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SME DEVELOPMENT IN ALBANIA AND THE PROGRAMS TO SUPPORT EXPORTS IN THE TIME OF CRISES.

Ministry of Economy, Trade & Energy in Albania. SME DEVELOPMENT IN ALBANIA AND THE PROGRAMS TO SUPPORT EXPORTS IN THE TIME OF CRISES. 3 February 2012 Economic Faculty, Tirana/Albania. Macro – Economic Indicators in Albania, Year 2008- 2010.

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SME DEVELOPMENT IN ALBANIA AND THE PROGRAMS TO SUPPORT EXPORTS IN THE TIME OF CRISES.

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  1. Ministry of Economy, Trade & Energy in Albania SME DEVELOPMENT IN ALBANIA AND THE PROGRAMS TO SUPPORT EXPORTS IN THE TIME OF CRISES. 3 February 2012 Economic Faculty, Tirana/Albania

  2. Macro – Economic Indicators in Albania, Year 2008-2010 • Economic growth:3,9% compare 3,3% in 09 and 7,9 in 08; • GDP per capita: 3900 USD; • Inflation: 3,6% compare 3,4% in 2008; • Unemployment: 13,49% compare 12,7% in 2008; • Contribution of private sector : 82% of GDP & 82% of Employment • Remitances:690 mln Euro, decrease by 27.5% compare 2008; or 7% of GDP compare 10.9% of GDP in 2008 • Contribution of SME sector : 73%of GDP & 71%of Employment • 99%of private sector is SME. • FDI, 826Mln Euro or 9,4% of GDP from 6,7% in 2008 • Exports 1,1 Miliard Euro or 12,2% of GDP increased 56% • Credit for private sector 39,6% of GDP compare 37,1% of GDP in 2008

  3. ACTIVE ENTERPRISES IN ALBANIA, year 2010 • Total number of active enterprises: 100,687 • 26,4% are lead from female • Micro (1-9) – 95.7 % • Small (10-49) – 3 ,5% • Medium (50-249) – 0.7 % • Large (+250) – 0.1 % 62% are self-employed New enterprises 2011 12,706 • 5% less active companies compare 2009 • 3,1% increased the number of employee compare 2009

  4. ACTIVE ENTERPRISES DURING THE YEARS

  5. SPREAD BY ECONOMIC SECTORS -2010 • The spread of SMEs according to economic sector: • Trade – 44.4% • Industry – 9.9% • Hotels, coffees, restaurants – 15.6% • Transport and communication – 10.3% • Other services – 13.9% • Construction – 4.2% • Agriculture and fishing – 1.7%

  6. GEOGRAFICAL SPREAD OF ACTIVE ENTERPRISES

  7. ASSESSMENT OF SME POLICY REFORMS • Ease of doing business in Albania, according to Doing Business 2012, Albania is ranked 82 out of 183 countries. (86 in 2008, 136 in 2007 year ); • National Register Center as one stop shop since Sept.2007 • National licenses Center as one stop shop since June 2009 • Reduction of time and cost for starting a new business. Now it is needed 5 steps ( 10 steps ) and 5 days ( 36 days); • E-Government: ( Public procurement, Business Registration, Tax Administration and Licensing); • Online service in tax declaration and payment; Large tax payers can declare and pay electronically VAT, Income tax, Social and health insurance tax and annual declaration of corporate tax. www.tatime.gov.al; • Online public procurements operational since beginning of 2009; • Information technology : e-signature, e-commerce. During 2007- 2010 period there is an increase of internet users, 15,3%, 18%, 32% & 51% ( source ITU);

  8. FISCAL REFORMS • The reduction of the corporate income tax : from 30% in 1999 to 25%, in2004, 23% in 2005, 20% in 2006-2007 and 10% since January 2008.Also,personal income tax is 10%; • In 2009 was ratified the law for the right of compensation to later tax obligations and contributions of social health insurance with the amount of VAT to be refunded; • Postpone of the VAT payment on machinery,equipment andraw materials, which in 2008 was over 12 monthsdepending on the investment cycle and the start of production; • Social security contribution from May 2009 is reduced to the level of 15%.

  9. DOING BUSINESS IN ALBANIA

  10. The credit according the years and sectors.% of total credit

  11. 1. Italian program for SME support with soft credit line The program aims to foster the economical and social growth of Albania, supporting the access of local SMEs to the credit system and enhancing the formal economy. The Program includes: • A Credit Line (25 million Euro) in favor of Albanian SMEs; • A Guarantee Fund (2,5 million Euro) to support the SMEs access to the credit system;

  12. Credit Line A 25 million Euro soft loan to finance the purchase, by Albanian SMEs, of goods and services of Italian origin, including: • Raw materials • Equipment • Technologies and relevant TA • Maintenance and spare parts • Industrial Licenses A maximum of 30% of the financing to each project could cover local costs.

  13. Credit Line - Eligibility Criteria All the Albanian SMEs and related projects, responding to the following criteria, can access the Credit Line: SMEs legally registered in Albania SMEs owned for at least 51% by Albanian citizens SMEs having an annual turnover not higher than 5 million Euro SMEs having not more than 250 employees Projects with a total requested loan amount ranging between 50,000.00 Euro and 500,000.00 Euro

  14. Credit Line - Priority Criteria SMEs considered as a priority: • Manufacturing companies • Export Oriented SMEs (export at least 50% of total sales) • New SMEs created by Albanian citizens resident in Italy • SMEs part of clusters or industrial zones/parks

  15. Credit Line - Priority Criteria Priority Projects /Sectors: Agriculture sector and agro food processing sector Renewable energies and energy efficiency/conservation projects Low environmental impact and pollution abatement projects Projects creating new job opportunities Projects localized in less developed area of the country (out of Tirana-Durres area)

  16. Credit Line - Lending conditions Applied Interest Rates: • Up to 5.5% annual interest rate for loans in EURO • Up to 8.5% annual interest rate for loans in LEK Repayment period: From 3 to 8 years. Grace Period (only interests paid): From 1 to 2 years.

