Matteo Colangeli-2019 a record year, but 2020 a key year for the EBRD and Albania

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By Rudina HOXHA 

Matteo Colangeli, Head of the EBRD Office in Albania, comes in an exclusive interview for the front page of STAR BUSINESS to take a look at the EBRD plans for Albania in 2020. 

"2020 will be an important year for us. The new strategy for Albania, for the period of 5 years until 2025, will be approved by our Board of Directors in February, "said Colangeli in this exclusive interview.

""We anticipate GDP growth of up to 3.5% this year," he said.

 He also highlighted the EBRD-EU's 100m-euro tourism program, noting that

"Implementing the program we are developing with the EU to increase the competitiveness of tourism in Albania is a key priority for us. There are many parties who need to coordinate their work under this program and this is clearly affecting the timeline for its preparation.” 

"I think this program could play an important role in the economic recovery of Durrës and the communities that were severely affected by last November's earthquake," Colangeli added.

What were the EBRD's achievements in 2019 and what remains to be achieved this year?

2019 has been a record year in terms of new operations (13) for a total business volume of approximately E150m which led to the growth of our portfolio to over E720m, the highest level since the start of operations in Albania. We have completed the second installment of our E218m loan for KESH, in recognition of the progress made in the conditionality of the reform. We have also increased our support for the private sector by financing cross-border investments in the region and domestic projects, mainly through risk sharing with commercial banks. Implementation of important initiatives progressed last year, including the expansion of our Women in Business program with Intesa SanPaolo Bank and the new partnership with Raiffeisen Bank for the agribusiness sector supported by the National Guarantee Fund. 2020 will be an important year for us. The new strategy for Albania, for the period of 5 years until 2025, will be approved by our Board of Directors in February. We will focus on strengthening governance for the entire economy, supporting competition and private sector involvement, expanding energy resources and the green economy. For this year, we have planned investments in infrastructure to unlock the tourism potential of the country. We are also working to provide an EU grant-supported funding structure for businesses operating in the tourism value chain. I hope that 2020 will be the year when large-scale solar energy generation will begin to develop in Albania. Supporting the growth of this sector in line with international best practice is a key priority for us.

 Infrastructure remains a key aspect of Albania's development. What are the EBRD's plans in this regard?

Albania continues to suffer from a significant infrastructure gap compared to other countries in the region. A large part of the investments made in recent years have gone to the road sector, where some improvements have been made. Railways continue to be part of major investments and the rehabilitation of the Durrës line, which we are financing together with the EU, is only the first step in rebuilding a railway network in Albania. The other area we need to focus on in my opinion is environmental infrastructure, especially in relation to waste and wastewater management. I think that getting closer to European standards in this area is very important, not only for the quality of life of the citizens of Albania, but also for the economic competitiveness of the country, especially in the tourism sector. 

Matteo Colangeli-2019 a record year, but 2020 a key year for the EBRD and Albania 1

Does the EBRD intend to expand its investment activity in Albania? 

We are a demand driven bank. We do not have a limited envelope for each country. We can escalate our investments as much as necessary to support Albania on its path to a stable and successful economy. There are two main boundaries to expanding our activities. The first is to remain additional to commercial banks. Instead of competing with them, we aim to develop partnerships that can unlock more loans to the economy. The second is our standards. We will only fund companies and projects that meet EBRD requirements, including financial integrity and transparency, as well as environmental and social issues.

Has the preparation of the EBRD-EU program for tourism (60 million euros loan from the EBRD and 40 million euros from the EU) in Albania been completed? What are your expectations for this program?

Implementing the program we are developing with the EU to increase the competitiveness of tourism in Albania is a key priority for us. It is a multifaceted initiative including investments in infrastructure provision and rehabilitation of cultural and natural heritage sites, as well as access to finance and skills for SMEs and comprehensive technical assistance to raise quality standards and involvement in the sector. There are many parties who need to coordinate their work under this program and this is clearly affecting the timeline for its preparation. Certain activities are already underway, such as mobilizing counseling support to help entrepreneurs acquire the knowledge needed to become more competitive. We aim for others to start opening up this year. I think that this program could play an important role in the economic recovery of Durrës and the communities that were severely affected by last November's earthquake.

What is your opinion on the measures that Albania should take when it comes to climate change?

