TIRANA, Feb. 18 – One year after its launch, USAID’s AgroCapital programme, has facilitated $4.7 million of financing for the Albanian agriculture which despite employing around half of the country’s population and providing around 20 percent of the GDP, is one of the least financed sectors in the Albanian economy.
Speaking at conference on the project’s progress this week, U.S. Ambassador to Albania Donald Lu urged Albanian authorities to make legal reforms that would ease access to financing for the agriculture sector.
USAID’s AgroCaptial primarily targets accelerated financing but the full impact is economic development for agriculture. Greater access to capital will enable agribusinesses to expand production, upgrade equipment, grow their business and hire more employees, says CBS, a business consulting non-for profit organization, which is partnering with USAID in the project implementation.
AgroCapital will grow investments by $18.5 million by facilitating financing of $14.8 million. Agribusinesses supported by the program will grow their sales by $28 million and the activities will generate 1,150 new jobs.
Agriculture employs 50 percent of Albania’s working age population but receives only 4 percent of total financing therefore making contribution of only 18 percent of GDP, much below its potential, says project officials.
Reasons for such low levels of financing are closely related to both supply (banks and financial institutions) and demand (farmers and agribusinesses) sides of credit, say project coordinators. Banks perceive agriculture lending as high risk, turning away from it. Farmers and agribusinesses on the other hand lack formalized business structures, a key condition for financing. Subsidy schemes while helpful are insufficient to close the gap from the banking sector. Adding into the mix are lack of appropriate information platforms informing the community the financing opportunities. The result has been an uneasy relationship between the banks as supplier of credit and farmers/agribusinesses as customers.
USAID has recently provided $750,000 in technical and financial assistance for the flood-affected agricultural areas in southern Albania.
