Albania 2002 Challenges of Local Governance and Regional Development

HUMAN DEVELOPMENT REPORT Albania 2002 Challenges of Local Governance and Regional Development

Prepared for the United Nations Development Programme (UNDP)

by the Human Development Promotion Center (HDPC)

challenges of local governance and regional development 1 ______for specific aspects, it is collaborated with

The Albanian Association of Municipalities The Institute for Research and Development Alternatives The Albanian Center for the Information Technology The Center for Autonomy and Local Democracy The Institute for Habitat Development (Co-Plan) The Institute for Contemporary Studies The Institute of Urban Research

and Arjana Misha, Artan Hoxha, Auron Pasha, Besnik Aliaj, Emira Galanxhi, Ferdinand Poni, Godiva Rrembeci, Prof.Dr.Gjergji Sinani, Klement Kolaneci, Prof.Dr.Kosta Bajraba, Mimoza Dhembi, Vojsava Progri. ______

Translator Robert Elsie

Information contained in this report is not subject to copyright. However, clear acknowledgement and reference to of the Albanian Human Development Report 2002 authorship is required, when using this information.

The views expressed herein are those of the authors of the report and do not necessarily reflect the views of the United Nations Development Programme.

For more information please contact:

Human Development Promotion Center (HDPC) Rr. Vaso Pasha, P. 9/1, Tirane Tel: +355 4 253 300, Fax: +355 4 253 299 E-mail: [email protected]

and/or

Office of the Resident Representative UNDP Tirana, Albania Tel: +355 4 233122 E-mail: [email protected]

This report is available electronically through the Internet World Wide Web, at:Htpp:///www.undp.org.al

Graphic design: studio grafike Elsi Kongo

Photographs by Genci Treska

Printed on PEGI

©:HDPC

Note: The report refers to the developments in the country up to the end of September 2002. This report is based on official statistics from the Albanian Institute of Statistics (INSTAT). . Besides the references, data from different studies are provided by NGOs and individuals who collaborated during the preparation of the NHDR 2002. report.

2 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 HUMAN DEVELOPMENT REPORT Albania 2002

Challenges of Local Governance and Regional Development

Prepared for the United Nations Development Programme (UNDP) by the theHuman Development Promotion Center (HDPC) ______

Lead Author Dr. Ylli Çabiri

Core Team Edi Rama, Filloreta Kodra, Dr. Lindita Xhillari, Milva Ekonomi, Piro Misha and Remzi Lani,

Technical and administrative support for the preparation of the NHDR 2002 was provided by: Peter S. Gudgeon - Interregional Adviser, United Nations DESAexpert Sergej Tsvetarsky - Statistical Expert

and Eno Ngjela - Project Coordinator, UNDP Tirana :

challenges of local governance and regional development 3 4 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 Preface

It is my great honor to be invited to write a few MDGs and must now move ahead to make sure words by way of introduction to this – the fifth they commence – there is no time to loose. Human Development Report - prepared for Albania. The previous NHDRs of Albania Significantly the report observes that there is little covered a diverse set of development themes correspondence between the objectives of the local including the main development issues since 1990. government reform and the actual support given to the various regions. It is revealed that fiscal Increasingly the national HDR is seen as a decentralization – which should go hand in glove document, which highlights and explores issues with administrative decentralization, has been relating to critical economic, social and human largely ignored as an essential instrument of local development concerns of the day. It is intended to development. The result is that the poorest regions raise the level of debate on important features of are grossly under-resourced and getting poorer and social and human development. This I believe it the richest regions - mainly in the center of the has succeeded in doing. As can be seen from the country around Tirana are becoming richer and title of this report – a particularly sensitive and even in a sense over developed in a haphazard and germane topic has been chosen for discussion, unplanned manner. The poorest regions are loosing namely decentralization and local governance. The population at an alarming rate, employment Report is replete with observations, ideas and opportunities for the youth are almost non-existent suggestions on the policy front covering, inter alia, and infrastructure is falling into disrepair. This the social failures of the transition process, how to does not bode well for the future more equitable improve local governance, bring about more development of Albania. equitable development and on how to involve the citizenry in local government affairs. Finally I would like to express my deep appreciation to the Human Development Promotion Center As is now well known the national Human (HDPC), which has marshaled the expertise to Development Reports also present the calculations undertake the research in this Report including the of the various human development indicators of calculation, for the first time, of the HDI, and the the host country in accordance with the associated indices. methodology presented in the global Human Development Reports. In more than one sense, I would also like to express our appreciation to the 2002 NHDR for Albania marks a major UNDESA, which provided technical support for watershed in that, for the first time, the national the preparation of the NHDR 2002. Not least we HDI has been calculated. It also breaks new ground have utilized the expertise of the Bulgarian Institute in the presentation of regional human development of Statistics – through Mr. Sergej Tsvetarsky in indicators – at the district and prefecture levels. the preparation of the national and regional HDIis. On the basis of this new information, the report This is an excellent example of intra-regional draws out some relevant comparisons of the technical cooperation, which I am happy to economic and social conditions in the poorest support. regions and in the rapidly growing urban centers that are the new homes of the economic migrants The next stage will be to ensure that the Report from the poorest districts. gets adequate exposure and we will support this through a series of workshops after the initial The Report also covers the linkages between the launching ceremony. We have already paved the HDIs and the Millennium Development Goals way for this by the hosting of a meeting of the (MDGs) – and it is seen that for the attainment of regional media on the preliminary findings of the the latter the government must address the problem NHDR and used the services of a seasoned expert of deep-rooted rural poverty by tackling the in the media world – Mr. Ian Williams to guide deprivation in the most isolated regions. A new this process. In closing, I believe the challenge is regional planning approach must be developed to now also for the government and Civil Society in jointly address the problems of rural poverty, Albania to ensure that the issues addressed in the depopulation and deprivation and the rather NHDR 2002 are taken up in earnest. chaotic forms of urban development that has emerged in Albania. Likewise, support to the Anna Stjarnerklint – government and the peoples of Albania in the Resident Coordinator and UNDP Resident design and implementation of a feasible path to Representative - United Nations achieving the MDGs has assumed a high profile in the UN system and the international Tirana community. All countries, and not least Albania, December 2002 must rapidly develop a strategy for achieving the MDGs. The government has agreed to these

challenges of local governance and regional development 5 Glossary of Acronyms ______

CoM Council of Ministers GPRS Growth and Poverty Reduction Strategy NHDR National Human Development Report INSTAT National Institute for Statistics MDG Millennium Development Goals HDI Human Development Index HDPC Human Development Promotion Center UNDP United Nations Development Programme NGO Non Governmental Organization GDP Gross Domestic Product EU European Union HPI Human Poverty Index GDI Gender Development Index GEM Gender Empowerment Measure TAI Technology Achievement Index

6 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 table of contents

EXECUTIVE SUMMARY 8

1 THE HUMAN DIMENSION OF DEVELOPMENT 17

1.1 Transition expectations and reality 17 1.2 Poverty and social exclusion 22 1.3 The role of development strategies 25 1.4The measurement of human development 26 1.5 The challenge of local development 37 1.6 Human development and linkages with the MDGs 39

2 THE LOCAL MOSAIC AND LOCAL GOVERNANCE 43

2.1 Trends in local governance 43 2.2 Current territorial and administrative divisions 45 2.3 Assessment of the new local government administrative structure 50 2.4Regionalism - a new vision for development 53 2.5 Beyond consensual politics 55

