Business & Financial Literacy Training for Young Entrepreneurs — Bosnia and Herzegovina's Crisis-Era Microfinance Pilot

In 2008-2009, at the height of the global financial crisis, Bosnia and Herzegovina's Entrepreneurship Development Center (EDC), with faculty from the University of Tuzla, delivered a combined business-skills-and-financial-literacy course to young (18-35 year old) clients in good standing at a partner microfinance institution.

Researchers Miriam Bruhn and Bilal Zia (World Bank) set out to test whether combined business and financial literacy training could improve survival and outcomes for young entrepreneurs during a severe economic downturn.

Eligible microfinance clients were randomly assigned to a training invitation or a comparison group; about 39% of those invited took up the course, and outcomes were measured roughly a year later through follow-up surveys of both existing businesses and clients planning to start one.

The crisis dominated the results: about 36% of all sampled businesses closed within the year regardless of training, and one-year survival was statistically indistinguishable between the training group (62%) and the comparison group (61%); of 178 youths who intended to start a business, only one actually did. Among businesses that did survive, however, those in the training group reported measurably better business practices, more investment, and better loan terms than untrained survivors, with the strongest gains concentrated among entrepreneurs who already had higher financial literacy at baseline.

The case is included as an honest, rigorously measured example of a well-implemented training programme that could not overcome a severe macroeconomic shock -- a caution for city and national programmes against expecting business training alone to sustain survival during a downturn, and a pointer toward targeting resources at entrepreneurs best placed to act on new business knowledge.