SMEs depend on a supportive business environment to start, operate and grow, making sound policies, fair competition, access to finance and effective support services essential to their development. This cluster examines whether the policy, regulatory and institutional environment enables SMEs to start, operate, grow and exit the market under clear, predictable and proportionate conditions. It assesses how effectively SME considerations are embedded in policy design, as well as whether SMEs operate on a level playing field, including efforts to reduce informality, protect competition, ensure fair access to public procurement, and provide timely access to justice.
SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Albania
Abstract
Small and medium-sized enterprises (SMEs) play a pivotal role as the backbone of economic activity in economies that have undergone structural transitions and systemic shocks. In Albania, SMEs demonstrate notable adaptability and resilience, positioning themselves as key drivers of employment, entrepreneurship and local development. They account for 82.5% of total employment and represent 99.8% of all enterprises, highlighting their central contribution to economic growth and competitiveness (INSTAT, 2025[1]). This prominence underscores the need to systematically embed SME-specific considerations across all policy areas that affect private-sector development.
Creating an enabling environment for SMEs to invest, innovate and expand requires clear, predictable legislation, well-targeted support measures and effective co-ordination across government institutions. In this context, this section assesses government initiatives to promote an enabling environment for SMEs, in line with OECD principles on regulatory quality, better regulation and SME policy (OECD, 2022[2]; 2025[3]). It examines measures to facilitate market entry and exit, ensure that legislative and policy frameworks are evidence-based, proportionate and responsive to SME needs, and minimise administrative and compliance burdens. The section also considers the effectiveness of consultation mechanisms and the extent to which structured stakeholder engagement supports transparent, accountable and predictable policymaking.
2.1.1. Reinforcing regulatory, institutional and policy frameworks for SME lifecycle support
A solid institutional and regulatory environment is the foundation for supporting SMEs throughout their lifecycle, from establishment to growth and, where relevant, exit. Compared with other Western Balkan economies and Türkiye (WBT), Albania’s regulatory environment ranks among the strongest, trailing only North Macedonia and Montenegro (World Bank, 2024[4]; WIPO, 2025[5]). In this regard, progress during this assessment cycle reflects both regulatory reforms and strengthened institutional arrangements, alongside the introduction of new support programmes targeting SMEs and innovative start-ups (see section 2.4). Consistent with this, Albanian firms are less likely than their regional peers to view regulations as a barrier to growth, with the notable exception of tax-related regulations, where obstacles were perceived as higher than the regional average (RCC, 2024[6]). However, significant gaps remain in following through on adopted measures, particularly in monitoring and evaluating their effectiveness and in systematically integrating SME feedback to inform policy adjustments (OECD, 2023[7]). While governance structures have been reinforced since 2022, co-ordination remains fragmented, underscoring the need for more continuous and structured mechanisms to avoid overlaps and ease the administrative burden on SMEs. In this respect, the European Commission has noted that, although Albania’s regulatory framework shows a degree of alignment with the EU acquis, institutional capacity to support SMEs effectively remains limited (European Commission, 2024[8]).
A renewed regulatory framework for SME development was established in 2022 with the adoption of the Law on the Development of Micro, Small and Medium-sized Enterprises (MSMEs). The law introduced, for the first time, an official definition of MSMEs aligned with European standards, set out the forms of public support available to SMEs, and created a consultative council designed to systematise public-private dialogue. To manage state-funded financial support, the law introduced an Enterprise Development Fund administered by the Albanian Investment Development Agency (AIDA), the responsible body for delivering all public services to enterprises. Reflecting its expanded mandate, AIDA’s budget nearly doubled in nominal terms between 2023 and 2025, while staffing capacity increased from 39 to 51 employees since the last assessment (Council of Ministers of Albania, 2024[9]). The law is anchored in the Business and Investment Development Strategy (BIDS) 2021-2027, which serves as the government’s overarching framework for SME and enterprise policy.
Rather than treating SMEs as a standalone policy area, BIDS 2021-2027 embeds SME development within investment promotion, internationalisation, and human capital development priorities, with a strong emphasis on entrepreneurship, innovation and the development of the start-up ecosystem. This reflects Albania’s ambition to shift towards a more knowledge-intensive and innovation-driven business base. By 2027, the strategy aims to increase start-up density from 88 to 132 per million inhabitants and to raise its score on the Global Competitiveness Index’s innovation capacity pillar from 29.8 to 34 (MEI, 2024[10]). While up-to-date data on these specific indicators remain unavailable, Albania’s ranking in the Global Innovation Index surged in 2025 (Figure 2.1) (WIPO, 2025[5]). Challenges persist, however, in translating innovation-related inputs into commercial and productivity-enhancing outputs.
Notes: The values on the y-axis represent Albania’s ranking in the Global Innovation Index (GII), reflecting relative performance. The GII is a composite indicator that assesses innovation performance across economies, drawing on a broad set of metrics covering institutional quality, human capital, infrastructure, market sophistication and knowledge outputs.
Source: WIPO (2025[5]).
Implementation progress under BIDS has remained relatively consistent with previous cycles. The mid-term monitoring report assessing the implementation of the 36 actions planned for 2021-2024 found that around 72% of measures have been fully or partially executed (MEI, 2024[10]). Based on these findings, targeted amendments were introduced to the Strategy, including in areas such as economic diplomacy, start-up integration, access to EU programmes, and cooperation between VET institutions and businesses. However, performance against target values remains largely unmeasured or off track. For instance, the five-year survival rate of start-ups is estimated at approximately 40%, well below the aspirational benchmark of 65%. Among the most successful instruments implemented to date is the ProSEED programme’s “CoSolve-19” training and mentoring initiative, which combined grant financing with capacity-building support. The initiative trained 703 participants and awarded 229 grants of EUR 7 000 each, with monitoring results suggesting that employment impacts are more significant when financial support is coupled with technical support. Nevertheless, support remains heavily concentrated in Tirana (see section 2.4.1), and multiple government-funded and donor-driven initiatives too often operate in parallel, limiting scale and coherence.
The strategic focus on innovation and start-ups, complemented by the National Strategy on Scientific Research and Innovation 2023-2030 and the Smart Specialisation Strategy 2025-2030, has been further reinforced through dedicated legislation and institutional reforms. During the previous assessment cycle, Albania’s start-up and innovation ecosystem was still in a formative stage, having emerged only a few years earlier and operating without a centralised institutional framework. New foundations were laid with the adoption of the Law on Start-up Support and Development in 2022, which introduced a legal definition of start-ups within Albania’s regulatory framework, set out a range of associated benefits, and created a dedicated grant scheme. Building on this foundation, the government established Start-up Albania in May 2023 as a national agency tasked with consolidating and expanding existing initiatives and instruments to support start-ups, managing the official start-up register, and functioning as a “start-up one-stop-shop” (see Dimension 3). This institutionalisation was further strengthened with the adoption of the National Strategy for the Development of Innovative Entrepreneurship 2024-2030 in December 2024, including a dedicated green and digital agenda for innovative entrepreneurship and research and development (R&D) aimed at enabling start-ups to capitalise on the twin transition.
As part of the government’s broader digitalisation reform, Albania has made 95% of public services available through the e-Albania platform (OECD, 2025[11]). Rising slightly from 1 225 in 2022 (Government of Albania, 2022), the platform now offers 1 271 administrative services to citizens and businesses as of January 2026, most of them being fully digital and applying the once-only principle (e-Albania, 2026[12]). The platform now serves as the exclusive channel for business registration and licensing, operated by the National Business Center, and enables businesses to generate online certificates for taxation, social and healthcare contributions, liabilities and company status. The transition to fully digital service delivery is ongoing, with the remaining physical service counters expected to close upon completion of the digitalisation process. In parallel, the Open Data Portal (opendata.gov.al) is operational, providing access to an expanding range of datasets, among which six are specifically tailored to SME needs (Government of Albania, 2025[13]), contributing to greater transparency and data-driven decision making.
Further advances in digital service delivery have also been supported by Diella, Albania’s virtual assistant launched at the end of 2023, which processed over 1 million queries in its first year. Moreover, the e-Albania portal now also serves as the exclusive channel for business registration and licensing, operated by the National Business Center (NBC). Soon, the transition is expected to be completed with the full digitalisation of the application process, allowing the closure of the remaining physical service counters and further enhancing efficiency and accessibility. Procedures are already broadly aligned with European standards in terms of time, cost and administrative steps. Nonetheless, both registration and licensing processes are now under review with a view to further easing the administrative burden for firms. Proposed changes include eliminating the registration application fee (currently around EUR 1) and reducing the processing time for Group 1 licences from two working days to one.1
While some services and procedural guidelines were successfully transitioned to online platforms, the process remains tied to the deregulation reform and is still ongoing across all line ministries. The NBC, as the agency responsible for central co-ordination and oversight, collects business feedback through various channels. However, no mechanisms are currently in place to systematically track whether this input is considered and integrated into service improvements.
In 2024, Albanian businesses perceived tax-related legislation as the most significant regulatory obstacle to growth (RCC, 2024[6]). Against this backdrop, Albania implemented a major reform of its income tax framework through Law No. 29/2023, which entered into force in 2024. The reform centralised administration under the national tax authority, replacing the previous municipal collection of simplified business taxes, and consolidated digital filing through the e-Albania portal and the e-Filing system (Government of Albania, 2023[14]). The law also broadened the definition of taxable business income to include self-employment earnings, capital gains on asset disposals, royalties, and transactions involving digital and virtual assets, thereby strengthening the tax base. For self-employed persons and gig workers with annual turnover up to ALL 10 million (Albanian lekë) (approximately EUR 100 000) – one of the highest thresholds in the region – the reform introduced the option to deduct either presumed expenses (set by sector) or actual documented costs, with the selected method binding for at least three years. Although the framework combines progressive personal income tax with a single corporate income tax rate, transitional provisions apply a 0% tax rate until the end of 2029 to both self-employed individuals and incorporated businesses below a turnover threshold of ALL 14 million, introducing differentiated treatment across firm sizes and legal forms. While this approach lowers short-term tax liabilities for smaller businesses, the absence of a publicly available empirical assessment of behavioural responses to the new threshold structure creates uncertainty regarding the reform’s longer-term implications for firm growth, formalisation and compliance dynamics.
