SARAJEVO, Bosnia and Herzegovina – Djana Fadil of the Railway Zadruga in this war-fatigued city has battled to keep his zadruga (credit union) open including resisting attempts by the government to arrest him. The zadruga has 4,700 members, a 30-person volunteer board and US$5 million in assets. It operates on the one-member-one-vote system. Before the war it was the largest of 10 in the region with 65,000 members. Fadil was its accountant. After the war, he reopened it. When David Grace, the World Council of Credit Union's Senior Manager of Associations, visited him last month in his third floor office, Grace was greeted like a member of the family. Fadil proudly showed how he kept his records and bragged about his lending/savings ratios. The offices are in part of a building which the zagruda once owned along with a second building. Grace described the zagruda as a "struggling root in what was once a healthy forest of credit unions." The government is not anti-credit union/zadrugas, but is concerned that they are operating without a regulatory structure. Grace was in Sarajevo to meet with banking, government officials and aid agencies as an initial step to writing legislation. Bosnia and Herzegovina (BiH), which is slightly smaller than West Virginia, is still recovering from its bitter ethnic war. BiH is divided into three almost equally-followed religions: Muslim, Christian and Jewish. Although this month marks the 10-year anniversary of the signing of the Dayton Accords in Paris, Sarajevo has only a few buildings not pock marked by bullets and mortars. Wreckage of other buildings, including those of the government, are skeletal ruins. There is no money for repairs. Unemployment officially is 44%, although so many people work "on the black" it is probably closer to 20%. Markets are beginning to reopen and cafs are well occupied showing that recovery is beginning. Mattress accounts were and are the most common savings in a country where only 20% of the population has a bank account. They kept their money in German marks. The government expected when the mark was converted to Euros some US$3 billion would be exchanged. Over US$6 billion had been squirreled away. Vjeckosav Domljan, former Bosnian ambassador to Canada is one of the driving forces to create zagruda legislation. He joined a credit union while serving in Ottawa. Domljan is more than being idealistic when he sees credit unions as a way to change the economic environment of BiH. With his background as a professor of economics at Sarajevo and working with a stock exchange, he sees credit unions as a way to tap into mattress savings accounts and finance micro enterprises. Grace was in BiH for initial talks in the development of credit union legislation that would help Fadil keep his credit union open. Grace met with 11 agencies including the Governor of the BiH Central Bank Kemal Kozaric. He also met with representatives of the World Bank USAID, the Canadian International Development Agency and UNIFAD. An old hand at international work, Grace is comfortable working with translators, this time both from the economics department of Sarajevo University and those provided by the agencies he visited with. He found that the banking system was well developed. The country has 25 banks of which five hold 80% of the assets. These five are all international banks, and they fear that if there is a major economic downturn the banks will pull out making the need for another sector in the financial marketplace even more important. Although his visit was only the first step in many needed to create the legislation that will give rise to the sector, Grace says he has "no doubt that the credit union system will re-emerge. It is only a matter of when." [email protected]