By Axel Reiserer
€15 million risk participation facility will allow increased lending to eligible agribusinesses
ProCredit Bank Albania Sh.A (PCBA) has become the first financial institution in Albania to receive a €15 million risk participation facility under the new Albania Agribusiness Support Facility.
The facility is an innovative product that will enable PCBA to expand its lending to Albanian agribusinesses by supporting financing of up to €30 million equivalent in local and foreign currency.
PCBA is a mid-sized bank with a leading position in lending to small and medium-sized enterprises (SMEs) and agricultural clients. It is a member of the ProCredit Group, which is led by the Frankfurt-based parent company ProCredit Holding.
Agribusiness is a vital sector of Albania’s economy. It provides employment for more than 50 per cent of the population in rural areas and accounts for around 20 per cent of the country’s GDP. However, the sector remains underserviced by financial institutions, with loans to agribusiness accounting for only 2 per cent of total lending to the economy.
The new Albania Agribusiness Support Facility, launched by the EBRD and the government of Albania, is addressing this challenge by improving access to finance for local agribusinesses through dedicated credit lines or by sharing the risk of lending to the agribusiness sector. The government has made available up to €36 million to support the facility and the EBRD is providing up to €100 million in funding and risk-sharing facilities.
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 agribusiness SMEs 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.
Henry Russell, EBRD Director, Financial Institutions, Western Balkans, said: “We are very pleased to sign this important agreement today. It will free up much-needed finance for Albania’s agribusiness sector and contribute to closing the significant gap in available financing in both local and foreign currency. At the same time it will also support the expansion of ProCredit Bank Albania as an important lender to local SMEs, especially in the agribusiness sector.”
Adela Leka, spokesperson of ProCredit Bank Albania, added: “We know how important agriculture is for the Albanian economy. As a bank specialized on SMEs, we plan to support new investments by agricultural SMEs. We strive to address their challenges and to help them invest in modern technology, engage in energy efficiency projects, and expand their market share. We consider these as key factors for future development, not only for the individual businesses but also indirectly for the economy in which they operate.”
Since the start of its operations in Albania, the EBRD has invested more than €1 billion in over 70 projects in the country. The Bank is active in all sectors of the economy with a special emphasis on infrastructure and energy, where demand and potential are high. The EBRD’s strategic priorities for 2016-18 in the countries where it invests are re-energising growth, strengthening regional integration and addressing global challenges.