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Albania
The Development Challenge
The legacy of fifty years of misguided economic policies continues to leave Albania with widespread poverty, a decrepit infrastructure, and weak public institutions. Twelve years into transition, Albania's 3.5 million people have a per capita income of $1,300, which is among the lowest in the region. The economy is dominated by subsistence agriculture, which provides more than 33% of output and employs 70% of those who have jobs, and a large informal sector. As poor infrastructure, corruption, and lack of commercial law discourage private investment, Albania ranks among the lowest Foreign Direct Investment recipients in the region. High levels of private remittances, which are sensitive to internal and external shocks, contribute to Albania's growing trade imbalance.
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Public support for reform is diminished by: a) 10% to 22% unemployment, b) underemployment, in which only 22% of individuals aged 15 and older are fully employed, and c) high levels of poverty with almost 30% of all Albanians falling below the poverty line. While only one in four rural households receive running water indoors, more than 50% of the population have no running water, and only 14% receive a continuous stream of electricity. The poor are twice as likely to lack access to key public and private services, thus facing large physical and economic barriers to accessing quality health care. Democracy and governance remain weak, as bureaucracies consistently fail to deliver rights, privileges, and services due citizens under law. Pervasive corruption within the system taints the legitimacy of the State.
Albania faces the major, but not unique challenge of maximizing economic growth, employment and income through increased private investment, while simultaneously increasing tax revenues, improving public services, and strengthening democracy, governance, and rule of law. Continued U.S. Government (USG) assistance will accelerate Albania's transition towards a market economy, a stronger establishment of democracy based on the rule of law, and integration with the European Union (EU) and neighboring states. It will also enable Albania, as the largest Balkan Muslim country, to continue its contributions to regional stability and its support for U.S. foreign policy. The Government of Albania (GoA) supported for the USG in its war on terrorism and its actions in Iraq. The GoA entered the Article 98 agreement (a bilateral non-surrender agreement protecting American citizens from the International Criminal Court), and deployed Albanian troops in Iraq and Afghanistan.
The USAID Program: The USAID program in Albania supports economic growth and micro, small- and medium-enterprise (SME) development, democratic development and rule of law, and social stability. These objectives directly support and are consistent with multi-dimensional U.S. interests identified in the President's 2002 National Security Strategy and the Joint State-USAID Strategic Plan. The Program Data Sheets provided below cover the six strategic objectives for which USAID is requesting funds. They concentrate on the following three general development themes:
- Economic growth and SME development by increasing private investment, improving the availability of credit, supporting capital formation, and strengthening the banking system;
- Democratic reform and rule of law to support civil society by increasing citizen awareness of public issues, assisting in elections, strengthening legal institutions, supporting the GoA decentralization program, and mitigating corruption and trafficking of persons;
- Health reform to improve primary health care by developing and implementing quality primary health care models, strengthening management capacity at the primary health care level, and encouraging community participation to ensure improved health care for Albanians.
FY 2004 funds will be used to implement ongoing activities and programs. USAID also intends to use FY 2004 and FY 2005 funds to carry out new activities and programs in support of a new faith-based initiative as well as ongoing initiatives in democracy and governance, rule of law, anti-corruption, and anti-trafficking. The specific activities to be funded by FY 2004 and FY 2005 appropriations are described in more detail in the following Program Data Sheets.
Other Program Elements: USAID provides assistance for Albania through numerous programs that do not draw on bilateral funding. For example, regionally-funded activities in Albania include: support for NGOs that monitor government accountability; support for NGOs working on anti-corruption; advocacy and information sharing via the Organization for Economic Cooperation and Development's Anti-Corruption Network; support for women's legal rights; provision of training for journalists, labor leaders, health professionals, bankers, and other professionals; and a number of energy activities that seek greater efficiency in power generation and distribution as well as management of energy resources.
Other Donors: The U.S. remains Albania's third largest bilateral donor after Italy and Greece. Multilateral contributors and include the International Bank for Reconstruction and Development, International Monetary Fund, European Union (EU), European Bank for Reconstruction & Development (EBRD), European Investment Bank, Open Society Foundation, United Nations Development Program, Food and Agriculture Organization, International Fund for Agricultural Development, and United Nations Children's Fund (UNICEF). Bilateral contributors include: Germany, Swedish International Development Agency (SIDA), British Department for International Development (DFID), Danish Agency for International Assistance (DANAID), and Dutch Development. Key elements of donor support focus on democratization and institutional development, with an emphasis on the judiciary, political cooperation, media, local government, and civil service reform, and the fight against crime and corruption. USAID is the leading donor agency in anti-trafficking, agriculture, export competitiveness, and industrial clustering.
Cooperation between USAID and other donor organizations active in Albania is robust. Through work with the Organization for Security and Cooperation in Europe, the international community coordinates its support for democratic reform, elections, and improved security. USAID, IBRD and EBRD collaborate in working on energy sector reform. A donor coordination group in support of the GoA implementation of its National Strategy for Social Economic Development (poverty reduction strategy) meets regularly. The Council of Europe, DANAID, DFID, SIDA and USAID work jointly to assist the recently established School of Magistrates in education for new judges and prosecutors. The SNV and USAID coordinate closely on assistance to local governments. UNICEF, SIDA, the Oak Foundation, Terre des hommes (Tdh), and the National Albanian American Council (NAAC) work closely in the area of child anti-trafficking. In addition, the IBRD, the World Health Organization and USAID are integrating efforts to reform Albania's health sector.
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