3 CENTRALIZED DECENTRALIZATION 59

3.1 Decentralization within the framework of centralized governance 59 3.2 Progress in decentralization 61 3.3 Local administration capacity - reason or pretext 67 3.4Issues in fiscal decentralization 68 3.5 Regional funding policies and strategic development 76 3.6 The centralizing influence of international assistance 78 3.7 The main challenges in decentralization 80

4 CIVIL SOCIETY PARTICIPATION IN LOCAL GOVERNANCE 83

4.1 Urbanization phenomenon in Albania 83 4.2 The Planning of urban and regional development 85 4.3 Management of urbanization 88 4.4 The challenge of promoting the values of citizenship 91 4.5 Public participation - a process, not an event 94

ANNEXES

Annex 1: Technical Note 99 Annex 2: Statistical Data 105

challenges of local governance and regional development 7 executive summary

Introduction - coincided with the end of the first decade of great political, economic and This National Human Development Re- social change in Albania. This report port for 2002 marks a further significant recorded changes in the economic and step in the process of documenting and social fabric of society to the extent that analyzing the outcome of the transition the Albanians would never have imag- process in Albania. It includes the first at- ined ten years ago. The aspiration of tempt to calculate the array of indicators the democratic movement of 1991 to attached to the composite Human Devel- make “Albania like the rest of Europe” was opment Index (HDI) which is published only the beginning of a process of com- annually by the United Nations. In addi- prehensive and radical reforms which, tion it has gone a step further with the in retrospect, are regarded as quite cou- calculation of sub-national (regional) hu- rageous and yet very costly in human man development indicators. It is expect- terms for the poorest country in Europe, ed that the HDI calculation process will a country which had just emerged from be refined progressively year on year. The a communist dictatorship and extreme HDI exercise has been extremely valuable international isolation. in identifying important trends and changes in Albanian economic and social condi- Ten years later, Albanian society finds tions at the national and regional levels – itself profoundly restructured. It now notably under the decade of transition to has the gulf between the extreme rich a market economy. and abject poor, and between the two, there is a widening middle class. The The report is set out in four chapters. The extremely high rate of urbanization, first, describes the essential and impor- social fragmentation and the lack of so- tant linkages between the transition proc- cial cohesion have had dramatic effects ess and human development including the recently, both for the cities and for the regional HDIs, the second chapter exam- countryside. ines the difficulties facing local governance in managing local development in Civil society would seem to be the most the public interest. The third chapter neglected element of transition in Alba- focuses on the phenomenon of “central- nia. The population is still hardly able ized decentralization” which characteriz- to organize itself as a community, the es the unsuccessful attempts to incorpo- desire and willingness of the people to rate a regional development component implement legislation is progressing in development. The final chapter ex- slowly, and there is little participation plores some of the strategic initiatives re- on the part of interest groups in draft- quired to address the regional developing reforms and policies. Business is en- mental imbalances that have arisen over deavouring to advance in an unregulat- the past ten or so years and in particular ed or easily deregulated environment in the polarization of growth into a relative- which the informal market predomi- ly narrow belt between Tirana and Durres nates. Politics have taken on new forms. and the deterioration of significant parts The high level militancy that marked the of the rural areas. early and mid years of the 1990’s has been replaced by more specific types of militancy, with specific interests seeking The human dimension to bias the development process in their of development favour.

The publication of the National Report The implementation of a rigorous re- on Human Development – Albania 2002 form programme gave quick and evident

8 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 results in the promotion of macro-eco- These calculations have shown that the nomic stability. But the political, eco- Human Development Index in 2001 is nomic and social crisis of 1997 showed 0.764 and that Albania ranks 70th in the that these reforms were not enough to classification of the United Nations for guarantee the success of the transition. the 173 countries which were counted The atmosphere of political conflict, in- in this index. It is also included among stitutional weakness, corruption, and the the countries with a medium level of non-implementation of legislation have human development. The statistics reveal been some of the major adverse and con- substantial differences in the level of hu- straining factors which were not taken man development among the various re- into account sufficiently in the design of gions of the country. The highest HDI the transition strategy. The 1977 crisis level was in the prefecture of Tirana and reversed the main social and economic the lowest was in the prefecture of Kukes. indicators to the levels they were at the There were also substantial differences start, and, most serious of all, Albanian within prefectures, shown clearly by the confidence in the country’s political and statistics for the district level. government institutions, was deeply shaken. Everything began anew with an- The Index of Gender Development, as other stabilization programme in the year a measurement of the inequality between 1998, combined this time with repeated women and men, seen from the perspec- demands for institutional consolidation. tive of basic skills and living conditions, Albania has finally begun to show real is 0.758 and Albania ranks 61st in this progress. classification. This puts it in with the group of countries with a medium level The initial reform programme was pro- of gender development. At the local lev- moted by a large number of strategies el, the prefectures of Tirana, Fier and oriented towards economic transition to Durres have the highest rate of gender a market economy. However, Albania has development and the prefectures of now gone through ten years of transition Shkoder, Diber and Kukes have the low- without a strategy for combating pover- est rate. The Index of Gender Empow- ty, for reforming the education system or erment, which focuses on the ability of for changing the situation in the public women to show their skills and to play health sector. One of the main handicaps an active role in political and economic of almost all macro-economic and secto- life and in decision-making, is 0.422 and ral strategies which have been planned Albania ranks 58th in the classification of for the country has been the low level of the United Nations. reliability of the statistics upon which they rely, the lack of measurable indica- Another calculation is the Index of Tech- tors, the lack of requisite cost analyses nological Achievement, which shows the for implementation, and the lack of a level of each country with regard to the guaranteed funding analysis. presence and utilization of technology at the service of human development. Alba- Reform progress has had some an impact nia’s rate is 0.304, which ranks it among on the indicators of human development the countries that are dynamically adapt- based on the United Nations Human ing to modern technology. Development Index (HDI). To analyse- this impact, an initial attempt was made The results of these calculations clearly to calculate these indicators at the nation- show that there are great imbalances in al and local levels, based on data from the progress of human development at the year 2001. the local level. For the first time the

challenges of local governance and regional development 9 executive summary

calculations of regional HDIs has shown opment Goals (MDG). It is now regarded the marked spatial disparities that have as essential that account be taken of the emerged in the country over the past 10 MDG indicators at the local level, in years. The current development strategies particular those related to poverty, edu- and policies do not reflect or seek to ad- cation, health care and gender equality. dress these imbalances very well, and cer- This could enable the preparation of more tainly not directly. They all aim at an im- specific action plans to fulfil targets, to provement of the indicators at the nation- calculate costs, to identify sources of fund- al level. Experience from this decade of ing and to orient and coordinate fund- transition has proven clearly that this ing for more priority activities. macro-economic level approach, when carefully implemented under conditions of political stability, encourages econom- The local mosaic and local ic growth and global development in the governance country. But its effects on human development, in particular at the local level, Albania does not have a long and unin- have been less evident and much slower. terrupted tradition of local governance. A direct influence on the indicators relat- In the first decade of the transition very ed to human development, in particular, little attention was paid to local govern- to issues such as income, education, health ance compare to political and economic care, social services, and gender equality reform. The change first began in 1992 etc, can only be achieved quickly and with with the setting up, for the first time, of low costs by taking specific measures for units of local governance after direct elec- the zones in which the indicators have tions and the attribution to town and deteriorated most or record the lowest lev- rural municipalities of a number of di- el in absolute terms. This implies a more rect responsibilities and more autonomy. sectorally disaggregated and spatially oriented approach to transition. These reforms were influenced and in- terfered with by interests and political cir- As a consequence, local development, as cles at the central government level. The a new vision for the country’s develop- central government has had substantial ment, would seem to constitute yet an- political influence on local government. other challenge for Albanian transition. This influence would seem to be inevita- It represents first and foremost a novel ble for as long as local government is re- mentality of government which is need- stricted in the legal, administrative and ed to meet this challenge, a mentality financial means it has at its disposal to much more attune to local government fulfil its duties and competencies under and to the role of people in government the law. The reform and effectiveness of than it has been in the past. Closely relat- local government fell victim to the fight- ed to this is the need for a review of existing and bitter conflicts characteristic of ing development strategies in order to political life in the country during most accommodate the national objectives they of the last decade. Influenced by the re- contain to local objectives, together with sults of parliamentary elections, the Al- work on selecting priorities for each re- banian political establishment has had gion, calculating implementation costs difficulty accepting cohabitation between and reorienting funding. the central and local governments, and the central government has often even The challenge of local development is of deprived the local authorities of their particular significance with regard to the competencies under law. fulfillment of commitments made within In 1999, the Strategy for Decentraliza- the framework of the Millennium Devel- tion and Local Autonomy was drafted for