Albania’s insolvency framework is regulated by Law No. 110/2016 on bankruptcy. It is comparatively advanced by regional standards, including key elements designed to improve efficiency and predictability for businesses in distress, although it does not yet operate a structured early warning system for SMEs (see Cluster 2). Accelerated and out-of-court procedures are available, though the institutional capacity of SME support agencies remains limited. A step forward since the last assessment has been the tightening of licensing criteria for insolvency administrators in 2023, aimed at strengthening trust, professionalism and procedural effectiveness. Strong creditor protection further underpins confidence in the system. However, the absence of systematic SME-related insolvency data constrains the government’s ability to assess performance and draw evidence-based conclusions. Average bankruptcy proceeding duration aligns with EU benchmarks (see Cluster 2). Despite the lessons of the COVID-19 crisis, no new measures have been introduced since 2022 to enhance the resilience of the insolvency framework, for instance, by streamlining administrative procedures or establishing contingency mechanisms to address potential surges in insolvencies. The framework also continues to lack differentiation between fraudulent and honest bankruptcies, perpetuating cultural stigma around entrepreneurial failure. While procedural design and court supervision of administrators help to deter abuse, supporting the recovery of viable firms has not been prioritised in policy action or awareness-raising initiatives.
2.1.2. Securing systematic, comprehensive and transparent dialogue between policymakers and SMEs
Public-private consultation is designed to ensure that businesses have a meaningful voice in the drafting of legislation. Where consultations function effectively, they improve the quality of laws, enhance the predictability of the regulatory environment, and support a more business-friendly policy framework. Within the Western Balkans, Albania stands out as a frontrunner in this area. According to the 2024 Support for Improvement in Governance and Management (SIGMA) Public Administration report, Albania achieved the highest regional score for the “consultation on public policy” indicator with 64 out of 100, while the regional average was 41 (OECD, 2025[15]). This performance reflects both a legislative framework largely aligned with EU standards and a structured system for reporting and monitoring the performance of consultations, which remains unmatched in the region. The framework law has remained unchanged since the previous assessment (Law No. 146/2014 on Public Notification and Consultation), while implementation has advanced in terms of consultation frequency, transparency and accessibility. However, significant concerns remain about the effectiveness and accountability of consultations, as they often seem to have limited impact on the substance of legislation.
Stakeholder engagement in Albania is anchored in a formal institutional framework defined by Prime Minister’s Order No. 3/2021, which sets out the principles, responsibilities and procedures governing the consultation process. Broadly aligned with OECD standards on transparent and participatory rulemaking, the implementation of such a framework has improved in recent years. By 2023, nearly all ministries had adopted annual consultation plans and published performance reports that incorporated quantitative indicators such as participation levels, response rates and consultation duration (Institute for Democracy and Mediation, 2024[16]). The Council of Ministers consolidates these data into government-wide reports, while the RIA and Legislative Acts Programming Unit in the Prime Minister’s Office provides procedural and quality oversight, contributing to greater consistency across ministries. Nevertheless, operational gaps remain: several ministries implemented less than half of their consultation plans in 2023, and the absence of a structured monitoring and evaluation mechanism limits the administration’s capacity to assess consultation quality, measure policy impact and support institutional learning. Stakeholder participation is primarily facilitated through the Electronic Register for Public Notices and Consultations (RENJKP), which serves as a single, publicly accessible entry point for consultation notices, draft legislation and supporting documentation. Its systematic use has strengthened transparency and predictability in the regulatory drafting process. In 2024, 77 out of 78 draft acts requiring consultation were published on the platform, complemented by meetings, public hearings and targeted outreach by email.
Procedural compliance is high, with more than 97% of consultations meeting the statutory minimum duration, although consultation timelines do not consistently reflect the complexity of draft measures. The 205-page Economic Reform Programme 2023-2025, for instance, was subject only to the minimum consultation period. While these figures suggest a highly institutionalised process and one of the highest formal consultation rates in the Western Balkans Six (WB6) economies, consultations still cover only a limited share of overall legislative output. Broadly defined exemption clauses under the Law on Public Notice and Consultation have been applied extensively, covering nearly 93% of draft acts linked to sectoral strategic documents in 2024, up markedly from previous years (75% in 2023 and 64% in 2022). The lack of publicly available justification matrices for these exemptions reduces transparency and risks weakening the consultative function of the framework.
Even where consultations are conducted, participation by non-institutional stakeholders remains modest, and evidence of their involvement is not transparently reported. Available evidence indicates that half of line ministries received fewer than 20 comments across their consultations in 2023, while only one institution engaged as many as 75 non-governmental stakeholders (Institute for Democracy and Mediation, 2024[16]). Government reporting provides only aggregate participation data, making it difficult to assess the depth of private-sector involvement. Perception-based evidence points in a similar direction: according to the SIGMA Survey of Citizens, businesses and civil society actors in Albania feel less involved in legislative drafting than their regional peers (OECD, 2025[15]). Civil society representatives consulted in focus groups have also highlighted that earlier notification of consultations would enhance their capacity to prepare substantive contributions. Even though reliance on the RENJKP portal has broadened access and reduced information asymmetries, experience suggests that digital consultations, while cost-effective, tend to generate lower interaction than more targeted or in-person engagement formats.
Although Albania’s legislative and institutional framework is broadly aligned with European standards, and procedural compliance is consistently high, the European Commission’s Enlargement Report notes that consultation practices remain largely formal. Business representatives continue to raise concerns that their proposals and comments are rarely reflected in draft acts, limiting the perceived relevance and impact of the process (European Commission, 2024[8]). Institutions rarely provide justifications for rejecting or partially accepting stakeholder comments, and no clear procedures exist for addressing complaints about consultation processes (Institute for Democracy and Mediation, 2024[16]). Although regulatory impact assessments (RIAs) are required to be published with draft legislation under consultation, they are rarely produced and, when available, seldom report on how consultations influenced the draft act. The absence of such feedback and evaluation further weakens accountability and undermines stakeholders’ trust in the process.
The way forward
Strengthen SME data systems and co-ordination mechanisms. Albania has made progress in expanding the availability of SME-related data and improving the statistical basis for SME policymaking. However, data collection remains dispersed across several institutions, with limited integration of information sources. While this reflects the involvement of multiple actors in the SME policy ecosystem, it can make it more difficult to obtain a comprehensive and consistent picture of SME performance and needs. Further efforts to improve data quality, enhance co-ordination among data-producing institutions, and promote greater standardisation and interoperability of data systems would support more effective monitoring and evaluation of SME policies.
Develop a programme to reduce administrative burden on SMEs. Albania is encouraged to adopt a strategy for legislative simplification and administrative burden reduction, focussed on identifying, rationalising and eliminating unnecessary charges and procedures for businesses. While the expansion of digital government services and the establishment of business one-stop-shops have eased some compliance costs, no comprehensive reform agenda currently addresses broader legislative simplification. Such an agenda should also include measures to reduce para-fiscal burdens on businesses, drawing on regional good practices.
Prioritise enforcement of mandatory RIA requirements by strengthening oversight and applying more rigorous quality control standards. Efforts should focus on improving the analytical quality of RIAs, including the assessment of impacts, consideration of alternative policy options and effective use of stakeholder input, while continuing capacity-building activities for civil servants. The government should also enhance transparency by systematically publishing RIAs and ensuring meaningful stakeholder consultation. At the same time, Albania should accelerate ongoing preparations for the gradual extension of RIA to selected categories of secondary legislation, particularly Council of Ministers Decisions with significant impacts on businesses and citizens, through a phased implementation plan with clear timelines and pilot applications.
Strengthen the accountability, transparency and impact of private sector engagement in policymaking. Albania is encouraged to strengthen the accountability of its consultation system by ensuring that exemption clauses are applied transparently, monitored systematically and used only in clearly justified cases. Institutions should also be required to explain how stakeholder comments have been considered and reflected in draft acts and RIAs, including through consultation feedback reports, thereby reinforcing the credibility and influence of the consultation process. To improve the quality of engagement, Albania could complement online consultations with more targeted outreach and use of interactive and virtual consultation formats.
Slovenia consolidates enterprise data through the Slovenian Business Register (PRS), managed by AJPES, which functions as the government’s central reference register of business entities. Depending on the legal form, PRS either acts as the registration authority of record or integrates registration data transmitted from other competent bodies, providing a single, authoritative source maintaining core business attributes consistently across institutions. In addition to registration, it supports the electronic collection of data for statistical surveys in co-operation with the Statistical Office and the Bank of Slovenia, and it provides structured register data for re-use. The register environment is also linked to tax administration processes: once an entity is registered, entry into the tax register is done ex officio, and information is channelled through one-stop-shop arrangements.
Aspects of this model may offer useful policy insights for Albania as it strengthens its enterprise data infrastructure. One possible direction would be to progressively develop the existing NBC structures into a single “backbone” register that could serve as an authoritative enterprise master dataset, support greater alignment between tax, statistical and business-support datasets.
Source: Agency of the Republic of Slovenia for Public Law Record and Services (2026[17]).
One of the key preconditions for fostering a favourable business environment is ensuring that all firms operate on a level playing field, where the rules of fair competition and integrity apply equally, including in public procurement. When unfair competition is tolerated, special or ad hoc rules favour dominant firms, and informality remains widespread, the result is resource misallocation and market distortions.
In Albania, informality has remained high since the previous assessment. Recent reports by the European Commission show that informality continues to constrain the revenue base, with informal labour significantly reducing public income through wage underreporting (European Commission, 2025[18]). By contrast, the economy has increasingly aligned with the European Union’s standards on fair competition, despite inefficiencies in public procurement and persistent support for loss-making state-owned enterprises (SOEs) (European Commission, 2024[8]). Furthermore, Albanian SMEs struggle to access efficient and accessible legal remedies, with high case backlogs and low levels of commercial specialisation within judicial systems, which restrict available legal options (EBRD, 2023[19]).
The following section will assess Albania’s efforts to level the playing field for SMEs and foster a more favourable business environment by tackling informal competition, safeguarding fair market conditions in both private and public contracts, and ensuring timely legal recourse for SMEs.
2.2.1. Tackling informality for a more competitive business environment
The informal economy mainly comprises SMEs operating outside legal requirements and conventional regulatory frameworks, typically concentrated in agriculture, construction, trade, and services (OECD, 2024[20]). Although individually small, these enterprises collectively represent a significant loss of government revenue and a distortion of the business environment as a whole (OECD, 2023[21]).
In Albania, the informal economy is estimated to account for 30% to 35% of total gross domestic product (GDP), up from 7.2% in 2019 (IMF, 2022[22]). This trend can also be observed through the Balkan Barometer, which shows that since 2022, an increasing number of businesses have identified the informal economy and unfair competition as obstacles to their growth (RCC, 2024[6]; 2022[23]).
High economic informality is driven by a high level of informal employment in Albania, with the economy recording one of the highest levels of informal labour in the region (European Commission, 2024[8]; ILO, 2025[24]). In 2024, unregistered employment in Albania accounted for approximately 29.4% of the total employed population, above the regional average of 20%, and remained broadly stable over the last few years (Figure 2.2) (OECD, 2025[25]; European Commission, 2024[8]).
Note: Data are unavailable for Kosovo* (2017, 2018, 2019) and Montenegro (2017, 2018, 2019).
