Albania

Albania produces much more than 90% of its electricity with hydropower. Precipitation levels have varied considerably in recent years with power plant output being insufficient when rain is scarce. Power then needs to be imported at high prices. As a result, Albania wants to expand its electricity grids to neighbouring countries in order to have sufficient capacity for electricity imports, but also to be able to export electricity when water reservoirs are full. Albania also wants to further exploit the untapped potential of hydropower. KfW is supporting the energy sector in several areas, such as expanding high-voltage grids. As early as 2011, Albania was connected to the European high-voltage grid via a transmission line from Tirana to Podgorica in Montenegro. A connection between Albania and Kosovo has been completed and a third connection to North Macedonia is under construction. Electricity transmission and distribution within Albania is also being modernised, and public buildings are being upgraded to be more energy efficient. KfW, for example, is promoting the renovation of student accommodation in Tirana. The Albanian government and KfW are also working together on a comprehensive reform of the sector. This is improving conditions for economic growth and employment and helping Albania move closer to the EU.

Albania has plenty of water, but in some cities people receive only two hours of drinking water a day. Moreover, sanitation systems lack the necessary structure. In rural regions the situation is even more precarious. This is often due to the run-down infrastructure. Less than 40% of waste is collected, with some of this being disposed in unorganised and unregulated disposal sites. On behalf of the German government, KfW is supporting the modernisation of the municipal infrastructure. Germany is currently the lead donor in this sector.

KfW is also helping the country develop national master plans for water supply, sanitation and waste management. This is providing Albania with a unique tool in the region to identify needs and make relevant investment decisions. The core element for KfW-supported investments is a performance concept that provides utilities with financial resources provided they meet certain minimum requirements.

Despite Albania's good economic performance in recent years, unemployment remains high. There is also a shortage of skilled workers. This is compounded by an ongoing exodus from rural to urban areas, which poses increasing challenges for the densely populated cities. Small and medium-sized enterprises in rural areas in particular often find it difficult to get loans from banks, which prevents new jobs from being created.

KfW, on behalf of the German Government, is helping the supply of labour by strengthening vocational training and education. As a first step, a vocational training centre near Tirana will be expanded, while at the same time options for additional investment in the vocational training system will be explored. Such investment will improve the education of vocational students and their chances of finding well-paid work. Complementing these are regional efforts on promoting training in Albania.

KfW are also helping to create demand for labour. For example, the rural credit guarantee fund was established with funds from the EU and the German Federal Government, enabling banks to grant more loans to small and medium-sized enterprises. The investments made possible as a result will create jobs and encourage long-term employment.