Machinery and equipment, businesses increase investments - BoA program improved access to financing, but informality remains a challenge
From the Bank of Albania's Program dedicated to increasing financing and reducing credit costs for a segment of the private sector, which began implementation in the second quarter of last year, micro, small and medium-sized businesses have increased investments and received funds to purchase mainly equipment and machinery.
During the year, 131 loans were granted, with a total value of 1.8 billion lek, or only 7.2% of the total fund. About 98% of these loans are new financing, which confirms that the program has served as an instrument for stimulating additional investments and not as a mechanism for refinancing existing liabilities.
About 85% of the funds were received by small and medium-sized businesses, while the micro segment remains less represented. In terms of sectors, the funds were mainly absorbed by industry (33.7%), trade (30.5%) and agriculture (22.9%), reflecting their potential for productivity growth. About half of the financing was used for the purchase of equipment and machinery, indicating a clear focus on expanding production capacities and modernizing the activity.
In terms of geographical distribution, most loans are concentrated in the country's main economic centers, while about 83% of the portfolio has a 5-year maturity, demonstrating a long-term investment orientation. All banks in the system have actively participated in the program.
According to the Bank of Albania, this program has contributed to improving access to financing for micro, small and medium-sized businesses. However, the still low level of use of the fund suggests that the main limitation of access to credit for small and medium-sized businesses is related to structural factors, such as informality, lack of sufficient collateral, limited managerial capacities and insufficient financial planning of businesses, as well as the perception of risk by banks.
Consequently, sustainably improving access to finance requires more than liquidity instruments. It requires a coordinated approach between public economic policies and structural reforms that strengthen formalization, increase financial transparency, improve the business climate, and reduce legal and administrative uncertainties, the Bank of Albania states.
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