Monday, July 23, 2012

Passport Series: Awakening Albania's economic potential

Raised on a strict diet of hardship and isolation, Albania is a sleeping beauty slowly awakening to a world of technology, capitalism and democracy, that it is both eager and a bit wary of joining.

A former member of the Eastern Bloc, Albania-- home to 3.2 million people-- is located in Europe's mountainous southeastern corner and bordered by Montenegro, Macedonia, Kosovo and Greece. The land it occupies has been Roman and Ottoman, and seen Italian and German occupations.

For half a century, Albania toiled under a pseudo- communist authoritarian regime, but in the late 1980s as the Soviet Union begin to weaken economic and civil unrest in Albania began to loosen the regime's tight grip on power and in 1990 it collapsed.

Albania has emerged as a parliamentary democracy with a transitional economy. Nevertheless, as Alice Reeves, our Kiva Fellow in Albania, aptly points out in a blog post

"Albania’s transition to democracy has not been smooth. Nationwide pyramid selling schemes (also known as Ponzi schemes) caused a economic collapse that took Albania uncomfortably close to civil war in the late 1990s. An influx of Kosovar Albanian refugees fleeing wars in neighboring states also stretched this small state’s ability to cope." 

Couple these destabilizing factors with the global financial crisis and the picture of Albania's vulnerable economic situation begins to come into focus. 

Due to this instability, Albania remains one of the poorest countries in Europe, and has found itself longing for membership to the European Union. 

While the European Union is focused on dealing with it's own economic woes, Albania's membership is pending its ability to address "urgent issues" by strengthening its rule of law and combating corruption and organized crime. 

One of the key problems facing Albania is the large portion of the population that lives in remote rural areas isolated from access to markets, resources and infrastructure. The lack of access means that many starve during the winter and can't get their surpluses to market during the harvest.

Because goods, resources and money don't flow freely from one region to another, Albania relies heavily on food imports. On top of that, almost half the residents in the north and northeast regions of the country are poor, with more than a fifth living in extreme poverty. 

A poverty reduction strategy paper recently released by the IMF found that in Albania "there is a proportional relation between the level of poverty and the level of the quality of the road infrastructure." So a feasible solution is there, it's all about finding the resources to pursue it.

With job and educational opportunities scarce in these isolated communities, it is easy for preconceived notions and retrogressive traditions to take hold. Discrimination against the vulnerable Roma minority population, lingering patriarchal customs and multi-generational blood feuds are not uncommon. However, as our Kiva Fellow stated after her first week, "There is a palpable sense of activity here in Albania. So many individuals are keen to improve their livelihoods, small businesses and personal circumstances".

Today, Albania is taking steps to address poverty and increase sustainable social and economic development by implementing medium and long-term programs aimed at improving education, healthcare, and infrastructure. The population is also calling for accountability and increased participation in decision making to empower the poor. 

Albania's new people-based approach to sustainable development is complemented by the the social and economic support offered through microfinance. By coupling Albania's strong familial bonds and work ethic with economic options, we can extend opportunity, encourage education and help usher in a future filled with entrepreneurship and new possibilities.