10 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 the first time with a new and long-term of the first level of local government. vision for the development of local gov- Among the elements for review could be ernment in accordance with the Europe- the classification of naming, in particu- an Charter of Local Autonomy. Laws were lar for some of the towns with a small passed such as the Law on the Organiza- population, the possibility of equating tion and Functioning of Local Government the number of towns with the number and the Law on Territorial Administrative of town municipalities, and the existing Division. The territory of the country was division of the municipality of Tirana divided into 76 town municipalities and into 11 municipalities, which was not 309 rural municipalities, which repre- carried out on the basis of sufficiently sented the first level of local government. convincing or acceptable criteria. They were grouped into 12 regions, which represent the second level of local The question of optimal size for the units government. of local government must be the object of discussion especially for the regions, The first level of local government is al- too, which are not carrying out their ba- ready in place and is exercising its au- sic functions: drafting regional policies thority. This achievement was influenced and harmonizing them with state poli- by tradition, a clearer definition of du- cies. Analyses carried out up to now on ties and the fact that local government the reasons for this situation seem to adapted relatively rapidly to its duties. avoid discussing the main issue, which is Also of influence was the fact that the linked to the optimal size for the units of town and rural municipalities were run the second level of local government. It by officials directly elected by the peo- is evident that the existing division has ple. As a consequence, the municipali- been strongly influenced by tradition, ties in question are often regarded as the and that other, more suitable and more only real institutions of local governance. contemporary criteria must be taken into consideration. As an example, one could The second level of local government, on mention the criterion of approximation the other hand, has not yet found its role with European structures. and has not been able to exercise its authority properly because it does not rely Regional development has already be- on a clear electoral mandate and does not come a trend in local governance have clear competencies, nor assets, funds throughout the countries of the Europe- and property of its own. The regional an Union. This new vision for develop- council reflects all the confusion and res- ment has begun to be included on the ervations which have arisen in the course reform agendas of the candidate coun- of creating a second level of local gov- tries for EU membership. Most of these ernment. countries have already passed specific laws on regional development and some of The territorial administrative division of them have begun to adapt their territori- the units of the first level of local gov- al organization to the duties involved in ernment has, in general, succeeded in this development. fulfilling its duties with regard to public services. However, the major demograph- It is a new concept for Albania. Up to ic changes which have occurred, the new now, it has not been accounted for in na- level of local autonomy and the higher tional and sector development strategies, scale of responsibilities with which the in the strategy for the reform of local gov- local authorities have been charged re- ernment, in initiatives for the moderni- quire a more in-depth analysis of the ex- zation of legislation, or in the new terri- isting territorial administrative division torial administrative division.

challenges of local governance and regional development 11 executive summary

for decentralization began to be influ- An analysis of the indexes calculated at enced by the central government’s ina- the national and regional levels shows that bility to effectively administer most ur- there is profound regional inequality in ban services and was reinforced by pres- human development in Albania, in par- sure from politicians, local administra- ticular in economic development, and tion, civil society and the local business that this inequality is rapidly increasing. community. In order for this situation to begin to change, specific regional action must be The decentralization reform has ad- taken aimed at mobilizing the economic vanced at two different speeds. Progress and human potential of all the regions has been made in the preparation of a with low indicators. Success here depends legal framework, but implementation to a large extent on the size of the region, has, by comparison, fallen behind. The which must be sufficient to offer real op- deadlines set forth in the basic law on portunities for development. In general, local government have not been adhered dividing a country up into little bits, as to. Nonetheless, it is generally held that was the case of the administrative divi- the deadlines were more optimistic than sion carried out in Albania, substantially the concrete possibilities for implement- restricts opportunities for implementing ing the reform. regional development policies. At the moment, Albanian legislation is It would seem that this very important in full or sufficient compliance with and very essential process couldn’t be re- most of the paragraphs of the European alized with the existing institutions, legal Charter of Local Autonomy. This shows framework and administrative divisions. that substantial progress has been made The current regions have difficulty rein fulfilling the legal framework for de- sponding to this process and this is not centralization. But the legislation has not simply a question of experience. As a con- yet been fully implemented. As a result, sequence, Albania, which regards mem- actual compliance is in fact lower. bership in the European Union as its greatest challenge, will soon be far behind The process of transferring duties and the times in its reform. Now is the mo- responsibilities from the central to the ment to review legislation, to set forth the local government authorities has prov- optimal size for the units of local govern- en to be slower than real possibilities and ment at the second level, and to look for- much slower when compared to the ward. A special law and a special govern- deadlines set forth by law. The transfer ment structure for regional development, of duties related to the infrastructure and which have shown themselves to be par- public services has only been accom- ticularly effective in most of the transi- plished in part. Unsolved remain prob- tion countries, would serve as important lems linked to the approval of construc- instruments to initiate this process. tion sites and urban planning. The Council for Territory Adjustment con- Centralized decentralization tinues to function as a body, which al- lows the central authorities to take deci- In Albania the reform of local governance sions even when the political majority along with attempts at fiscal decentrali- in this government is not the same as in zation was initially conceived as more of local government. The transfer of duties a desire among politicians to introduce related to social services has not yet been forms of government similar to those in made. Progress in the transfer of duties the western democracies, than as an inev- linked to local economic development, itable reality in governing. Later, the need public order and civil defence, and to

