UNDP, Development Agencies and Municipal Funds: Grants for Rural Tourism in East Herzegovina

Rural and agritourism in East Herzegovina — in Trebinje, Bileća, Nevesinje, Gacko, Ljubinje, Berkovići and Istočni Mostar — has in recent years stopped being a side activity and become a serious opportunity for additional income for rural households, small winemakers, cheese and honey producers, and operators of village guesthouses. Very few households, however, can finance the renovation of a building, the fitting-out of accommodation, or the purchase of equipment on their own. This is exactly where grants (non-repayable funds) and favourable loans come in, offered by international development programmes, Republika Srpska institutions, and local development agencies.

This guide maps the main sources of funding relevant to our region, explains the logic by which they operate, and gives practical steps for preparing an application. It is not meant to replace the official terms of any individual public call — those change from year to year — but to help you understand the landscape and not miss an opportunity when one opens.

Who Funds Rural Tourism in Herzegovina

It helps to divide the sources into three layers, because they differ in amounts, conditions, and who is eligible to apply.

International development programmes

The largest single grants usually come through programmes funded by the European Union or bilateral donors and implemented by UNDP in Bosnia and Herzegovina (the United Nations Development Programme). These programmes deliberately support rural development, the creation and preservation of jobs, and the protection of natural and cultural heritage.

Domestic Republika Srpska institutions

The second layer consists of RS institutions: the line ministries, the Investment-Development Bank of RS (IRB RS) with its favourable credit lines, and incentives tied to the Law on Tourism and to agriculture. These sources are more stable and predictable, but the amounts are as a rule smaller than the large EU grants.

Regional agencies and municipal funds

The third layer is closest to the beneficiary: regional development agencies (for example TREDEA — the Development Agency of the City of Trebinje) and municipal budget funds. They often offer smaller amounts, but with a simpler procedure and with mentoring that is invaluable for a first-time applicant.

Key takeaway: there is no single "rural tourism fund." There are several parallel streams — EU/UNDP grants, republic-level incentives and loans, and local funds — and the most successful beneficiaries combine several of them over time.

UNDP and EU4AGRI: Partnership as a Condition

The EU4AGRI programme (and the related EU4AGRI-Recovery and EU4Business) is a typical example of a large EU initiative to modernise the agri-food sector and rural tourism in BiH. It is funded by the European Union and implemented and co-financed by UNDP in BiH and the Czech Development Agency (CzDA).

Through measures supporting investment in rural tourism, public calls worth several million KM have been issued, and the amount per application in earlier calls ranged, as an indication, from a few tens of thousands up to around two hundred thousand KM (excluding VAT), depending on the number of partnership members. Remember that word — partnership. The defining feature of these calls is that an individual does not apply alone; a consortium does: a lead applicant and at least two partners. The lead may be a unit of local self-government, a company or craft business providing tourism services, a public institution managing a protected area, or an association experienced in tourism development and promotion.

For a small Herzegovinian household this means it pays to link up with the municipality, the tourist organisation, neighbouring producers, or an association, because doing so opens the door to the largest amounts. Follow current calls on the UNDP BiH and EU4AGRI websites.

Via Dinarica, USAID and Other Initiatives

Alongside EU4AGRI, the Via Dinarica project is especially relevant for Herzegovina — a network of hiking and cycling trails along the Dinaric Alps that connects rural communities. In some phases it has been funded by Italian development cooperation (through AICS) and implemented by UNDP BiH; through it, calls have been issued to award grants to local service providers along the routes.

Nor should we forget USAID projects aimed at developing sustainable tourism in BiH, which traditionally invest in destination management, training, digital promotion, and networking of small service providers. Although the specific projects change, the pattern is the same: support through grants, technical assistance, and capacity building, often in partnership with local organisations.

Republika Srpska: Ministries, IRB RS and Municipalities

At the republic level, two ministries matter most: the Ministry of Trade and Tourism of RS (responsible for tourism activity and incentives under the Law on Tourism) and the Ministry of Agriculture, Forestry and Water Management of RS (agricultural incentives that often cover agritourism production — cheese, honey, wine, dried fruit). The residence tax charged by registered providers is partly channelled back into tourism development.

IRB RS offers favourable credit lines with lower interest and longer grace periods than commercial banks, including lines for tourism and for small and medium enterprises. A loan is not a grant, but combined with grant funds it can complete the financing structure of an investment. Information is available at vladars.net and irbrs.org.

Finally, there are the municipalities and cities of East Herzegovina, which through their budgets and development agencies issue smaller calls — for registering a business, equipping, promotion, or attending fairs. TREDEA in Trebinje also coordinates EU projects covering several Herzegovinian municipalities, so it is worth following at tredea.ba.

What a Typical Public Call Looks Like

Although the details differ, most calls share the same structure. A public call is published with a deadline (usually a few weeks), defined eligible beneficiaries, a list of eligible costs, a mandatory own co-financing rate, and scoring criteria. The application is submitted electronically or on paper, together with a business plan or description of the investment. After an administrative check and evaluation come a ranking list, contracting, and — most importantly — payment against proof of costs, often as a reimbursement after you have paid for and documented the investment yourself.

Eligible costs and co-financing

Typically eligible costs include the renovation and equipping of accommodation, sanitary facilities, kitchen and hospitality equipment, arranging the yard and guest amenities, signage and promotion. Almost every grant requires an own contribution (co-financing) — indicatively between 10% and 50% of the project value. VAT is most often an ineligible cost. That is why a realistic financial plan, in which you know how much you must provide yourself, is decisive.

Practical Steps — an Application Checklist

1. Register your activity. A formal status (craft business, rural household, company) and proper registration are a prerequisite for almost every grant. Check the categorisation of your accommodation under the Law on Tourism.
2. Get your paperwork in order. Certificates of settled taxes and contributions, ownership or right of use of the property, financial statements — request these in advance, because issuance takes time.
3. Follow the right sources. Regularly check UNDP BiH, EU4AGRI, vladars.net, irbrs.org and tredea.ba, plus your municipality's notice board.
4. Build partnerships early. For large EU calls, connect with the municipality, the tourist organisation, and neighbouring producers before the call opens.
5. Prepare a business plan. A short, realistic plan with a revenue projection, expected overnight stays, and contribution to the local community earns points.
6. Plan your liquidity. Since payment is often a reimbursement, secure funds to pay up front — through an IRB loan if needed.
7. Keep every receipt. Photograph the works, keep invoices and bank statements; cost justification is the stage at which grants are most often lost.
8. Ask for help. Development agencies and consultants offer mentoring — use it for your first application.

With patience and good preparation, a combination of EU/UNDP grants, republic-level incentives, and local funds can turn a Herzegovinian rural household into a sustainable tourism story.