Agriculture Ministry pledges more public funding, but says private sector should also contribute more.
TIRANA, Jan. 3 – Albania’s minister for agriculture, Genc Ruli, says the government is looking for ways to increase credit for agriculture and rural economic activity, a sector that in Albania has mostly been served by micro-credit organizations.
The government wants to nudge these organizations to lend more.
In addition to public funds through various support schemes for agricultural and rural development, which the government plans to increase, Mr. Ruli said private micro-finance institutions could also play a very important role.
So Mr. Ruli held a consultative meeting in 2009’s last few days with representatives of micro-credit associations to discuss the difficulties the agriculture industry faces in obtaining loans.
“Based on your several years of experience, let’s try to identify together what can be done to make it easier for farmers to get micro-credits to further expand their agricultural activities,” Mr. Ruli said at the meeting.
Two thirds of Albania is tied to agriculture and 50 percent of the jobs in the country are either directly or indirectly associated with agriculture.
And although in recent years banks have begun to enter the micro-finance market, they have spread very little in rural areas, according to Mr. Ruli.
The problem is that even the micro-credit that exists today covers only 10 to 15 percent of the demands of rural enterprises.
In addition to high levels of interest in getting loans, rural businesses face other challenges in getting credit, such as a lack of the required amount of collateral, the terms and conditions of credit payment don’t meet the business cycle of agricultural businesses, and they have cash flow problems in addition to a higher level of risk compared with urban businesses.
“Increasing competition and market access and diversification of the rural economy, along with improving the quality of life in these areas, constitute some of the main objectives of government’s rural development during this mandate,” Mr. Ruli said.
