Italian development aid in brief

1. Background and main reasons for the presence of Italian Cooperation

Albania is a low-middle income country (per capita GDP USD 3,821.092) with a moderately high level of unemployment (13%) (source IMF: 2013). It ranks 70th in the 2012 Human Development Index (HDI) with a value of 0.749, that is the 5th lowest among European countries after Moldova, Bosnia-Herzegovina, Macedonia and Ukraine (source HDI: 2013).

Geographical proximity, historical ties, economic, cultural and social exchanges make Albania a priority country for the Italian Development Cooperation (IDC), which is one of the key donors of the Country. Italy is committed to the Albanian sustainable socio-economic development and EU integration process through a consolidated presence and a comprehensive framework of development cooperation programs. The current IDC portfolio of planned and ongoing projects for Albania amounts to Euro 304.7 million, which sums up the financial commitment of the current Country Programme (Euro 51 million) and the leftover from previous programming. Remaining constraints along the path towards the EU integration of Albania and the leading role of Italy in this process justify the negotiation of a new multiannual programming of the Italian aid for Albania. The Italian Official Development Assistance (ODA) disbursed in Albania amounts to about 700 million Euros, invested since the early nineties in the country with the purpose of facing the 1990s emergencies, supporting modernization of public infrastructures, promoting democratisation and institutional strengthening, fostering sustainable socio-economic growth and, in recent years, accompanying the country’s integration into EU. A Framework Agreement on Italian-Albanian Cooperation has been signed on December 2, 2008. The current Country Programme has been defined by the Protocol on Italian-Albanian Development Cooperation 2010-2012 signed on April 12, 2010.

2. Other international donors, coordination and opportunities of division of labor, joint evaluation exercises (Harmonization)

Among the main bilateral donors active in Albania, according to the disbursement in the last 10 years are: the EU, Germany and USA. In addition, there is a considerable presence of International Organizations, such as OSCE, Council of Europe and World Bank and a consistent number of UN Agencies (inter alia, UNDP, UNESCO, WHO, UNODC, UNICEF, IOM, UNECE, UNEP).

As one of the major donors, the Italian Development Cooperation has an active role in all the main processes of donors’ coordination. Albania has a rather well-developed and government-led donor coordination system in place. Furthermore, the Fast Track Initiative of Division of Labour is becoming more and more developed. It is led by the Government of Albania, through the DSDC. As FT-DoL facilitator for Albania, IDC promoted a Memorandum of Understanding (MoU) signed in 2010 which recognized a lead donor for each sector. Italy was chosen as lead donor for Private Sector Development.

As regards the Instrument of Pre-Accession (IPA) framework, IDC has applied for the assignment through Indirect Centralized Management of the IPA 2013 program “Support to agriculture and rural development - SARD II”. Finally, Albania joined the UN Deliver as One (DaO) pilot initiative. In line with this approach, the Government of Albania – UN Programme of Cooperation 2012-2016 provides a single plan for all UN agencies in Albania, and promotes sustainable and equitable development in the areas of governance and rule of law, economy, environment, regional and local development and inclusive social policy.



3. Other expressions of the Italian Cooperation System in the country (NGOs, universities, local authorities, private sector) and strategies for their involvement

Italy is the main trade partner of Albania with the highest number of joint enterprises and locally based Italian companies (around 400), mostly represented by Small and Medium Enterprises (SMEs). IDC, with the Italian- Albanian Programme for the development of SMEs, provides Italian – Albanian SMEs with access to favorable credit facilities. Existing academic partnerships can be synergic with the ongoing IDC programme aiming at the establishment of an inter-universities ITC network managed by a dedicated Service Center on the model of the Italian academic research network GARR. Moreover, IDC has provided more than 45 scholarships in the last five years to allow public Albanian officials attendance and participation in post-graduate trainings held by Italian universities.

Many Italian regions participate and co-finance development cooperation activities, and two of them (Puglia and Emilia Romagna) have permanent representatives in Albania. Further opportunity of inclusive partnership of the Sistema Italia in Albania is provided by the Italian-Albanian Debt for Development Swap Programme (IADSA) with a budget of € 20 million, spread over five years.

4. General objectives of the Italian cooperation in the country, sharing with counterparts and consistency with international guidelines on aid effectiveness

The General objectives of the Italian Development Cooperation in Albania are:

• Fostering sustainable social and economic development;
• Supporting the country in the EU integration process.

