By Axel Reiserer
Local farmers and agribusiness companies to benefit from fresh funds
Intesa Sanpaolo Bank Albania has joined the Albania Agribusiness Support Facility (AASF) to increase local farmers’ and agribusiness companies’ access to finance.
The EBRD is providing unfunded risk participation of €25 million. This will free up to €50 million in loans to be extended by Intesa Sanpaolo Bank Albania to the agribusiness sector. This portfolio of loans will be supported by a first-loss risk cover provided by the government of Albania.
In addition, technical cooperation funds will be available to support the bank to develop new financial products that meet the needs of the local agribusiness sector.
Agribusiness is a vital sector of Albania’s economy. It provides employment for around 50 per cent of the population and accounts for around 20 per cent of the country’s GDP. However, the sector remains underserved by financial institutions, with loans to agribusiness accounting for only 2 per cent of total lending to the economy.
The AASF, launched by the EBRD and the government of Albania last year, is addressing this challenge by improving access to finance for local agribusinesses through dedicated credit lines or by sharing the risk of lending with participating financial institutions. The government has committed to make available up to €36 million over three years to support the Facility and the EBRD is providing up to €100 million in funding and risk-sharing facilities, which will enable an additional €80 million of investment by the participating financial institutions.
Intesa Sanpaolo Bank Albania is a fully owned subsidiary of Intesa Sanpaolo Spa and the fourth-largest bank in Albania. The bank has a strong regional network of branches which will help AASF to reach rural clients. Intesa Sanpaolo Bank becomes the fifth financial institution to join the Facility after ProCredit, NOA, Fondi Besa and Société Générale.
Matteo Colangeli, EBRD Head of Albania, said: “The signing represents a significant milestone in the implementation of our Facility in support of Albania’s agribusiness. We now have five participating financial institutions committed to step up their lending to the sector under our Facility and expect an acceleration in investments over the coming months. Strengthening the competitiveness of the agribusiness sector will generate sustainable growth in the Albanian economy, an objective to which we are firmly committed.”
Silvio Pedrazzi, CEO of Intesa Sanpaolo Bank Albania added: “This agreement will enhance the development of sustainable financing in the agricultural sector, providing a viable and continuing line of business credit. We commit our resources to develop, launch and implement the Facility, working with the EBRD and its appointed experts in being able to deliver even better customised products and services for this specific sector where we have focused for the past three years. This will include all clients’ categories such as: corporate, small and medium-sized enterprises, small businesses, sole proprietors, or any other legal entity formed under the laws of Albania, engaged in one of the wide range of agribusiness activities such as primary agriculture, agri-equipment, logistics, service providers and agri-processing.”
In addition to financing instruments, the framework also includes technical assistance to help financial institutions enhance their lending, as well as advisory services through the EBRD’s Advice for Small Businesses that will help small and medium-sized agribusiness enterprises to develop their performance in a wide range of areas and improve their bankability. The EBRD is also continuing to support the Albanian institutions with specific activities in favour of sectoral reform in coordination with other development partners.
Since the start of its operations in Albania, the EBRD has invested more than €1 billion in the country. The Bank is active in all sectors of the economy, with a special emphasis on infrastructure, energy and SME development, where demand and potential are high. Under the EBRD’s new transition concept the Bank aims to promote the six transition qualities of resilience, integration, inclusion, “greenness”, good governance and competitiveness, which are key elements of successful and sustainable market economies.