Agriculture is starting to become a cool thing in Albania. That cool that the European Union and Micro Finance Institutions have gathered their forces and give 22 million Euros in loans through micro financing for Albanian farmers and young people of 18-35 years old which want to invest in the sector.

Even though agriculture has long had an image problem, with the majority thinking of it only as back-breaking labor, without an economic pay-off, and little room for career advancement, the sector is proving to be a major force to boost the Albanian economy.
50% of the labor force is in Agriculture and they produce 18% of the GDP. So, if you happen to be young and a farmer you should see agriculture as your next big thing and live from hand to mouth.

The new guarantee agreement of The European Investment Fund (EIF) with the non-bank microfinance institution BESA will cover a loan portfolio of ALL 3billion (c. €22million) for micro-borrowers, targeting in particular the agribusiness sector and youth entrepreneurial activity. More than 5,000 micro-borrowers with limited access to finance are expected to benefit from this transaction.

As we know by fact that access to credit is severely restricted for a large part of the rural population, mainly because banks tend not to think that the economic and financial preconditions are met to expand their portfolio of agricultural loans. It’s too big of a risk to them.

“The agriculture sector is heavily underfinanced. The Government only this year is giving 15 million of Euros in subsidies for Albanian farmers. The problem is where we are going to get additional money to help farmers? Micro Financing is one the solutions”, said at the MFC annual conference the Minister of Agriculture, Edmond Panariti, stressing the urgent need to increase the lending in the sector.

In the past years microfinance has mushroomed from the small private initiatives in the early ’90 to be recognized now as part of the financial markets thanks to the support of donors and the serious involvement of the government.

Albanian microfinance focuses on the agricultural sector and offers personalized loan products adapted to any type of seasonality or production and business cycle. It reaches more than 10% of the rural population through lending to micro and small Albanian farms.

According to Zana Konini, head of FED Invest board the micro finance institution have injected 1 billion Euros in the Albanian economy since their started to operate back in the 1992. “We have a portfolio that goes to 110 million Euros a year and we have surpassed the time of micro financing as a mean of survival”, Konini said.

Paneli shqiptar diskuton mbi potencialet dhe pengesat e financimit në bujqësi. (Nga e Majta). Deniz Deralla- Banka e Shqipërisë, Edmond Panaritit- Ministër i Bujqësisë, Bashkim Sykaj-Ministria e Ekonomisë, Enio Jaço- CEO Creative Business Solutions.

One of the advantaged of the microfinance sector the fact that it extends credit and saving services to a segment of the population that lives in the most distant areas of the country and cannot be reached by other, bigger financial institutions.

Although some businesses will inevitably fall by the wayside, those that flourish and grow are likely to have better management and better long-term prospects than they would have without the support of microenterprise programs.

For every loan from micro financing 1.4 new jobs are created.

For Enio Jaço, Executive Director of Creative Business Solution, which in collaboration with USAID has been supporting Albanian farmers to get access to financing through AgroCapital project, the agriculture sector is a huge potential for Albania and should be seen with priority.

“Albania’s agriculture has a high potential of growth due to ideal weather conditions, agro tradition and geographic location. Competitive labor force and government priority make agro investments very attractive and there is constant demand from European and global markets. But unfortunately Agriculture gets only 4% of all financing”, said Enio Jaço in his remarks, stressing that Micro Finance institutions must have smart products that capture micro and rural needs including grant investments.

The financing need of local economy remains still a big challenged due to the problems related to property and the level of informal economy.
Mr. Deniz Derralla, Director of the Banking Supervision in the Bank of Albania emphasized the importance of the micro financing institutions and guaranteed maximum support from the Central Bank for these institutions.

“Micro financing is not an easy job. I come from that sector and I know how hard it is, but it should not loose it’s social purpose, of helping the poor to get the financing, banks are not willing to give”, said Deralla.

Despite the low financing agriculture is by fact the backbone of the Albanian economy, trying to power ahead despite the hurdles of lack of financing with the premises to be the sector that will boost the most the Albanian economy. /