Sources: OECD (2025[25]); ILOSTAT (2026[26]).
Sectoral data from the International Labour Organization (ILO) show that agriculture, wholesale and retail trade, and construction are the sectors most affected by informality. Agriculture alone accounts for an estimated 63.9% of all informal employment, far exceeding wholesale and retail trade at 12.6% and construction at 7.6% (ILO, 2025[24]). As wholesale and retail trade and construction are among the sectors with the highest concentration of SMEs in Albania, informality directly affects a large share of the SME population (INSTAT, 2024[27]). By contrast, the lack of disaggregated enterprise data for agriculture constrains the assessment of the scale of SMEs operating in this sector, despite its dominant contribution to informal employment. Taken together, the concentration of widespread employment informality in SME-intensive sectors and the limited visibility of SME activity in agriculture suggest that employment informality affects a substantial, though only partially measurable, share of the Albanian SME base. Widespread employment poses a risk to both SMEs and the broader business environment, as companies operating in full compliance with the law may find themselves at a competitive disadvantage compared to firms that conceal labour costs and rely on unregistered workers. Addressing this challenge requires targeted efforts to promote SME formalisation, combining incentives for compliance with stronger enforcement and increased penalties for irregularities.
To encourage formalisation and guide policy work, Albania adopted in 2024 the Medium-Term Revenue Strategy 2024-2027, replacing the earlier 2022-2026 strategy, which had neither been formally adopted nor incorporated the conditions set out in the European Commission’s Growth Plan and the economy’s Reform Agenda. The Medium-Term Revenue Strategy focusses on tax simplification for SMEs, aiming to streamline tax procedures by raising the value-added tax (VAT) registration threshold to ALL 10 million (EUR 100 000), shortening the average refund time from 35 to 25 days, lowering point of sale (POS) commissions for greater uptake, and expanding digitalisation of fiscal services (MEI, 2024[28]).
Early evidence suggests that the Medium-Term Revenue Strategy is being successfully implemented, with some degree of positive effects already emerging. For instance, POS use among SMEs has increased significantly in the economy, with the number of active POS platforms rising from 16 227 in 2022 to 24 481 in 2024 (Bank of Albania, 2025[29]). Additionally, the Albanian government introduced a new update to its digital fiscalisation platform in April 2025, allowing for the pre-filing of VAT declarations (General Directorate of Taxes of Albania, 2025[30]). The new system effectively precalculates VAT liabilities and significantly eases administrative burdens, which are often heavier for SMEs due to their limited resources and smaller operational capacity. As a general outlook, domestic VAT revenues increased by 29.8% since 2022, from ALL 45.9 billion (~EUR 387 million) in 2022 to ALL 59.6 billion (~EUR 502 million) in 2024, reflecting a higher degree of formalisation of the economy, with more businesses operating through traceable transactions, among other factors (MEI, 2025[31]).
Prior to the adoption of the Medium-Term Revenue Strategy, Albania introduced Law No. 29/2023, on income tax, entering into force in 2024 (see Section 2.1.1) and maintaining a 0% income tax rate as a transitional measure for commercial and self-employed individuals, as well as certain entities with an annal turnover below ALL 14 million (~EUR 145 000) (Government of Albania, 2023[14]). The measure is set to last until 2029, after which the tax on net income will revert to the standard rate of 15%. Overall, while this reduction is expected to reduce informality among micro-enterprises and self-employed workers, which on average have a yearly turnover below ALL 11 million (~EUR 105 000), by lowering the tax burden (INSTAT, 2025[32]), there is limited evidence to gauge how firms and individuals will adjust their behaviour under the new threshold regime, making the reform’s longer-term effects difficult to assess.
In addition to providing incentives for SMEs to enter the formal economy, governments also need to develop a robust enforcement system capable of detecting irregularities and imposing appropriate penalties. Weak enforcement of compliance regulations has been directly correlated with high levels of informality (OECD/ILO, 2019[33]).
Since the last assessment, Albania has undertaken several measures to tackle irregularities through increased enforcement and higher levels of control. In 2022, the General Tax Directorate officially penalised non-electronic fiscalisation, effectively compelling SMEs to adopt electronic invoicing following the implementation of the Law on Fiscalisation and Invoice Monitoring of 2019 (Government of Albania, 2020[34]). Albania has also increased the use of digital tools to tackle informality, for example, through the introduction of the Matrix of Intelligence and Risk Assessment (MIRA), a programme powered by artificial intelligence (AI) and developed in co-operation with the ILO, capable of facilitating labour inspection by rapidly detecting cases of undeclared work (ILO, 2025[35]). The programme was developed by the State Labour Inspectorate (ISHP), the institution responsible for compliance with labour laws in Albania. Overall, these measures have shown a positive impact, with ISHP data showing an increase in fines issued between 2022 and 2024 alongside a reduction in inspections, possibly indicating a more efficient detection system resulting in more targeted inspections (ISHP, 2025[36]).
Together with the progress achieved in revenue administration and enforcement capacity, ongoing reforms to streamline business registration are further strengthening incentives for firms to formalise their operations. Business registration services were fully digitalised in 2024, officially transitioning all services to the e-Albania portal (see Section 2.1.1). This measure is set to shorten processing times and facilitate entry into the formal economy for businesses, albeit its full impact on SMEs will depend on users’ access to digital services. While increased digitalisation has not translated into a significant rise in business registrations, which have remained relatively stable at around 15 000 new enterprises annually between 2022 and 2024, a substantial increase in the registration of farmers can be noted, with their number growing from 84 369 in 2022 to 105 709 in 2024, marking a 25% increase (INSTAT, 2024[37]).
2.2.2. Protecting and monitoring fair market competition
One of the most important aspects of a level playing field is maintaining competitive neutrality, ensuring that no entity operating in the market benefits from preferential access to market or public resources. SMEs are particularly vulnerable to unfair competition, as their smaller size and limited capital make it harder for them to compete with firms that benefit from market distortions. This principle is especially critical in public procurement, where transparency and non-discrimination in bidding are essential for effective contract allocation.
In Albania, the framework for fair competition is defined by Law No. 9121/2003 on Competition Protection. It is enforced by the Albanian Competition Authority (CAA), an independent public body responsible for monitoring the business environment and issuing legally binding decisions against non-compliant companies. Since 2022, budget allocation for the CAA has steadily increased, from ALL 74.5 million in 2022 (~EUR 770 330) to ALL 113.1 million in 2024 (~EUR 1.1 million) (CAA, 2025[38]). However, the number of total decisions has not increased in parallel, suggesting that capacity gains have not yet fully translated into higher enforcement activity. Consequently, the benefits of this institutional strengthening may not have reached SMEs, which remain less affected by the CAA’s current enforcement focus. A proposed amendment to the Law on Competition Protection in 2023 is set to strengthen enforcement tools and better address collusive bidding,2 which often hinders SME market access; however, the draft has not yet been adopted and remains under public consultation.
When it comes to its monitoring mandate, the CAA focusses its oversight on key sectors where irregularities are more likely to affect a larger share of the population, including telecommunications, pharmaceuticals, energy production, banking, insurance and agriculture (CAA, 2023[39]). However, most of these sectors are markets where large enterprises account for the majority of capital and resources, with SMEs having little to no participation, except in agriculture. While the CAA’s focus on large and systemically important sectors is necessary to safeguard market integrity, it inevitably limits the Authority’s direct engagement with SME-intensive markets. Strengthening analytical and monitoring capacity in sectors where SMEs are predominant could help ensure that competition policy also supports a more inclusive and level business environment.
The CAA complements its oversight and enforcement role with awareness-raising activities for the private sector, including training, workshops and guidance on implementing compliance programmes. Although lacking a specific framework aimed at SMEs, the CAA's activities are instrumental in maintaining a fair business environment through engagement with private stakeholders. For instance, it organised approximately ten workshops between 2022 and 2024, with several stakeholders being SMEs, including a roundtable with local SMEs in the Fier Region in 2022 and a workshop with the Commercial Union of Albania on bid rigging in 2023 (CAA, 2023[39]). This type of engagement is highly beneficial for smaller firms, which often struggle to remain informed about evolving compliance standards due to their limited size and capabilities. Ensuring the continuity of such activities strengthens their long-term impact; however, the CAA reported no meetings with local SMEs in 2024 (CAA, 2025[38]). Additionally, the CAA regularly offers businesses the opportunity to express their views on decisions it takes and to report breaches of competition law. However, the uptake of these measures by SMEs remains underreported.
Fair competition and transparency are key principles in public procurement, as transparent processes foster competitive markets by providing all potential suppliers, including smaller firms, with equal access to information and opportunities (OECD, 2025[40]). Public procurement is an essential part of the Albanian economy, increasing from 9.4% of total GDP in 2022 to 16.5% in 2024, amounting to approximately ALL 402.3 billion (~EUR 3.9 billion) (Public Procurement Agency, 2025[41]). It plays a central role in the business environment and offers considerable growth potential, underscoring the need for SMEs to have fair access to public contracts and benefit from the opportunities they present. However, survey data indicate that 56% of businesses in Albania believe public procurement operates through prearranged agreements, with many companies avoiding bidding altogether due to perceived preconceived outcomes (OECD, 2025[15]).
Against this backdrop, SMEs dominated the domestic public procurement landscape in 2024, securing 94.6% of all awarded procedures, either individually or in consortia with other SMEs (Figure 2.3), compared to 55.3% in 2022 (Public Procurement Agency, 2025[41]). This represents an approximate 71% increase in the share of public contracts awarded to SMEs, signalling strong progress in their inclusion within public procurement. Competition levels, however, remained mixed; on the one hand, small-value procurements continued to attract high participation; on the other, approximately 25% of high-value procurements above ALL 1 million (~EUR 850 000) concluded with only one bid submitted (Public Procurement Agency, 2025[41]). This suggests that headline improvements in SME participation may mask persistent challenges in ensuring fair competition, particularly for larger contracts.
Source: Public Procurement Agency (2025[41]).
In 2024, the Law on Public Procurement was amended to harmonise EU Directives on public procurement in specific sectors (namely water, energy, transport and postal services sectors) in an effort to increase the transparency of the bidding process, such as through the full digitalisation of communication between stakeholders, and the introduction of digital tools such as a public procurement passport to facilitate the identification of every tender (see Dimension 5b) (Government of Albania, 2024[42]). The increased transparency and digitalisation of procurement procedures are likely to facilitate SME participation by streamlining the bidding process and increasing fair competition. However, some legal requirements, most notably tender securities,3 currently set at 2% of contract value, can impose a significant financial burden on smaller companies, while favouring larger ones. While mitigating measures exist, such as exemptions for low-value procurement procedures and alternative forms of securities, these requirements are likely to continue limiting SME participation in higher-value tenders.
