Small and medium-sized enterprises (SMEs) have a crucial role in the transition process in every country. SMEs already make up the vast majority of private agricultural businesses operating in Albania and because of their size and adaptability are likely to be the main source of employment generation. Improving the agricultural business environment for SME development is a key objective of the rural policy framework in Albania. The Albanian authorities are increasing the support given to the agricultural SME sector, in recognition of the growing importance of SMEs to the national economy. The institutional responsibility for the rural policy formulation and the supporting of the SME development remains with the Ministry of Economy. Institutional set up seems to be simple and straightforward. However, the impression is that they lack capacities to do their work. Various reports find the work in most cases is organized in a spontaneous way; although there are developed organization charts, there are not clear lines of responsibilities within the organization structures, etc. Agricultural reform measure have largely contributed to strengthening the rural private sector development and supported the SME development. However, the progress is still behind the other competing countries from the region. The main challenges associated with the development of the agricultural private sector, in particular SMEs, remain the relatively poor investment climate and the level of corruption. Poor law enforcement, very weak corporate governance, both at the macro and at the enterprise levels, lack of management skills and poor infrastructure, constitute major impediments to the SME development. The legislation and the regulations influence the SME-s in a wide range of ways. They influence the process of the creation of a business which consists of the business registration and the provision of the respective license. Basically, after the year 2000, Albania has approved several laws to enable the proper functioning of businesses. The improvement of the business climate or the creation of its regulatory and institutional mechanisms has been one of the priorities of the Albanian government. The commercial legislation is one of the priority areas in the framework of the integration process. There is still much more to be done in the area of the financing of SME-s since the climate of micro-credits or long term credits is not too favorable.  The findings are related to the fact that new SME-s encounter a lot of difficulties to receive a credit from the banking sector and there is a fairly high credit cost.  The conditions required from the banks are not too favorable for the businesses and the interest rates are too high in cases when the credit is required for investments in machinery and equipment. On the other hand, identifying the financing and the development of SME-s as one of its priorities in application of the SAA obligations, the Albanian Government  has approved several important laws in that framework.

small and medium enterprises; employment; legal framework; rural economy

Presentation: oral