I think Albania is significantly exposed to climate change, especially given its almost complete dependence on hydropower. We have observed in recent years how instability in rainfall patterns has had material impacts on the country's economy and finances. The first adaptation strategy should be, in my opinion, the source of expanding energy generation, especially using the country’s potential in solar energy. We are pleased in this regard that we have supported the Ministry of Infrastructure and Energy in preparing a transparent competitive process for the allocation of 140 MW of solar capacity in Karavasta. The second should be to make better use of the country's abundant water resources, starting with investing in water supply networks. We are working with UKT to improve the infrastructure in Tirana and we are interested in extending our support to other parts of the country. At the level of the private sector, I think there is room to significantly increase the energy efficiency performance of homes in Albania by investing in insulation and solar panels. We have created a credit structure through commercial banks that enables families to borrow for these investments and take advantage of EU grants to partially cover these costs.

Matteo Colangeli-2019 a record year, but 2020 a key year for the EBRD and Albania 2

What do you see as the primary objectives on which the efforts of the Albanian economy during 2020 should be focused?

We forecast GDP growth of up to 3.5% this year. A number of external factors, mainly uncontrollable, will have material impacts, including economic developments with the EU's main trading partners, global market dynamics in export goods such as oil and chrome / ferrochrome, as well as of course rainfall and electricity generation. However there are important areas where measures can be taken to promote growth. First and foremost, continue efforts to reduce informality, including tourism, where the focus should also be on increasing visitor revenue (and not just the number of visitors) as well as the overall quality of the experience provided. Second, the distribution of infrastructure investments needs to be accelerated and priority given to those who directly address obstacles to economic development. Third, it is important to move forward rapidly to expand energy sources, especially solar energy. In terms of sectors, natural resources and energy are important assets and will continue to play a major role in the country's economy. It is important that they are utilized taking into account the environment and the impact they may have on other sectors of the economy. In my view, Albania should make efforts to climb the value chain in sectors where there are competitive advantages such as; tourism, agribusiness, light industries and foreign business services. A specific point to focus on is enabling the growth of medium-sized companies in a business environment which is characterized by a small portion of large groups and a large group of small enterprises. Support for the growth of some small businesses, their formalization and competitiveness will be key to achieving job creation, it is necessary to reverse the demographic decline and keep talented Albanian youth in this country. .

 

* Below you will find the English version of the interview, according to the print edition, February-March 2020

 

2019, a Record Year but 2020 a Key Year for EBRD and Albania

By Rudina HOXHA 

Matteo Colangeli, Head of EBRD Office in Albania, splashes on front page of STAR BUSINESS to make an inside look of the EBRD plans for Albania in 2020. 

“2020 will be an important year for us. The new country strategy for Albania for the 5 year period to 2025 is due to be approved by our Board of Directors in February, ”Colangeli said in this exclusive interview.

"We forecast GDP growth to pick up to 3.5% this year, ”he said.

 He also underlined the EUR100 million EBRD-EU program on tourism underlining that 

“The implementation of the program we are developing with the EU to boost the competitiveness of tourism in Albania is a key priority for us. There are many stakeholders that need to co-ordinate their work under this program and this is obviously impacting the timeline for its preparation.” 

"I think this program could also play an important role in enabling economic recovery in Durres and communities that were severely impacted by last November's earthquake," Colangeli added.

What were the achievements of EBRD in 2019 and what remained to be achieved this year?

2019 has been a record year in terms of new operations (13) for a total business volume of nearly E150m which led to our portfolio growing to over E720m, the highest level since we started operations in Albania. We committed the second tranche of our E218m loan to KESH, in recognition of progress made on reform conditionalities. We also stepped up our support to the private sector, financing cross border investment in the region and domestic projects, primarily through risk sharing with commercial banks. The implementation of important initiatives also continued to advance last year, including the expansion of our Women in Business program with Intesa SanPaolo Bank and the new partnership with Raiffeisen Bank under the financing facility for the agibusiness sector supported by the Natonal Guarantee Fund. 2020 will be an important year for us. The new country strategy for Albania for the 5 year period to 2025 is due to be approved by our Board of Directors in February. We are going to focus on strengthening governance across the economy, supporting private sector competitiveness and inclusiveness, diversifying energy sources and the green economy. For this year, we have in the pipeline investments in infrastructure to unlock the country tourism potential. We are also working on a financing facility supported by EU grants for businesses operating in the tourism value chain. I hope that 2020 will be the year when large scale solar power generation starts being developed in Albania. Supporting the growth of this sector in line with international best practive is a key priority for us. 