To further strengthen SME inclusion in public procurement, Albania has made SME participation a core component of its recently adopted National Strategy for Public Procurement 2024-2030, with a dedicated indicator to track progress. This indicator measures the share of public procurement contracts awarded to SMEs relative to total contracts, with a baseline of 93.9% and a target of at least 50% by 2030 (Government of Albania, 2024[43]). While this approach effectively institutionalises SME participation in procurement as a quantitative benchmark, its effectiveness will depend on whether future implementation efforts also address Albania’s continued prevalence of single-bid tenders and limited use of quality-based award criteria, and whether high SME participation rates translate into market access rather than repeated awards to the same firms.
A solid institutional framework for fair competition must also ensure balanced public support within the business environment, avoiding disproportionate advantages to any one entity, particularly in cases of government support to SOEs. Due to their size and capital resources, SMEs face greater challenges entering markets and competing with SOEs that public financial institutions and guarantees support. Current SME public support programmes face the risk of being crowded out by subsidies targeting SOEs, with at least 7 of the 21 SOEs owned by the Albanian Ministry of Finance reported as loss-making in 2022, thus requiring financial support (OECD, 2024[44]). According to data collected by the Albanian government on economic damage due to irregularities in public spending, 29.2% was caused by SOEs, highlighting their financial difficulties (Ministry of Finance, 2024[45]). Both OECD and EU data show that SOEs in Albania continue to suffer from limited oversight and decentralised ownership responsibilities, with shares scattered across ministries and no central co-ordinating body (European Commission, 2024[8]; OECD, 2024[44]). This contributes to SOEs operating in an uncompetitive manner, potentially with significant repercussions for SMEs. In particular, since SOEs in Albania largely operate in essential sectors such as electricity, gas, infrastructure, and telecoms, their low profitability can translate into higher costs for SMEs, undermining their competitiveness due to their relative inability to absorb increasing input costs (OECD, 2024[44]).
2.2.3. Providing efficient judicial and out-of-court dispute resolution mechanisms
When it comes to dispute resolution, SMEs are particularly vulnerable to lengthy, costly procedures. Due to their small size and limited financial resources, SMEs need legal decisions delivered promptly and compensation disbursed without delay in litigation, as they may lack the capacity to absorb temporary losses or sustain prolonged uncertainty to the same extent as larger companies. It is thus essential to create a legal environment that supports both quick and cost-effective judicial processes, while in parallel encouraging alternative dispute resolution (ADR) mechanisms to streamline procedures. In Albania, SMEs continue to face barriers to dispute resolution, with a high backlog of cases, limited court specialisation and a weak mediation framework, further complicating access to justice.
To ensure quick resolution and dedicated processes, an efficient judicial system for SMEs requires the establishment of specialised commercial courts. Albania, however, has no dedicated commercial courts or commercial divisions, and business disputes are handled in civil courts. Together with North Macedonia, Albania is one of only two WBT economies without a separate commercial court system.
In 2023, a judicial reform came into effect, modifying Albania's judicial map by reducing the number of judicial districts from 22 to 13 and integrating commercial case handling into the civil divisions (Government of Albania, 2022[46]). As a result, SMEs risk receiving inconsistent or poorly aligned treatment, as their cases are handled within the same procedural frameworks as non-commercial civil disputes. Furthermore, in Albania, civil cases account for most of the legal backlog, suggesting significant waiting times, with trial durations reaching 1 250 days in 2023 (High Judicial Council of Albania, 2024[47]). Although Albania adopted the Court Backlog Reduction Strategy 2024-2027 to streamline judicial processes and reduce pending cases, it did not address commercial cases. Moreover, since 2022, no significant changes have been made to current legislation to improve the commercial specialisation of courts, signalling that business disputes have not been a primary focus of judicial reform.
When backlogs slow the judicial system, it is important for SMEs to have access to a range of more efficient out-of-court solutions. While Albanian law formally allows resort to ADR, in practice, it remains underused (European Commission, 2024[8]). The Law on Mediation No. 10385/2011 provides the legal basis for out-of-court mediation across civil and commercial matters, but does not require judges to refer cases to mediation or establish it as a default option in commercial disputes (CEPEJ, 2023[48]). Despite its potential benefits for SMEs, particularly lower costs and faster resolution, mediation remains largely unused, with no cases referred in 2022 (European Commission, 2023[49]). This underutilisation is further reflected in limited capacity: in 2023, Albania had 126 mediators, or approximately 1 mediator per 22 200 inhabitants, a relatively low ratio that underscores the marginal role of mediation within the justice system (CEPEJ, 2024[50]).
Arbitration is another possible solution for out-of-court disputes for SMEs, offering a faster and more flexible alternative to court litigation. In Albania, however, a concrete legal framework for arbitration was introduced only in 2023 with the adoption of Law No. 52/2023 on Arbitration, which fully aligns with the standards set by the United Nations Commission on International Trade Law (UNCITRAL) (ICC, 2024[51]). The law formalises the validity of electronically signed arbitration agreements, increasing access to arbitration for both private and public entities and establishing reasonable pricing for its procedures (Government of Albania, 2023[52]). The introduction of the Law on Arbitration marks a positive development for SMEs, as it establishes several mechanisms that could improve their access to out-of-court dispute resolution. For example, it allows for online hearings and remote participation, facilitating accessibility for SMEs by reducing travel and representation expenses, key aspects for SMEs not located in urban centres or near arbitration institutions (Government of Albania, 2023[52]). The law also strengthens legal safeguards by allowing interim measures before the constitution of the arbitral tribunal, enabling parties to mitigate risks such as insolvency or bankruptcy; here, delays could have severe financial consequences (Government of Albania, 2023[52]). This is particularly important for SMEs, whose limited resources make quick legal decision making critical, for example, in cases of delayed invoices, which remain to this day one of the major causes of SME bankruptcy in the European Union (European Commission, 2025[53]). Lastly, the law also establishes that costs must be proportionate to the dispute, facilitating access to SMEs with limited capital (Government of Albania, 2023[52]). While the introduction of the arbitration framework constitutes a positive institutional development, its effectiveness for SMEs will ultimately depend on uptake and implementation, underscoring the need for systematic monitoring and impact evaluation over time.
The infringement of Intellectual property rights (IPR) is another important source of disputes for SMEs. In this regard, Albania has made notable progress in aligning its IPR framework with EU standards, particularly through the adoption of Law No. 52/2025 on Trademarks, which aims to strengthen the General Directorate of Industrial Property, the central authority responsible for IPR registration and oversight (Government of Albania, 2025[54]). However, no simplified procedure framework for SMEs or SME-specific channels for resolving IPR disputes exists, which severely limits their access to efficient and effective legal procedures.
The way forward
Strengthen competition monitoring and enforcement in SME-intensive sectors. While the CAA has conducted extensive monitoring in sectors dominated by larger companies, such as telecommunications, pharmaceuticals, and energy production, it is encouraged to expand its focus to more SME-dominated markets, especially in light of the recent budget increase. Expanding competition oversight to SME-intensive sectors would strengthen the effectiveness of competition policy and reinforce trust in market institutions.
Enhance SME engagement and monitoring of their participation in competition processes. The CAA’s current legal framework allows for the collection of opinions from SMEs, but further efforts should be made to encourage, record and incorporate their inputs. Furthermore, actively seeking consultation with SMEs by continuing outreach activities with local businesses may increase awareness of competition frameworks.
Enhance the use of alternative dispute resolution mechanisms. Both mediation and arbitration are efficient out-of-court dispute resolution tools for SMEs, but remain underutilised in Albania despite the adoption in 2023 of a new Law on Arbitration. Raising awareness on both mechanisms would help normalise their use, alongside measures to build capacity, such as the inclusion of arbitration clauses in business contracts and the introduction of mandatory mediation for certain commercial disputes (see Box 2.2).
Facilitate SME access to intellectual property registration and dispute resolution. Although Albania has made progress in aligning its legal framework with EU standards, there is no dedicated mechanism for IPR disputes, nor are there specific procedures for SMEs regarding intellectual property. Creating SME-specific procedures to protect intellectual property would strengthen SMEs' capacity to safeguard their innovations and benefit from them.
To reduce the backlog of pending civil cases and promote ADR, Italy introduced in 2010 a framework that makes mediation compulsory as a first step in certain types of civil and commercial disputes.
The disputes subject to compulsory mediation include, among others, those related to property rights, rentals, loans, company leases and claims for certain types of damages. The established framework also requires mediation in disputes between banking and financial institutions and their clients for sums up to EUR 100 000. If in such cases mediation is not undertaken before resorting to civil or commercial courts, the judge may declare the claim inadmissible, compelling the parties to seek mediation.
Under Italian law, mediators must be registered in a centralised register under the supervision of the Ministry of Justice, with the most recent data showing 22 490 registered mediators, equivalent to approximately 1 mediator per 2 617 inhabitants. In 2023, Italy recorded 178 182 mediation cases.
Policy impact
Mediation in Italy has proven successful in reducing the number of cases that rely on court proceedings, with data from the Ministry of Justice showing 50.1% of all mediation cases in 2023 leading to an agreement, with 30.4% already after the first meeting. Similarly, 51% of total mandatory mediations were successfully settled, and 31% already after a first meeting. This marks a significant number of disputes that could otherwise have further increased the number of pending cases in civil and commercial courts.
Sources: Ministry of Justice (2023[55]); European Parliament (2011[56]).
Access to finance is a critical enabler of SME establishment, growth and resilience, allowing firms to invest in innovation, expand operations, and manage cash flow. Limited access can disproportionately constrain smaller businesses compared with larger, better-capitalised firms.
Overall, following recent policy rate cuts, SME borrowing costs have eased in most OECD Member countries, but they remain above pre-COVID levels. Reflecting still-tight financing conditions, 25 of 39 OECD Member countries recorded a lower share of outstanding SME loan stocks in 2024 than in 2023 (OECD, 2026[57]).
Consistent with this pattern of constrained external finance, Albanian firms continue to rely heavily on internal resources. In 2023, 43% of businesses identified internal funds as an important source of financing, ahead of all available external sources, such as bank loans (34%), credit lines (30%) and equity financing (26%) (Dushku, 2025[58]). However, cyclical factors appear to have played an important role in explaining recent credit growth, while structural barriers to accessing finance persist. Key factors behind this performance include persistent structural barriers to accessing corporate credit and the limited availability of financing options beyond bank loans, particularly for SMEs.
Expanding SMEs’ access to finance requires improving the use of assets as collateral, notably by strengthening asset registration systems that broaden the collateral base and facilitate access to bank finance. In parallel, the government can play a central role in establishing the basic legal and regulatory frameworks necessary to support alternative financing mechanisms, such as leasing, factoring, venture capital and online avenues for alternative finance, which remain underdeveloped in Albania. Complementary measures, including targeted credit guarantees and public credit lines, can further incentivise financial institutions to lend to SMEs. Finally, direct public support, such as grants for investment in innovation, greening and digital transformation, can strengthen SMEs’ capacity to invest and grow despite existing financial constraints.