IDC strategy and objectives for Albania are framed into the National Strategy for Development and Integration (NSDI), i.e. the national medium to longer term development strategy of the country, which is at the core of the alignment and harmonization process of the international partners of Albania. As a consequence, the Italian Cooperation contributes to the following NSDI priorities and policy objectives:

• Strengthen democracy and rule of law;
• Ensure competitive and sustainable economic development through efficient use of resources;
• Foster social inclusion, welfare and develop the labour market;
• Develop society based on knowledge, innovation and digital technology.

Local ownership and alignment of the Italian aid to Albania are ensured throughout the whole project cycle. Programme/project design is based on the national sector objectives as highlighted in the NSDI and relevant sectoral policies and carried out jointly with local stakeholders. Moreover, both country programme and projects bilateral agreements include provision for regular review mechanisms in order to maintain alignment and respond to emerging needs.

Democratic ownership of the local CSOs on IDC country objective are indirectly ensured through: i) the NSDI consultation mechanisms with non government policy stakeholders both during the design and the implementation phase of the national strategy and sector policies and ii) regular IDC consultations with Italian NGOs, which have well established partnerships with local institutions, communities, informal groups, private producers and local CSOs.

5. Priority sectors and expected results of the Italian Development Cooperation in Albania.

The current IDC portfolio of planned and ongoing projects for Albania amounts to Euro 304,7 million, of which nearly Euro 255,2 million are soft loans, Euro 29,5 million are grants and Euro 20 million are disbursed under the Debt for Development Swap Initiative. It sums up the financial commitment of the current Country Programme (Euro 51 million) and the leftover from previous programming.

IDC in Albania is currently active in 11 sectors, identified within the OECD DAC categories. However, the current 2010-2012 Country Programme, and that, currently under negotiation, for 2013-2015, focus on the following three main sectors: i)Private Sector Development; ii)Agriculture and Rural development; and iii) Social Development. Given its considerable portfolio of activities (about Euro 194 M), an additional investment in the transport/infrastructure sector of €3 million is also foreseen. At the same time, other areas of intervention will include water and sanitation, local governance and energy. The following are the main expected results:

• Private Sector Development: Strengthen the capacity of local entrepreneurship with particular reference to Small and Medium Enterprises, facilitating effective collaboration between Private Banks and SMEs, as well as promoting sustainable production standards and improved work conditions;
• Agriculture and Rural Development: i) Foster Albania’s adoption of the EU acquis; ii) Strengthen income generation of Albanian rural population and improve national food security and sustainable agriculture;
• Social Development: i) Strengthen inclusive education and Vocational Education and Training (VET); ii) Improve public health and preventive health care addressing inequality in health care service provision; iii) Promote social and economic inclusion of marginalised categories (e.g. people with disabilities, children, rural women, unemployed youth); iv) Employment generation and sustainable community development in rural and disadvantaged areas;
• Energy: Increase the electrical energy transmission capacities to turn the country into an electricity transmission hub in the region;
• Transport: Complete major investments on the national road network and develop Valona port on the basis of master plans, by rehabilitating and extending the port infrastructure and super-structure;
• Water: i) Expand and improve the quality of water and sewerage services sector; ii) Orientate utilities towards full cost recovery and control and iii) Enhance the institutional capacity of the sector and align the national legislation to the EU directives;
• Local Governance: Strengthen capacity of local government in bringing social services closer to citizens.

As far as resource allocation and financial instruments are concerned, the 2013 – 2015 IDC Country Portfolio might include: i) a grant component amounting to 5 million Euro for initiatives related to the education sector (Euro 3M), with a specific attention for the Vocational and Educational Training and Higher Education, and to agriculture and rural development (Euro 2M), possibly also in connection with the pending selection for the indirect centralized management of IPA 2013; ii) increase the provisions for the current Debt for Development Swap Programme to support social sector development; iii) remodel the undisbursed soft loans worth Euro 30M, available thanks to economies in the implementation of the projects in the energy and water sector. Moreover, if Albania will be confirmed as a middle low income country also for 2013, the country will be eligible for new soft loans, which might be used to fund new initiatives within the above mentioned 3 priority sectors.