TIRANA, May 19 – Credit to the key agriculture sector has slightly invigorated during the past three as a USAID-funded project facilitated about $15 million for Albanian farmers and agribusinesses.
“The program facilitated $14.8 million financing for Albanian agribusinesses, stimulated sale growth with $28 million, and generated 1,150 new jobs,” said Enio Jaà§o, the director of Creative Business Solutions which implemented USAID’s AgroCapital project.
The growth in credit to the agriculture sector, employing about half of the country’s population but accounting for only 20 percent of the GDP, is considered key for its future development.
Agriculture currently accounts for only 1.6 percent of credit to the private sector, being one of the most underfinanced sectors of the economy.
“Financing growth is vital for agriculture. We are especially happy to have turned the corner and been able to win over financial institutions and agribusinesses skepticism to invest in agriculture. With the EBRD and the Government of Albania Guarantee Fund of Euro 75 Million, not only more financing has been secured, but also more consultancy services for the Albanian farmers,” said Agriculture Minister Edmond Panariti.
A USAID official said reforms in Albania’s court and legal system will have a strong impact on agribusinesses.
“Enhancing the rule of law will have a significant impact in creating a more transparent, equitable, and predictable business environment which supports lending and access to finance,” said USAID Assistant Administrator Thomas Melia.
The European Union also views agriculture as a crucial sector for the development of Albania.
“We have been supporting Albanian agriculture since the early 1990s and continue that under the IPARD financing framework. For the next four years, the European Union has allocated Euro 72 Million for the Albanian agriculture financing and these are real investments not only for agriculture, but also Albania towards its EU integration,” said Jan Rudolph, the head of the economic section of the EU Delegation to Albania.
The Albanian economy grew by grew by 2.6 percent in 2015 but agriculture had a negative contribution to the GDP, likely affected by massive floods that hit the country in early 2015. For the whole of 2015, the agriculture sector, which is seen as key to compensate for the pre-crisis construction and remittances boom, contracted by 0.87 percent, according to state statistical institute, INSTAT.
With the remittances-fueled construction boom almost over, more and more Albanian enterprises are turning to agriculture as a growth opportunity, engaging mostly in egg, fruit and vegetable production, a considerable part of which are destined for exports.
The number of new businesses engaged in agriculture, forestry and fishing quadrupled in 2014 when it rose to 1,031, up from only 259 in 2013, according to INSTAT.
Albania continues remaining the most agriculture-based economy among the seven enlargement economies, according to a report published by Eurostat, the statistical office of the European Union.
Agriculture, a sector which employs around half of the country’s population, is one of the least productive sectors in Albania’s economy. Although it has been the sector with the most stable growth in the past six global crisis years, the Albanian economy continues remaining largely dependent on agriculture imports which are around six times higher compared to exports.
Experts say the small size of farms, lack of appropriate management of land and agricultural infrastructure and technology make the Albanian agricultural sector more problematic compared to other countries in the region.
Agriculture is also one of the most climate-sensitive of all economic sectors, and without a clear plan for aligning agricultural policies with climate change, the livelihoods of rural populations are at risk, says the World Bank in a publication over reducing the vulnerability of Albania’s agricultural systems to climate change.
The early 2015 massive flooding in south-western Albania affected some 400,000 people and thousands of hectares of crops, causing damage of about Euro 110 million, a report shows.