In this context, this section assesses the success of policies in enabling SMEs’ access to bank finance and alternative financing avenues, as well as the direct financial support implemented to encourage SME establishment, operations and growth.
2.3.1. Facilitating bank lending to SMEs
Access to bank finance is crucial for Albanian SMEs to sustain operations and drive growth. In Albania, the financial system relies heavily on the banking industry, constituting 90% of total financial system assets in December 2023 (Bank of Albania, 2024[59]). The Albanian banking sector is generally well-capitalised and therefore resilient to economic shocks: in December 2023, the core capital adequacy ratio4 was 19.3%, surpassing the euro area (15.9%) (European Central Bank, 2025[60]). The banking sector is also broadly liquid and profitable, with high liquidity assets and non-performing loans falling to 4.7% of total gross loans in December 2023, the lowest level since 2008 (Bank of Albania, 2024[59]).
Despite a generally sound banking system, Albania’s credit infrastructure remains underdeveloped, constraining SME access to finance. As of 2025, the Credit Registry managed by the Bank of Albania covers only 14%5 of businesses and does not include data from retail or utility providers. Moreover, the lack of a legal framework to establish a private credit bureau undermines the completeness of credit information in the economy and contributes to banks’ cautious lending behaviour.
Albania’s asset registration systems also penalise SME lending, facing significant implementation challenges that restrict the economy’s collateral base. The State Cadastre Agency covers the entire territory of Albania and provides property information through the e-Albania platform, with full digitalisation of cadastre records expected by 2026 under the European Union’s Property Rights Project, which is expected to improve property registration and strengthen collateral frameworks for SMEs. Regarding security pledges, securities must be registered with the Albanian Securities Register (ALREG) in accordance with the Law on Capital Markets.
In practice, however, challenges persist in the agricultural sector, where no institution systematically records ownership of livestock, agricultural assets, or greenhouse equipment across all regions. Similar registration gaps affect certain motorised vehicles, including agricultural machinery, where debtors frequently lack formal ownership documentation.
Despite these shortcomings, it is worth noting that Albania’s legal framework permits a wide range of assets, including intangible ones, to be used as collateral for SME loans. The Law on Securing Charges regulates general collateral arrangements, while the Law on Secured Liabilities establishes the framework for movable assets. Importantly, the Law on Securing Charges also permits businesses to pledge patents, trademarks, copyrights, accounts and contractual rights as collateral.
Challenges regarding liquidation processes also constitute an obstacle to SMEs’ access to bank finance (Statovci et al., 2023[61]). Notably, digital tools have not been implemented to streamline liquidation processes, with procedures remaining largely manual. This limitation undermines efficiency and transparency in insolvency resolution, potentially obstructing access for smaller businesses and increasing creditors' overall risk perception.
Structural weaknesses in credit infrastructure, asset registration and liquidation processes continue to constrain access to bank finance in Albania, notably by prompting banks to impose stringent collateral requirements. In 2024, 74.1% of firms in Albania6 were required to provide collateral for a new loan, compared with much lower rates in most EU economies, such as Croatia (53.6%) or Ireland (40%) (OECD, 2026[57]). As a result, outstanding loans from commercial banks have remained low, stagnating at around 32% (32.3% of GDP in 2019 vs 32% in 2024) (IMF, 2025[62]), a level below the WBT average of 36.3%, with SMEs particularly affected. Their share of total outstanding commercial bank loans fell from 29.9% to 26.9% in 2024 (IMF, 2025[62]), well below the WBT average of 35.5% (Figure 2.4).
Notes: The WBT average excludes Montenegro due to insufficient data.
The EU-27 average is not included here due to insufficient data coverage across economies.
Source: IMF (2025[62]).
Finally, policies that could directly compensate for SMEs' lack of collateral, such as a comprehensive public credit guarantee scheme (CGS), are limited in Albania. This being said, two sectoral CGSs have recently been introduced: the Manufacturing Sector Guarantee Scheme (2024-2028) and the Sovereign Guarantee Scheme for Agricultural Lending (2025), which are further complemented by international programmes funded mainly by the European Union and the European Bank for Reconstruction and Development (EBRD).
Overall, Albania still lacks a scalable, permanent credit guarantee scheme that could structurally improve SME access to bank finance (Table 2.1). While the Albanian Development Bank was officially established in 2025 through Law No. 23/2025, with initial capital of ALL 10 billion to be contributed progressively from the state budget, and registered as a joint-stock company fully owned by the Ministry of Finance, it is expected to become operational in 2026 to support economic development and improve access to finance for SMEs.
Notes: WB EDIF: Western Balkans Enterprise Development and Innovation Facility.
* The scheme will benefit SMEs by 60%.
** This refers to committed volumes, as no information is available on the implementation. Active credit guarantee schemes also include the EBRD’s HI-BAR program, the EBRD’s Risk Sharing for ESG projects program, the EBRD’s Credit Enhancement of Green Bonds, the EBRD’s Growth for All program, KfW’s MSME Guarantee Platform, the EBRD’s Digital Transformation Platform Guarantee, and the EU-KfW’s Western Balkans Guarantee - Supporting Entrepreneurs’ and MSMEs’ Resilience program. For more details, see Western Balkans Investment Framework (2026[63]).
Sources: Information provided by the Government of Albania during the assessment; Albanian Association of Banks (2025[64]); EIF (2024[65]); EBRD (2025[66]; 2025[67]); Albanian Development Guarantee Foundation (2025[68]).
2.3.2. Providing alternatives to bank finance
In addition to maintaining an adequate supply of bank credit, governments should facilitate SMEs’ access to a wider range of external financing options to support their growth, including emerging digitally enabled alternatives, such as crowdfunding (Bianchini and Lasheras Sancho, 2025[69]). In Albania, however, SMEs continue to have access to a very limited set of alternatives to bank financing, as most relevant legal frameworks have yet to be implemented.
Established SMEs in Albania have limited access to capital markets for financing investment. The Albanian Securities Exchange remains focused on government securities trading, while the equity and corporate bond markets are largely inactive. A notable development took place in June 2023, when the microfinance institution Noa7 issued the first Albanian corporate bonds, valued at ALL 500 million (~EUR 4.95 million), marking an initial step toward developing the corporate bond market.
To develop its capital markets, Albania’s Council of Ministers approved the policy document, Creation of an Enabling Environment for the Development of Capital Markets in Albania (2023-2027), in April 2023, prepared by the Albanian Financial Supervisory Authority in co-operation with the Ministry of Finance and the Bank of Albania. As a result of this initiative, implementation has focused on operationalising the capital-market framework through secondary regulation and strengthened supervision. Albania’s capital-market development has been supported by the enactment of Law No. 62/2020 on Capital Markets and the adoption of a substantial set of implementing regulations (including rules on prospectus requirements, transparency for issuers, licensing and operational requirements for intermediaries and market-abuse provisions), alongside upgrades to market surveillance and supervisory tools.
High-growth SMEs and early-stage firms also face very limited alternatives to bank financing to fund investment, as private equity, particularly venture capital (VC), remains underdeveloped in Albania, constraining start-ups and high-growth SMEs by limiting access to equity finance needed to scale up. Expressed in purchasing power parity in 2021 prices, available data on VC indicate that total invested volumes reached only EUR 52 000 in 2024, approximately 1.5% of the Western Balkan total figure (EUR 35.8 million) (see Figure 2.5).
Notes: For comparability, Turkiye's data have not been included in the figure.
In 2024, private equity volumes were estimated to be EUR 2.5 billion (2021 PPP).
Source: OECD calculations based on Dealroom (2025[70]).
The main barrier to the development of private equity and VC is the absence of a dedicated legal framework, coupled with a lack of incentives such as favourable tax treatment. However, despite these limitations, a small number of international initiatives channel equity (and quasi-equity) financing to Albanian SMEs through direct investment funds, although the overall scale of this support remains modest (see Table 2.2). In addition, initiatives such as EU4Innovation offer complementary business development services alongside financing. In parallel with Albania’s nascent private equity and VC market and the absence of dedicated public participation in VC financing instruments (e.g. public cornerstone commitments, co-investment schemes or funds-of-funds), the business angel network (BAN) segment also remains at an early stage. Angels Albania is currently the only operational BAN, and its activities are largely supported by international programmes (EU4Innovation, the Swiss Entrepreneurship Programme and the WB6 Startup Academy) through ecosystem-building measures such as capacity building for prospective angel investors, pitch events and investor-start-up matchmaking.
Notes: The data for the private capital raised and the number of private investors refer to the end of 2024. While the Western Balkans Enterprise Development and Innovation Facility provides equity investment, no transactions were registered in Albania for 2023 (EIF, 2024[65]) or 2024 (EIF, 2025[71]). No programme dedicated to venture capital has been identified.
Sources: EBRD (2025[72]; 2025[67]; 2025[73]); Early Warning Systems (2025[74]); Western Balkans Investment Framework (2026[63]).
Another underutilised avenue for accessing finance is crowdfunding, which can be particularly useful for early-stage businesses. Crowdfunding constitutes a way to make the most of diaspora’s financial transfers, which are significant in the case of Albania, as remittance inflows accounted for 8.4% of GDP in 2024 (World Bank, 2025[75]), Albanian SMEs cannot make the full potential of the diaspora’s financial transfers to fund their investments, as a more systematic, government-backed approach to it is lacking, such as the absence of a legal framework governing crowdfunding activities. As of February 2026, the Ministry of Economy and Innovation (MEI), with support from the Swiss State Secretariat for Economic Affairs (SECO) and implemented through the World Bank, has advanced preparatory work on new legislation, including a gap analysis and initial drafting. A focal point has been appointed within the ministry, and an initial co-ordination meeting has been held to establish a working group bringing together key stakeholders, including the Financial Supervisory Authority and the Bank of Albania. While the process has been delayed by institutional reorganisation and changes in ministerial responsibilities, the legislation is currently scheduled for approval under the 2026 legislative programme.
Factoring and leasing are also marginally used by Albanian SMEs. Leasing volumes reached EUR 58 million (0.23% of GDP) in 2023,8 a level ten times lower than the EU average of 2.05% in 2023 (Leaseurope, 2024[76]). Factoring remains marginal, with a market size of EUR 4.1 million in 2023, comparable to 2019 (EUR 4 million). With the exception of a few international programmes providing leasing finance, such as the EBRD’s SME Reboot Programme, Go Digital, and Youth in Business, the absence of active policy measures, such as tax incentives, promotion programmes, measures to introduce dedicated digital tools and training opportunities, constrain further development of factoring and leasing, reflecting the lack of initiatives encouraging businesses to use these financing instruments and ongoing challenges in financial literacy of Albanian SMEs (Lubonja, Gjylameti and Kurti, 2019[77]), as only 29.9% of adults reached the minimum financial literacy benchmark in 2023, compared to 38.9% across OECD Member countries (OECD, 2023[78]).
