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PRESS RELEASE November 8, 2019

World Bank Group Publishes the 2019 Enterprise Survey for Albania

Tirana, November 8, 2019 — The results from the 2019 Albania Enterprise Survey paint a rich picture of the business environment faced by Albanian firms. The survey shows that firms in 2019 are performing better than they did in 2013, namely the real annual sales growth is considerably higher, and so is the annual employment growth. Also, firms are twice more likely to invest in fixed assets than in 2013, this is a rather significant sign of the positive general outlook of the private sector. However, labor productivity is still stagnating, thus constraining firms to grow further and create more jobs.

The World Bank Group Enterprise Surveys team has released new 2019 survey data for Albania on October 10, 2019. The data was collected in partnership with EBRD and EIB. The Enterprise Survey is a firm-level survey that covers a broad range of business environment topics, including access to finance, corruption, infrastructure, crime, competition, and performance measures. The results of the survey are used to inform, prioritize, and track over time important reforms enabling businesses to grow.  For this 2019 Albania data release, business owners and top managers in a representative sample of 377 firms operating across different sectors and regions were interviewed from January 2019 through May 2019.

Since 2013, Albania’s economy has also seen a sizeable rise in the share of firms exporting their goods to the international markets. Fifteen percent of firms in 2019 directly exported at least 10 percent of their sales, compared with 9 percent in 2013. Albania is now at the Europe and Central Asia (ECA) average on this rather stringent measure of exporting activity. 

As the economy expands and businesses grow in sophistication, their requirements for a high-quality business environment also increase. This includes access to a wider range of financial instruments, skilled workforce, fair and efficient court system, quality of infrastructure and public services. This survey shows how Albanian enterprises are adapting to business environment challenges and upgrading their capacities. To overcome skill mismatch, Albanian enterprises hire more workers, invest more in training their workers and innovating their business products or processes. The data shows a higher rate of innovation that the private firms engage in 2019 compared to 2013. Eighteen percent of firms introduced a process innovation in 2019, as opposed to 4 percent in 2013.   Forty-two percent of firms in 2019 reported introducing a new product or service, as compared to 10 percent in 2013 while ECA average is 29 percent. The percentage of firms that invest in Research and Development increased from 1 percent in 2013 to 15.4 percent in 2019.

According to the survey the labor market has become more inclusive: the percent of firms with women entrepreneurs increased from 13.1 percent in 2013 to 20.7 percent in 2019, while the proportion of female permanent full-time workers increased from 45.4 percent in 2013 to 52.8 percent in 2019.  

The survey shows that there are improvements since 2013 regarding regulations. Senior management of private firms now spend only 2.3 percent of their time dealing with government regulations in 2019, as opposed to 7 percent in 2013. ECA average is 11 percent, considerably worse than what Albania managed to achieve.

On the other hand, the general measures of perception of corruption and bribery show increases compared to previous survey. However, surveys on perceptions of businesses need to be interpreted carefully and aggregate survey results need to be broken down. For example, the share of firms that name corruption as their top obstacle, the change since 2013 is rather small. Also, many responses suggest improvements. For instance, in the process of securing government contracts, the share of firms reporting corruption decreased from 40 percent of firms in 2013 to 15 percent in 2019. In addition, corruption in the process of obtaining construction permits has dropped from 32 percent of firms reporting this in 2013 to 17 percent in 2019. The set of specific interactions where the perception of corruption has increased are: during tax administration, process of obtaining import licenses, in obtaining electrical and water connections.

Changes in perceptions are often hard to understand and interpret since they are often driven by more than direct experiences, and aspects that the Enterprise Survey does not measure. Moreover, the survey detected that firms have become more direct in voicing complaints about all aspects of their business operations. This is a positive development as voicing complaints helps identify the issues to be addressed. The list of the top most frequently named aspects as their biggest obstacle has changed considerably since 2013, with just tax rates and informality remaining in the same list across the years.

Overall, as supported by the findings of this survey, the business environment in Albania can significantly benefit by continuing reform progress in the justice system, governance and public service delivery, education, infrastructure, and access to finance. The World Bank is working together with the Albanian government to overcome many obstacles identified in the enterprise survey. A recent effort is the Regional Trade and Transport Facilitation Project, which aims to lower trade costs and increase transport efficiency among Western Balkan countries. This initiative alone is expected to reduce export and import costs by more than 10 percent. The Albanian authorities and the World Bank are also working closely together on deepening and diversifying the financial sector in order to unleash opportunities for enterprises to invest and grow.



Ana Gjokutaj