Role of microfinance institutions in financing and development of the rural sector

 MSc Ilir Tomorri,  Prof. Dr. Flutura Kalemi, Dr. Remzi Keco
Fakulteti i Ekonomisë & Agrobiznesit, Universiteti Bujqësor i Tiranës



During the last decade, Albanian economy crediting has undergone an increase from which have benefited mostly the businesses in financing their capital needs. Even though this tendency has been implemented in most economic sectors, the agricultural enterprises have been slightly included. Crediting in the agricultural sector has fluctuated 1-2 percent of the total which shows that during this period it has been impossible for farmers to access financing.
The seasonal nature of the agricultural products, the relatively high risk due to the production volatility from one year to the other and even of the prices of the agricultural products, small farms area and fragmented, ownership problems and difficulties in providing of the collateral, the level of used low technology, are some of the reasons that have generated in a very strict policy by the banks and other financial institutions in financing in the farming.
This has caused the decrease of farmers’ financial capability that constitute more than a half of the hired population and give about 19 percent of the National Product to be low. Development of agricultural sector, in conditions of market economy requires a financial support for realization of investments.
The growth of the agricultural mechanisms and of the importance of necessities of agro-industry sectors and services in rural areas, aims to offer a natural market for providing financial services to the agricultural enterprises.
In conditions when the agriculture sector, is always considered as a priority and the highest growth potential is necessary to explore other ways of financing for farms and rural enterprises. Specialized rural financial institutions are more successful in attracting funds and fulfillment of the needs for credit of the farmers.
In this context, the micro credit financial institutions enable perhaps one of the most efficient solutions that farmers can adopt to finance their activities.
This study analyzes the possibility that rural microfinance institutions, to return to a powerful instrument in the field of financing to farmers and rural enterprises and it aims to highlight the benefits that will create the agricultural sector.

Keywords: microcredit, effectivity, rural financing.

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