For more than a decade now, banking experts have considered agriculture as a sector with great potential to boost lending. In fact, agriculture is probably the most under-credited sector of the Albanian economy, given its contribution to GDP and employment. But despite the banking sector’s efforts to boost business in the area, lending for agriculture remains modest.
In the first half of the year, loans for the agricultural sector amounted to 4.5 billion leks, down 15% on the same period a year earlier. Agriculture currently accounts for only 1.4% of the total loans issued by banking sector.
Lending is conditioned by the sector’s weak ability to absorb financing and this is directly linked to low competitiveness, lack of expertise and problems with land titles.
Crediting has not improved by the various incentive schemes launched by the government and development banks either. In 2016, the Albanian government and the European Bank for Reconstruction and Development introduced the ambitious scheme of financial guarantees for farmers. A guarantee fund of 75 million euros would provide farmers with access to funds from commercial banks amounting to around 300 m euros. But looking at the figures, the results of this scheme have been modest and nothing has changed in terms of doing more to credit the agricultural sector. TemA