Croatia – Historic Day For Small And Medium Business


From left: Minister Darko Horvat Minister Tomislav Tolusic and Vjeran Vrbanec, president HAMAG-BICRO

From left: Minister Darko Horvat
Minister Tomislav Tolusic and
Vjeran Vrbanec, president HAMAG-BICRO

A long awaited lift to the prospects of desperately needed boost to small to medium business enterprise in Croatia has finally surfaced, promising to prop-up the dying economy and revitalise job numbers, create new jobs there where it counts when it comes to preventing people leaving Croatia in search of jobs elsewhere. Small and medium business has always been the backbone and sustenance of a stable and solid economy – it’s taken Croatia many years to actually help the idea of this fact infiltrate what occurs on the ground and, so, this is great news.

The official signing of an Agreement on financing between Croatia’s ministry of regional development and EU funds, Croatian agency for small business, innovations and investments (HAMAG-BICRO) and EU funds was held in Zagreb on Thursday 30th June 2016. This Agreement relates to the implementation of financial instruments within the framework of the operative program known as “Competitiveness and Cohesion” 2014 – 2020.

The main aims of the Competitiveness and Cohesion program are to boost economic competitiveness, support alignment with the EU environmental acquis, invest in transport infrastructure (TEN-T) and network infrastructure. The EU allocation amounts to EUR 6.88 billion (4.3 billion from the European Regional and Development Fund (ERDF) and 2.56 billion from the Cohesion Fund).

Almost 60% of the ERDF allocation is aimed at strengthening the economic competitiveness of Croatia. It’s said that it will support national efforts to develop an innovation-driven economy, primarily by building-up scientific excellence, encouraging Research/Development/Innovation investment and technology transfer in the business sector. Next generation network (NGN) broadband will be further extended and e-public services developed. Competitiveness and innovation in Small and Medium sized Enterprises will be supported through increased entrepreneurship, better access to finance and the development of high-quality business services.

Drawing available EU funds for Croatian business development has been pitiful since Croatia became EU member three years ago – one would be justified in thinking that this was due to the formal Social Democrat government’s inability or sabotage – or even both. It’s almost unthinkable that a government of a country with serious economic problems would not even come up with processes for utilising the EU financial assistance, let alone draw on available funds to the full. Well, that is exactly what happened in Croatia during the past two years – creating the economic hopelessness that sent significant numbers of skilled and qualified Croats abroad and lowered living standards of those that remained.

Based on 2014 the results of international research (Global Entrepreneurship Monitor, Doing Business, Global Competitiveness Report, Corruption Perceptions Index), in which Croatia has been involved for many years, the key development problems of the small and medium enterprise sector in Croatia have been identified: insufficient level of new business venture start-up activity, small share of growing enterprises, limiting administrative barriers to implementation of entrepreneurial activity, insufficient development of the financial market, and lack of education focused on the development of entrepreneurial knowledge and skills.


Small and medium enterprises (SME) are the most important driver of the economy, and the important role of this sector is particularly evident through their share in employment, in total realised income and exports. Successful performance of the SME sector is more important than ever.


Growing small and medium enterprises are an essential part of the solution to the problem of long-term high unemployment in Croatia and the shedding of essential talent through increased emigration as a result of a poor employment market. Survival and development of Croatian small and
medium enterprises in the European Union’s single market depend on their ability to compete successfully and adaptation to the demanding market and fierce competition.


The Agreement signed in Zagreb last Thursday has for the first time ever in Croatia enabled access for small and medium business entrepreneurs to the EU structural and investment funds via financial instruments.


This is fantastic news!


The Agreement represents the most significant reform in business entrepreneurship and trade – new finance instruments with maximum credit potential, which will secure favourable guarantees for business projects that include most favourable conditions in the business market and exceptionally low interest rates – notes the website of Croatia’s Ministry of Regional Development and EU Funds. Micro and small business loans, individual and portfolio guarantees as well as the interest rates subsidy are said to significantly lighten the entrepreneurs’ access to financing in the coming period.

Minister Tomislav Tolusic Photo:Patrik Macek/Pixsell

Minister Tomislav Tolusic
Photo:Patrik Macek/Pixsell

Entrepreneurs will have at their disposal loans at lower interest rates than those offered by banks and they will be able to secure favourable guarantees. The financial instruments that entail significantly reduced or smaller administrative requirements also enable a much simpler access to EU funds for entrepreneurs in Croatia,” said minister Tomislav Tolusic.

There are four new financial products that will be kicked-off as a result of this Agreement: “Micro Credits”, “Small Loans”, “Limited Portfolio Guarantee” and “Individual Guarantees”. These will be administered by the Croatian agency for small business, innovations and investments (HAMAG-BICRO). This sweep into significant business reform has already guaranteed the sum of almost 1.2 billion kuna (160 million euro) for small and medium business. HAMAG-BICRO Board president Vjeran Vrbanec said that the activation of these financial instruments through the four said financial products will realise small and medium business loans to the value of some 600 million euro – which is quite significant for the size of Croatian economy at this stage.