12 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 the separation of duties held jointly by country’s population lives, and these the local and central authorities in the funds have been diminishing from year fields of education, health and environ- to year. For 2001, about two-thirds of mental protection has also been slow. the population, inhabiting about 86% of the territory of the country, received less The weakness of local government capac- than half of the funds nationally availa- ities and the risks linked to them serve as ble for expenditure. Funds remain con- the main reason for delaying the transfer centrated in the districts with a high of duties and for the slow progress made Human Development Index. in decentralization. The approach of first strengthening these capacities and then The difference is even more evident if a transferring responsibilities to them can- detailed analysis is made of allocations not be a rational solution for local gov- from the national budget to the districts ernment and is in contradiction with the via the line ministries. Here it can be seen decades of experience gained in reform not only that the vast majority of funds at the central government level. are spent in districts with a high Human Development Index, indeed with a grow- The delay in transferring fiscal responsi- ing tendency, but that funds for districts bilities from the central to the local gov- with medium and especially with low ernment has been one of the most con- Human Development Indices have been troversial issues of recent years. From the cut back by the line ministries. This gives data on the main indicators of the local the impression that the line ministries budget one can clearly see that although have been gradually abandoning districts the expenditures of local government with a low Human Development Index. have grown from year to year, they have hardly changed at all in relation to state There may be objective reasons for the budget expenditures. This shows that fis- low level of funding for districts with a cal decentralization has made no real low Human Development Index, for ex- progress. Similarly, an analysis of the to- ample a lack of resources, low investment tal sum of state budget funds and of funds efficiency, and important emigration belonging to local government, which are trends, etc. But it now appears evident spent at the local level (in the districts), that it would be essential to define a stra- shows not only that the main portion of tegic stance for this part of the popula- expenses has remained in the competen- tion. cy of the central government administration, but also that the portion of funds The composition of international aid has which local government has at its disposal also revealed clear centralist characteris- has indeed diminished compared to the tics. Particular importance has been at- total of funds available. tached to technical assistance to strengthen governance, to programming and im- An analysis of the total expenditures at plementing comprehensive reforms, to the district level, from state budget funds drafting national and sector policies and to funds belonging to the local authori- strategies, to preparing a legal framework ties, shows that there does not seem to and the approximation thereof to inter- be a particular national finance policy national standards, and to promoting linked in any way to a strategy for medi- other components which support govern- um-term national and regional development functions. This importance is also ment. Over the last ten years, there have expressed in the fact that donor commit- been insufficient funds for development ment in these fields has represented about in regions with low indicators of human 29% of all funding accorded to Albania development, where about 22% of the over the period of transition. Almost all

challenges of local governance and regional development 13 executive summary

this assistance was accorded to the cen- of mini-cultures and professions, which tral government, and only about 4% was were substantially different from the rest given to the local authorities. Direct as- of the urban population. The new areas sistance to support local government ca- of inhabitation have been deprived of pacities, to raise the level of the local ad- even a minimum of infrastructure and ministration and to increase public par- services, of planning and of public in- ticipation in government represents less vestment fund. The new migrants often than 1% of total financing by internation- find themselves living in worse economic al donors. conditions than they had known in their regions of origin. Many of these new Decentralization is a reform, which re- areas have no schools and social service quires a political commitment and broad facilities, and illiteracy is becoming a participation from both the central and growing problem. All these factors have local governments. It cannot achieve suc- made the phenomenon of rapid urbani- cess if one of the governments in ques- zation a critical process accompanied by tion considers itself in the role of the lead- high economic and social costs. er and leaves the other government simply to implement the process. The Albanian state, which was much more focussed on issues of political and transition reform, was unprepared to Civil society participation in deal with the great influx of new mi- local governance grants. Nor could the local authorities come to terms with this new and un- The massive migration of the population foreseen situation. from the villages and small towns to Ti- rana and the large cities has drastically This new situation constitutes a diffi- increased the rate of urbanization. City- culty and further burden on local gov- dwellers represented 42.3% of the popu- ernment. Most of the essential services lation in 2001 against only 35.74% in needed by the newcomers are linked di- 1989. rectly to the duties and responsibilities of the local government authorities. Demographic changes have brought Faced with these challenges, the local about great changes in population distri- authorities are helpless to act and feel bution and density per region. These left abandoned without the support, in changes can only be established for cer- particular, the financial support they tain when the results of the 2001 census need from the central government. On are ready. Whole villages have been virtu- the other hand, they are under pressure ally abandoned and the population in the because of the continuous and uncon- main cities has grown substantially. But trolled growth in the number of new- the territorial administrative division, in comers, at a time when no initiatives particular with regard to the first level of have been forthcoming from the central local government, has not been able to government authorities to balance out adapt to these changes. regional development so that the rural areas of the country and the more iso- The sudden rise in the urban population lated towns are not abandoned com- turned an important part of the rural pop- pletely by their inhabitants. ulation into city-dwellers, without giving them time to adapt to the change. In the Urbanization is a necessary process to the suburbs of these cities, there arose an un- benefit of the country’s development. But usual mixture of population from the var- the main issue is the fact that, up to now, ious rural areas of Albania, a melting pot no one feels responsible for this process.

14 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 There is no one who has shown a willing- nication with the public. This lack of ness to give it direction by means of deci- vision is also seen clearly in the Strategy sions of a strategic nature, which could at on Decentralization and Local Autono- least have a medium-term effect on chan- my, which has not dealt at all with this nelling the process. As a result, the costs of important aspect of local governance. development are very high and must be But nor is the public particular enthusi- borne almost entirely by the local commu- astic to co-operate. nities, in which expenditures up to now are but an insignificant amount of what will Public information is the most elemen- be needed to create normal living condi- tary level of participation in governance. tions for the newcomers. It is the responsi- In reality, information culture is a new bility of the central government to include phenomenon in Albania and it has been urbanization on its agenda and to share its slow to spread. The slowness is justified responsibilities with local government for by the opinion generally held that the the costs involved in this process. average citizen is only interested in his own problems. But the basic issue would Recent urban developments in the coun- seem to be that there is a misunderstand- try in and around Tirana - the metro- ing about a range of mutual responsibil- politan region - has begun to conflict ities between local government and the with its harmonious development. The community to keep one another in- metropolis has an urgent need for one formed. From this angle, it is obvious unified administrative structure, which that much remains to be done. has not been foreseen in the strategy for decentralization or in current legislation The integration of the public in decision on local government and urban planning. making and follow-up implementation on basic issues of local government, such Co-operation between the local author- as the process of drafting the budget, stra- ities and the community depends, first tegic planning, defining priorities for ac- of all, on co-operation and social cohe- tion, etc, is another important compo- sion within the community itself, which nent for its participation in governance. can be attained by means of a long proc- The commissions of the municipal coun- ess of continuous cultivation and im- cils and the public commissions are the provement. Mass migration and the high most wide-spread forms of such partici- rate of urbanization within the period pation in Albania. The work of these of but a few years seem to have slowed commissions has often made it possible this process down. The newcomers stem to find a solution to the issues of the day from various cultures and traditions, but without the pressure of official meetings they all need ties to connect them and and administrative restrictions. Nonethe- bring them closer to the population of less, this type of participation is often not the towns where they have settled. Citi- utilized effectively or appreciated by the zenship is the key element, which can structures of local government. accelerate the fostering of these ties and Partnership is the highest level of public help include these people in discussions participation. The potential for partner- to solve common problems. ship with civil society in Albania and, in particular with the business community In Albania, there is little participation, is, in general terms, still unclear, indeed in particular in the decision-making many views on the subject are prejudiced. process. The local government authori- It is seen more in terms of a spontaneous ties, for their part, are satisfied to imple- relationship than as a means of deciding ment only the minimal standards re- together on what is most necessary and quirements set forth by law for commu- most suitable.

challenges of local governance and regional development 15 executive summary

Partnership with civil society, in particu- port the projects which they are imple- lar with non-profit organizations, is some- menting, and, in some cases, to make what more advanced. Local administra- modest financial contributions them- tions are endeavouring to coordinate the selves. activities of these organizations, to sup-

