From left: Suma Chakrabarti, EBRD president; Henry Russel, EBRD director Financial Institutions for Western Balkans, Moldova and Ukraine; Arben Ahmetaj, Albania’s minister of finance and Edi Rama, the Prime Minister of Albania.
The agreement brings together the government of Albania, the EBRD and the banks: 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.
The Albania Agribusiness Support Facility will contribute to enhance access to financing for local agribusinesses by providing dedicated credit lines or by sharing the risk of lending to the agribusiness sector with partner financial institutions. The government of Albania has made available up to €36 million ($39 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.
Strengthening local enterprises is a key priority for the EBRD as it aims to support the countries where it invests to re-energize growth. Limited access to finance remains a key impediment for the development of a strong and flourishing private sector.
Agribusiness is a vital sector of Albania’s economy, EBRD said. It provides employment for more than 50% of the population in rural areas and accounts for around 20% of the country’s gross domestic product (GDP). However, the sector remains underserved by financial institutions, with loans to agribusiness accounting for only 2% 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 program 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.
“We are very pleased to sign this important memorandum of understanding which will support unleashing the potential of Albania’s agribusiness sector,” said Suma Chakrabarti, EBRD president. “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.”
Albania’s Prime Minister Edi Rama said, “This program will be of added value for the development path we have chosen. We will switch from subsidized 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.”
The EBRD to date has invested more than €1 billion in over 70 projects in the country, EBRD said. The bank is active in all sectors of the economy with a special emphasis on infrastructure and energy, where demand and potential are high. The EBRD’s strategic priorities for the period 2016-18 for its countries of operations are: re-energizing growth, strengthening regional integration and addressing global challenges.