Promoting Economic Growth and Prosperity

CURRENT SITUATION
Continued macroeconomic stability and strong migrant remittances have helped Albania maintain in recent years a healthy economic growth despite the persistent energy crisis. However, Albania remains one of the poorest countries in Europe and its per capita income is among the lowest in the Balkan region. High unemployment, low levels of foreign direct investment, and a widening trade deficit are all cause for concern. While micro, small and medium enterprises are the driving force for Albania’s economic growth and job creation, performance has been hindered by the weak competitive capacity, limited access to commercial credit and the unfavorable business environment caused by widespread corruption, unfair competition, high costs of business registration and inconsistent application of fiscal laws and regulations. In addition, poor infrastructure (energy, communication and transportation), disputable property ownership, and weak rule of law discourage domestic and foreign investments.

PROGRAM OVERVIEW
USAID’s Economic Growth program promotes sustainable broad-based economic growth. It aims to address the constraints to private enterprise development, decrease trade deficit, increase FDI, create employment, and reduce poverty. USAID will achieve the program objective through strengthening the competitive capacity of private enterprises; increasing the access of MSMEs to credit; and fostering a policy environment that enhances business development, trade and private investment.

PROGRAM FOCUS

• Improving the capacity and environment for trade, investment, and financial sector development;
• Strengthening regulatory capacity for restructuring the energy sector and supporting the privatization of the distribution function of the Albanian Power Corporation;
• Increasing agricultural sector productivity and competitiveness;
• Improving private sector competitiveness through productivity improvement and workforce development.

SUCCESSES

• There were over 122,000 visits to the trade information website maintained by USAID-supported Albanian Center for International Trade in 2007.
• Sixty-three training sessions were conducted for 1,410 people to improve their trade and investment capacity. Assisted enterprises invested about $4.5 million in technological innovations and developed 35 organically certified products in compliance with international food safety standards.
• With USAID assistance, the capacity of the Bank of Albania now functions as a strong independent institution and a key internal anchor for economic policy making and macro-economic stability contributing to Albania’s impressive economic growth in recent years.
• USAID has strengthened risk management processes, improved the quality of research and statistics, contributed to the implementation of sound monetary policy and increased the ability of bank supervisors to efficiently and effectively inspect commercial banking activities. The Bank of Albania conducted 16 on-site examinations of the commercial banks to ensure sound management and stability of the banking system.
• Assisted firms had over $61 million of domestic sales and $17 of export sales in 2007.