Press release number: IFAD 32/06

Rome, June 20, 2006. A private rural commercial bank providing financial services that promote economic growth will be set up as part of a new development programme supported by the International Fund for Agricultural Development (IFAD). The programme aims to improve the lives of poor Albanian men and women living in remote mountain areas of the country.

The bank is an innovation in Albania. It will be created through the conversion of the already-existing Mountain Areas Finance Fund as part of IFAD’s Programme for Sustainable Development in Rural Mountain Areas.

It is expected that by 2010 the bank will provide computerized services through 40 branches in rural areas, catering for around 20,000 clients with savings accounts. About 10,000 borrowers will be able to expand their rural businesses through bank loans. The new bank will have a total loan portfolio of US$40 million.

The five-year programme will cost US$24 million and will be partly financed by a loan of US$8 million from IFAD. The loan agreement was signed today at IFAD’s Rome headquarters by the President of IFAD, Lennart Båge, and the chargé d’affaires, Embassy of the Republic of Albania in Rome, Ilir Tepelena.

Cofinancing is provided by the Organization of the Petroleum Exporting Countries (OPEC) Fund for International Development and private investors.

The programme will also strengthen support to the IFAD-financed Mountain Areas Development Agency, a specialized regional agency that is a key source of knowledge, brokerage and information. It will be assisted to promote investment at local level, devise new approaches to economic development in mountain areas, and support new small businesses that will boost household incomes.

''This programme will support the growth of rural enterprises and help them become more profitable, generating employment opportunities for rural inhabitants,” says Henning Pedersen, IFAD’s Country Programme Manager for Albania. “This will engender a profitable economic development spiral.”

Albania is a mostly mountainous country and more than half the population lives in rural areas. Poverty persists despite recent years of economic improvement because of low employment levels, particularly in mountain areas, the consequent low income levels and an unequal pattern of economic growth.

Livestock production is a major part of the country’s agricultural sector, especially extensively-grazed goats and sheep in mountain areas. However, urban buyers are becoming more discerning, which means that marketing fresh and processed animal products has become more difficult. New initiatives are needed to enable people to lift themselves permanently out of poverty, such as support for improved supply chain management.

The new programme will focus on underemployed and unemployed rural men and women, small and medium-sized farms, and rural entrepreneurs in an area with a total of 1.7 million people. Substantial resources will be mobilized in mountain areas and local institutions and organizations will be strengthened to influence and support private and public-sector investment.

This is the fourth initiative IFAD has supported in Albania with loans totalling US$42.3 million.

---

IFAD is a specialized agency of the United Nations dedicated to eradicating poverty and hunger in rural areas of developing countries. Through low-interest loans and grants, it develops and finances projects that enable rural poor people to overcome poverty themselves. There are 187 ongoing IFAD-supported rural poverty eradication programmes and projects, totalling US$6.2 billion. IFAD has invested more than US$2.9 billion in these initiatives. Cofinancing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help nearly 80 million rural poor women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$9.0 billion in 705 programmes and projects that have helped nearly 300 million poor rural men and women achieve better lives for themselves and their families. Governments and other financing sources in the recipient countries, including project participants, have contributed almost US$8.8 billion, and multilateral, bilateral and other donors have provided another US$7.0 billion in cofinancing.