Gradual economic growth and reform
Home to a population of close to 3 million and once the poorest country in Europe, Albania went through a period of political and economic stability following the collapse of the communist regime in 1991.1 Since the early 2000s, Albania has impressively implemented market-oriented reforms, attracted foreign investments, and improved its infrastructure. In doing so, Albania’s economy has grown steadily over the last two decades. From 2021 to 2022, Albania’s economy grew by 8.5%, compared to the EU’s overall growth of 5.4%.2,3
Albania’s alternative lending market
The rapid growth and development of Albania’s economy in the 2000s has had a significant, albeit slow, impact on its alternative lending market. As of 2021, 89% of all financial activity in Albania was tied to its banking sector.4 But as the country modernizes and attracts foreign investments, its financial sector is seeing more diversity, creating new opportunities for lending companies to flourish.
Alternative lending in Albania has primarily been driven by fintech companies and peer-to-peer platforms, which have emerged as a response to the limitations of the traditional banking sector.
The Bank of Albania holds the exclusive responsibility for governing all lending and payment operations carried out by financial institutions, both banking and non-banking. The growth of the alternative lending market has been supported by a favorable regulatory environment. With regulators in Albania fervently approaching the modernization of the financial sector, the alternative lending industry is developing rapidly, with much room for further growth.5
Recently, the payment initiation service (PIS) and account information service (AIS) were introduced, with the goal of lowering transaction expenses and complying with EU regulations. PIS and AIS are vital to promoting competitiveness in Albania’s financial sector, as they enable new players to enter the market. These services have a variety of benefits, from allowing third party providers to access consumers’ banking information, to initiating payments on their behalf. From ease of payments to the security of their financial data, consumers will have more choice and convenience than ever before with more service providers in the industry.6
These developments will make financial services accessible to a wider range of individuals and businesses, especially those who have historically been excluded or underserved by the traditional banking system. For lending companies Eleving Group and IuteCredit in Albania, this means more potential borrowers who were previously unable to access traditional bank loans.
With opportunities for new players to enter the market, the direct results can be seen in the growth in market share of non-bank financial institutions. By the end of 2021, the total assets of non-bank financial institutions were valued at over €76 billion, with lending company Iutecredit holding 19% of the market share in Albania. Loans make up the largest share of assets by non-bank financial institutions at 49%.7
Growth in Albania’s loan portfolio
Overall, the development of Albania’s alternative lending market reflects the country’s broader economic and social transformation over the past two decades.
The loan portfolio of non-bank institutions saw a growth of 15.1% in 2021, bringing its value to a total of €5.5 billion. As the country continues to modernize and integrate into the EU as a part of its plans for accession, it’s likely that its alternative lending sector will continue to see such growth. In 2021, a total of 260 979 non-bank loans were issued, of which 156 992 remained active by the end of the year.8
Non-bank loans for individuals made up the largest market segment at 91% of total loans granted in 2021. Loans for small businesses and agriculture were the next largest segments, while the remaining loans granted were allocated to other categories.9
Albania’s structural reforms are still underway to boost the economy, following the COVID-19 pandemic and the devastating earthquake of 2019. The effects of the war in Ukraine compounded growing inflation and led to further challenges affecting the country’s long-term plans.10
Projections estimate that economic activity will grow at an average rate of 2.7% through 2024, influenced heavily by global conditions and persistent supply side shocks.11 However, continuing geopolitical tensions have the potential to escalate inflation and unsettle financial markets, which are hard to determine based on the unpredictability of the circumstances.
A rapidly emerging loan portfolio
In Albania’s alternative lending scene, key players to watch on Mintos are Eleving Group and IuteCredit. Both lending companies have well-established loan portfolios in Albania– at €25 million for Eleving Group and €49 million for IuteCreditt.12
Lending activity in the alternative lending sector in Albania has seen significant growth in recent years, with €36 million investments made in Notes and claims on Mintos in 2022 alone. With an increasing number of individuals and businesses looking for alternative sources of funding, the alternative lending market in Albania has the potential to become a key contributor to the country’s economy.
If you’re interested in finding out more about how you can invest with Mintos, explore Albania’s leading lending companies.
1 The World Bank in Albania, The World Bank (Accessed March 2023)
2 European Economic Forecast. Spring 2022, European Commission (Accessed March 2023)
3 GDP growth (annual %) – European Union, The World Bank (Accessed March 2023)
4 Annual Report of Activities, Albanian Microfinance (Accessed March 2023)
5 Payment Services Directive (PSD) An overview, Bank of Albania (Accessed March 2023)
7 Annual Report of Activities, Albanian Microfinance (Accessed March 2023)
10 Statement by Mr. Federico Giammusso, Executive Director for Albania and Ms. Laura Cerami, Advisor to the Executive Director December 7, 2022, International Monetary Fund. European Dept. (Accessed March 2023)
11 The World Bank in Albania, The World Bank (Accessed March 2023)
12 The figures represented refer to the lending company’s loan portfolio on Mintos, minus provisions.