HAMAG-BICRO will head the implementation of micro and small loans between 25,000 and 50,000 euro to business applicants; interest rate will reportedly be from 0.5 to 1.5% for investment projects and up to 3.5% for trade financial resources. On the other hand, said Vrbanec, assurances to commercial banks will include guarantees that the entrepreneurs who have borrowed funds from them will in fact repay their loans. The Agreement also enables interest rate co-financing.

Vjeran Vrbanec HAMAG-BICRO Croatia Photo:

Vjeran Vrbanec

If the banks will be so flexible that they lower the interest rate for each individual entrepreneur, we are then prepared to a further reduction of the interest rate for those entrepreneurs. If, for instance, the interest rate on some loan is 4% it can be lowered to 1 or 0,5% and in some situation to even 0%,” claims Vrbanec.

Minister Tolusic said that the loans will be available from August this year and involved guarantees by the end of this year. If negotiations succeed, large companies could also be able to access similar loans at favourable interest rates through the Croatian Reconstruction and Development bank, says Tolusic.


Minister Darko Horvat Photo: HINA/ Daniel KASAP / dk

Minister Darko Horvat
Photo: HINA/ Daniel KASAP / dk

Minister for small and medium-sized business, Darko Horvat, has pointed out that the potential of some 13 billion kuna (165 million euro) has already been identified for project proposals of micro, small and medium trading companies/businesses. He said that 10 billion kuna investments raise the GDP by 1% and, hence, it’s expected that the GDP will increase this year by that percentage.

The new financial instruments are an another indication of this government’s persistent efforts to remove barriers in the business environment, its efforts in securing of strong business establishments within the Croatian economy and its efforts in creating a healthy investment environment. With this reform we have succeeded in relocating the intensive support for small business from the Croatian government budget to the EU budget,” stated minister Horvat.

As this government is only in care-taker mode and with general elections due in September this year a keen eye needs to be kept on the actual implementation of the Agreement signed last Thursday that offers small and medium business a real chance of life and success. It doesn’t take much to stuff things up in Croatia when it comes to the implementation of major reforms – it’s still suffering within the former communist Yugoslavia non-entrepreneurial and a largely anti-private-business environment at the grassroots or at trade activity level. However, with the continuance and increase of targeted education and support that steer successful business development – a vibrant and well-endowed economy may indeed be possible in Croatia. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)


  1. Even baby steps are often evidence of progress. Overdue progress. This seems encouraging news, Ina.

  2. Even though this finance was acquired during the caretaker Government, I hope the implementation during August will lead to people seeing which party was responsible for obtaining it. Maybe this will lead to a stable Government after the elections which the Communists will not be able to uproot quite so easily and will finally lead to their downfall in Croatia and eventually elsewhere.
    xxx Huge Hugs xxx

    • I hope the voters will think with their head rather than ideological winds, David – and then stability will follow including a stable progress in business and economy. Am so waiting for communism to sink into forgotten past in Croatia, fretting it’s going to be a while yet – but also more and more strengths for reforms in visible – just need to endure. Many hugs 🙂

  3. Good news. I am glad.

    Despite such funds for the Welsh valleys, people there voted to leave the EU. Does this increase EU popularity?

    • Whether this will increase EU popularity depends on actual implementation of the program, Clare – while there’s still much mistrust but hopefully it can be fixed or trust spread more widely. EU popularity in Croatia is a divisive issue as far as I have ascertained the pros and cons at every corner but I think the pros may outweigh the cons particularly as it gives the unemployed opportunities for searching for work elsewhere but that of course is something Croatia and every EU country should avoid – each should build solid employment opportunities at home and live as good neighbours rather than rivals when it comes to jobs and who is taking them

  4. I don’t mean to downplay this event, this IS great news, but I live here and see the problem differently. Financing business doesn’t solve problems, it’s the foundational lack of management experience that small companies have, therefore, don’t know how to use the money effectively. From poor hiring decisions, horrible conditions provided to employees, low wages, disrespect for employees, business owners not respecting labor laws, the list goes on and on.
    Here is just 2 examples of how money gets thrown out the window and companies fail to grow: I walk into a furniture store with 10,000 kunas to buy new furniture for my house. The store is empty, 5 employees hover in a corner chatting, no rush, don’t worry, I don’t give a shit, I don’t get paid enough so why try and sell anything? We wait 10 minutes and leave but we could have dropped 10,000 kn in 1 hour.
    This is what happened to this company: These employees have no incentive to sell anything, they get paid a basic salary. They are not trained in economics, they don’t understand that if they DON”T sell, they will get fired eventually. The owner doesn’t understand if he pays his employees a commission on sales, they would be attacking every customer walking into that store. This company went belly up a few years later….

