> EBRD (European Bank for Reconstruction and Development):
Albania
Generating Growth in Europe – The EBRD’s Role By Suma Chakrabarti
Foreign direct investment in emerging Europe is increasingly integrating local March 2013 firms to global supply chains. Evidence shows that foreign banks increased access to finance and the efficiency of local financial systems in the EBRD region. The EBRD is one of the largest investors in the private sector in Albania. Its At a glance Emerging needs cross-border finance. While the EBRD strongly promotes main areas ofEurope focus are supporting the financial sector and small-medium production enterprises, improving infrastructure, and developing natural of operations signed the development of local deposit bases, many countries inNumber our region will need resources. The Bank is also engaged in policy dialogue with the Albanian 63 access to foreign savings for some government, with the potential to invest in key time. public sector projects, along with the implementation of numerous donor-funded projects in the country.
ive years since of the global economy Highlights 2012 plunged into the deepest crisis for
F
decades, growth and of recovery remain The Bank signed a total 12 projects elusive. Thus the pursuit €69 of renewed in Albania in 2012, totalling million, growth has become the 70 pereconomic cent of which were in the challenge of our time. private sector.
Net cumulative business volume
€702 million
market access lowers the costs of innovation and Total project value exporting. Crucially, trade integration highlights 13.3 MW, these utilities will generate upthe importance of local economic institutions. to 66.2 GWh of electricity per year, andTechnology adoption is unlikely in environments property disbursements rights and an unstable Cumulative help offset over 45,000 tonnes of CO2 with weak business climate.
“In Europe at the heart of the debate on how to reignite growth is integration.” annually.
In Europe at the heart of the debate on how to In the transport sector, the EBRD reignite growth is integration. Sceptics point to provided additional financing of crisis. the contagion effect exposed by the Euro €7.5 million for the completion of the – Another example – reaching beyond Europe isnew the road rapid between spread of the mortgages crisis theUS cities of Levan of 2007 through the highly integrated global and Vlore in south-western Albania. financial system turning it into an international The road was open to the public in July credit crunch.
€2,524 million €590 million
flows. The result was a closing of the gap with In 2012, the Bank continued to supportThis also applies to finance. Prior to 2008, Portfolio the West which the EBRD has been proud to policy makers often viewed cross-border and the Albanian sector bygoods, providing promote. It was not financial only the free flow of multinational banking as a natural element of funding to of micro-credit but long-term also the establishment an institutional economic integration and a driver of growth. framework that enabled with the the Evidence shows that foreign banks increased institutions aimingconvergence, at increasing Number of active operations EU role as anchor. Today, 12financial of these countries are access to finance and the efficiency of local of non-bank institutions, members of the European Union and Croatia will financial systems in the EBRD region. It is supporting their lending to SMEs and join later this year. therefore universally accepted that financial 2012 and has significantly improved improving corporate governance and development and economic development go Operating assets accessibility in the Riviera. credit management The hand-in-hand. In the face of that, it Albanian would be easy to turn Integration was the driver ofprocedures. change. So, where one’s back on integration and retreat inwards, did Bank it to runcommitted out of steam?aWhen 2007 credit €5.0the million small To improve the safety the power precisely the response whichofbrought depression crunch it was Europe that suffered as credit much Given this background, policymakers had little andhit, medium-sized enterprises sector share ofofportfolio infrastructure the Wars. BankBut signed a is that as anywhere. The Euro was meant to build on the doubt, ifPrivate between the two World the truth any, about the benefits integration. line to Veneto Banca, €1.3 million credit integration isn’t the problem. The realKESH’s problem is success of the single market, another step down Just as in the Asian crisis of 1997, this belief has €12.7 million loan to support €1.1But million line to been challenged but it remains true. Emerging that integrationplan has not enough and its the line road to of NOA, integration. it wascredit incomplete, investment forgone the far safety upgrade Fondi Besa and €1.0 million credit line Europe to quality has been insufficient, in particular in the equipped with a common monetary policy but needs cross-border finance. While the at the Komani hydropower dam, the financial sector. not Credins a common fiscal policy. As a result some EBRD strongly promotes the development of Leasing. largest hydropower plant in Albania. countries have been able to rack up huge debts local deposit bases, many countries in our region This project is part ofintegration an overalldelivered andIn thedown natural resources the From 1945 onwards, drag the whole Eurozonesector economy. will need access to foreign savings for some time. economic gains.programme In Europe, it was an engine for investment co-financed by EBRD extended the second tranche In November 2012, we at EBRD announced growth. The European Single Market which came Emerging Europe felt the pain – even though a new Joint Action Plan with the European the World Bank, KfW and SECO. The of €19.2 million to Bankers Petroleum into being in 1992 serves as a prime example, many countries are not members of the Euro Investment Bank Group and the World Bank EBRD projects 2008-12 EBRD continued to support private to support in the remediation and both with its achievements and its shortcomings. – through the import of financial instability Group Volume which will more than EUR30 billion (€see millions) Number of projects sector investment in renewable redevelopment of the Patos-Marina channeled to emerging Europe in the next two After the Iron Curtain came down in 1989, and rapid deleveraging. West European banks 120 12 energy through Western Balkans oilfield, largest in Albania. In the integration in Europethe intensified rapidly. active in the the region cut back their lending and years, at a time when the pains of Eurozone bank Sustainable Energy Direct Funding construction materials sector Bankdeleveraging may be felt at ever greater scale. some closed their operations. The credit the crunch 100 EBRD continue to facilitateInregional a destroyer of economic growth. In these 10 Facility (WeBSEDFF). 2012 integration the Bank became provided additional equity support of and export-led growth. We target our lending to circumstances, it is hardly surprising that some In emerging Europe, integration also takes the extended a €6 million loan to finance the €4.4 million to Antea Cement Factory, a SMEs and refinance corporate clients with key governments prefer to seek national solutions. form of 80 lowering barriers to trade. There is a 8 construction of the Ternove hydropower greenfield cement plant built two yearsthorny road roles in their markets. In 2012, we signed more ahead of Europe for closing the gap plant inproject north-east Albania and business a ago with produce 1.5 million than one every day for a total However, it iscapacity time to to restate the case for between institutional and financial integration. 60 6 €5.2 million forbillion. the construction of integration. tonnesInternational of cementtrade annually and locatedBut possible volume of almostloan EUR9 not only benefits solutions like the European Stability consumers; it also encourages firms’ innovation Mechanism are being developed and positive the Verbe-Selce hydropower plant near about 30 km north of Tirana. 40 We a rapidintransition in the former and helps them to grow. Foreign direct investment steps towards deeper integration will support 4 thewitnessed city of Korçë south-east Albania. Communist-ruled countries of Eastern Europe to in emerging Europe is increasingly integrating the long-term growth prospects of the whole With a combined generation capacity of a free market with increasing trade and capital local firms to global supply chains. Greater continent. 20 2
€439 million 44
€351 million 54%
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