16 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapter I

The human dimension

of development

1.1 TRANSITION - unlimited external assistance and foreign EXPECTATIONS AND REALITY investment.

The Expectations of Of course, such a situation of great ex- Post-Communist Transition pectations existed in almost all the post- communist countries of Europe. What The last decade has been one of great po- distinguished Albania from the other litical, economic and social transformation transition countries was that its point of in Albania, representing one of the most departure was vastly different. It was the notable and turbulent periods in the his- most isolated and poorest country on the tory of the country. Most of the changes continent with one of the highest percent- were difficult to predict for Albanians, ages of rural population 2. The country whose expectations of a better life at the was ruled up to 1990 by an orthodox outset of the transition from communism communist autarchy, which rejected even were enormous, characterized as they were the reforms that had been implemented by a desire to become a country like the in the other former communist countries. rest of Europe1 right away. The difficulties This has, of course, had a substantial in- and sacrifices involved in the transition pe- fluence on the path of transition in Alba- riod were not on the agenda of the trans- nia and, as a result, on the pace and depth formation the Albanians had envisaged. of reforms undertaken. Their expectations for the future were great, but the path to turning them into a Commencement of a Comprehensive Reform Programme reality was lined with much naive thinking. Democracy was identified with po- The greatest challenge to transition was the change from expectations litical pluralism, justice was thought of and unlimited trust in Europe on the part of the Albanians to simply in terms of a reform of the legal programming and implementing the concrete and complex reforms system, a market economy was envisaged which would thoroughly transform relations between people and their in terms of extreme liberalism and the mentality, institutions, legislation and models of government in order privatization of almost everything, and to bring about an opening to the world and an end to poverty. economic development was viewed as

1 We want Albania to be like the rest of Europe was the slogan of the democratic movement of 1991. 2 About 64% of the population in 1991 was resident in rural areas - Source. Census of Population. INSTAT. Tirana. 1990.

challenges of local governance and regional development 17 The human dimension of development

The Outcome of the feuding, etc. Demographic develop- Post- Communist Economic ments together with major internal (ru- and Social Reforms ral to urban) migration, rural depopula- The need for transition confronted Alba- tion and social fragmentation, the effects nian authorities and society with a heavy of unchecked urbanization, increasing agenda of political, social, economic and lack of social cohesion, all with long-term institutional reforms necessary for attain- repercussions for the emancipation and ing a market based and democratic sys- civilization of society, have had trouble- tem of governance. some effects both in the cities and in the countryside. Regional allegiances, held Developments over the last decade have back by ideology during the communist stimulated an evident change in the qual- period, have begun to resurface, exert- ity of Albanian society. A highly structured ing their influence both over political and and increasingly diversified society has government organization and over the emerged from the amorphous, uniform country’s economic and social develop- Albanian society of the communist era, ment. but the process is not over and the dynamics of social and economic restructur- Lack of observance ing are still rapid. of the Rule of Law The desire and willingness of people to Frustrated Reforms respect the law is the one sphere in which During the first decade of the transition, at a time when many other Albanian society in transition has made former communist countries, for various reasons, resisted the least progress. The lack of respect for implementing reforms at all, Albania was considered to be a the rule of law is regarded in general courageous and ambitious country willing to carry out radical reforms. terms as an institutional weakness. For It attained considerable success in many important indicators but, this reason, the main work required to in contrast to the other former-communist countries, the first five strengthen respect for the legal system has years of the transition culminated in the internal crisis of 1997, focused more on strengthening of insti- which severely damaged the achievements, which had been tutions. Yet, efforts to interest Albanian accomplished . civil society in respecting the law by encouraging the willingness and social con- Characteristics of social science of people to change their attitudes transformation have proven largely unsuccessful. Albanian society now has a rapidly growing urban-based elite alongside a largely Maturation of the political system stagnant poor and rural population. Be- The political arena in Albania has tween them stands an ever-growing com- evolved substantially over the last decade. mercial and business oriented middle During the early stages of the transition, class. The wealthy elite minority has once politicians were divided into self-declared again made its appearance in several “anti-communists” and those accused of spheres in the wake of much social up- being the “heirs of communism.” This heaval. The opening of Albanian society extreme ideological polarization, which had made the life style and preferences of rather superficially equated democracy urban society (especially in Tirana) more with anti-communism, also had an uniform and European but, at the same impact on relations between the political time, the other part of society, rural soci- parties and created a climate of extreme ety in particular, has returned to its tradi- conflict in the country which, in turn, tional way of life: characterized by patri- gave rise to tension and social archal families, the Kanun 3 and blood- destabilization. For quite a while, it also

3 The Kanun refers to traditional codes of community and personal behavior (based on Code of Honor).

18 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

The Emergence of Civil Society Organizations non-profit organizations are based in the capital. Nonetheless, over the last two to three years, there Civil society would seem to be the last element of the has been an increase both in the number of non-profit Albanian transition to evolve. Its development has led organizations (NGOs) and their activities in various to the birth and crystallization of interest groups. districts of the country. This increase has been in two During the first phase of the transition, when special directions: firstly, some of the main non-profit interests had not yet been formed, and when society organizations in the country have moved their activities was still going through a phase of crisis in its values, from Tirana to the districts, either by setting up Albanian society failed to come to terms with the branches there or by supporting local organizations. simplest aspects of daily life in a community. Its ability Secondly, at least in the larger towns, community to organize itself as a community is still weak. One leaders, who have now formed associations and clubs cannot yet speak of the creation of a stable social etc, have been more active in their endeavours to profile or of the results of civil and community revitalize cultural and intellectual life in the solidarity. communities in which they live.

Albanias new civil society is most developed in the Nevertheless, the migration of non-profit organizations capital city. One indication of this fact is that over out of Tirana cannot be considered a grass-roots half of all non-profit organizations in Albania are based movement. It is a downward movement rather than an in Tirana. This is related to the lack of tradition in upward one. For this reason, the role of NGOs in this field and to the fact that most of the donors for community consolidation is still weak. had repercussions on the reform process gun to organize themselves. This has and on the functioning and effectiveness meant that reforms are no longer beyond of government institutions. the scope of interest of these new stakeholders and actors, who are on the Over the last few years, politics have de- scene more and more now. veloped new characteristics. The high level of political militancy characteristic Political stability has been of the earliest years of transition has been strengthened replaced by a narrower militancy, and one, Over the 1991-1997 period there were which is more, focused on self-serving four parliamentary elections, but since interests. For example, if, in the early then, the normal four-year term has come stages of the transition, personnel changes into effect. The political agreement in the administration were carried out reached in 20024 for the election of a with the idea or pretext of replacing the President by consensus constitutes a ze- old class and bureaucracy, it is now ac- nith in the evolution of Albanian poli- cess to government administration which tics. It was much easier to attain broad- motivates membership in political par- based consensus in Albanian society for ties. The extreme polarization of the pub- the reforms undertaken in the period lic has gradually been replaced by a cer- 1991-1996 and for the profound trans- tain reservation and even an indifference formation and social consequences im- towards politics. However, during the plicit in these reforms because of the sim- early stages of the political transition, or- plistic nature of the choice before the elec- ganized interests (such as labour and vari- torate. Either “there were only winners,” ous occupational groups) were the only or, to put it in other terms, “no one had actors involved, whereas now, other ac- anything to lose.” Later on, the decision- tors, such as business, civil society and making process became more complex be- local communities etc. have gradually cause interest groups began to resist been gaining more weight and have be- change and to exert pressure to make

