UNIDO-Boosting Albanian industrial transformation through quality and standards

Albania’s economy is steadily growing with high potential for exports. Rich biodiversity in Albania represents an important potential for economic development resulting in Albania becoming one of Europe’s top producers of medicinal and aromatic plants in recent years. But why are Albanian products hardly to be found in Europe? What hinders Albanian producers from exploiting the full trade potential of their products?

To participate successfully in the global trading system and reap the benefits that globalization promises, the country must cope with the numerous challenges and constraints posed by a continuously changing marketplace. Most noteworthy among these challenges are the intense competition due to the globalization of economies and the liberalization of markets; the impact that the  governance of international retailers and buyers has on access to markets; increased consumer awareness and the resulting growing demand for high-quality, organic, minimally processed products and the emphasis on traceability and social responsibility; and the increasing risk of marginalization faced by areas with poor infrastructure and small producers. Even though many opportunities have been induced by trade liberalization and efforts have been made to strengthen their integration into the world trade system, Albania – among many developing countries - has not been able to substantially increase their access to global markets. In their efforts to improve compliance, the challenge for national governments and development partners is the allocation of scarce financial and technical resources amongst a plethora of capacity building needs. There is, therefore, a need to identify where the most acute compliance challenges are rooted. In a trade context this means identifying the products and markets with the highest rates of non-compliance and addressing the underlying causes.

This is where the United Nations Industrial Development Organization (UNIDO), through the Global Quality and Standards Programme (GQSP), aims to make a difference. In light of the continued and growing relevance of standards compliance, and the solid and positive track-record of joint cooperation projects, UNIDO and Switzerland, through the State Secretariat for Economic Affairs (SECO), have developed a flagship approach, GQSP, which is now a global initiative assisting 12 countries worldwide to boost their competitiveness in 16 diverse sectors. The GQSP identifies quality- related challenges and makes targeted interventions at every single stage of the value chain, increasing compliance with international market requirements, thereby helping industry to boost their competitiveness and ultimately engage in global trade. The programme is based on UNIDO´s innovative and holistic approach to quality infrastructure cum value chain development. In support of these national efforts, the programme elaborates global solutions for common challenges through the development of global public goods, like the Quality Infrastructure for Sustainable Development Index and the Standards Compliance Analytics. Since its launch, the GQSP has strengthened over 130 quality institutions and service providers around the world. It has directly supported more than 3,000 firms, mostly small and medium-sized enterprises, in improving their operations, management practices and access to new markets.

Given the rich biodiversity in Albania, its existing position as a recognized exporter of Medicinal and Aromatic Plants (MAPs) and considering that the majority of the importers are developed countries with stringent requirements in terms of standards and quality, Albania needs to address several supply-side gaps to realize its full potential. Overall, the agricultural sector (including MAPs as well as fruits and vegetables) is the most important sector in the Albanian economy. It contributes to 22.5% of the country's GDP and is the main source of income for the rural population. The improvement of the sector is a challenge for the Albanian Government. Although several reforms have been proposed to increase transparency, accountability, effectiveness and efficiency in the agricultural sector, their success in implementation has been limited. The agro-food sector in general is characterized by a very large number of producers and a short value chain. Yet, constraints are faced related to limited traceability, lack of quality standards and safety measures, inadequate infrastructure and lack of recognized testing capacities in the country. Another factor that is dominant in Albania is the farming culture and mentality of the producers, combined with poor education levels and little or no culture for quality among the rural population, which ultimately impedes entrepreneurs from being adaptive to the new challenges of economy, market demand, increasing quality and safety requirements as well as diversification of their products. This means, not only do local producers have very little awareness and knowledge about quality requirements, there is also a lack of adequate and internationally recognized testing and quality infrastructure services to prove compliance with market requirement, even if those are met. One of the key challenges identified to be a major obstacle to trade and exports, is the use of banned pesticides. This is clearly highlighted in an analysis of standards compliance capacity resulting from border rejections of food and feed products exported from Albania to the EU, conducted by UNIDO based on its Standards Compliance Analytics. Resulting from this analysis, Albania must put special emphasis on strengthen its capacity to export agricultural products that do not present - and can prove not to present - evidence of pesticides or any other contamination, including those resulting from lack of hygiene conditions and bacteria.

Against this background, within the framework of the GQSP, the objective of the project in Albania is to strengthen the quality and standards compliance capacity to facilitate market access primarily in the MAPs sector, which will also benefit the food and vegetable (F&V) sector. For the past few years, Albania has been one of Europe's top producers of MAPs, with its production focused on wild plants such as sage, lavender and cornflowers. These plants are often harvested in the foothills, though they are being increasingly cultivated on a more commercial basis. The overarching goal of the intervention is to align Albania’s quality infrastructure to the needs of the  national production and thereby boost export of MAPs, and fruits and vegetables, in view of accessing foreign markets, particularly the EU market.

Following a comprehensive approach to strengthening Albania’s trade capacities, UNIDO will support producers to make best use of standards, meet market requirements and thereby improve their production processes. Complementary, the GQSP will strengthen national quality infrastructure institutions, in view of providing state-of-the-art services and align to the requirements of the EU, and enhance conformity assessment, including testing and  certification, to provide internationally recognized services that are accepted globally. Further, the programme will as well provide policy advice to support the alignment of the national quality infrastructure with the systems of the EU. Special emphasis will be put on the promotion of a quality culture and the promotion of collective efficiencies.

All these endeavours are expected to lead to enhanced capacity to trade and boost exports of medicinal and aromatic plants, empowering small producers and improving the lives of the rural population, in line with the Government’s priorities. By creating a conducive environment, creating a culture for quality and providing support to the private sector to increase their productive capacities, the approach strengthens the supply side and stimulates demand for quality services in the long run – promising sustainability.

UNIDO assists countries to accelerate their transformation towards inclusive and sustainable industrialization, bridging gaps and seizing industrial development opportunities to achieve the 2030 Agenda. More than ever, inclusive and sustainable pathways to industrial development require systemic approaches as well as innovative, collaborative, transformational and flexible solutions.

UNIDO value addition is based on its needs driven, tailored solutions. In cooperation with the United Nations development system at the global, regional and country levels, it prioritizes evidence-based programming, prominently in the context of the Programme for Country Partnerships. Thought leadership and convening of global partners remain vital approaches to boost cooperation for ISID, with a special focus on expanding collaboration with the private sector as a key player to catalyse transformative solutions. Tapping into its pool of specialists, the Organization offers its partners a wide range of co-created and co-owned solutions. UNIDO´s comprehensive approach promotes industrial development in which women, youth, marginalized and vulnerable groups in society equally lead, participate in, and benefit from economic transformation.