environments, all of which attracts a significant movement of people to the cities. Most rural households generate their income either from regular employment or from social benefits and remittances, with relatively few depending on agriculture, self-employment or investment income. Several indicators suggest that the rural population is not very entrepreneurial, with most preferring a steady job to starting their own business, and families in employment having higher average incomes than the self-employed. Social exclusion in rural areas is multi-dimensional and goes beyond unequal income distribution. It is particularly influenced by limited social services, infrastructure and networks, including access to quality public utilities.

Through its Rural and Regional Development Sector, UNDP BiH aims to advance human development and decrease regional disparities in Bosnia and Herzegovina by tackling the most pressing local and rural development challenges. The programme employs a comprehensive and integrated approach to development at the local level, in line with European principles and norms. It combines system-building and vertical integration efforts (the integration of government processes from the local to cantonal, entity and national level) with area-based interventions delivered through the five regional offices.  The Sector focuses on strengthening the capacity of local authorities to plan, finance and implement local development policies and priority projects and to deliver results. By introducing a standardised methodology for integrated local development planning as well as dealing with civil society, solid foundations for integrated and participatory local development have been created. Capacity development is directed towards creating effective practices for the management of local development and the provision of services. It also targets partnership building, absorption capacities, vertical and horizontal co-ordination (inter-governmental level and inter-municipal co-ordination), as well as the monitoring and evaluation of the effectiveness of local development policies.

A further Sector objective is to stimulate the economic recovery and development of rural areas. Support is provided for entrepreneurial activity and investment, supply chains, income generation and the introduction of quality and safety standards to increase the competitiveness of local producers. In this regard, support is provided to enhance export capacities through the implementation of the Roadmap for the Export of Food of Animal Origin to the EU, to bring producers in line with EU standards. Throughout the projects of the Sector, particular attention is paid to the socially excluded, of which many are returnees and displaced persons, to enable them to actively participate in the market and generate income.

Improving the local infrastructure and increasing access to quality communal and social services in rural areas is a further target area of the Sector. Activities focus on small and remote communities, as well as the most vulnerable and socially excluded population groups, such as returnees, displaced persons, people with disabilities, the elderly, women, children and youth. Priority projects include the rehabilitation of the electricity supply, water supply and wastewater infrastructure, rural roads, and improving the education and health infrastructure.

Finally, in line with the EU approach to rural development, the Sector promotes environmental protection, the sustainable use of natural resources, and energy efficiency in rural and urban areas. These important aspects are addressed through integrated local development planning processes and the provision of support to the implementation of priority initiatives.

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