4 This agreement was encouraged by the international community.

challenges of local governance and regional development 19 The human dimension of development

themselves heard and, if possible, to in- participation, at the same time fluence and dictate changes in their favour. government programmes and donor As a result, long “negotiations” were re- strategies frequently include the terms quired in order to attain the consensus participation and co-operation with civil needed for reform. Under pressure from society and the business community. such interest groups, there was also a spi- Nevertheless, in practice, participation ral of revision of many of the reforms un- is limited and there is little influence dertaken during the early years of transi- exerted on the decision-making process. tion. In the period 1997-2001, numerous The legitimacy of representation of the laws, such as those on taxation, privatiza- actors involved is frequently not very tion, the finance system, decentralization, clear. This, in turn, creates the impression civil administration and university au- that political and undisclosed tonomy etc, were revised and enacted (en- compromises have been made and tered into force) for a second time. This hidden agendas are paramount. was this primarily due to initiatives brought forth by interest groups which Interest groups, for their part, are still were opposed to the institutional struc- polarized and have difficulty working to- tures and rules of the game set forth at a gether in order to find solutions for their time when these groups did not exist or common problems. In the search for were too weak to influence the political clear and definite solutions, there is, in process. particular, ambivalence and divergence between honest work and corruption, be- Influence of Interest Groups tween the institutionalization of the The participation of interest groups as market-based and the informal sectors actors in formulating reforms and policies of the economy, between the well-being and, gradually, in monitoring their of families and illegal traffic in drugs and implementation, is becoming more and human beings, between the complete more evident. Nonetheless, the level of opening of an as yet fragile and uncom- participation desired is still much higher petitive economy and domestic produc- than reality. Indeed one could simply call tion, and between environmental protec- it fashionable to participate. Most speeches tion and unchecked urbanization. by politicians refer to the need for

Changes in the business environment Business in the transition period took initial steps of its own in a system in which the economy was still state-run and the notion of private property, after more than four decades, had disappeared almost entirely. Dynamism, energy and a willingness to take risks are all characteristics of Albanian business. After initial adventures and tribulations with imports during the early years of the transition, Albanian businessmen now enjoy a satisfactory evolution and have taken on more of the characteristics of Western entrepreneurs. There have been increasing signs of value-added growth in investment for capital decision makingin circulation and, as a result, a rise in efficiency on the part of the administration and a rise in the allocation of capital towards more productive investments. Business has become an increasingly important factor for employment, revenues and development.

Albanian business, reflecting a new model of the free market economy, is endeavouring to advance in a game without rules or with rules which can easily be bent, in a predominantly informal market, though in some sectors, it is confronted by evident monopoly tendencies, which cause added costs for the economic development of the country. Though some Albanian businesses have attained individual success, they are still in the first stages of transforming themselves into organized actors with collective objectives who are endeavouring to improve conditions for business as a whole, conditions such as transparency, neutrality for the rules of the game, a strengthening of free and open competition, an opening of markets and a strengthening of partnership. As a result, business is not as prepared as it should be to deal with the competitive challenges of a global economy and integration.

20 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

The initial success of the economic reforms During the early stages of the transition, the Albanian economy went through an extreme crisis, which was reflected, in a drastic fall in production as a result of the massive shutdown of inefficient state- owned companies and the collapse of agricultural production. This can be clearly seen in the negative growth of the GDP Graph 1-Evolution of the main macro-economic indicators up to the year 1993 and in the high levels of inflation. (See Table 1.1) nomic situation were not enough to The implementation of an ambitious guarantee the success of the transition reform programme coupled with a lib- to a market based democracy. The cli- eralization of prices and markets, pri- mate of political conflict, institutional vatization, establishment of a commer- weakness, the lack of willingness or lit- cial banking system, and the drafting tle interest in respecting the law, the idea of new legislation brought forth swift that you can make money without work- and notable results in macro-economic ing, corruption etc, were some of the stability, which was viewed quite posi- major factors which were not taken into tively by international institutions. consideration sufficiently in the early During the period 1993-1996, in par- stages of the transition. ticular, there was impressive growth in the private sector, which led to a sub- The repercussions of the 1997 stantial rise in the GDP of about 13% crisis were ubiquitous and in a fall of inflation to 6%. The One of the consequences of the 1997 private sector, almost non- existent up crisis was a dramatic fall in overall eco- to the year 1990, turned into the main nomic activity. The main macro-eco- contributor to the GDP with about nomic indicators returned to the levels 75% in 1996. (See Table 1.1). experienced at the start of the reforms. The GDP slumped to the level of 1992, inflation to the level of 1993 and direct The 1997 crisis highlighted foreign investment was cut in half. On missing elements in the reform top of everything, confidence on the part process of the Albanians in their political sys- The political, economic and social cri- tem and government was seriously sis of 1997 showed that stabilizing re- shaken. (See Table 1.1). Everything be- forms and a satisfactory macro-eco- gan anew with another programme for

challenges of local governance and regional development 21 The human dimension of development

economic stabilization, this time combined with a variety of demands for institutional consolidation. Albania once again began to show signs of real progress. GDP growth stabilized at 6- 8% and inflation dropped to 2-4%. Budget revenues rose continuously and expenditures remained at approximately the same level of 31-33% of GDP, in line with the forecasts in the mid-term programmes for economic development. (See Table 1.2).

Foreign investment Likewise the reforms instituted after 1997 and the progressively improving investment climate was reflected in the rise in Foreign Direct Investment (FDI). By 2001 the FDI inflow US$220 million had increased fivefold over the level recorded in 1997 (US$42 million) and over 20 fold the 1991 level. (See Table 1.1).

Institutional strengthening Profound institutional reforms were undertaken not only in public administration, but also in government decentralization, in the fight against corruption and trafficking and in strengthening the court system. These had a noticeable influence on rein- forcing the state and its institutions. The issue of integration in the European Un- ion (EU) gained prime importance.

1.2 POVERTY AND SOCIAL EXCLUSION

The steady growth in poverty over the transition period

Poverty as a multi-dimensional phenomenon has grown markedly in Albania and contrasts starkly with the obvious economic achievements of the last decade of transition. Whereas in the past, the widespread state of poverty was not officially recog- nized5, the Albanians now suffer from a measurable increase in income poverty and from a rapid polarization of society reflec- tive of increasing economic and social dis-

