Situation and cooperation

View of Tirana, Albania

Poverty in Albania has been cut significantly in the last two decades. Yet the global economic crisis and the euro crisis have also had an impact. Economic growth is centred around the urban areas of Tirana and Durrës. A lack of legal certainty, poor infrastructure, and corruption and organised crime are all holding back Albania's economic development. The Socialist-led "Alliance for a European Albania", with new Prime Minister Edi Rama at its helm, has been governing the country since September 2013. It has embarked on a determined course of reforms and has achieved some initial successes in the fight against corruption and organised crime.  Yet Albania still only achieves 33 out of 100 hundred possible points in Transparency International's corruption perception index, placing the country 110th out of 175 countries assessed.

Development potential

View of Lake Shkodra in Northern Albania

There is considerable potential in Albania to harness hydropower.  The engines of the country's growth are its textiles and shoe manufacturing industries, its tourism industry and its telecommunications sector.

Albania also has numerous natural resources such as chromium, copper, nickel, iron, coal, natural gas and oil. Extraction of these resources has, in the past, had a massive impact on the environment, however.

The backbone of the Albanian economy is agriculture. About 40 per cent of the workforce earn their living in this sector, which accounts for 22 per cent of Albania's gross domestic product. In the past few years, the sector has shown modest growth. The increase in fruit and vegetable exports is proof of improved productivity in the agricultural sector. In many parts of the country, though, the necessary infrastructure (roads, water and in many cases power) is still lacking, as are markets and capital for investment. The food industry and the service sector (for example tourism) have the potential to make a greater contribution to economic development and to provide more jobs

Priority areas of German cooperation with Albania

For Albanian-German development cooperation in 2014 and 2015, Germany provided financial cooperation loans and grants totalling around 23 million euros and also around 12 million euros in technical cooperation.

For many years now, development cooperation has focused on the following priority areas:

  • Energy
  • Drinking water supply, sanitation and waste management
  • Sustainable economic development.

In its bilateral development cooperation with Albania, Germany pursues several cross-cutting goals – not only poverty reduction and the improvement of people's everyday lives, but also support to help the country reach EU standards. 


High voltage powerline near Koplik, Albania

Germany's bilateral cooperation activities are geared to improving Albania's energy sector and making it more environmentally friendly. Projects and programmes in this sector are intended to help ensure that Albania, and the entire region of south-east Europe, has a power supply that is stable, sustainable and secure, and covers its costs. They also aim to make a contribution to global climate protection.

The funds made available under Germany's financial cooperation programme will be used to upgrade parts of Albania's national grid, such as the 110 kV transmission line in southern Albania. They will also be used to finance the extension of cross-border transmission lines. For example, the cross-border 400 kV transmission line between Albania and Montenegro, which was completed in 2011, is helping to improve the power supply in both countries and to integrate them into the European Network of Transmission System Operators for Electricity, ENTSO-E. Two further transmission lines between Albania and Kosovo and Albania and Macedonia are to help improve the regional transmission of electricity and to ensure greater energy efficiency.

As part of the energy sector programme, investments are being made in measures to increase energy efficiency – for example, by modernising public buildings in accordance with modern energy efficiency standards and by overhauling existing small-scale hydropower stations or expanding capacities. Germany's financial cooperation programme is also helping to fund a restructuring of Albania's electricity sector.

Drinking water supply, sanitation and waste management

Waterworks of Shkoder in Albania

Germany supports Albania in its efforts to upgrade its water sector to meet EU standards, as regards both rural and urban water supply systems. For instance, as part of programmes geared to improving municipal infrastructure, support is being provided for the construction of water supply and sanitation systems that are environmentally sound and economically viable in medium-sized towns. In some cases, this is being done in cooperation with the EU and with Switzerland. The financial cooperation support that Germany is providing in this sector is being complemented, under the technical cooperation programme of assistance, by advisory support for Albania's water authority.

At the request of the Albanian government, the German government is also supporting the introduction of a modern waste management system. For example, in the Korca region, a waste management scheme is being established across several local authorities that is environmentally sound, places minimal strain on natural resources and is also economically viable.

Sustainable economic development

The aim of bilateral development cooperation in this area is to create sustainable and inclusive employment and earning opportunities. This is done by supporting economic development, with a particular focus on small and medium-sized enterprises, and also by reforming the system of vocational training to bring it into line with EU standards. This should improve living conditions for broad sections of the population.

Germany is engaged in technical cooperation in support of sustainable economic development in rural areas of Albania and in support of small and medium-sized enterprises. The vocational training programme is helping young people to acquire the skills needed for the labour market. It focuses on establishing vocational training centres, additional training schemes, and measures to improve cooperation between the state and the private sector.

Albania is also part of the German government's projects and programmes for promoting cooperation between the countries of south-east Europe. Some examples are the Open Regional Funds for foreign trade, energy efficiency, municipal services, legal reform and biodiversity and also the support being provided for Prespa biosphere reserve. 

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