EU for Innovation programme in Albania is funded by the European Union with additional support from the German Federal Ministry for Economic Cooperation and Development (BMZ) as well as the Swedish International Development Cooperation Agency (Sida) the project aims to strengthen the eco-system for innovation and start-up promotion in Albania. The project has a budget of up to 7.539.238 EUR (EU contribution: 6.600.000 EUR, German contribution: 719.238 EUR; Swedish contribution: 220.000 EUR). The programme will be implemented by GIZ Albanian and the Swedish Embassy Tirana.

Since 1991, Albania has gone through an extremely difficult transition process from a centrally planned economy to one based on individual freedom and private property ownership. The Albanian reforms have focused on getting basics in place: the quality of higher education and training, financial market development, modernization of government, and other institutional reforms.

Albania is ranked 83 in the Global Innovation Index (GII) 2018. Innovation-related topics did not receive much attention at the national policy level until recently and even today, while the required policies, strategies and action plans are in place, implementation and coordination of various actors is still lacking.

Innovative start-ups in Albania face a number of difficulties in the process of getting off the ground. There are very few Albanian companies, which have reached international recognition and success. Currently, traditional business approaches are still much more prevalent in Albania, and the awareness of the benefits of innovative entrepreneurship is low. Universities are only slowly picking up the current trend not only to provide employees for traditional industries but also to train students to set up their own businesses. Many young people prefer a job abroad with a salary above the average Albanian salary, rather than taking the risk of creating their own company, which leads to substantial outflux of skilled human resources (brain drain) from the country.

The overall number and proportion of innovative sustainable start-ups with high growth potential remains low.  In order to survive and grow, innovative start-ups require linkages with open, collaborative and extended resources, unlike larger enterprises which have more capacity for in-house research and development (R&D) and innovation.

The innovation system in Albania is highly fragmented, with few linkages between science and private sector and weak innovation support infrastructure. The insufficient capacity for technological absorption and research, development and innovation (RDI) is reflected in low levels of public and private sector expenditure on R&D (about 0.1 % of GDP in 2017).

In recent years and in the larger context of global developments in ICT, the nascent Albanian infrastructure of innovation support providers such as incubators, accelerators, innovation centres, co-working spaces (many of which were donor funded), has emerged. They began to offer business support services to start-ups including training, mentoring, networking but also co-working spaces and other facilities. However, the overall innovation support infrastructure is still rather underdeveloped, and many business service providers struggle to identify and implement sustainable business models. There are also major gaps in the availability of comprehensive innovation support services for more advanced entrepreneurs and start-ups, such as product design, certification, prototype development, technology transfer, intellectual property rights protection, etc. In order to generate a critical mass of start-ups that could provide a pipeline of high growth and innovative enterprises, additional innovation support and capacity building for the key innovation ecosystem actors is required.

While some of these above problems and their causes can be addresses by the Action, others – like the small size of the Albanian market and the brain drain – are considered to be part of the framework conditions under which the Action operates. This Action will focus on improving the innovation ecosystem through enhancing the innovation capacity among start-ups, innovation service providers and policy-makers; strengthening industry-science linkages and innovation networks, and providing grant funding for innovative start-ups and innovation service providers.

The potential that the Action builds on is in the political will and the reform agenda of the Albanian government. Innovation and competitiveness are high on the agenda in the key strategic documents. A number of new government initiatives for incubators and innovation hubs have been launched at the national and municipal government levels and the topic is also high on the regional agenda for the Western Balkans.

Based on this the programme is designed to create different incentives to improve the innovation ecosystem and to boost start up creation in Albania. The programme will be implemented through three different areas focusing on: Capacity for innovation among innovation ecosystem actors, Building linkages within the Albanian innovation ecosystem and internationally and Funding innovative start-ups and innovation support providers.

Interested to learn more about the Entrepreneurial Ecosystem in Albania? Download the first Gap Analysis, published in January 2019.

Download the follow-up research on the “Entrepreneurial and Innovation Ecosystem in Albania”, here.