22 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

Steps towards integration with the European the poorest countries of the Balkans. Likewise the Union European Union is often ambiguous and disunited in its The process of integration in the European Union is at the demands with regard to an agreement with Albania. On focus of all discussions in Albania, in particular since 1997. their part, the Albanians have responded to demands Politicians consider the signing of a Stabilization and for reform by making drastic reforms regardless of the Association Agreement to be a political priority, price they must pay. Despite various contradictions representing the confirmation of a decade of progress observed in the European position on this issue, Albania made in Albania and an indication of government responded to the demand for regional integration as a achievements. The government considers the process pre-condition for EU integration not only with a sober which will strengthen and accelerate reforms in all fields approach to its neighbours, but also with a pro-active and thereby bring the country progressively closer and policy with regard to raising co-operation and finding closer to the European Union. The government also fields of common trans-border and inter-regional dministration considers it to be a learning process by interest. The will to respond positively to the demands rigorously fulfilling all the demands already included in of the EU had a substantial influence in easing the the national strategy of integration. The Albanianss domestic political tensions. This, in turn, brought about consider it to be the only road to progress and have a new spirit of dialogue between former adversaries expressed their unanimous support for rapid integration. within Albania. As a result of this new spirit, consensus As a consequence, the population, the government and was achieved between the main political parties, which the politicians, as in perhaps no other country, are eagerly will encourage the acceleration and strengthening of and tensely following every meeting of the political the reform process in the country. structures of the European Union in which Albania is In reality, Albania still has a long way to go to become a mentioned. responsible partner in a united Europe. In Albania, it is The European Union, for its part, has consistently put generally believed that the will of the Albanian people to off negotiations with Albania, reflecting some hes. join Europe merits much more attention and Hesitancy over t about expanding its frontiers towards encouragement from Europe. parities. Government politicians and as- agriculture are poor and about 28% of sistance from international organizations the inhabitants of rural areas form part and donors have focussed attention recently of the lowest quintile income bracket. The on the reduction of poverty. Gini Coefficient at the national level is 0.43 7 and shows that inequality is one of Rural and urban poverty incidence the highest of all the countries of the re- The results of inquiries, despite the ab- gion. Qualitative assessments8 have also sence of systematic data and limitations been made to assist in estimating the level on methods utilized, suggest that the level of income and other attributes of human of poverty in Albania is high and increas- poverty. Those persons interviewed stated ing both in urban and in rural areas. At that, in order to fulfill their basic needs, the moment, 29.6% of Albanians, or they needed an average of twice the in- about 920,000 inhabitants are considered come they were currently receiving. Only poor (income poverty under US$2 per 17% of those interviewed stated that they day), whereas over 500,000 individuals had no problem living on their current live in extreme poverty (income poverty income level. under US$1 per day) 6. Poverty is concentrated in rural areas, where 4 out of 5 Linkages of poverty to people are classified as poor, a much employment and spatial higher incidence than in urban areas. development The ten years of transition reveal a strong The profound difference in living stand- correlation between poverty and unem- ards in urban and rural zones is seen ployment. Although a survey of the work clearly in the distribution of income. force in Albania has yet to be carried out, About 48% of the people who work in the results of which might offer possibili-

5 Poverty was only officially recognized in Albania in 1991. 6 Results of the 1998 Living Conditions Survey, INSTAT, Tirana, July 2001.

challenges of local governance and regional development 23 The human dimension of development

ties for further analysis, it is an accepted tion in Albania, is characterized by a clear fact that unemployment is at a high level, and massive depopulation of the poor- indeed higher than official statistics would est areas of the country and by a high point to. The indicators of unemployment concentration of migrants in the more have features which reflect not only developed urban centres. Once again, the rhythms of change, but also traditions, prime motivation for such migration has characteristics and opportunities for de- been poverty, the limited opportunities velopment in the various regions. Thus, for finding jobs, and difficult living con- for the period 1998-2001, Laci, Librazhdi, ditions. Kucova, Tropoja, Shkodra and Puka, were considered enclaves of unemployment 9. Poverty and social exclusion Although it is not the only determining Poverty and social assistance - factor, poverty has a noticeable effect on regional variations the social exclusion of individuals, fami- The extent of poverty is also reflected lies and various groups of the popula- clearly in the number of families receiv- tion. There are still no clear indicators, ing social assistance. In the prefectures of and thus no full studies, to provide an Dibra and Kukes, about 36% of all fami- analysis of this reality, but it is generally lies were receiving social assistance in accepted that, with some exceptions, the 2001. In the prefecture of Shkodra, about population in the north and northeast- 32%, and in the prefecture of Lezha about ern areas of the country is the socially 24%. The number of families officially most excluded. living under the poverty line also varies considerably within regions. Statistics Neglect of the social costs of show that in 17 rural municipalities of the transition and reform prefecture of Kukes, 15 rural municipali- As such, poverty has become an impor- ties of the prefecture of Dibra, 16 rural tant dimension of transition in Albania, municipalities of the prefecture of Shkodra but only in recent years has it been taken and in 8 rural municipalities of the pre- into sufficient consideration by decision- fecture of Korca, 40 to 95% of the popu- makers and by international organiza- lation lived at or under the official pov- tions which have supported the reform erty level. 10 process in Albania. There have been various explanations for the lack of atten- Poverty and migration tion paid to this problem, but one fac- Poverty is considered to be the main rea- tor, which has certainly had an influence, son for the high level of migration within has been concentration on macro-eco- and from the country. According to offi- nomic and fiscal stabilization at the na- cial statistics, over the ten year period of tional level. While these are important the transition, about 25% of the popula- development variables, they often dis- tion has emigrated from Albania. About guise unequal development among the 91% of those interviewed in a sample of various sectors and in particular pro- Albanian migrants in Greece and Italy said found discrepancies in the development that economic and living conditions were of the various regions of the country. the prime reasons for their emigration. 11. Internal migration, considered to be one The above shortcomings illustrate the of the most dramatic processes of transi- statistical reality that an improvement in

7 Idem 8 The World Bank. A Qualitative Assessment of Poverty in ten Zones of Albania. Washington DC, July 2001. 9 Based on a study carried out by the Ministry of Labour and Social Affairs, March 2002. 10 Based on data from the General Administration of Social Services, July 2002. 11 UNDP, HDR - Albania 2000, Tirana 2001

24 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone an indicator at the national level does not term “donor” has been replaced by “in- necessarily mean that the social and eco- ternational partner” and partnership it- nomic situation of all the members of so- self has taken on a much more conditional ciety has improved to the same extent. It connotation. Most of the development is therefore essential for poverty and de- strategies have been suggested and im- velopment analyses to cover various so- ported, but they are now being absorbed cial groups in order to see how and to without much discussion from the pub- what extent different groups and regions lic administration and institutions. Al- are profiting from the implementation of though these strategies have been declared economic and social policies. It is impor- to have an Albanian dimension, the proc- tant that the scale of development be stud- esses which are drafted to carry them out ied and analyzed at the local level in or- do not, in many cases, sufficiently address der to foresee which national strategic the reality of Albanian problems, nor do measures would be efficient to fight pov- they offer convincing solutions based on erty at the community levels. real capacities and consensus among the actors. The acceptance and preparation of strategies seem to be motivated more 1.3 THE ROLE OF to accommodate the requirements of the DEVELOPMENT STRATEGIES international donors/partners than to meet the needs of the Albanian interest New paradigms and strategic groups. approaches The strategic approach has assumed an In general, the strategies are top-down al- important role in the agenda of transi- though they claim to be bottom-up. Most tion reforms in Albania (and elsewhere), of them endeavour to sketch the future in particular in association with interna- without measurable goals, a plan of im- tional technical assistance. Especially for plementation or a neutral monitoring sys- the period after 1997, one could go so tem. In many cases, the strategies are con- far as to speak of an “inflation of strate- flicting and are not coordinated among gies.” In this period, the term “compre- the institutions in question, which causes hensive strategy” replaced the term dilemmas for their implementation. This “macro-economic stabilization policies.” is also true in general terms for the coun- To the term “economic growth” has been try strategies prepared by the donors added the term “poverty reduction.” The which appear to have been largely inde- role of international organizations has pendently formulated and reflect the become more decisive, too, but now, the agenda of the respective donor agencies.

