POVERTY IN ALBANIA A QUALITATIVE ASSESSMENT By: Hermine De Soto (World Bank ECSSD) Peter Gordon (Consultant) Ilir Gedeshi (CESS) Zamira Sinoimeri (CESS) Washington, DC June 30, 2001 TABLE OF CONTENTS FOREWORD . v ACKNOWLEDGMENTS . vi ACRONYMS . viii GLOSSARY OF TERMS . ix EXECUTIVE SUMMARY . xi I. INTRODUCTION . 1 Objectives and Methodology . 1 II. ALBANIAN DEFINITION OF POVERTY . 7 III. INCOME AND SUSTENANCE . 11 Inadequate Income . 12 Multiple Sources of Income . 14 Old and Deteriorating Housing and Other Assets . 15 Unemployment and Unstable Employment . 17 IV. AGRICULTURAL ACTIVITY . 19 Small-Scale Agriculture . 20 Irrigation Difficulties . 24 Marketing-Related Problems . 25 V. INDUSTRIAL ACTIVITY, EMPLOYMENT AND INCOME 29 Underemployment under Communism . 29 Industry Closings during Privatization . 29 Current Conditions of Key Industries . 31 The Informal Sector: Casual and Part-Time Employment . 33 VI. NDIHME EKONOMIKE AND OTHER ECONOMIC ASSISTANCE 35 VII. REMITTANCES AND MIGRATION . 39 Migration Patterns and Flows . 40 Who is Migrating? . 42 Frequency and Length of Migration . 44 Benefits of Migration . 45 Problems Caused by Migration . 46 VIII. INFRASTRUCTURE . 49 Water and Sewerage . 51 Electricity . 54 Roads . 56 Telecommunications . 56 iii IX. EDUCATION . 59 Declining Attendance . 59 Declining Quality of Teaching . 62 X. HEALTH AND HEALTHCARE . 67 Increase in Illnesses . 67 Declining Healthcare Delivery . 68 XI. SOCIAL CAPITAL . 75 Governance . 76 Civil Society . 83 Ethnic Minorities . 90 Horizontal Organizations and Institutions . 93 Family Relations and Female Exclusion . 96 Social Capital is Finite . 99 XII. DIMENSIONS AND CAUSES OF POVERTY IN ALBANIA . 101 Degrees of Poverty . 102 Coping Strategies . 105 Distance from Urban Centers . 107 Regional Variations of Poverty . 108 Causes of Poverty . 115 XIII. CONCLUSIONS . 121 Policy Implications. 122 ANNEXES Annex 1 Explanation of Social Capital . 125 Annex 2 “The List” . 127 BIBLIOGRAPHY . 129 MAP OF ALBANIA . 133 LIST OF TABLES Table 1 What Does the Word “Poverty” Mean to You? . 7 Table 2 Median Expenditure of Households Each Month . 13 Table 3 Median Amount of Income by Source . 14 Table 4 Ownership Rates of Household Items . 16 Table 5 Location of Crop Sales . 26 Table 6 Location of Livestock-Related Product Sales . 26 Table 7 Purchases of Crops . 27 Table 8 Ndihme Ekonomike . 35 Table 9 People’s Evaluation of How Government Works . 81 Table 10 Involvement in Community Decisionmaking . 82 Table 11 Impact of Politics and Political Parties on My Life 82 Table 12 How Would You Feel about Having the Following Types of People as a Neighbor? . 89 Table 13 Household Characterization of Own Socioeconomic Condition . 101 iv FOREWORD Over the last ten years, Albania has made substantial political and economic progress, especially since the civil turmoil of 1997. Yet challenges remain, especially with regard to reducing poverty: Albania, still bein g one of the poorest countries in Europe. To this end, the Government of Albania and its civil society partners have put considerable effort into formulating the country’s Growth and Poverty Reduction Strategy (GPRS), which aims at reducing poverty through a comprehensive national development strategy. The strategy was based on an analysis of the qualitative aspects of poverty in different areas of the country and among various groups in Albania. It was for this purpose that the qualitative poverty assessment presented here was undertaken. The qualitative poverty assessment presents information on a variety of sectors to support the GPRS with regard to how poor Albanians experience and express what poverty means to them -- and not only in terms of income poverty. The study found that Albanians experience poverty in terms of lack of hope, feelings of defenselessness and exclusion from social and commercial life, and an inability to continue cultural traditions. Different minorities have somewhat different experiences, with the Roma remaining the poorest and most vulnerable to social exclusion. To support the GPRS approach of involving civil society through participation, the authors disseminated the study findings widely through regional and national media, and also discussed the findings with the study participants, national NGOs, the parliament, and the international donor community. From the beginning, the Government of Albania – including President Rexhep Meidani -- actively supported the study. The President showed a keen interest in the study, in what Albanians said about poverty in cities, farming communities, peri-urban settlements, fishing villages, and in how poverty affects the quality of schools, health centers, and rural markets. We believe that this report will serve various sectors in the