USAID CATALYZE/NOA Inject US$2 Million into Albania’s Footwear & Apparel Sector through Innovative Loan Product
The Footwear & Apparel Loan Project safeguards hundreds of jobs and demonstrates potential for replication in other key industries
The United States Agency for International Development (USAID), in partnership with the Albanian microfinance institution NOA, successfully injected US$2 million into Albania’s footwear and apparel sector through the implementation of the Footwear & Apparel Loan Project (FALP).
Launched in January 2023, the innovative loan product was designed in collaboration with the USAID CATALYZE Engines of Growth Western Balkans project, NOA, and the business services association Pro-Export Albania to meet the needs of small and medium-sized enterprises (SMEs) operating in the women-focused leather and textile industry. In less than two years, FALP provided uncollateralized loans with values up to EUR 75,000 (est. US$ 83,000) coupled with dedicated technical assistance to 74 SMEs across Albania.
In Albania’s textile, clothing, leather, and footwear industry, the number of operating businesses had decreased by 7% and the number of employees had decreased by 19% since 2022, despite the high potential within the market. The decrease was further exacerbated by the ongoing impacts of COVID-19, currency fluctuations, and price surges as a result of Russia’s invasion of Ukraine.
FALP investments protected several dozen companies from potential bankruptcy by allowing them to upgrade their production lines, preserve staff costs, and fulfill contractual export obligations.
As a result, FALP has helped safeguard hundreds of jobs and millions of euros worth of Albanian exports, demonstrating the powerful impact of combining innovative financial solutions with technical assistance. This success highlights the potential replicability and scalability of the guarantee-like mechanism in other key sectors, such as agritourism and energy efficiency business solutions.
NOA, a financial institution licensed by the Central Bank of Albania, has provided financing solutions to SMEs, farmers, and families whose access to finance is limited due to geographical, social or administrative barriers since 1998.
Adam Norikane, USAID Senior Technical Advisor, who spoke at the September 26, 2024, closing event for the FALP project, said, “As part of USAID’s ongoing commitment to empowering Albania’s small and medium-sized enterprises, we are proud to have partnered with NOA on the Footwear & Apparel Loan Project to help safeguard hundreds of jobs and strengthen Albania’s competitiveness on the global stage. This initiative underscores our dedication to providing innovative financial solutions that can uplift key industries and pave the way for sustainable growth, even in the face of economic challenges.”
The FALP project aimed to test the reaction of a high-growth sector to the introduction of a guarantee-like scheme directly targeting beneficiary businesses and assess the institutional interest and capacity for a similar mechanism in other sectors. The success of the project, which provided financial assistance, support for innovation, business development training, capacity-building, sustainability, and market expansion, resulted in a fivefold financial leverage of its initial investment (approximately US$400K project costs, for US$2M injected funds). This was achieved by consolidating the ratio behind the creation of a large guarantee fund that directly supported businesses that can’t access traditional banking products.
Herjola Spahiu, NOA’s Chief Executive Officer, said, “The FALP funding was entirely dedicated to Albania’s footwear and apparel sector, marking a groundbreaking initiative for an industry where financing was unavailable after the devaluation of exports. Our goal was to be the first to support high-risk new businesses, while ensuring long-term growth for a sector employing tens of thousands of women and making a significant contribution to Albanian exports. I believe we have achieved this goal.”
The USAID CATALYZE Engines of Growth project has mobilized more than $169 million in private capital for 2,790 SMEs since launching in September 2020. Of those SMEs, more than $62 million has been channeled to 1,259 women-owned SMEs.
