“Lending and financing the Albanian agricultural sector”
On January 26, 2022, the Governor of the Bank of Albania, Mr. Gent Sejko, participated in the activity organized by the Ministry of Agriculture and Rural Development on: “Lending and financing the Albanian agricultural sector”.
The activity was opened with welcome and opening speeches by: the Minister of Agriculture and Rural Development, Ms. Frida Krifca; the Minister of Finance and Economy, Ms. Delina Ibrahimaj; the Head of Albania of the European Bank for Reconstruction and Development (EBRD), Ms. Ekaterina Solovova; the Chairman of the Supervisory Board of AAB, Mr. Bledar Shella; the Governor of the Bank of Albania, Mr. Gent Sejko; and the Prime Minister of the Republic of Albania, HE Mr. EdRama.
This meeting focused on fostering discussions on lending to the agricultural sector in Albania and launching the initiative on the Facility for Supporting Agribusiness and Tourism in Albania.
In his address, Governor Sejko pointed out that despite considerable progress in recent years, the Albanian agricultural sector as a whole and the branches related to it – agro-tourism and agro-industry – are still far from the full use of the resources and potentials at their disposal.
The Governor emphasized that notwithstanding the developments in the agricultural sector which can be complex, support with funds and loans to the agricultural sector deserves greater attention from the banking sector.
“In concrete terms, the agricultural sector only benefits from 1.7% of the financing that banks grant to private companies. This ratio has not changed over the last decade, despite the novelties that the banking system has brought to the credit market, while it remains far from reality. needs of this sector” – said Mr. Sejko.
The low lending rate is linked to the high risk – both real and perceived – that investing in agriculture entails, although this risk is being reduced. On the other hand, promote agro-tourism and support agro-industry, develop the value chain and the profitability of investments in agriculture.
Next, Governor Sejko commended the Albania Agro-Industry and Tourism Support Facility (AATSF), which includes the joint contribution of the Albanian government and the European Bank for Reconstruction and Development (EBRD). He added that this facility brings a significant contribution, of about 150 million euros, in both forms: direct loans and guarantee of support for loans.
With this in mind, the Bank of Albania believes that it is time for the banking sector to pay more attention to the agricultural sector. Albania has about 24% of its territory in agricultural land and offers still totally untapped possibilities in the fields of agro-tourism and agro-industry. This potential should be viewed as an opportunity for joint growth for agriculture and banking, as well as an opportunity to diversify the sources of credit risk on your balance sheets.
At the end of his speech, the Governor underlined that without affecting its soundness indicators, the banking system will be able to position itself as an actor supporting development. This sector must increase its attention and its capacities for financing, analysis and advice, while fulfilling its mission for the sustained growth of the country.