2.3.3. Providing direct financial support to SMEs' operations and growth
When SMEs face persistent constraints in accessing affordable external finance, public intervention becomes crucial to sustain entrepreneurship, stimulate investment and advance strategic transitions. Direct financial support, through grants, targeted funds, or co-financing mechanisms, helps SMEs overcome the limitations of shallow capital markets and a banking sector that remains risk-averse toward capital ventures. Beyond short-term liquidity, such instruments are essential for fostering internationalisation, encouraging R&D and accelerating both digital and green transformations.
Albania has a few running programmes that support the establishment of SMEs, mainly targeting underserved groups, such as women entrepreneurs and unemployed young individuals (see Cluster 4). These programmes are primarily funded by donors, such as the EBRD, but also receive support from the government and local institutions, such as the Besa Funds Youth Loan and Loan for Women in Business programmes, aiming to provide financing on preferential terms, such as the absence of collateral, to promote entrepreneurship among underserved groups all across Albania (Fondi Besa, 2025[79]).
Albania has recently strengthened its policy focus on supporting SME growth through a series of dedicated financial programmes aligned with the BIDS and Action Plan 2021-2027, marking a gradual shift from donor-driven support.
Regarding SMEs’ innovation efforts, two new government-backed programmes supporting start-ups have been launched since the last assessment, scaling up financial support for SMEs engaged in innovation activities. After being suspended during the COVID-19 pandemic, the Innovation Fund resumed the provision of grants to SMEs undertaking innovation projects in 2024, despite a modest total budget of ALL 15 million (~EUR 155 000), thereby continuing its role in supporting small-scale innovation efforts. Introduced in 2024, the Support Program for Startups and Startup Facilitators provides grants to start-ups operating in priority areas9 of the National Smart Specialisation Strategy 2025-2030, with a focus on green and digital innovation (Albania Tech, 2025[80]), for a total allocation of ALL 300 million (~EUR 3.1 million) stemming from the state budget. Launched in 2025 with a substantial financial envelope of EUR 7 million (SEE News, 2025[81]), the Empowering the Next Generation of Innovators Programme offers grants specifically to start-ups developing digital innovations (NomadTech, 2025[82]), constituting a powerful financial tool to support digital innovation in Albania.
However, despite these recent domestic initiatives, the bulk of the existing support for SME innovation efforts remains provided by the large number of donor-funded instruments (Table 2.3) and through the increasing available non-financial support (see Section 2.4), which plays a central role in sustaining Albania’s upward trends in SME innovation performance (Figure 2.6).
Notes: The non-listed credit lines include the EBRD’s Western Balkans Women in Business programme and Youth in Business programme, the EU-KfW’s European Fund for Southeast Europe S.A. SICAV-SIF, the EBRD’s Growth for All programme, the Cassa Depositi e Prestiti’s Green Finance for Inclusion programme, the EU-KfW’s Green for Growth Fund, the IFC’s Western Balkans Climate Programme, KfW’s EU Market Creation Facility, the EBRD’s Risk sharing for ESG projects, the KfW’s MSME Guarantee Platform, the EBRD’s Digital Transformation Platform, he EBRD’s Global Green Bond Initiative and the EBRD’s Single Market Ready program.
Sources: MEI (2025[83]); NomadTech (2025[82]); SEE News (2025[81]); Albania Tech (2025[80]); European Commission (2024[84]); EU4Innovation (2024[85]); EIB (2025[86]); EBRD (2025[87]; 2025[88]; 2025[89]; 2025[67]; 2023[90]); Fondi Shqiptar I Zhvillimit (2025[91]); CDP (2024[92]); AIDA (2025[93]); Western Balkans Investment Framework (2026[63]). Information provided by the Government of Albania for this assessment. Information sent by the Besa Fund to the OECD for this assessment. Amounts refer to outstanding loan.
Regarding support for SMEs’ internationalisation, Albania has recently introduced a financial scheme to enhance SME export capacity. Launched in 2024, AIDA’s Fund for Enterprise Development offers up to ALL 2.5 million (~EUR 26 000) in grants to finance activities such as staff training, e-commerce development, product certification, participation in international fairs, and the purchase of machinery to boost productivity and competitiveness (AIDA, 2025[93]). However, as with innovation efforts, most SME support remains non-financial and consists primarily of advisory and facilitation services provided by AIDA (see Section 2.4).
With the launch of the Empowering the Next Generation of Innovators Programme and the Support Programme for Startups and Startup Facilitators, Albania has introduced targeted financial support measures to foster SMEs’ digital transformation. However, these initiatives primarily focus on start-ups. Beyond these, other SMEs currently lack dedicated support mechanisms and can only benefit from the EBRD’s Go Digital in the Western Balkans programme, launched in 2024, which has provided around EUR 4 million in financial support as of the time of writing (see Cluster 3 for more details).
Notes: “SME product innovation” measures the frequency of SMEs that introduced at least one product innovation, either new to the enterprise or new to their market. “SME process innovation” measures the frequency with which SMEs introduce at least one business process innovation, either new to the enterprise or new to their market. For more information, see European Commission (2025[94]).
Source: European Commission (2025[95]).
Regarding the green transformation efforts, SMEs must rely almost exclusively on donor-funded initiatives (see Cluster 2 for more details). The only exception relates to SMEs operating in the agricultural sector, which may benefit from the Sovereign Guarantee Scheme for Agricultural Lending introduced by the Ministry of Finance and the Ministry of Agriculture and Rural Development. With a financial size of ALL 3 billion (~EUR 31.1 million), the scheme will cover up to 70% of the collateral required for loans of up to ALL 25 million (~EUR 260 000) per beneficiary (Albanian Association of Banks, 2025[64]).
The way forward
Create a scalable centralised credit guarantee scheme to support access to bank finance for SMEs. Such a policy tool would primarily address the barrier posed by insufficient collateral, while also reducing commercial banks’ risk exposure and thereby providing strong incentives for SME lending. It could be oriented towards investment priorities, such as SMEs’ green transition. With the Albanian Development Bank officially established, it could develop credit guarantee instruments to facilitate lending to underserved sectors and segments, including SMEs.
Strengthen the framework for alternative SME finance and catalyse an early-stage equity market. Albania is encouraged to complete the legal and regulatory framework for key non-bank instruments (private equity/VC funds, business angel activity and BANs, and crowdfunding platforms) to reduce excessive reliance on collateral-based lending and to address gaps in early-stage finance for innovative and young firms. In parallel, to help crowd in private investors where the domestic VC market is thin, Albania could consider public participation in VC markets through: 1) direct vehicles (public co-investment funds or co-investment alongside private VC and angel investors); and 2) indirect vehicles (public fund-of-funds or cornerstone commitments into privately managed VC funds).
Develop targeted financial education initiatives on digital financial services, with a focus on vulnerable groups. Given the increasing digitalisation of traditional financial services and the emergence of new avenues for finance relying on digital tools, Albania should prioritise improving digital financial literacy, as currently, fewer than 10% of individuals in Albania possess the minimum level of digital financial literacy, three times lower than the OECD average of 34% (OECD, 2023[78]). Unlike the current Bank of Albania’s strategy for financial education and inclusion, the following framework and its action plan should include specific measures to address this gap, alongside annual monitoring and competitive funding for implementation (see 2.3).
Strengthen asset registration systems to expand the collateral base and support SME lending. Albania should prioritise completing the digitalisation and integration of asset registration systems to enhance legal certainty and facilitate the use of movable and immovable assets as collateral. Ensuring the full operationalisation of ALREG would reduce legal risks for lenders and improve the enforceability of security interests. The government could also expand registration to include agricultural assets by establishing a dedicated registry or strengthening co-ordination among existing institutions. These measures would broaden the economy’s collateral base and increase SME access to secure lending.
Building on the What We Heard mapping policy report published in April 2024 (Government of Ireland, 2024[96]), Ireland has adopted its first National Financial Literacy Strategy 2025-2029 (Government of Ireland, 2025[97]). The Irish framework is supported by an annual action plan that emphasises digital literacy, provides regular monitoring, and introduces competitive funding opportunities for initiatives that advance financial literacy objectives.
Explicit focus on digital finance literacy
The Irish Financial Literacy Strategy includes five dedicated policy actions focused on digital financial literacy, aiming to enhance citizens’ ability to use banking apps, access financial products online and strengthen digital skills among older people, women, the unemployed, and persons with disabilities. These actions combine public-awareness campaigns, community-based training and targeted programmes for vulnerable groups. Implementation extends beyond the government, with partnerships among the Central Bank, Allied Irish Banks, local government management agencies, and An Cosán – an organisation active in financial education.
Annual monitoring of the action plans
Ireland’s monitoring framework is well designed, increasing the likelihood of effective implementation. Each year, the Minister for Finance publishes an annual review of the strategy’s delivery, providing an update on progress against the previous year’s action plan, highlighting additional relevant financial literacy initiatives, and outlining a new action plan for the upcoming year.
Competitive grants for the implementation of the action plan
The government has launched the 2025 Collaboration and Innovation Fund, with a budget of EUR 250 000 to support projects that promote financial literacy (Government of Ireland, 2025[98]). The fund targets local and national initiatives that develop innovative and collaborative approaches to improving financial literacy among adults with unmet literacy, numeracy and digital skills needs, and to fostering more accessible financial services. Eligible applicants include organisations from the non-profit, public, voluntary, and community sectors, with each proposal requiring a partnership of at least two organisations. The list of successful projects is published annually (Adult Literacy for Life, 2025[99]).
Support services for SMEs “are a common policy tool for supporting business productivity, growth and survival”, typically including “business advice, consultancy, coaching, mentoring and management training to start-up entrepreneurs and SME managers”, and, in many OECD Member countries, are combined with financial measures “in the expectation of positive synergies” (OECD, 2021[100]). Evidence shows that such services, when systematically designed and targeted, help SMEs overcome information gaps and capability constraints that limit innovation, competitiveness and internationalisation.
In Albania, the SME policy framework has evolved markedly in recent years, moving toward a more structured and co-ordinated approach to enterprise support. Business support services (BSSs) are now embedded within the economy’s broader competitiveness and EU integration agenda, reflecting efforts to strengthen innovation, entrepreneurship and digital transformation across the SME sector. Guided by BIDS 2021-2027 and its 2025 amendments, and supported by new legislation, the institutional framework has expanded to include clearer mandates, stronger evidence-based planning and closer alignment with European standards (Government of Albania, 2025[101]). The European Commission (2024[8]) report also noted progress in this area, particularly in the implementation of support programmes for innovative start-ups. However, sustaining this momentum will require not only stronger institutional capacities and monitoring systems but also improved operational coherence across implementing bodies, deeper regional and sectoral outreach, and the integration of private and donor-led support into a more scalable, results-oriented SME ecosystem.
