Financing of agricultural sector from microfinance institutions in Albania as an important factor on income improvement and farms development


1Overall Budget Financial Analyst / Social Insurance Institute
2Lector of Faculty of Economy and Agribusiness / Agricultural University of Tirana

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Microfinance is defined as a way to reach and serve the poorest or the financially excluded people (low-income individuals) and the potential micro-entrepreneurs with services of the financial industry, which the formal banking system doesn’t provide to these clients, such as credit, savings, and others. As in other developing countries, microfinance has also developed in Albania. The incentive of microfinance has a positive impact on the development of the country as this will increase domestic production. Microfinance institutions have contributed to poverty reduction, to the overall economic development and to the agriculture development. Well-functioning microfinance sector can contribute on creation of the sustainable financial institutions of the country. Improvement in microfinance institutions (MFIs) seems to have a positive impact on the lives of the people who are able to work but are limited to banking service. The role and importance of the microfinance on agricultural sector have been increased during the last decade in Albania. Effects on the poverty reduction, households, farmers, etc. achieved through access to financial services, mainly small loans, offered by microfinance institutions, made that microfinance activities take a considerable attention during the last decades. The aim of this paper is to present a picture of the developments and the reality of the microfinance sector and microfinance institutions in Albania, as one of the main directions of simultaneous impact on improving the socio-economic situation of the households and the economic development of the farmers. The purpose of this paper in function of the methodology that we have followed is the assessment of the economic and social impact of microfinance on clients of microfinance institutions as one of the most important financial resources in Albania.

Keywords: microfinance; microfinance institution; farms; small loans.

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