PRESS RELEASE
Bank of Albania organises the Round table: “Lending to Agricultural Sector, Identifying the pathways and establishing the instruments for a qualitative progress in lending to agricultural sector”

On 6 February 2025, the Bank of Albania hosted the Round table: “Lending to Agricultural Sector: Identifying the pathways and establishing the instruments for a qualitative progress in lending to agricultural sector”.  This Round table was organised under the auspicious of the Governor of the Bank of Albania, Mr Gent Sejko, and was attended by the Prime Minister of the Republic of Albania, H.E. Mr. Edi Rama, the Minister of Agriculture and Rural Development, Ms Anila Denaj and the Minister of Finance, Mr Petrit Malaj. The meeting aimed to bring together the executives of the banking system and representatives of agribusiness companies, who contribute to this field.

The sharp economic and financial development of Albania in recent years provides an opportunity to reflect on the structural issues of the economy, aiming for a more rapid economic growth, more harmonious development across economic sectors, and a more balanced distribution of the economic growth.

The simulation of agricultural sector is crucial for the economic development and the improvement of the country's well-being through a faster and more comprehensive lending by the banking industry remains of particular importance.

At the beginning of his speech, Governor Sejko stated that the Bank of Albania and the Albanian Government aim, through this round table, to identify the obstacles faced by agricultural sector lending, as well as the appropriate ways and instruments to address them.

The Governor added that despite the many challenges we have faced, the Albanian economy has performed positively over the course of past decade. In the past ten years, the volume of economic activity in real terms grew by 39%, while the average income per capita increased by 58%. The Albanian economy, in nominal terms, have grown from an economy of around EUR 10 billion in 2014 to an economy of almost EUR 25 billion in 2024.

However, Mr Sejko pointed out that these positive development trends are not uniform everywhere. In more concrete terms, the agricultural sector displays the weakest performance among the major sectors of the Albanian economy, caused by structural problems, such as land fragmentation; poor technological infrastructure; low horizontal and vertical integration between farmers, markets, and other sectors of the economy. In the same vain, credit to agriculture sector accounts for less than 2% of bank credit to businesses.

He also added that this progress, still falling short of the desires and needs that the agricultural sector has for credit, reflects both the reality of the risk associated with lending to this sector, due to the nature of the activity, its structural problems, the lack of collateral, and the high costs of lending. “However, increasing your attention to its financing is a matter of strategic importance for the development of Albania. Studies conducted in this area have evidenced that lending to the agricultural sector has twice the impact on poverty reduction compared to lending to other sectors of the country said the Governor.

In this context, the governor highlighted that the recent initiative of the Bank of Albania to approve and implement a Financing Program for micro, small, and medium-sized enterprises offers an opportunity to open a new chapter in lending to agricultural sector.

This program responds to the concerns and demands of businesses itself, as well as the bank’s analyses, which observe an uneven lending performance among businesses analysed by size. Although micro, small, and medium-sized enterprises are the backbone of the Albanian economy, generating more than 80% of added value and employing nearly 80% of the workforce in the country, this sector is four times less financed than large enterprises and corporations. This phenomenon results from many factors, some of which we have tried to address through this program.

The Bank of Albania has made available a fund of ALL 25 billion to support the financing of micro, small, and medium-sized enterprises. This program, which will be implemented through commercial banks, offers the possibility of significantly reducing the cost of credit for these enterprises, which could reach up to 2%, but in any case, will not exceed the level of 3.5%, in turn enabling them to invest in physical assets, capital equipment, or technological platforms that serve to increase productivity. Also, the Governor also clarified that the fund will be made available to commercial banks, which – through their selection process and at their own risk – will channel it into loans granted for enterprises.

This initiative represents an important opportunity to boost lending to small and medium-sized enterprises in general, and to those operating in the agricultural sector in particular. This initiative can be further supported by risk-sharing programs from the government, which I believe will be discussed further in this roundtable.

Mr. Sejko, thanked the participants for their contributions and discussions, and stated that the conclusions of this round table will serve to compile a work agenda, which will establish the premises for a new approach towards lending to agriculture, in turn enabling a qualitative step toward the further development of this sector.