This section, therefore, examines the design, delivery and effectiveness of BSSs in Albania, distinguishing between foundational services and instruments aimed at supporting SME expansion, upgrading and internationalisation.
2.4.1. Foundational SME business support services
The framework for BSSs in Albania has evolved significantly in recent years, reflecting a shift from fragmented, donor-led interventions toward a more structured, state-driven approach, anchored in BIDS 2021-2027 and its 2025 amendments. The strategic framework is underpinned by strengthened legal foundations, notably Law No. 25/2022 on Start-ups and Law No. 43/2022 on MSMEs, which together provide statutory recognition for advisory, incubation, and enterprise development services. Complementary regulations, including Council of Ministers Decision (VKM) No. 539/2022, formalised competitive evaluation processes and established the Board of Evaluation for SME Requests,10 enhancing procedural transparency. However, while the amended BIDS sets out clear institutional roles and monitoring procedures, the framework provides limited operational guidance on the design, sequencing and scaling of business support measures.
Implementation capacity has expanded alongside the strengthened framework, with AIDA continuing as the lead implementing body under MEI. Budget allocations for SME support managed by AIDA reached ALL 151.8 million (~EUR 1.47 million) in 2024 and ALL 131.8 million (~EUR 1.28 million) in 2025. In 2024, grant schemes attracted strong demand and were fully executed (355 applications, 101 awards) (AIDA, 2025[102]), indicating high absorption capacity but also underscoring continued reliance on competitive grant instruments rather than more diversified, market-shaping BSS tools. Alongside AIDA’s horizontal role, start-up-specific measures introduced under the 2022 Law on Start-ups are implemented by the Startup Albania Agency, established in 2023 to consolidate start-up support instruments, manage the official start-up register and operate as a one-stop-shop for start-ups. These measures are supported by a dedicated annual start-up budget of EUR 3 million in 2025, earmarked for start-up-oriented incubation and early-stage acceleration services. However, AIDA has yet to establish a dedicated unit for advanced non-financial support (e.g. scale-up advisory, technology upgrading and export readiness), thereby constraining the institutionalisation of more specialised BSS delivery. Moreover, while co-ordination across the ecosystem has been reinforced through the Consultative Council for Enterprises,11 the Investment Council12 and the newly established Business House13 (European Commission, 2024[8]), operational coherence remains a challenge, with overlapping mandates, limited interoperability between systems, and weak co-ordination between agencies providing financial incentives and AIDA (European Commission, 2024[8]).
Programme uptake of public non-financial BSSs has expanded, with AIDA managing an increasingly diverse mix of training, advisory and digitalisation programmes.14 In 2023, 1 300 entrepreneurs participated in training and advisory activities, most frequently in business development, taxation, information and communication technology, and trade, while around 500 SMEs received targeted support in financial reporting and export readiness (AIDA, 2023[103]). However, beyond start-up and early entrepreneurship support, few structured programmes address the needs of scaling or growth-oriented enterprises, such as tailored assistance with accessing new markets, regulatory compliance or advanced technology adoption, limiting the continuity of support along the SME growth pathway (see Section 2.4.2). Digital platforms, including Access to Finance, e-Albania platforms, and the Startup Albania portal, have simplified access by integrating registration, application, and monitoring processes, and the addition of a virtual assistant has made procedures more user-friendly. Nonetheless, co-financing requirements and lengthy reimbursement procedures continue to deter micro-enterprises, particularly outside Tirana, where awareness and capacity are lower (Government of Albania, 2024[104]).
Alongside predominantly public delivery, the role of private BSS providers has expanded modestly, although their integration into the national BSS system remains limited. Recent policy measures, including the Startup Grant Scheme and legal provisions, have formalised co-operation with accelerators, incubators and consulting firms. At the same time, donor-funded initiatives such as the EBRD’s Go Digital and Youth in Business programmes and the United Nations Industrial Development Organization (UNIDO)’s Global Quality and Standards Programme have strengthened advisory capacity in digitalisation, entrepreneurship and quality compliance. However, this engagement remains largely programme-based rather than systemic. The absence of a national accreditation framework for private BSS providers, combined with infrequent data collection on SME awareness, satisfaction and demand, constrains quality assurance, service diversification and market development. These limitations are particularly binding for Albania’s start-up ecosystem, where the small domestic market would warrant more outward-oriented incubation and acceleration services, yet weak market signals limit the emergence of specialised internationalisation support. As a result, most private consultancies remain urban-centred, and the private BSS ecosystem continues to depend heavily on donor funding.
Geographical coverage of BSS programmes remains uneven. The majority of beneficiaries are located in Tirana and coastal municipalities, with limited uptake in rural and remote regions despite awareness campaigns and partnerships with local governments and chambers of commerce (AIDA, 2023[103]). While no formal mobile units or dedicated regional delivery mechanisms are in place, this reflects a deliberate implementation choice rather than an institutional gap, as previous outreach efforts involved targeted engagement with local businesses and stakeholders but resulted in limited participation. As a result, a more structured multi-regional approach remains under consideration but has not yet been operationalised. Overall, experience from outreach activities suggests that limited participation from non-urban areas persists even where awareness-raising efforts are undertaken, indicating that uneven coverage reflects demand-side barriers rather than delivery constraints (AIDA, 2026[105]).
As foundational support provision expands across multiple instruments and delivery channels, effective monitoring and evaluation becomes increasingly important to ensure coherence, accountability and policy learning. While reporting mechanisms are in place, with more regular monitoring reports for both BIDS and AIDA activities, these primarily ensure transparency rather than learning. This is illustrated by BIDS’s 72.7% implementation rate for 2021-2024 across action lines (Government of Albania, 2024[104]) and by AIDA’s annual reports, which include detailed beneficiary lists, grant-tracking data and post-grant monitoring forms. However, limited beneficiary profiling – by sector, gender or minority status – constrains assessment of whether BSS interventions are aligned with competitiveness priorities and inclusive growth objectives. More broadly, the absence of independent evaluations and the weak integration of donor-led assessments into national reporting limit understanding of longer-term impacts on productivity, firm upgrading and export diversification. These shortcomings are compounded by limited financial and human resources dedicated to evaluation, constraining the transition toward more results-based policymaking. At the same time, annual needs assessments and consultations have become mandatory under the amended strategy, marking a shift toward more evidence-based policymaking. Complementing these efforts, Albania has also strengthened the quality assurance of policymaking through improved regulatory impact assessment (RIA) practices. In 2025, the RIA and Regulatory Acts Programming Unit reviewed 47 RIA reports submitted by line ministries and issued more than 1 100 recommendations, of which approximately 88% were incorporated into final versions (Government of Albania, 2026[106]). However, the feedback loop from consultation to programme redesign is still partial, and there is limited evidence of comprehensive market research to assess SME demand for specific advisory or training services, reducing the potential of tailored BSS offers to SME needs.
2.4.2. Support services for SMEs’ expansion and growth
Building on the strengthened foundational business support framework, Albania’s support system for SME expansion and growth has gained coherence and breadth since 2022, but remains unevenly developed. The revised strategy signals a lifecycle-based framework linking SME support to competitiveness, innovation and digital transformation (Government of Albania, 2025[101]) alongside a multi-year budget of ALL 408 million (EUR 3.9 million) for 2024-2025 (Ministry of Finance, 2025[107]) under the strategy’s measures, enhancing budget predictability and supporting greater continuity in SME support programming. In practice, however, while early-stage entrepreneurship and basic upgrading are relatively well covered, more advanced services aimed at scaling, accelerating growth and strengthening strategic competitiveness remain accessible primarily to firms that already demonstrate market or export readiness, rather than through structured progression pathways.
Within this landscape, innovation support represents the main entry point for SMEs seeking to move beyond start-up activity. Albania’s start-up ecosystem has expanded beyond basic incubation and now comprises 12 incubators and 11 accelerators (Albania Tech, 2025[108]), most of which are privately managed and geographically concentrated around Tirana. Access to these incubation and acceleration programmes is facilitated by AlbaniaTech’s platform (launched in 2021), which provides one-stop access to information on start-ups, investors, support organisations and programmes of the Albanian ecosystem for innovation. At the same time, the National Strategy for Innovative Entrepreneurship 2024-2030 foresees the establishment of additional innovation accelerators, marking further development of the BSS infrastructure for SME innovation. Despite this expansion, innovation support does not yet operate as a sequenced growth model. Firms accessing incubation or acceleration services are not systematically connected to subsequent stages of support for digital upgrading, green transformation, scale-up readiness or internationalisation. As a result, innovation support remains largely front-loaded, facilitating entry and early experimentation rather than sustained upgrading, productivity growth or progression toward export-oriented competitiveness (see Cluster 2).
Digital transformation and green upgrading, although increasingly recognised as drivers of competitiveness, remain weakly integrated into SME growth-stage support. Digitalisation and sustainability objectives are referenced across core strategies, including BIDS, the Digital Agenda 2022-2026, and climate-related frameworks, but without clear SME-level targets, performance indicators or an integrated delivery model. In practice, despite the economy-led strategic framing, digital and green upgrading relies heavily on donor-backed financial instruments, while co-ordination with advisory services and skills development remains limited. As a result, most SMEs continue to adopt basic digital tools, while more advanced digital and sustainability-related upgrading remains constrained by skills shortages, investment costs and limited tailored support (see Cluster 3).
For SMEs that reach a higher level of commercial readiness, internationalisation constitutes the most developed layer of growth-oriented, with the widest and most institutionalised toolbox. Since 2022, export promotion has expanded through a combination of export-readiness training, grant schemes, participation in international trade fairs and the launch of digital tools such as the Export Albania platform,15 which has become the central hub for export promotion, offering training, visibility tools, and business-to-business (B2B) matchmaking. Export promotion measures are delivered primarily through AIDA, supported by closer co‑ordination with MEI and by integrating the Enterprise Europe Network (EEN), which links domestic SMEs into EU innovation and partnership frameworks. The amendments to the BIDS did not significantly expand institutional delivery capacity, while both the number of staff dedicated to export promotion and the ratio of AIDA’s export promotion budget to total export value have increased only marginally (OECD, 2024[44]). The Export Promotion and Facilitation Programme 2026-2030, adopted in 2025, with a planned value of EUR 1.5 million, aims to consolidate export promotion measures under a unified framework. While the Programme introduces defined pillars and a broader set of operational tools, advisory services for scale-ups, investment readiness, and post-export mentoring remain limited, leaving a gap in continuity for businesses transitioning from entry-level to growth-oriented internationalisation.