Infrastructure remains a key aspect of Albania's development. What are the EBRD plans in this respect?

Albania continues to suffer from a substantial infrastructure gap, even compared to other countries in the region. A large share of investments made in recent years has gone to the roads sector, where some improvements have been made. Railways continue to be severely under invested and the rehabilitation of the Durres Tirana line, which we are financing together with the EU, is only the first step to re-establish a rail network in Albania. The other area that should be in focus in my view is environmental infrastructure, particularly in relation to waste and waste water management. I think moving closer to European standards in this area is very important, not only to the quality of life of Albania's citizens but also to the country's economic competitiveness, especially for the tourism sector. 

Does EBRD intend to scale up its investment activity in Albania? 

We are a demand driven bank. We do not have a limited envelope for each country. We can scale up our investments as much as needed to support Albania on its path to becoming a sustainable and successful economy. There are two main boundaries to expand our activities. The first is to remain additional to commercial banks. Rather than competing with them, we aim to develop partnerships that can unlock more lending to the economy. The second is our standards. We will only finance companies and projects that meet EBRD requirements, including on integrity and financial transparency, as well as on environmental and social issues. 

Matteo Colangeli-2019 a record year, but 2020 a key year for the EBRD and Albania 3

Has the preparation of the EBRD-EU program on tourism (60 million euro loan by EBRD and 40 million euro grant by EU) in Albania been finished yet? What are your expectations about this program?

The implementation of the program we are developing with the EU to boost the competitiveness of tourism in Albania is a key priority for us. This is a multifaceted initiative including investments in enabling infrastructure and the rehabilitation of cultural and natural heritage sites, as well as access to finance and skills for SMEs and comprehensive technical assistance to raise quality standards and inclusion in the sector. There are many stakeholders that need to co-ordinate their work under this program and this is obviously impacting the timeline for its preparation. Certain activities, like for example mobilizing consulting support to assist entrepreneurs in acquiring the know-how needed to become more competitive, are already under way. Others we target to start rolling out from this year. I think this program could also play an important role in enabling economic recovery in Durres and communities that were severely impacted by last November's earthquake. 

What is your view on the measures Albania has to take when it comes to climate change?

I think Albania is significantly exposed to climate change, particularly in view of its almost entire dependency on hydropower. We have observed in recent years how volatility in rainfall patterns has had material impacts on the country's economy and finances. The first adaptation strategy should be in my view diversifying sources of electricity generation, particularly by tapping the country potential in solar energy. We are pleased in this respect to have supported the Ministry of Infrastructure and Energy in preparing a transparent competitive process for the allocation of 140 MW of solar capacity in Karavasta. The second should be making better use of the country's abundant water resources, starting from investing in its water supply networks. We are working with UKT to upgrade infrastructure in Tirana and are interested in extending our support to other parts of the country. At private sector level, I think there is scope to significantly increase the energy efficiency performance of homes in Albania, by investing in insulation and solar panels. We have established a lending facility through commercial banks that enables households to borrow for these investments and benefit from EU grants to partly cover their cost.

What do you see as priority objectives for Albanian economy efforts to be focused during 2020?

We forecast GDP growth to pick up to 3.5% this year. A number of external and largely uncontrollable factors will have material impacts, including economic developments in key EU trading partners, global market dynamics in export commodities such as oil and chromium / ferrochrome, as well as of course rainfall and hydro power generation. There are however important areas where action can be taken to promote growth. First and foremost, continuing the drive to reduce informality, including in tourism where focus should also be directed to increasing revenues per visitor (rather than simply the number of visitors) and the overall quality of the experience offered. Secondly, delivery of infrastructure investments should be accelerated and priority given to those more directly addressing bottlenecks to economic development. Thirdly, it is important to move forward rapidly with the diversification of energy sources, particularly in solar power. In terms of sectors, natural resources and energy are important assets and will continue to play a major role in the country's economy. It is important that they are exploited with due consideration for the environment and the impact they may have on other sectors of the economy. In my view, Albania should make efforts to climb the value chain in sectors where it has competitive advantages, such as tourism, agribusiness, light manufacturing and business services outsourcing. A specific point to focus on is enabling the growth of medium sized companies in a business environment which is characterized by a handful of large groups and a large pool of micro enterprises. Supporting the growth of some of those small businesses, their formalization and competitiveness will be key to achieving the sustainable job creation which is needed to reverse the demographic decline and keep young talented Albanians in this country.

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