Case Studies in Microfinance: Albania - Albanian Development Fund (ADF)

This paper provides information on Albania's microfinance sector in the year 1997 by focusing on ADF's activities in urban and rural microfinance. ADF was the only substantial business reaching out to the poor in Albania.

The author brings out the microfinance sector scenario by discussing the following:

• The socio-economic context of Albania:
  • Describes the crisis that struck Albania in 1997 bringing to a halt the reforms process initiated by the Government in 1992.
• Poverty and access to social services:
  • Widespread poverty was prevalent owing to limited government resources and limited development of the private sector.
• The formal financial sector:
  • The sector was entirely owned by the government with no domestic private banks operating,
  • The banking system was not properly geared to tackle market realities and was driven by government subsidies and laxity.
• Sizing of the microfinance sector;
• The Albanian Development Fund:
  • Organizational structure and governance,
  • Rural credit program,
  • Savings services,
  • Urban credit program.
• Factors of success of the ADF;
• Critical issues for the future of ADF.

The paper also presents the case of 'The Foundation for Enterprise Finance and Development' (FEFAD). This foundation is driven by the government rather than government subsidies, and is successful in reaching its target clientele in a cost effective manner.

The author concludes by summarizing the objectives of ADF in setting up its rural and urban credit programs, and suggesting a future course of action for ADF.