The Embassy cooperates with Rabobank and FED Invest in ambitious plan for rural economy in Albania
Approximately 40% of all 2.8 million citizens of Albania live in the countryside, and amongst them a vast majority cultivates the extremely fertile soil for a living. The development of the rural economy in Albania, and the improvement of living standards of the rural population are therefore of great importance.
For those not familiar with agriculture in Albania: the tomatoes, peppers, onions, cucumbers, pomegranates and grapes are of incredible taste and produced in an entirely organic way. In short, it’s a sector where opportunities are up for grabs.
Therefore, a new project has been initiated by the Dutch Ministry of Foreign Affairs, Development Facility European Fund for South East Europe (EFSE), Rabo International Advisory Services (RIAS) and the Albanian FED Invest. FED Invest is actually the equivalent of Rabobank, it is a new Albanian cooperation bank focussing on agriculture. The intention of this Public Private Partnership (PPP) is to make a next step in enhancing agricultural business in Albania. The project is called “Enhancing financial services to contribute to the economic development of rural Albania”. The parties officially signed the project at the Dutch Embassy in Tirana on Thursday 22 September.
No more money in an old sock
Albania’s economy continues to grow, but in the last years this growth has slowed down. Since Albania is still one of the poorest countries in Europe, initiatives like these are welcomed with open arms. Approximately 38% of the population older than fifteen years has a bank account at a formal financial institution, whereas only 10% of consumer credits are provided through these institutions. This means that a vast majority of the population is still in no way involved with electronically regulated financial services. This is the main reason these parties are starting from the bottom: providing rural inhabitants with a bank account. The days of keeping money in an old sock under the bed are behind us, however nostalgic those may be. In order for the rural economy to flourish, people are expected to regulate their money flows electronically. This project will help individuals in better managing their finances, which should result in increased security for individuals and micro, small and medium enterprises. Also, the capacity to provide loans to rural inhabitants will arise, which should result in a more efficient and mobile way to set up economic activities.
Albania as trendsetter
The Embassy is a member of the Program Advisory Committee, overseeing the overall progress of the program and providing an advisory role. The Embassy has been involved in several Dutch financed agricultural projects in the last couple of years, so we can share our experience. One particular example is a project with the “Lushnje group”, which represents a group of vegetable growers that drafted a plan for improving access to finance in these sectors and took part in a mission with the objective to assess the seeds-, vegetables- and dairy sector.
The actual implementation of the project will be done by FED Invest, with technical assistance of RIAS and EFSE, as part of the PPP framework agreement between The Netherland’s Ministry of Foreign Affairs and RIAS. An interesting feature of this project is that Albania will be a trendsetter: the cooperation with FED Invest has convinced Rabobank and the Worldbank to design a worldwide partnership to support financial cooperatives in rural areas.
Thus, the conditions for a prosperous agricultural sector in Albania are present, and now by means of this financial inclusion project the foundation has been laid to actually set in motion this development. The seeds have been planted, it’s time to harvest.