Balkan habitually was referred to as ‘the region that produces more history than they can consume’. Whereas European Union is referred to as ‘a unification of nations that began from economic cooperation’. There is a magical formula of co-existence. Economic cooperation. That magic combination is the best package Europe can pass to Balkans.

Balkan countries share a common history and often they speak the same language, particularly when it comes to agriculture. The latter is one of the most important sectors for the economy and employment in the region. Agriculture constitutes 17% of the GDP of these countries. Statistics show that agriculture in Albania and Kosovo accounts for a quarter of the GDP. The weight of agriculture in Serbia’s and Bosnia’s economy is an average of 1/5th, 11 percent in Macedonia and so on. All of the above mentioned figures are way too high compared to the contribution of agriculture into European Union’s GDP which stands at an average of 1.7%.

Agricultural enterprises are the keystone for Balkan economies playing a very important role. Nevertheless they face hardships and lack of financing.

Balkan’s Agriculture momentum

A Balkan tour. Six countries. Profitable and gainful cooperation. In focus; agriculture.

The EBRD President, Sir Suma Chakrabarti during his recent Balkan tour re-affirmed the EBRD’s commitment to the process of regional integration among the six Western Balkans countries, Albania, Kosova, Montenegro, Macedonia, Bosnia and Herzegovina and Serbia.

The EBRD is a leading investor in the region and last year alone invested more than €1 billion in various projects in the Western Balkans ranging from energy efficiency to infrastructure and from support for financial institutions to agribusiness.

Albania Agribusiness Support Facility- Historic agreement

During the The EBRD President visit to Albania the government and the European Bank for Reconstruction and Development (EBRD) have launched the Albania Agribusiness Support Facility on Tuesday – an innovative financing facility for local agribusiness companies.

Six financial institutions expressed their intention to join the programme with the signing of a Memorandum of Understanding, including Raiffeisen Bank of Albania, Intesa Sanpaolo Bank Albania, Societe Generale Albania and ProCredit Bank Albania, as well as the two microfinance institutions Fondi Besa and NOA. Other banks are expected to join the facility in the future.

In an interview for AgroWeb, Christoph Denk the Head of the EBRD Tirana Office has stated that ‘The main idea of the EBRD’s Agribusiness Financing Facility is to unlock financing to agri-businesses by sharing the credit risk among three parties: (1) The commercial bank or microfinance institution (2) The Government of Albania through the National Guarantee Fund, and (3) the EBRD. Specifically, the idea is for the Government of Albania to provide a certain amount of budgetary resources as a guarantee, or a so-called first loss cover. This is to protect a portfolio of agri-business loans from losses that may occur. In addition to this, EBRD will also provide an additional guarantee to share the risk of the agribusiness loan portfolio with the bank or the microfinance institution.

CEO of Intesa Sanpaolo Bank, Mr. Silvio Pedrazzi (on the left) and Ms Adela Leka, Spokesperson of the Management Board of ProCredit Bank Albania (on the right) during the signing ceremony with six financial institutions. Photo: WebLibrary

At the agreement ceremony, Albania’s Prime Minister Edi Rama said that: “This programme will be of added value for the development path we have chosen. We will switch from subsidised and subsistence farming towards an agriculture of investments and sustainable development. It has not been an easy process to progress from an innovative idea of our government to the agreement we are signing today. I want to wholeheartedly thank the President of the EBRD, who from day one has been a firm supporter of Albania and of our partnership. His role has been fundamental in reaching this agreement and creating this instrument – a new and unknown tool, at least in our region.”

EBRD President Sir Suma Chakrabarti highlighted, “We are very pleased to sign this important Memorandum of Understanding which will support unleashing the potential of Albania’s agribusiness sector. The Albania Agribusiness Support Facility is an excellent example of how a coordinated approach by several actors can produce a whole that is greater than the sum of its parts. We are particularly grateful to the government of Albania for its commitment and the financial sector for its support.”

The government of Albania has made available up to €36 million from its budget over three years to support the facility and the EBRD is providing up to €100 million in funding and risk sharing facilities.

The contribution by the EBRD and the government of Albania will facilitate lending by the participating financial institutions of up to €180 million growing to a potential €300 million in loans to the sector in foreign and local currency, including other complementary initiatives. With this contribution by its government, Albania joins the EBRD donor community.

Agribusiness is a vital sector of Albania’s economy, providing employment for more than 50 per cent of the population in rural areas and accounts for around 20 per cent of the country’s GDP. However, the sector remains underserved by financial institutions, with loans to agribusiness accounting for only 2 per cent of total lending to the economy.

The Albania Agribusiness Support Facility is addressing this challenge by enhancing access to finance across the country. In addition to financing instruments, the framework also includes technical assistance for capacity-building at participating financial institutions to expand their lending to the sector as well as advisory services for agribusiness borrowers through the EBRD’s Advice for Small Businesses programme to assist small and medium-sized enterprises of the sector to enhance their performance in a wide range of areas and improve their bankability. The EBRD is also continuing to support Albanian institutions with technical assistance for capacity building and with specific reform initiatives in coordination with other development partners.

The Balkan Tour started from Kosova

EBRD President Sir Suma Chakrabarti visited Kosovo on July 25, at the start of a wider regional tour of the Western Balkans.

During the meeting with the President of Kosovo, Hashim Thaci, President Chakrabarti said: “The EBRD as a development bank and I as its President are committed to supporting all Western Balkans countries, including Kosovo, both in regional integration and on their European path. We started an investment and policy-focused dialogue between the region’s leaders two years ago at the EBRD’s inaugural Western Balkans summit, and I am proud to see that the process of regional cooperation in this new format has gained momentum, under the leadership of the EU. The EBRD welcomes the Kosovo authorities’ active participation in regional cooperation.”

EBRD signed two agreements with local banks in Kosova, both aimed at helping local private sector businesses. One agreement, providing up to €5 million for trade finance and a credit line of €1 million for energy efficiency and small-scale renewable energy projects was provided to BPB, one of the two majority locally owned banks in Kosovo, where the EBRD is also a minority shareholder.

There is a lot of untapped potential in Balkans. Unlock financing is the answer./