II 114th CONGRESS 1st Session S. 2307 IN THE SENATE OF THE UNITED STATES November 19, 2015 Mrs. Shaheen (for herself and Mr. Wicker ) introduced the following bill; which was read twice and referred to the Committee on Foreign Relations A BILL To promote the strengthening of the private sector in Bosnia and Herzegovina.

1. Short title This Act may be cited as the Bosnia and Herzegovina-American Enterprise Fund Act . 2. Purpose and findings (a) Purpose The purpose of this Act is to support economic opportunity and political progress in Bosnia and Herzegovina through the creation of an enterprise fund that will provide financial investment and technical assistance to small and medium-sized enterprises. (b) Findings Congress makes the following findings: (1) The United States has a strong interest in ensuring the gains in stability and reconciliation made since the end of the Bosnian War in 1995 are not overtaken by difficult economic conditions. (2) In 2014, protests broke out across Bosnia and Herzegovina as a result of widespread frustration among the populace regarding the economy, which is currently experiencing an unemployment rate of more than 40 percent. (3) (A) A crucial element for economic progress in Bosnia and Herzegovina is robust growth among small and medium-sized enterprises (SMEs), which have struggled to access necessary financing. (B) Although the private sector credit-to-GDP ratio in Bosnia and Herzegovina grew from 25 percent in 2001 to over 65 percent in 2008, it has failed to grow in the 7 years since, and is significantly less than the average for advanced economies. (C) Bank lending, which grew similarly rapidly before 2008, has grown barely more than 1 percent per year since then. (D) International financial institutions and foreign-owned private investment funds active in Bosnia and Herzegovina have provided growth finance for larger companies and infrastructure project financing, but have not substantially invested in SMEs. (4) (A) Bosnia and Herzegovina’s demographic, income and geographic characteristics are promising for SME growth. (B) Bosnia and Herzegovina is a market of almost 4,000,000 people, whose per capita income has grown by almost 50 percent in less than a decade, and substantial growth remains in order to achieve income parity with its Balkan neighbor economies. (C) Bosnia and Herzegovina currently imports almost $10,000,000,000 of goods per year, a substantial portion of which could be substituted for by domestic SME production. (5) To help foster and support the fledgling private sector in Central and Eastern Europe after the fall of the Berlin Wall, Congress, through enactment of the Support for East European Democracy (SEED) Act of 1989 ( 22 U.S.C. 5401 et seq. ) and the FREEDOM Support Act ( 22 U.S.C. 5801 et seq. ), authorized nearly $1,200,000,000 for the United States Agency for International Development (USAID) to establish 10 new investment funds (collectively known as the Enterprise Funds ) to both support economic development objectives and realize substantial financial returns. (6) The Enterprise Funds— (A) channeled approximately $10,000,000,000 of public and private funding into more than 500 enterprises in 19 countries; (B) leveraged $6,900,000,000 in private investment capital from outside the United States Government; (C) provided substantial development capital where supply was limited; (D) created or sustained more than 300,000 jobs through investment and development activities; (E) funded $80,000,000 in technical assistance to strengthen the private sector; and (F) are expected to recoup 177 percent of the original USAID funding. (7) Enterprise funds established in partnership with United States partners, such as Poland, Hungary, Albania, Russia, and other European countries, have proven beneficial to the economies of such countries. (8) Creating a similar fund in close partnership with the people of Bosnia and Herzegovina would help sustain and expand economic reform efforts in Bosnia and Herzegovina and empower entrepreneurs to create urgently needed employment opportunities. (9) Establishing an enterprise fund for Bosnia and Herzegovina would— (A) help improve financial institutions within the country; (B) provide debt, equity, and other investment vehicles for commercially viable SMEs; and (C) make the investment environment more attractive to domestic and international investors. 3. Purposes of Bosnia and Herzegovina-American Enterprise Fund The purposes of the Bosnia and Herzegovina-American Enterprise Fund are— (1) to promote the private sector in Bosnia and Herzegovina, while considering the development impact of investments and profitability of those investments, particularly in small and medium-sized enterprises, and joint ventures with participants from the United States and Bosnia and Herzegovina; (2) to promote policies and practices conducive to strengthening the private sector in Bosnia and Herzegovina through measures including loans, microloans, equity investments, insurance, guarantees, grants, feasibility studies, technical assistance, training for businesses receiving investment capital, and other measures; (3) to promote good corporate governance and transparency in Bosnia and Herzegovina, foster competition, catalyze productivity improvements in existing businesses, and strengthen local capital markets; and (4) to promote security through job creation in the private sector in Bosnia and Herzegovina and to further the creation of a middle class in Bosnia and Herzegovina. 