The foundation will use the earnings on its $100 million endowment to promote private sector development through programs which will support education for sustainable development, entrepreneurship, leadership development as well as cultural tourism and eco-tourism.
When the Albanian-American Enterprise Fund started operating, it had $30 million seed money from the U.S. Government, which wanted to support free markets in Albania. Now, 14 years and $175 million later, the new investment mandate has ended for the fund. But a new journey to help Albania’s development is beginning.
AAEF recently announced that will take more than $100 million of what it made in Albania, and invest it in the creation new non-profit foundation for Albania, the Albanian American Development Foundation (AADF). It will also provide further funding when needed.
“This new foundation may become the largest non-profit institution in Albania with a beginning endowment of well over $100 million,” Michael D. Granoff, Chairman of the Board of the Albanian-American Enterprise Fund, said in a statement.
The new foundation will promote private sector development through programs which will support education for sustainable development, entrepreneurship, leadership development as well as support for cultural tourism and eco-tourism, according to AAEF.
“We believe that the single greatest need in Albania is education in its broadest sense. There is a need for education and training at virtually every level throughout Albania, from teaching basic economic concepts in secondary schools to training senior level company managers,” Mr. Granoff said. “This will be the lens through which the Foundation will set its initial course. We intend to build the activities of the new Foundation slowly and carefully as we did with the Fund. Our Foundation can make an important contribution to the development of Albania and we want to make sure we do it right. Our sole interest is in bettering the lives of Albanians. Our goal is to become the Gates Foundation for Albania.”
The endowment for this Foundation is the result of the success of the AAEF over the past 14 years in investing profitably and transparently in private sector development in Albania. Future increases in the endowment of the Foundation will come as current Fund investments are realized, according the Albanian-American Enterprise Fund.
Over the past 14 years, the AAEF has made a major contribution to the Albanian economy, its legal structures, financial institutions and society at large.
The value of the Fund has increased from the original $30 million grant from the U.S. Government to over $100 million. The AAEF is one of the most successful enterprise funds.
“We have received strong and consistent support from the governments of the United States and Albania and have worked in a nonpolitical way with every government. Every government and every party has realized that the Fund works to improve the lives of all Albanians and that has made our job easier,” Mr. Granoff said in the statement. “The Fund has stimulated free markets and entrepreneurial activity by making debt and equity investments of more than $100 million in small and medium sized enterprises. We have persevered through good times and bad. Much credit goes to the outstanding team of people who have worked for the Fund in Tirana and New York for many years, and to a dedicated Board of Directors who work without pay to make the Fund a success.”
The companies AAEF invested in have contributed over $1 billion to the GDP of Albania and created over 5,000 jobs. AAEF investments have included the American Bank of
Albania, Mother Teresa International Airport, the insurance company Sigal and
the biometric identity document company Aleat among many others.
Companies that the Fund started or invested in have provided models for professional management, transparency and good governance. The Fund has implemented Western style personnel policies and benefits including tuition reimbursement programs, medical coverage, and stock option plans, according to AAEF.
Despite its considerable accomplishments since 1992, Albania’s transition to a society of legal justice, civic participation, widespread economic prosperity and democracy remains a work in progress.
Many economic and social challenges are acknowledged but unresolved, while others are unaddressed. Nearly all are underfunded, in part due to a lack of resources both public and private, and in part because private philanthropy is not yet well developed.
“So with the support and encouragement of the U.S. President, Congress, the State Department, and USAID, the AAEF’s Board of Directors is creating the Albanian-American Development Foundation to help address these concerns,” Mr. Granoff said.
“The Foundation will be an enduring legacy and symbol of U.S. support for an important ally. In essence it is a partnership of the people of the United States with the people of Albania. Now is a time of great challenge and opportunity,”
How the AAEF made millions, started top companies, and why that money will stay in Albania.
Jeffrey Griffin has been President and Chief Executive Officer since late 2001 at AAEF, a not-for-profit, U.S. corporation established pursuant to the Support for East European Democracy Act of 1989.
In an earlier interview with Tirana Times, Mr. Griffin said the Fund will cease new investments starting in early 2010, but work will continue on investments already in process. His message for other investors is to come fill the gaps in Albania, because there is profit to be made here.
“I would encourage people to look at Albania as a potential investment destination. Financial investment opportunity in the country is high. However, the more profitable investment would be through strategic partnerships with current operators who are looking to expand their present operations even beyond the borders and into the region. Albania is the ideal place from this point of view,” Mr. Griffin said. “It has the crossroads from east to west and vice versa. It has traditional dealing with its neighbors and does so without the ethnic or political problems that the media likes to advertise. So I encourage everyone to come here. If you are an entrepreneur, than this is the place to start a business. If you are a company that is looking to expand your horizons than this a great place to expand, to find the right partners.”
The AAEF’s primary purpose is to promote private sector development. To accomplish this, the AAEF invests in or lends to a wide array of private enterprises and provides guidance and advice on management issues to its portfolio investments. In addition, AAEF provides its portfolio investments with training to establish best business practices that incorporate acceptable financial reporting standards.
The Fund’s goal has always been to enhance the development of the private sector enterprise in Albania. There are twelve enterprise funds of this kind around Europe, and each of them is devoted to the country for which they were created, and each of them has the goal of trying to enhance private enterprise.
It helped to develop Albania’s banking sector, both in best practices and building proper rules and regulations, by creating and building the American Bank of Albania. The bank, is now owned by Intesa Sanpaolo Bank Albania and is a leader in the Albanian banking sector.
It created and strengthened the insurance industry by investing very, very early in SIGAL, and helping in selecting its future strategy partner UNIQUA and negotiating their partnership. Together with Hochtief and DEG, the Fund brought Albania’s airport to state of the art level by constructing a completely new facility.
“We have many more investments like these, and we believe we are fulfilling our commitment to better Albanian lives through development and enhancement of the country’s private sector,” Mr. Griffin said in another media interview.
The Fund will cease to make new investments at the end of March 2010, when it will celebrate its 15th anniversary. It won’t close. It will continue to assist the portfolio of investments it has and make further financial commitments to those investments if necessary and warranted. However, the Fund will not make any new investments after March 2010.
The AAEF was first incorporated in 1995. Since its inception the AAEF has invested in or lent to 40 Albanian companies. As of September 30, 2008, net assets of the AAEF amounted to $178 million.
Although incorporated as a not-for-profit organization, the AAEF is managed as a private investment fund to maximize risk-adjusted returns. Investments can include loans, leases, guarantees, and equity ownership. Profits generated from AAEF investments are reinvested in new projects in Albania.
In addition to recycling its profits to promote private enterprise creation and expansion, it is the AAEF’s intent to demonstrate to other potential investors that investment in Albania can be successful and profitable. As such, the AAEF strives to be a catalyst for additional private investment in Albania.
