Ibrahimaj: Entrepreneurial municipalities, we will apply financial instruments for local economic development
The Minister of Economy and Innovation, Delina Ibrahimaj, at the meeting attended by Prime Minister Edi Rama, the Minister of Local Government, Ervin Demo, the Minister of Tourism, Culture and Sports, Blendi Gonxhja and the mayors of the municipalities in the country, emphasized that
Municipalities must see themselves through the eyes of entrepreneurs by increasing cooperation with other institutions and businesses.
In her speech, Ibrahimaj said that taxes and fees are an element. The Mountains Package is an extraordinary opportunity to promote investment development in the municipalities you cover. Another form of how income can be generated is joint ventures. We have talked about joint ventures between municipalities and the private sector. We have talked about the possibility for some of you to create enterprises to manage markets or collection points," she said.
Minister Ibrahimaj added that 10 municipalities have been funded by AZHBR to set up markets, which is also a form that generates income by providing access to all agricultural or livestock production located in the areas covered by the municipalities.
According to Minister Ibrahimaj, another form is a tripartite cooperation, Municipality-QTTB-business as an opportunity to increase agricultural potential.
An essential aspect that Minister Ibrahimaj emphasized in her speech was the involvement of the Albanian Development Bank in meeting financing needs.
"We are operationalizing the National Development Bank, whose main goal was to finance development in local government, where funding is lower. Having a clear plan in five pilot municipalities, we will ensure that we finance these pilot projects within this year," said Ibrahimaj.
Ibrahimaj emphasized that there is a financing instrument that is available to business, but also to society, where the state is also a participant, and this is the Bank of Albania, which, according to the Minister of Economy and Innovation, has made available a fund of 250 million euros with the aim of financing business at low cost.
"The government has made available a sovereign guarantee that covers most of the risk of not placing a large collateral. We must focus on generating revenue because not everything depends on the State Budget. It is important to find instruments on how to maintain this economic growth at the same pace," Ibrahimaj said.
The full speech of Minister Ibrahimaj, at the meeting with the Mayors:
Good afternoon everyone.
It is a pleasure to be here with you today and to be able to talk together, openly, about the plans and projects that we have, in fact, we have been discussing with each other for some time, about how we can concretely move forward in the direction, first of all, of creating entrepreneurial municipalities.
I have spoken to some of you and during my career I have had the opportunity to speak with you and the concerns that you have, in order to support the local economy, in order to support businesses and the assistance that needs to be given to businesses, because, ultimately, the main source of income that you have today are taxes and fees and, if business does not grow, if the environment of the municipalities that you have does not grow, taxes and fees will not grow equally.
I would be very curious, for example, to know from the figures I heard from Blendi, whether tourism revenues in your municipalities have increased by 6.6%, just as the number of tourists has increased by 6.6%. I am convinced that in some municipalities yes, where the attention is great towards the collection of those taxes, where the attention has been great towards creating an environment for agritourism or hotel structures to grow, but not in all. So, taxes and fees are an element and the mountain package that will be discussed in detail is an extraordinary opportunity that all of you have to promote the development of investments in the municipalities that you cover.
On the other hand, another form of how income can be generated is SHAs. We have often spoken in other meetings, in the meetings we had with some of you in Berat or in other meetings we have had, about the ways in which this income will be generated. We have spoken about joint SHAs of municipalities and the private sector. We have spoken about the possibility that some of you could create enterprises to manage markets or to manage, to create, collection points. 10 of you have been financed by AZHBR to set up markets, which is a form of how you not only generate income for the municipality, but also how you provide access with standards to all agricultural or livestock production that is located in the areas that you cover, and I am curious that during today we can talk about how they went, who had a good experience, who had a bad experience and how we can spread this model that already exists to other municipalities.
Another way municipalities can generate income is through tripartite cooperation. Municipalities have assets that they need to make available for economic development. In some municipalities, there are Agricultural Technological Transformation Centers, QTTBs, which have the knowledge, know-how, and there are also private entities that have the desire to generate income and also have the managerial ability to generate this income. We think that it is very valuable to have cooperation, that is, to create joint ventures with all three of these components. So, with the municipality as the owner of the assets, with QTTBs as the owner of the knowledge, and with businesses as the owner of the managerial and practical knowledge, so that things can be moved forward.
