Albania Credit Guarantee Scheme Assessment
Micro, small, and medium enterprises (MSMEs) in Albania are significant contributors to the economy. In 2018, according to the Albanian Institute of Statistics (INSTAT), 99.8 percent of active enterprises were MSMEs, employing 79.8 percent of the w...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/907601595607606723/Albania-Credit-Guarantee-Scheme-Assessment http://hdl.handle.net/10986/34322 |
| Summary: | Micro, small, and medium enterprises
(MSMEs) in Albania are significant contributors to the
economy. In 2018, according to the Albanian Institute of
Statistics (INSTAT), 99.8 percent of active enterprises were
MSMEs, employing 79.8 percent of the workforce and realizing
around 69 percent of value added. At the same time, the MSME
sector is generally characterized by high informality
(especially in agriculture), limited availability of
collateral, and low levels of financial capability. Limited
access to finance, particularly bank credit, poses a
challenge for MSMEs in Albania. MSMEs can only reach their
full potential if they obtain the finance necessary to
start, sustain, and grow their business. Albania’s financial
sector ranks at 102nd place out of 141 countries in the
World Economic Forum 2019 Global Competitiveness Report.
Credit to the domestic private sector represents only 33
percent of gross domestic product (GDP) compared to above 50
percent in regional peers, reflecting very low levels of
financial intermediation. MSMEs – the backbone of the
Albanian economy – face significant constraints in accessing
finance, with 16 percent of small and 34 percent of
medium-sized enterprises reporting access to finance as a
major constraint in Albania. The overall MSME finance gap in
Albania is estimated at 9 percent of GDP. The Albanian
banking sector is extremely liquid and prevailing interest
rates are low; however, Albanian banks are reluctant to lend
to MSMEs as they perceive the sector as risky and there is a
limited secondary market for movable and immovable
collateral. Improving access to finance for MSMEs in the
country must be tackled in a holistic and strategic manner,
addressing supply, demand, and enabling environment aspects. |
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