4. Bosnia and Herzegovina-American Enterprise Fund (a) Designation The President is authorized to designate a private, nonprofit organization (to be known as the Bosnia and Herzegovina-American Enterprise Fund) to receive funds and support made available under this Act after determining that such organization has been designated for the purposes specified in section 3. The President should make such designation only after consultation with the leadership of each House of Congress. (b) Board of directors (1) Appointment The Bosnia and Herzegovina-American Enterprise Fund shall be governed by a Board of Directors, which shall be comprised of 6 private citizens of the United States appointed by the President of the United States in consultation with the Administrator of the United States Agency for International Development. The Board is authorized to appoint up to 3 additional members who are citizens of Bosnia and Herzegovina if agreed to unanimously by all members of the Board. (2) Qualifications Members of the Board of Directors shall be selected from among people who have had successful business careers and demonstrated experience and expertise in international and particularly emerging markets investment activities, such as private equity or venture capital investment, banking, finance, strategic business consulting, or entrepreneurial business creation, and backgrounds in priority business sectors of the Fund. (3) United states government liaison to the board The President shall appoint the United States Ambassador to Bosnia and Herzegovina, or the Ambassador's designee, as a liaison to the Board. (4) Non-government liaisons to the board (A) Authority to appoint Upon the recommendation of the Board of Directors, the President may appoint up to 2 additional liaisons to the Board of Directors in addition to the members specified in paragraphs (1) and (3), of which not more than 1 may be a non-citizen of the United States. (B) NGO community One of the additional liaisons to the Board should be from the nongovernmental organization community, with significant prior experience in development and an understanding of development policy priorities for Bosnia and Herzegovina. (C) Technical expertise One of the additional liaisons to the Board should have extensive demonstrated industry, sector, or technical experience and expertise in a priority investment sector for the Fund. (c) Grants (1) In general There is authorized to be appropriated for the Department of State for fiscal year 2016 $30,000,000— (A) to carry out the purposes set forth in section 3 through the Bosnia and Herzegovina-American Enterprise Fund; and (B) to pay for the administrative expenses of the Bosnia and Herzegovina-American Enterprise Fund. (2) Eligible programs and projects Grants awarded under this section may only be used for programs and projects that support the purposes set forth in section 3. (3) Compliance requirements (A) In general Grants may not be awarded to the Bosnia and Herzegovina-American Enterprise Fund under this section unless the Fund agrees to comply with the requirements under this section. (B) Grant agreement The grant agreement between the United States Agency for International Development and the Bosnia and Herzegovina-American Enterprise Fund shall state that the Fund shall end its reinvestment cycle not later than December 31, 2030, unless the Secretary of State, in consultation with the Administrator of the United States Agency for International Development, and after consultation with the appropriate congressional committees, determines that the Fund should be extended. (C) Prevention of money laundering and terrorist financing The grant agreement between the United States Agency for International Development and the Bosnia and Herzegovina-American Enterprise Fund shall state that the Fund shall comply with procedures specified by the Secretary of State to ensure that grant funds are not provided by the Fund to or through any individual, private or government entity, or educational institution that advocates, plans, sponsors, engages in, or has engaged in, money laundering or terrorist activity or, with respect to a private entity or educational institution, that has as a principal officer of the entity’s governing board or governing board of trustees any individual that has been determined to be involved in or advocating money laundering or terrorist activity or determined to be a member of a designated foreign terrorist organization. (D) Disposition of assets The assets of the Bosnia and Herzegovina-American Enterprise Fund at the time the Fund is dissolved shall be returned to the General Fund of the United