Albania lags behind in venture capital and private equity markets

The short-term outlook remains uncertain, but as for 2015 some positive externalities are expected to be derived from Albania’s EU candidate status and the construction of the Trans Adriatic Pipeline, says the EBRD in its Transition report.
TIRANA, Nov. 25 – Albania’s distance to developed venture capital and private equity markets remains huge, shows the 2014 Transition Report published by London-based EBRD.
The report ranks Albania 106th on poor capital markets, human and social environment and entrepreneurial opportunities which scored below 50 compared to the benchmark value of 100.
The EBRD report shows than more than twenty years after the collapse of the communist regime, the Albanian economy still has transition indicators representing little or no change from a rigid centrally planned economy. Data published in the latest 2014 Transition report show some indicators in Albania’s financial and infrastructure sectors still rank the country far from standards of an industrialized market economy. In the financial sectors, Albania has a major transition gap both in capital markets and private equity rated 2- and 1 respectively on a 1 to 4+ scale, unchanged compared to the previous report.
Almost a decade after its establishment, the Tirana stock exchange remains inactive due to the small number of listed companies currently counted on the fingers of one hand and lack of interest because of the high informality of Albanian businesses.
Insurance and other financial services are also rated 2, indicating that transition has barely advanced. In infrastructure the transition gap is bigger in the underdeveloped and dilapidated railway system and water and wastewater. In the energy sector, the electric power was downgraded from 3 to 2+.
The report measuring indicators for 32 economies in central and Eastern Europe rates Albania better on large and small scale privatizations, price liberalization and governance and enterprise restructuring and worse on small-scale privatization, trade and foreign exchange system and competition policy.
Albania was upgraded by better access to finance for SMEs, in addition to improvements in the skills of loan officers and lending departments dealing with credit applications by SMEs.
The transition indicators range from 1 to 4+, with 1 representing little or no change from a rigid centrally planned economy and 4+ representing the standards of an industrialized market economy.
As key priorities for 2015, the EBRD report notes that further visible achievements with regard to the business environment are needed and that energy sector problems should be tackled vigorously. Further efforts are needed to reduce non-performing loans which at around a quarter remains among the highest in the region.
“The short-term outlook remains uncertain. Growth is likely to pick up modestly in 2014, with the clearing of a large sum of government arrears, but the downside risks are high as macroeconomic imbalances persist. In addition, the financial sector continues to be exposed to both domestic and external risks, while other macroeconomic policy buffers have been exhausted. As for 2015 some positive externalities are expected to be derived from Albania’s EU candidate status and the construction of the Trans Adriatic Pipeline,” notes the report.