Interviews

“It is important that state institutions play a greater role in creating a business environment able to retain current investments and attract new ones”

FIAA: What is the IFC’s current long term finance investment strategy in Albania?

Mrs. Qorlazja: Thank you first of all for giving me the opportunity to talk about IFC in general and its work in Albania.

IFC was established in 1956 as part of the World Bank Group to support private sector investment in emerging markets to create jobs and raise standards of living. IFC’s financial products enable companies to manage risk and broaden their access to foreign and domestic capital markets. Our financial products consist of fixed and variable rate loans extended to the private sector, which finance both early-stage companies and expansion projects. IFC also makes loans to intermediary banks, leasing companies, and other financial institutions for on-lending. In addition to lending, IFC engages in equity investments that provide developmental support and the long-term growth capital the private sector needs. IFC invests directly in companies’ equity and also through private-equity funds.

“Albania needs greater trust in law and order”

FIAA: During your time here in Albania, have you seen any change in the operating environment for foreign businesses in the country?

Mr. Larsen: Yes – several laws which have been passed, for example. I think the law on strategic investment is beneficial for investors that want to do business here in Albania. It gives businesses a one-stop window in terms of interaction with the government, and so on. We already have that kind of one-stop window in the energy ministry and in the project implementation unit which has been established in the Ministry of Energy, and I believe that the law on strategic investment should help all businesses.

The fact is that Albania is in a period of active reform and we are hopeful of seeing changes in the energy sector as a result. The whole energy sector is undergoing reform and the new energy law passed last year makes commitments to changes in the institutions, for example, liberalization of the market for power trading. We were originally expecting these things to be in place by now, but they will come. The government is committed to reform and it will make it happen. I think it will take some more years still before we have a fully functional power market here in Albania.

“Justice Reform will contribute to creating a more predictable and transparent business environment in Albania”

FIAA: What is your impression on the current business operating environment in Albania?

Mrs. Vlahutin: Despite its dominant role in the economy, business is held back by significant shortcomings in the regulatory environment and the rule of law. To Business Operating in Albania, the challenges remain mainly related to judicial system, property rights enforcement, contract enforcement, fight against corruption and informality.

Whereas, Albania has great potential to develop in terms of its geographical position, natural resources, and relatively cheap labor force, it still has to improve labor skills, to improve trade logistics, reduce the regulatory burden to businesses and ensure law enforcement in order to increase its competitiveness and attract foreign investors. 

“Justice Reform can increase investment in Albania”

FIAA: What are your impressions of the business operating environment in Albania currently?

Mr. Canacaris: The environment has improved a lot in recent years, especially after the international crisis of 2008. For sure the growth in 2016 is much higher than in 2015, which was higher than 2014. The overall environment is not so bad. Of course, it can always improve.

What have been some of the drivers of this change in recent years?

The payment of the arrears by the state was an excellent move; the state needed to do it and it did it properly. And the power reform was also a good move; it has improved the business climate.

“Judicial reform is a major turning point for Albania”

FIAA: What is your perception of the Albanian economy currently?

Mr. Reinke: We have been saying for some time that a modest recovery is on the way. We see growth rates rising slowly — perhaps a bit too slowly — but nonetheless the outlook is positive. We remain somewhat concerned about the still high level of non-performing loans in the banking sector and very slow credit growth.
If we look at the performance of the economy in a regional and global context, it’s doing quite well. Both the recovery in the Eurozone and the current performance and outlook for emerging markets globally are much worse than we were expecting at the beginning of Albania’s programme with the IMF. Nonetheless Albania is continuing to recover. It is a broad-based recovery affecting all the sectors.

“The BoA expects Albania’s growth trend to continue in 2016”

 FIAA: What are current economic indicators telling you about the state of the economy in Albania?

Mr. Sejko: Economic growth was 2.98 % in the third quarter of 2015. Our estimate of growth for the full year 2015 is 2.7 %, compared to 2.0% in 2014 and 1.3% in 2013. For 2016 we forecast growth above 3.0%, which means a moderate growing trend. This is positive for Albania, especially considering the current difficult economic environment in the region and the eurozone.

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“EBRD plans further support for foreign investors in 2016”

FIAA: How do you see the outlook for Albania in 2016?

Mr. Denk: We think that the economic outlook for Albania will continue to improve steadily in 2016. Overall we expect the economy to grow by around 3.3% in 2016, up from 2.2% in 2015.

Vodafone Albania Chief Executive Officer and FIAA Vice President

“We will continue investing in new technologies in Albania”

FIAA: How is Vodafone performing in Albania?

Dietlof Mare: Vodafone is showing a strong performance on both revenue and EBITDA results for this year. Such performance has driven us to continue investing in technology and network expansion across Albania. This year alone we are investing €25 million. The outcomes of all our efforts have been translated into a very positive take-up of new technologies such as 4G and M-Pesa and into a strong positive usage among customers and growth in the average revenue per active user. In less than three months since the launch, 6% of our data traffic is routed through our 4G network. This uptake has been faster than any European country where Vodafone operates.

Our attention has also been focused on cost efficiencies, because in order to keep such strong performance there is always need for focus and cost discipline. I am proud to say that we are still able to maintain very healthy EBITDA margins although we are operating in a highly penetrated mobile market.

“The best path that the government has to pursue is to align this legislation to the EU Acquis”.

FIAA: Shall we start it with a few words about Titan?

Mr. Frantzis: Titan is a multiregional cement producer. We are vertically integrated in cement aggregates and red mix. We say multiregional because we are not multinational in the strict sense having presence in every country. We are present here in Southeast Europe and we are the biggest cement producer in Southeast Europe having presence in evry country like, Greece, Bulgaria, FYROM, Kosovo, Serbia, Montenegro and Albania. We are also present in Turkey, Egypt and the US where we have a large cooperation along the east coast. Also we have terminals in Italy, France and UK. We have revenues above 1.2 billion euro and we employ in total over 7000 employees. Back in 2010, we decided to invest in Antea building a green field plant here in Albania. This investment has been realised with the equity contribution of international financial corporation IFC and EBRD which they held at the time 40% of the equity and 60% Titan. The 200 million euro investment at the time was and I think it still is the biggest green field investment in Albania.

Clarifying the legal framework can drive investment in Albania

FIAA: How would you describe the investment climate in Albania for foreign investors?

Mr. Pedrazzi: A lot of improvements have been made in the past and the situation is evolving positively. Nevertheless, there is still a lot to do in order to make Albania more competitive and able to attract more foreign investment that is crucial for the country. The common point of interest both for FIAA members and for the institutions is clear: We have to work together to make further improvements.

What are the top priorities for improvement?

One competitive advantage in Albania is the low cost of labour compared to other countries, especially as far as manufacturing and services are concerned. Albania should put in place the conditions that enable foreign investors to further develop manufacturing and services. We need a clear and stable legal framework and an environment that ensures the fair application of the law. This is the point on which we have to work together with the institutions. The rule of law is key.