Outreach remains concentrated among established exporters, while planned financial instruments, such as export credit, guarantees and co-financing schemes foreseen under BIDS, have yet to be operationalised. As a result, SMEs continue to rely primarily on grants and trade fair participation subsidies. While Albania’s SMEs’ share in total exports increased from 63.9% in 2021 to 70% in 2024 (OECD, 2025[25]), the average export value per exporter declined from EUR 758 599 in 2022 to EUR 695 730 in 2024, indicating that growth has been broad but shallow (Government of Albania, 2024[104]). At the same time, Albania continues to outperform the Western Balkans average (47.6%) and the EU average (37%) in the share of SME exports, reflecting both the dynamism and fragmentation of its SME export base (Figure 2.7).
Percentage of exports of goods and services
Note: The WBT average does not include Kosovo as no data are available for 2022. The WBT average does not include Montenegro as no data for this indicator are available.
Sources: Eurostat (2025[109]); OECD (2022[110]; 2019[111]). Additional data for Albania from INSTAT (2025[112]) and information provided by the government for this assessment. Additional data for Bosnia and Herzegovina from the Agency for Statistics of Bosnia and Herzegovina (2020[113]; 2023[114]; 2024[115]) and the European Commission (2025[116]). Additional data for North Macedonia from MAKSTAT (2024[117]; 2024[118]). Additional data for Serbia from SORS (2024[119]).
Despite the broadening of export promotion instruments, the transition from export entry to deeper integration into global value chains (GVCs) remains weak. The Supplier Development Programme (SDP), introduced under the 2025 BIDS amendments, aims to connect 150 SMEs with 30 foreign investors and generate EUR 75 million in subcontracting by 2027 (Government of Albania, 2025[101]). While sectoral roundtables in textiles, agro-food, footwear, and medicinal plants signal a clear effort to identify potential supplier networks (AIDA, 2023[103]), implementation is at an early stage, with no dedicated financing mechanism or supplier database yet in place. Despite steady foreign direct investment (FDI) inflows averaging 7% of GDP during 2020-2023 (OECD, 2025[25]), spillovers into domestic supply chains remain modest, and the share of SMEs engaged in GVCs has stagnated at around 1.3-1.4% since 2019 (Government of Albania, 2024[104]). Cluster development, though recognised in strategic documents, remains fragmented and largely donor-driven, with little sustainable governance or R&D infrastructure.
As support instruments expand across innovation, digitalisation, greening and internationalisation, monitoring and evaluation have become increasingly important. Since 2022, monitoring arrangements have evolved, particularly within AIDA’s export promotion and grant schemes, through beneficiary tracking, follow-up surveys and publicly available annual reports. However, monitoring remains predominantly output-oriented. There is no systematic assessment of efficiency, cost-effectiveness, or longer-term impacts on productivity, export performance, or SME upgrading, nor are independent evaluations conducted regularly. While the integration of the EEN has introduced more structured diagnostics for a subset of SMEs,16 these tools have yet to be embedded within a comprehensive results-based framework capable of tracking SME progression across growth stages and policy areas.
The way forward
Strengthen the design and delivery of growth-oriented SME support instruments: Future interventions should focus on growth acceleration, including tailored advisory for scale-ups, investment-readiness programmes, and structured follow-up support for exporters. Integrating mentoring, advanced training, and consulting services for mid-stage enterprises within the BSS offer co-ordinated by AIDA and supported by dedicated budget lines under BIDS would enhance continuity along the SME growth pathway. Given Albania’s small domestic market, this should be complemented by strengthening the international orientation of start-ups, including through globally connected incubation and acceleration services, dedicated internationalisation programmes, and stronger partnerships with international networks, universities and the private sector. (OECD, 2024[120]) (Box 2.2).
Operationalise the Supplier Development Programme through a dedicated upgrading window within existing SME and export support instruments. The SDP introduced under the 2025 BIDS amendments provides a promising framework for SME-MNE (multi-national enterprise) linkages, but lacks financing and operational mechanisms. Although the Export Promotion and Facilitation Programme 2026-2030 improves overall coherence for export promotion measures, it does not introduce supplier‑development or SME-MNE linkage mechanisms. Introducing a pilot supplier-upgrading window, focussing on quality certification, standards compliance, and process upgrading, together with a digital supplier database, linked to the Export Albania and EEN Albania platforms, would enable systematic matchmaking and capacity building. Phased instruments such as export credits, guarantees, and co-financing for certification and standards would help SMEs move from entry-level exporting to higher-value subcontracting within EU and regional value chains. To guide implementation, Albania could draw on the OECD Policy Toolkit for Strengthening FDI and SME Linkages (OECD, 2023[121]), which provides a structured approach to mapping supply-chain gaps, assessing SME absorptive capacity, and designing targeted measures, such as supplier databases, co-financing schemes, or buyer-supplier matchmaking platforms, to maximise spillovers from FDI.
Strengthen co-ordination and efficiency across SME support institutions. Despite clearer mandates, overlaps persist between AIDA, sector ministries, and donor programmes, limiting efficiency and strategic focus, as also flagged in 2024 by the European Commission (2024[8]). Building on existing consultative structures, a dedicated operational co-ordination mechanism could be established under the Ministry of Economy, Culture and Innovation to ensure coherence across financial and non-financial support at all levels. Introducing performance-based budgeting and shared monitoring indicators between institutions would help track cost-effectiveness and improve allocation of funds.
Enhance the evidence base and evaluation of SME support measures. Monitoring systems have improved through the NEXTEEN diagnostic tool and annual BIDS reporting, but remain largely output-oriented. Future evaluations should incorporate outcome-based metrics such as productivity gains, export diversification or job creation. AIDA should develop an integrated results framework combining administrative and survey data to measure programme impact and efficiency. Introducing regular independent evaluations of flagship programmes, such as Export Albania, EEN Albania, and the SDP, would ensure continuous learning and better targeting of public funds.
Korea has developed a comprehensive and internationally oriented model to nurture high‑potential SMEs and start‑ups, combining structured growth pathways, investment‑readiness programmes, and targeted support for global expansion. This approach is coordinated across government agencies and delivered in partnership with private accelerators and international actors.
Stepwise support for growth‑oriented SMEs
Korea’s SME support system follows a sequenced pathway—Pre‑Startup, Initial Startup, and Startup Expansion Packages—providing tailored mentoring, business development training and grants of KRW 70–100 million (EUR 47,000 – EUR 67,000) depending on the stage of development. This staged model reduces early‑stage risk and ensures continuity of support through the scale‑up phase.
Investment-readiness through private–public acceleration
A core feature is the TIPS Programme, where approved accelerators invest first and the government matches their investment up to ninefold in R&D funding. TIPS combines mentoring, investor networking, and overseas marketing support, helping firms become investment‑ready and capable of scaling. Since 2013, TIPS has supported more than 400 start‑ups, triggering substantial follow‑on investment.
Dedicated programmes for internationalisation
To overcome the constraints of a small domestic market, Korea operates several outward‑focused programmes. K‑Startup Centers in eight partner countries host Korean start-ups abroad, offering co‑working spaces, legal and tax support, and links to foreign accelerators and investors. In 2022, 50 out of 82 supported firms achieved concrete internationalisation outcomes such as foreign establishment or revenue generation. The Global Corporate Collaboration Programme connects start‑ups with multinational companies (e.g. Google, Nvidia, Microsoft), providing access to global value chains, testing infrastructure, and co‑development opportunities.
Rigorous selection and partnership-driven delivery
Programme participation is highly competitive: accelerators must meet capital and expertise requirements, and start‑ups are screened jointly by Korean agencies and local partners in host countries to ensure product‑market fit. Delivery relies on collaboration with domestic conglomerates and international accelerators, expanding access to expertise, markets, and investment networks.
Source: OECD (2024[122]).
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← 1. In Albania, Group 1 licences are granted based only on the applicant’s self-declaration and are processed by the NBC within two working days.
← 2. Bid rigging refers to the act of businesses colluding together to raise prices or lower the quality of goods and services provided in order to stabilise incomes and avoid competition that would otherwise push them to drive prices (OECD, 2025[124]).
← 3. A tender security is a financial guarantee requested by the contracting authority and submitted by the bidder. Its purpose is to show that both the financial reliability of the bidder and genuine commitment can take the form of either a bank guarantee or an insurance bond.
← 4. This refers to the Common Equity Tier 1 (CET1) ratio, the most loss-absorbing type of capital. A strong CET1 ratio indicates that the bank can withstand shocks by utilising its most reliable capital. Regulators focus heavily on CET1 because it is the most credible safeguard against insolvency.
← 5. Data provided by the Government of Albania as part of the assessment.
← 6. Data provided by the Government of Albania as part of the assessment.
← 7. Created in 1998, Noa is the result of a donor-supported non-profit microfinance project aiding the most vulnerable areas and populations of Albania, particularly rural ones, with the objective of boosting the transition towards a free and competitive market economy. It preserved its non-profit status until 2007, when the Central Bank of Albania officially licensed it as a non-bank financial institution (European Microfinance Network, 2025[123]).
← 8. Information provided by the Government of Albania as part of the assessment.
← 9. Albania’s Smart Specialisation Strategy prioritises three sectors with strong growth and innovation potential: 1) renewable energy and natural resources, focussing on expanding renewable energy production and sustainable resource management; 2) sustainable and diverse tourism, centred on cultural heritage, health and wellness, and nature-based tourism; and 3) a healthy and sustainable food chain, promoting organic agriculture, agri-food processing, and high-value products such as fisheries and medicinal plants. For more details, see Government of Albania (2025[125]).
← 10. The Board is responsible for the competitive assessment and evaluation of applications submitted by SMEs under start-up and innovation support schemes. It applies predefined eligibility and scoring criteria, reviews project proposals, and issues recommendations for allocating public support. The Board’s role is limited to procedural appraisal and does not extend to policy design, programme targeting or strategic prioritisation, which remain under the responsibility of the competent ministries and implementing agencies.
← 11. An advisory platform for government-business dialogue, providing non-binding recommendations on enterprise-related legislation and policies.
← 12. A high-level advisory and co-ordination body supporting investment climate reforms and monitoring strategic investment initiatives, without direct decision making powers.
← 13. Business House facilitates dialogue between the Minister for Entrepreneurship and private-sector stakeholders.
← 14. Initiatives such as Digitally Fit for E-Commerce, Youth in Business, and the Digital Agriculture and Rural Transformation programme combine training, grants and technical assistance tailored to specific sectors.
← 15. Launched in 2023, the platform had profiled over 1 190 firms by the end of that year (AIDA, 2023[103]).
← 16. Operational since 2024, through its NEXTEEN diagnostic tool, EEN provides assessments of SME digital and sustainability readiness, signalling a shift toward more data-driven support delivery.