In the agricultural field, of course, there is a very high potential in this regard and I would like, by the end of today, we to decide on some pilot municipalities, where, in a short time, we can draft a business plan and, also, which will need financing, because part of the lack or deficiency in this regard is the income that may be missing.
The Prime Minister mentioned financing. We are operationalizing the Albanian Development Bank, which has had the main goal since the beginning of time to finance development, especially in local government, where financing opportunities are lower, and the Italian model that we are following has done exactly this in Italy. It has been a catalyst for the development of local economies, both in terms of modernizing the infrastructure of private businesses, but also in terms of cooperation and financing of businesses that are created by municipalities. We want to follow this model and we believe that, having a clear plan in five pilot municipalities, in a time of 3-4 months, we can finance these pilot projects within this year.
Also, for some time, since last year, there has been a financing instrument that is available to business, but why not also to these companies where the state is a participant, which is the Albanian Bank. The Bank of Albania has made 250 million euros available with the aim of financing business at low cost. Also, the Albanian government has joined the Bank of Albania initiative and, for these funds, has made available a sovereign guarantee, which covers most of the risk, making it possible to avoid the need to place a large collateral to obtain financing. In cooperation, these two institutions have made it possible to have funds available at 2%, which is an extremely positive and encouraging interest rate for businesses. Therefore, it is important to create these companies, so that the risk is shared, so that the risk is supported by public institutions, because part of the problem of the agricultural sector is that either they do not have assets to put up as collateral and banks do not finance them, or those that exist are overfunded. By creating these shared societies, we are able to spread it, thus liberating capital and liberating free initiative.
We must focus on generating income, since not everything can be done with the state budget and, in fact, the structure of the economy is like this. 70% of investments are private investments, they are not public investments. So, we must encourage private investments by making available what we can and the mayors of the municipalities must be the ones to lead this initiative. I am very willing to work, I said, together with each of you, with Minister Demo of course, so that we can make some success cases and then this model can be replicated as long as possible.
Today we have an economic growth that ranges from 3.5 to 4%. It is an economic growth that is the highest in the countries of the region and, undoubtedly, the highest in Europe. We are considered the economy with the fastest growth, that is, by the World Bank and the International Monetary Fund. Therefore, it is important that we find instruments on how to continue to maintain this economic growth at the same pace and, if we do not use all the mechanisms at our disposal, we will not be able to maintain it. Because today we have a growth that is driven by construction, real estate, and tourism. In order to make it possible for these sectors to continue to contribute at the same pace to the economy, we will need to make it possible for investments to be made and to make their contribution.
On the other hand, there was a discussion about vocational schools. The Prime Minister said: “We have the entrepreneurial state in the concept and essence of this governing mandate”, and I say this in relation to vocational schools, since vocational schools have also been given a target in the year we are talking about. All schools that have as their object the possibility of generating income, for example, tourism schools were mentioned, or agricultural schools have a target for generating income. Tourism schools can do catering and offer catering services for private businesses, for municipalities, for state enterprises, in order to generate income, because quality is related to income. Only by having more income, they can hire better teachers, students can be paid and a kind of sustainability can be achieved.
On the other hand, during this year we have undertaken that many professions that are given, that is, education is given in vocational schools, but also in vocational colleges, will be licensed, certified and will be introduced into the economy only by being certified and we strongly believe that, by doing this, we will increase the demand for vocational schools. On the other hand, the Prime Minister certainly emphasized that the facilities, laboratories, dormitories are essential in order for there to be a demand from the population to be involved in vocational education. We have started this process. We have 11 vocational schools that are under reconstruction. We have a large number of dormitories that are under reconstruction, always in cooperation with the Albanian Development Fund. However, the needs that you have, whether for vocational education, that is, for courses, for schools, but also for dormitories, we will discuss them during today's meeting.
I am here with Deputy Minister Manjani, who covers vocational education, and together we will make it possible, in cooperation with the AKPT, through the drafting of several projects that are both qualitative, with standards, and attractive to students who will go and attend vocational schools, but also by thinking about which courses should be opened that are necessary for the development of the local economy, we will have a detailed plan and we will follow it during this year.
I believe that these are the two main elements that we have to discuss today and everyone's contribution is very valuable, as it is a job that we must all do together.
Thank you!
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