Three decades after the collapse of communism, Albania, the country that suffered the harshest Stalinist dictatorship in Eastern Europe and the Balkans, has implemented a series of structural reforms to integrate into the European market and stimulate its economic development. However, this transformation process has not yet improved the Albanian startup ecosystem.
“The start-up sector has stagnated and in recent years no significant growth in the number of innovative startups with growth potential has been measured, according to a study carried out as part of an EU-backed project by the Gesellschaft für Internationale. Zusammenarbeit (GIZ) GmbH and the Swedish Embassy in Tirana.
According to the study, a number of problems hinder its development, including insufficient funding, very weak university-industry collaboration, corruption and access to financing. Albania’s private sector faces challenges: nine out of ten companies are microscopic in size and operate in traditional sectors such as agriculture, forestry, fishing, accommodation and catering.
Most startup funding relies heavily on government grants backed by very little money. Alternative financing resources such as crowdfunding and peer-to-peer lending do not have a legal basis.
The Albanian ecosystem still in the phase of “awareness and inspiration”
However, in recent years, Albanian start-ups and companies innovation The ecosystem has received financial assistance from different donors. However, the lack of coordination between these projects has failed to create long-term sustainable structures. The Albanian start-up ecosystem is still in the “awareness and inspiration” phase and remains very uncompetitive in the region and in the European market.
A road paved with challenges
Atina Laco, spokesperson for GIZ in Tirana, told Trending Topics SEE that innovative start-ups in Albania face a number of difficulties when getting started.
“Very few Albanian companies have achieved international recognition and success. Traditional business approaches still predominate in Albania and awareness of the benefits of innovative entrepreneurship is low. Although Albania is an almost homogenous society, with 90% of the population made up of ethnic Albanians, interpersonal trust is low,” Laco said.
Universities are slow to adopt modern trends
Albania has a very young population proficient in foreign languages and a high number of university graduates, but universities are only slowly resuming the current trend of not only providing employees for traditional industries, but also training students to create their own own company. Many young people prefer to work abroad with a salary higher than the Albanian average salary, rather than take the risk of starting their own business, leading to a significant exodus of qualified human resources and a brain drain from the country.
A very fragmented ecosystem
The innovation system in Albania is highly fragmented, with few links between science and the private sector and weak innovation support infrastructure. Additionally, the overall infrastructure supporting innovation is still quite underdeveloped and many business service providers struggle to identify and implement sustainable business models.
“There are gaps in the availability of comprehensive innovation support services for more advanced entrepreneurs and start-ups, such as product design, certification, prototype development, technology transfer, protection intellectual property rights, etc. », added Laco.
Support for nascent innovation slowly picks up
However, Albania’s burgeoning infrastructure of innovation support providers such as incubators, accelerators, innovation centers, coworking spaces, many of which are donor-funded, has emerged. They offer startup support services including training, mentoring, networking, but also coworking spaces and other facilities.
THE “The EU for innovation“The project works on this, focusing on improving the innovation ecosystem by strengthening the innovation capacity of start-ups, innovation service providers and policy makers, strengthening links between industry and science and innovation networks, and providing grants to innovative start-ups and innovation service providers.
Success
“KemiNet” is a startup that provides Internet connection and IT solutions in Albania. Together with GIZ, it implemented a program to support the employment of skilled labor and self-employed workers in the Albanian labor market, particularly qualified young people willing to acquire new skills for better respond to the demands of the ICT labor market in Albania. Following the “on-the-job training model”, which is very popular in Austria and Germany, GIZ has designed a “vocational training” program aimed at improving learners’ ICT skills.
The overall objective of the project was to stimulate employment and self-employment of qualified young people in local labor markets in Albania in the areas of basic hardware technologies and operating systems; Networking base; Website design and online marketing through joint cooperation with local private companies.
“The program has been very successful and many of our qualified interns have successfully started an internship, part-time or full-time job at different companies. There are also qualified participants who have launched their own businesses (start-ups),” Knit Bashari, owner of KemiNet, told Trending Topics SEE.
Difficult access to financing
Bashari notes that private sector investment in science and technology is very low compared to other countries in the region. The corporate and business structure is more focused on low-technology, labor-intensive and low-cost activities. The lack of investment in innovation is the result of difficulties in accessing financing.
Bank loans are primarily focused on businesses and have limited access to start-ups or small businesses. There are also very close links between the scientific community and the private sector, which poses a barrier to commercial innovation.
“Despite struggling to implement several policies and being programmed to support start-ups, Albania does not have a fertile business environment to promote start-ups. Some of the main problems that startups face are access to financing, raising funds for research and promotion, market size and lack of qualified and productive staff. On the other hand, there is no venture capital legislation to support the financing and growth of new businesses. Bashari said.
