Rural sector financing and role of microfinance institutions in its development

Dr. Ilir Tomorri1, Prof. As. Dr. Remzi Keco2, Dr. Ilir Kapaj2
1Unioni Shqiptar Kursim Kredi;
2Faculty of Economy and Agribusiness, AUT


During the last decade there has been an increasing trend in terms of development of the rural sector and in particular the requirements for financing by the farmers and businesses in this sector. In this context, the role and contribution of microfinance institutions in the economic development of a country is considered important, especially in supporting and empowering the poor segments of the population in social and economic life of the country. They complement the lack of presence of commercial banks in rural areas, fulfilling demands of farmers and rural businesses borrowed resources. Crediting in the agricultural sector fluctuates at 1.5-2 percent of the total loan portfolio in the country. The development of new entrepreneurship initiatives in the rural sector requires continuous support financial resources. Microfinance institutions as part of the financial sector in Albania, play an important role in financing farmers and rural enterprises and economic growth in the country. Nowadays, while the market is more competitive, it is becoming evident the need to increase opportunities in terms of financing rural businesses. This paper aims to assess the impact of microfinance on rural activities development and problems that accompanies this process. Further development of the rural sector will significantly improve the structure and rates of economic growth and quality of life in these areas.

Keywords: microfinance, rural sector, financing, farmers

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