States Treasury and used to reduce the debt of the United States in a manner agreed upon by USAID and the Board of Directors for the Fund, except for those assets used to designate a legacy foundation which is appropriately resourced to the needs of Bosnia and Herzegovina. (d) Notification (1) In general Not later than 15 days before designating an organization to operate as the Bosnia and Herzegovina-American Enterprise Fund pursuant to subsection (a), the President shall provide the information described in paragraph (2) to the Chairman and Ranking Member of the appropriate congressional committees. (2) Information The information described in this paragraph is— (A) the identity of the organization to be designated to operate as the Bosnia and Herzegovina-American Enterprise Fund pursuant to subsection (a); (B) the name and qualifications of the individual who will serve as Chairman of the Board of Directors; and (C) the amount of the grant intended to fund the Bosnia and Herzegovina-American Enterprise Fund over the lifetime of the fund. (e) Public disclosure Not later than 1 year after the entry into force of the initial grant agreement under this section, and annually thereafter, the Fund shall prepare and make available to the public on an Internet Web site administered by the Fund a report on the Fund’s activities during the previous year, including— (1) a description of each investment or project supported by the Fund, including each type of assistance provided in accordance with section 3(2); (2) the amounts invested by the Fund in each company or project; (3) the amounts of additional private investments made in each company or project; and (4) the amounts of any profits or losses realized by the Fund in connection with each such company or project. 5. Reports (a) Administrative expenses Not later than 1 year after the date of the enactment of this Act, and annually thereafter until the Fund is dissolved, the Fund shall submit to the appropriate congressional committees a report detailing the administrative expenses of the Fund, including any employee incentive compensation arrangements implemented by the Fund which are not considered to be industry standard. (b) GAO report Not later than 3 years after the date of the enactment of this Act, and every 3 years thereafter until the Fund is dissolved, the Comptroller General of the United States shall submit to the appropriate congressional committees a report assessing the activities of the Fund in achieving the stated goals of promoting private sector investment and employment in Bosnia and Herzegovina and identifying those institutional or regulatory constraints that inhibit a more effective application of Fund resources. (c) USAID reports Not later than July 1, 2022, and July 1, 2030, the Administrator of the United States Agency for International Development shall submit a report to the appropriate congressional committees assessing the performance of the Bosnia and Herzegovina-American Enterprise Fund with respect to the purposes set forth in section 3. (d) Appropriate congressional committees defined In this section, the term appropriate congressional committees means— (1) the Committee on Foreign Relations and the Committee on Appropriations of the Senate; and (2) the Committee on Foreign Affairs and the Committee on Appropriations of the House of Representatives. 6. Operation provisions (a) Applicable provisions Subsections (d)(5), (g), (h), (i), (k), (l), (m), (n), (o), and (p) of section 201 of the Support for East European Democracy (SEED) Act of 1989 ( 22 U.S.C. 5421 ) shall apply with respect to the Bosnia and Herzegovina-American Enterprise Fund in the same manner as such provisions apply to Enterprise Funds designated pursuant to subsection (d) of such section. (b) Reinvestment Returns on investments of the Bosnia and Herzegovina-American Enterprise Fund and other payments to the Fund may be reinvested in projects carried out by the Fund without further appropriation by Congress. 7. Best practices and procedures To the maximum extent practicable, the Board of Directors of the Bosnia and Herzegovina-American Enterprise Fund should adopt the best practices and procedures used by Enterprise Funds, including those for which funding has been made available pursuant to section 201 of the Support for East European Democracy (SEED) Act of 1989 ( 22 U.S.C. 5421 ). 8. Experience of other enterprise funds In implementing this Act, the President shall ensure that the Articles of Incorporation of the Bosnia and Herzegovina-American Enterprise Fund (including provisions specifying the responsibilities of the Board of Directors of the Fund), the terms of United States Government grant agreements with the Fund, and United States Government oversight of the Fund are, to the maximum extent practicable, consistent with the Articles of Incorporation of, the terms of grant agreements with, and the oversight of the Enterprise Funds designated pursuant to section 201 of the Support for East European Democracy (SEED) Act of 1989 ( 22 U.S.C. 5421 ) and comparable provisions of law.