    I sit in a Cafe, the only time the waiter comes to me is ask me what I want and collect the money. I sit in a Cafe for 2 hours sometimes more waiting for the ferry. I would have bought another coffee, another drink, another whatever, but this waiter NEVER came to ask me if I needed anything. I didn’t spend more because of principles, this Cafe, in my eyes didn’t deserve my money. What happened here? This waiter is taught to wait on tables, period. This waiter is not educated by his employer to ask customers every few minutes if they need anything. This Waiter doesn’t understand economics, if he doesn’t sell anything, he will eventually lose his job.

    This is deep issue of “lack of training”, if you wait tables, your employer has to train you in understanding what will it take to keep his/her job. In other words, you don’t just wait tables, that customer needs to come back, you need to sell coffee, beer, whatever in order to keep your job.

    This is the fundamental issue in Croatia. Sure the bigger companies can afford good managers, but the middle and small ones have no idea how to effectively run a business and I would have done one thing before issuing or lending any money, I would have offered some management courses as a requirement for lending money. This money, if not used wisely and productively, will not boost our economy, I have been here in Croatia 10 years now and see these fundamental problems everyday. I have much experience in marketing and management so I notice them immediately.
    Croatia needs some experts in management, administration, and finance, training employees in order to bring the level of employment to better standards. What good is it going to “konobarska skola”, if the waiter is not taught that his customer is GOD and he/she depends on that customer in order to have a job?

    • What you, Ines, describe from inside the shop and cafe is what was widespread in former Yugoslavia/ no customer respect nor competition to win customers as jobs were secure/state run regardless of productivity etc – I do like to hope that things are changing in that respect in Croatia and I do so agree with you: much needs to be invested in training and education. Without that many of the small to medium business may indeed fail – I pray they do not. Prayer, of course is not enough – education and insistence on standards of business trade (before such a loan is given) could be a tool that could transform the ailing and pathetic customer services. Competitiveness definitely involves good customer services and competing for every customer and many in Croatia do not seem to want to even acknowledge that fact

      • It’s just another bandage effect without fixing the foundation or core problem issues. Personally, if I was President of this country, I would get rid of everyone over 50 in government and give those positions to our young generation, the progress thinkers, anti-political, managers that can run this country like a business and not like a political game. I abhor politicians, they have done nothing other than cater to those they can keep their power…I don’t have solutions but I can tell you, had I returned here younger, I would have gone back to Canada. I am TCM Doctor yet I can’t legalize myself because we don’t have “Alternative let alone Chinese Medicine” as a Djelatnost….so I have to write to Presidents each time a new ones comes along begging for them to change something…..10 years, nothing has changed and I still work in the shadows…it’s a shame that I bring with me 40 years of experience and yet I can’t legalize and pay taxes like everyone else. I have now given up, put up a sign “dobrovoljno” and that’s all I can do.

      • So true, Ines – a small thing or a bandage but it doesn’t have to that way if those who have kicked it off know what they’re doing and not just scoring political points before elections…hopeful not too long now to see what happens…I agree more younger politicians and leaders, definitely get rid of dead wood that’s been there for a decade or more…been there during Yugoslavia…what a shame re you practice and the law that doesn’t match needs…one would have thought that at least the current president would know that laws arise from needs in community but obviously not much hope there yet…

  5. Hi. I have a question: I am working on an album, featuring ancient stories from around the world. Do you know where I can get some well known, ancient, Croatian folk tales? Something almost magical, mythical?

  6. Comrade Milanovic says to comrade Pusic, the mission is nearly complete. After the next election we will be able to completely incapacitate the population into zombies of communist dependency, destroy Croatia into the dustbin of history and finally create the greater yugoslavia we have struggled for all these years. Call Vucic and start planning the celebrations. Comrade Mesic intrudes and says already done.

    • Horrific thought, Sunman – let alone reality.

      • I know, a horror story indeed. But one which I think the left is pursuing. Interesting how in the recent situation assessment by SOA, the intelligence agency reported a growth in Chetnik ideology, not of facsism or Ustasa ideology. The myth creators and Yugo-nostalgics have been very busy and quite productive with their success.

      • They’ve been permitted to act as they please, Sunman, and that cannot be overlooked, someone has to act to stop that horror of communist nostalgia taking hold in daily lives

  7. Reblogged this on IdealisticRebel's Daily View of Favorites and commented:
    I wish every Croatian business much success. May you all succeed more than you expect. Blessings, Barbara

  8. This is a good thing for Croatia. I also like the observations made by Ines Radman on the need for training of people to deliver in business and other phases of life. And your response to her pleases me Ina. I really believe that education and training are indispensable for the growth of any country. So not just the money but the people to use the money well and business will grow. The economy will boom.

  9. Do you think the push for more Croatia is due to Brexit?

    • No, not really, Helena, because only 23% of voters voted yes on EU referendum a few years back – “sovereign Croatia first” so to speak either voted no or abstained and there is a lot of those and Brexit as well as the push for a federated superstate in EU is bound to raise protesting voices…

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