  17. Credit Line - Small Projects • A maximum of 10% of the total amount of the Credit line could be used to finance start-up projects with a budget between 15,000.00 and 50,000.00 Euro; • Small Projects will benefit of 4 years repayment period including 2 years grace period.

  18. Implementation of credit line for SME • During the period 2009- Jan 2012 are financed 64 SME companies and distributed 14,3 mio Euro. • 20 projects are in the export field with 5 mio Euro

  19. Credit Line – Participating Banks BancaIntesaSanpaolo - Agent Bank of the Program • RaiffeisenBank 7 2,3 mio Euro • National Commercial Bank (BKT) 28: 5,8 mio Euro • International Commercial Bank (ICB) 11: 1,7 mio Euro • Tirana Bank 2 0,5 mio Euro • CREDINS 6 1,4 mio Euro • BancaItaliana di Sviluppo (BIS) 6 : 1,8 mio Euro • National Bank of Greece 0

  20. 2. Agreement of Cooperation 2010-2012, Italian credit line second phase • Italo-Albanian Agreement of Cooperation for the period 2010-2012, signed on 12 April 2010 provides for financial support of 51 mil (28 Mil. Million as soft loans, loans 20 mil as Swap and 3Mil.Euro as a gift) in order to support the three main sectors: • Financing Program for the Development of private sector with additional funds 15 Mio. EURO; • Agriculture and land management and 10 Mio. EURO; • 28.1 Mio. EURO social development Purpose: financial and non-financial instruments to facilitate access to credit to SMEs.

  21. Export according the years

  22. 3. Competitiveness Fund, “Cost share Grant scheeme” Competitiveness Fund, created by DCM no. 112 dated 21/02/2007, a fund of 25 million lek / year, estimated in 2007-2010 successful. 98 projects were approved, of which 18 run by women (about 18%).

  23. Geographical Distribution of grants

  24. Grant Scheme by Cost Sharing used for: Grant funds are addressed in response to the demands and needs of exporting companies, but also in respect of the requirements and procedures of the project and mainly based on:- Establishment of "Quality Management Systems" ISO standards.- "Certification" of the product according to international market requirements.- Conducting business missions from Albanian exporters- Conducting technology expertise to improve- Realization of market research- Participation in business activities as visitors or exhibitors- Promotions of companies, etc..

  25. Cost share Grant scheeme, 2010-2012 By decision no. 112 dated 17.02.2010 decided Creating Competitive Fund for 3-year period 2010, 2011, 2012 with a value of 28 million leks / each year. The main objective of this scheme is to support the Albanian exporting business in its efforts to promote and increase exports. specifically: • To provide financial support (funding) for exporters, sharing with them in 50% of project costs (up to 1 million leks), relating to initiatives for introduction in new markets or consolidating existing markets, meeting quality standards the production processes and product, the business performance of missions, promoting activities, etc. • To support and intensify what the company is able to do with its capacity, but adding "grant funds" company sources

  26. 4. Credit Guarantee Fund for export Through Decision 489, dated 25.07.2007. This fund is part of the state issues and guarantees that the cap is 200 million leks (or about 1.5 million Euro) and will continue to be used for a period of 6 years. Guarantees are given for two businesses in which a woman is.

  27. 5. Innovation Fund • The innovation fund is created by CMD No.667, dt. 28.09.2011 for the 4 years. The grant by 12 mil. Lek/year. • Innovation Fund to provide assistance in the form of direct subsidies, micro, small and medium-sized, up to 400,000 lek. Depending on the assessment for the project submitted by the applicant. The scheme covers from 30% to 50% of eligible costs of the project. Innovation fund can use for: a)Audit of innovation and technology, which aims to enable the applicant companies to assess their current positions and opportunities for their innovation profile and/or technological positioning, according to a competitive structure development; b) the internationalization of technology, which aims to enable enterprises to identify the applicant and inspect seeking to adapt technology

  28. Selection Criteria The selection criteria of the companies are: a)businesses are classified as micro, small or medium, according to Law No. 8957, dated 17.10.2002, "On small and medium enterprises", as amended. b) Have the headquarter and main factories manufacturing within the territory of the Republic of Albania. c) Produce in Albania products and/or services which are traded within and/or abroad. d) Propose and develop activities, in accordance with the policy of the Innovation Fund.

  29. Company need • need to be improved technologically, for activitiesproposed; • an estimate for the expected business benefits from improving, the basis of which will develop proposed activities; • a business plan or a project which has integrated the proposed activity. • Argue that assistance through the Innovation Fund will help increase economic activity beneficial to the subject. • Have skilled staff to implement appropriate and timely activities proposed. • are able to finance 100% of all project costs, proposed before the end of it. Implementation Agency is AIDA www.aida.gov.al

  30. . Thank you! Tefta Demeti, Head of SME & Business Policy Unit MINISTRY OF ECONOMY, TRADE & ENERGY E mail: tefta.demeti@mete.gov.al

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