 When officials showed up in the village of Gjinar, in Albania’s Elbasan district, to offer microfinancing on the spot, villagers initially were confounded.
“It took time to convince the 121 villagers, who were each loaned some $100, that giving them funds to get back to work was the best way to fight poverty,” recalls Zana Konini, the General Director of Albania’s Rural Financial Fund (RFF). “But the effort paid off.”
The villagers bought their first cows and sheep, and quickly repaid their loans. The Rural Financial Fund, an Albanian foundation with legal and fiscal autonomy, serves farmers who have no access to banks in local townships. It is supported by a joint line of credit from the World Bank and the Swiss government.
Over the years, the RFF established 241 so-called village credit funds, where village members head decision-making committees and approve loans to fellow villagers.
The RFF is active in eight districts, and over the last decade it has approved 30,000 credits, altogether worth $19.5 million. Almost half of these small loans are used to buy livestock, a quarter for agricultural activities, and a little less than a quarter for trade.
News of the RFF spread by word of mouth. After hearing about a foundation lending money to farmers from a nearby villager, Kristaq Dhima, 50, and others from the village of Vajkan approached the RFF to start their own credit association. To set an example, and to make his co-villagers feel safe, Dhima was the first to deposit a modest sum of money. “They are trusting it. We are so much closer than banks, and our rates are one percent lower,” Dhima explains.
Updated: November 2003
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