Press Release AIPR - Micro-credits Support a Growing Rural Economy

In 1957, when the gentle hills here were collectivized, peasants from a distant village descended upon the Biduli family’s prized vineyards. They were told to uproot the vines and grow potatoes and corn instead to meet the production quotas of the communist state. That’s how it was when Dashnor Biduli was born 6 years later.

By World Bank Reports
In 1957, when the gentle hills here were collectivized, peasants from a distant village descended upon the Biduli family’s prized vineyards. They were told to uproot the vines and grow potatoes and corn instead to meet the production quotas of the communist state. That’s how it was when Dashnor Biduli was born 6 years later. Today his young daughters, Marina and Johana, hurry down a dirt path on the same land, now privately-owned, between orderly rows of vines, jostling glasses on a tray. “They are the future owners,” smiles Dashnor, watching the girls approach. Sipping the mellow wine that Dashnor produces with his brother Flamur on land that once belonged to their great-grandfather, it’s easy to forget past hardships. Yet the Biduli brothers’ return to family roots was far from pre-ordained. It required a combination of luck, hard work - and timely micro-credits. Dashnor and Flamur, like other Albanians corralled into collective farming, were in a bind when the communist system collapsed. Land was returned to their family, but state-owned goods like machinery, livestock and greenhouses were grabbed and destroyed in the tumultuous regime change. Farmers were left to their own devices, without money to spare and in some cases barely able to survive. An alternative to poverty or immigration A World Bank project launched experimentally in 1992 offered a welcome alternative to dire poverty or hard-knock immigration. The idea was simple: offer small loans to trustworthy villagers and wait for their investments to bear fruit. This micro-credit scheme, supported with additional World Bank funds in 1999, has grown into a successful network of rural micro-credit associations serving over 10,000 members. Zana Konini was there at the project’s beginnings when $50 and $100 loans were dispensed to villagers in cash “under the shade of a tree.” Now the head of the thriving Albanian Savings and Credit Union, Konini remembers the thrill of the early days. “We helped thousands of farmers buy their first cow, sheep or farming equipment. People would use the cow’s milk to feed their children and sell the calf to pay back their loan once a year. We would write business plans for a single cow,” she says. Explaining the advantages of borrowing and investing capital was a challenge, she recalls. People didn’t understand why the World Bank - such a rich institution - was coming to poor villages offering loans rather than flour, sugar or grants. “Our program not only helped start a profitable rural economy but also introduced the basic concepts of a market economy,” she says. Fuelling the growth of Albania's rural economy To this day, there are no banks in Albania’s rural areas. Villagers use cash, not deposits, and keep their money at home. Micro-credit institutions, based on individual trust and solidarity between villagers, fill an important gap in the financial fabric of the country. Together with remittances sent by workers overseas, small loans helped Albanians emerge from the deep crisis of the 1990s. Now the credits support the growth of a promising rural economy. Most of the loans still finance agricultural and livestock investments but the share of trade, tourism and crafts is increasing. As farmers’ ambitions and productivity have grown, so has the amount of money that credit associations lend to their members. The ceiling on loans will soon be raised to $8,000, eighty times the original limit set thirteen years ago at the project’s inception. In cities, where a similar micro-credit scheme was supported by World Bank funds, commercial banks are starting to offer financial services geared towards small businesses. But here in Pinet, as in other rural areas, micro-financing is still a god-send. Around the village, set in a lush corner of the Tirana district where the plains gives way to coastal hills, the results are hard to miss. New greenhouses dot the landscape. Land parcels owned by members of the local Savings and Credit Association are better irrigated, better laid-out and more productive than the lots of other farmers. Investing in Albania's future Flamur, 36, the younger Biduli brother, was among the first villagers to take the leap, when he borrowed $600 in 1994. Over the years, the two brothers borrowed repeatedly to plant new saplings and build the concrete posts and wire structures on which the grapevines now grow. Success did not come at once. Vineyards mature slowly so the investment had to be paid off with other crops, melon by melon and peach by peach. Under communism, Dashnor had worked as a “brigade leader”, supervising 52 farm laborers. Now he had to work with his hands from dawn to dusk. There were hard years when the brothers went separately to Greece and Italy to work as waiters. “It was a waste of time and spiritual torture,” remembers Dashnor, 41. Like other unhappy immigrants, they came home determined to succeed. “My family is here and so are the investment opportunities,” says Dashnor. The brothers’ dream is to move from bottling unlabelled wine which they now sell to friends and acquaintances in the capital, to full-fledged wine production. Radical expansion may not be realistic just now. The brothers employ no one. And to fertilize their land, they have but one cow. But things are changing all around. Commercial banks are getting ready to do business in small towns. And already, with limited investments, the Biduli brothers have woken up the hills from their productive slumber. For three decades, their family’s land was forced to produce mediocre crops for the collective larder. Now the land is giving its very best: exceptionally sweet grapes. Flamur is sure of it, “this is our family’s future,” he says raising a glass.