Bank, policy-makers, NGOs, the international donor community and the private sector – all involved in economic and social development in Albania. Laura Tuck Christiaan J. Poortman Acting Sector Director Country Director and Regional Coordinator for ECSSD for Southeast Europe Europe and Central Asia Region v ACKNOWLEDGMENTS The study was undertaken with the assistance of many individuals and organizations. We would like to thank Alexandre Marc, Sector Manager of ECSSD, for his support and feedback throughout the work. We also thank Eugen Scanteie, Resident Representative of Albania, and his staff for their valuable and kind assistance when we were in Albania. During the course of the study, we gained new insights into its importance to the Growth and Poverty Reduction Strategy (GPRS), from the Albanian GPRS Steering Committee. Ranjit Nayak coauthored the concept paper that documented our approach. He also provided assistance during field research and ensured the quality of the work. Our special thanks go to Parviz Fartash of the UNDP office in Tirana. He provided sound guidance on the geographic scope of the study, and his questions for the socioeconomic household survey contributed to expanding current regional knowledge on issues of governance and security. Several people reviewed the conceptual framework that guided the study. We are most grateful to the peer reviewers, Conception E. Del Castillo, Pierella Paci, and Philip Goldmann. Throughout the study, we also received helpful comments from: Kathryn Funk, Roy van Southworth, Andreas Rhode, Anush Bezhanyan, Calogar Carletto, Verdon Staines, Laurie Joshua, Julian Lampietti, and Helga Treichel. The field research was coordinated with the local research team from the Center for Economic and Social Studies, CESS, and was managed by Ilir Gedeshi. We are especially thankful to Blendi Ceka, who interpreted during fieldwork interviews; Emille Ostrosi, who tirelessly entered questionnaire data and ensured its quality; Manuela Murthi and Gent Hashorva, who compiled and tabulated the survey data; and Mira Haxhiu, Edlira Shtepani, Sophia Noti, and Adriana Toshkezi, who transcribed more than 120 tapes of focus group discussions and interviews, and translated the field notes into English. We especially would like to acknowledge the local research team’s patience and endurance during the time of energy shortage in Albania, especially during the fall and winter of 2000. We are most grateful to formal and informal leaders, including community and fis elders, for their hospitality and welcome when we interviewed them and their families. We extend our warm acknowledgement to all the people in various regions we visited in Albania, who consented to be interviewed, often under tremendously difficult physical and psychological conditions. We hope that their willingness to participate in the study will ultimately have a positive effect on their daily lives. Our sincere gratitude goes to Nora Dudwick and Stanley Peabody of ECSSD. We have learned and profited a great deal from their comments, which have immeasurably improved the draft of the report. We thank Daphne Sawyerr-Dunn from ECSSD, whose administrative support saved critical time throughout the conduct of the study. Deborah Davis receives our special thanks for her skillful editorial touches. Elena Negru and Evelin Lehis kindly assisted in compiling the final version of the report. vi Finally, without the financial generosity of the United Nations Development Programme (UNDP) in Tirana, and the Social Development Initiative for South East Europe, this study would have been far less comprehensive. We are most grateful for their support. vii ACRONYMS AEDP – Albanian Education Development Project CAS – Country Assistance Strategy CESS – Center for Economic and Social Studies (Tirana) DM – Deutsche-Mark Dr – Drachmas; at the time of researching this report, Dr1 equaled about L0.39 ECSSD – Europe and Central Asia Department, Socially Sustainable Development Unit GDP – Gross Domestic Product GPRS – Growth and Poverty Reduction Strategy IMF – International Monetary Fund L – Leks; at the time of research for this report, US$1 equaled about L142 LSMS – Living Standards Measurement Survey MOLSA – Ministry of Labor and Social Affairs NGO – Non-governmental organization QA – Qualitative Assessment UNDP – United Nations Development Program WB – World Bank viii GLOSSARY OF TERMS Analgesic : medicine to reduce or eliminate pain. Anemia: a condition in which there is a reduction of the total number of red blood corpuscles, or of the total amount of hemoglobin in the blood stream, or of both. Brucellosis : a persistent infectious disease caused by a bacterium transmitted to humans in the milk of infected cows and goats, and characterized by an undulating,