A Multiplicity of Strategies Despite the many strategies prepared, Albania at the end of the first decade of transition still lacks strategies to combat poverty, to reform the education system and to improve the situation in the public health system. The project not approved of for a long-term strategy in education, drafted seemingly without a broad process scope of inclusion, was widely criticized by interest groups from the moment it was made public. The project not approved of for a strategy for the public health system is known only to a small number of specialists. The long-term strategy for water supply in rural areas is still unknown to the rural local municipalities and communities concerned and has not been coordinated with the strategy for decentralization. The process of joining the World Trade Organization, based more on narrow political objectives, was implemented independently of the formal and informal tendencies of economic development, and without the participation of the business community. The accession negotiations failed to include on a calculation of the benefits and costs of international obligations to local business.

challenges of local governance and regional development 25 The human dimension of development

The Strategy for Economic Growth macro-economic indicators. Data analy- and Poverty Reduction. sis at the national level on living stand- The first signs of positive moves to formu- ards and income have served to comple- lating a more realistic and rational long- ment the spectrum of analyses. Estimates term strategy and accompanying pro- based on indicators of human develop- grammes appeared with the drafting of the ment have been lacking because these in- 2001 Growth and Poverty Reduction Strat- dicators were either not available or have egy (GPRS).12 This strategy relied on not been included.13 Such indicators analyses in line with the level of the coun- must be calculated not only at the na- try’s economic and social development and tional level but also at the local level so with progress capacities for each sector. It that the real reasons for unequal regional was also able to adopt clear medium-term development can be determined and un- goals in harmony with some of the main derstood, and so that interest groups can long-term objectives. It set forth the pro- get requisite information to make judg- gramme and the method of harmonizing ments as to the utility of the policies be- the national objectives with the pro- ing implemented to stimulate develop- grammes of sector reform. Nonetheless, ment in each region. there is still no clear idea about the costs of implementing this strategy and about fund- In view of this lack, an initial endeav- ing to cover the costs in question. Without our was made by HDPC to calculate this, it is difficult to determine how long the indicators of human development Albania will require to fulfill the objectives for Albania at the national and local it has set itself. Also delayed has been a level. This was done so that the signifi- monitoring and evaluation system for im- cance of systematic compilation of all plementation of progress. data relating to human development could be brought to the fore and in or- The limitations of alternative reform strategies der to set up a reference for monitor- The main handicaps of almost all the strategies planned continue to ing, analyzing and comparing human be a low level of reliability in the data on which they are based. development at the national and local This is due to major weaknesses in the information system, the lack level. It is important to calculate and of measurable indicators on the fulfillment of goals, and the lack of verify those indicators for a period of at requisite cost-accounting to implement them. Without exact data, least three years, not only because the costs and guaranteed funding, their implementation is often concept of human development is dif- impossible or haphazard. Instead of improving the processes involved, ficult to set forth in numerical terms a solution is sought in creating new strategies which then suffer the alone, but also because the data base same fate. upon which the calculations rely needs to be supplemented and made 1.4 THE MEASUREMENT more exact. OF HUMAN DEVELOPMENT Evolution of the human The Human Development Index development indicators From 1990 when the idea of a Human As already indicated, most of the analyses Development Index (HDI) was first in- and assessments on economic and social troduced, this indicator was always seen development in Albania over the years of as a successful alternative to measure transition have been biased towards reli- broader based human development and ance on economic growth and national to supplement the banking rationality

12 This strategy was approved of by the Albanian government in November 2001 and was called National Strategy for Economic and Social Development. 13Estimates of the Human Development Index for Albania have been included in some of the Global Human Develop- ment Reports published by UNDP.

26 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone which focused on economic growth 14, which showed substantial differences alone. All through the decade, the HDI in the national population as compared was an integral part of the Global Hu- to mid-term demographic forecasts made man Development Reports prepared by earlier. The same method of calculation UNDP and was gradually included in as that set forth in the Global Report on the National Human Development Re- Human Development was used in calcu- ports of the various countries. It is only lating the HDI at the national level in in the last two years that HDI data com- order to come up with results which can piled at the local level have been included be compared to those of other countries.15 in some of the National Reports. The HDI data for Albania have been in- Qualification of the estimates of cluded in the Global Human Develop- HDI in the NHDR ment Report since 1993 and are based While the tentative figures for the na- on approximate data and indices on life tional HDI for 2001 prepared for this expectancy, education and GDP. As can report show some improvement in the be seen in Table 1.3, the index on life ex- HDI as compared for the figure for 2000 pectancy and the index on education by in the Global Human Development Re- years remain largely unchanged, making port (2002), some qualifying comments the changes in the value of the HDI are in order. First the 2001 Population mainly responsive to variations in GDP. Census revealed for the first time a lower With these calculations, Albania is in- than projected population. This has cluded in the list made for 173 countries tended to raise the per capita index (GDP/income per capita) used in the The Concept of Human Development national HDI. Second the improvement The concept for evaluating the level of in the index for life expectancy in 2001 human development relies on a number over that of 2000 is subject to some un- of indicators, among which are certainty given that the registration of economic growth and other important measurements which directly reflect deaths are rather unreliable. However the the sustainable development of a given apparent improvement in the educational society. According to this concept, index as compared to 2000 reflects the prosperity is the goal of development, use of actual data as compared to the es- and economic growth is the means by timates in the Global HDR for 2002 (for which to reach development. Income or output are therefore major aspects, The calculation of the Human Development Index but are in themselves not sufficient to The HDI is a general measurement of human development capturing measure the level of development. the achievements of a country on the basis of the three main Other aspects such as life expectancy, components of human development: life expectancy, education education, poverty, gender equality, (expressed as a combination of the number of adults who know the level of utilization of technology complete the spectrum and make the how to read and write and the norm of elementary, secondary and evaluation of development more tertiary school attendance) and the standard of living (expressed realistic. These indicators also enable by per capita GDP, in terms of purchasing power parity (PPP in us to compare various countries with US$)). These three components are converted into specific indices one another. and on the basis of these indices, the HDI can be calculated mathematically. The level of the HDI varies from 0 to 1, the highest of the world. levels corresponding to the highest level of development. The The HDI in this Human Development methodology utilized in calculation has been constantly improved Report is calculated in accordance with over the last ten years. data from the year 2001 and has as its primary source of information the results of the 2001 National Population Census

challenges of local governance and regional development 27 The human dimension of development

the year 2000). For details on the estima- ance was taken into consideration since tion of the components of the HDI - see data for higher education on the distri- Annex 1. bution of students according to districts are lacking 17. Calculation of the Regional HDIs In order to provide an assessment of the The results of the calculations show sub- scale of human development at the local stantial differences in the level of human level, the HDI calculation method was ap- development between the various regions plied at the prefecture and district level. of the country. The highest HDI (GDP The purpose of these calculations was not per capita) was in the prefecture of Tirana, the HDI value itself, but the creation of a which ranked first, and the lowest level basis for comparison between the regions was in the prefecture of Kukes. (See Table in order to analyze disparities and spatial 1.4).

The prefectures are divided up into those with a low HDI (0.719-0.752), a medium HDI (0.753-0.786) and a high HDI (over 0.787) 18. These data show that Tirana and Fier are the prefectures with the highest level of human development. Six prefectures have a medium level and four prefectures, Lezha, Shkodra, Dibra and Kukes, have a low level.

Interpretation of the regional HDIs at the district level The restrictions on the analysis at the prefecture level do not permit a full reflec- tion of the reality of human development The HDI for Albania - 2001 at the local (district) level where there are The Index on Human Development for Albania, based on data from some low HDI districts within some 2001, is 0.764. According to the estimate in this NHDR the HDI higher level HDI prefectures. Altogether level would place Albania at rank number 70 in the classification there are 12 prefectures and 36 districts of the United Nations for the 173 countries included in the index. in Albania. Thus, although the prefec- With this HDI level, Albania ranks among the countries with medium ture of Tirana exhibits the highest HDI, level human development. the district of Kavaja, which is part of this prefecture, has a very different indicator and a much lower level as compared to tendencies in human development16. The the district of Tirana. The district of main reason for this is that in this compi- Saranda in the prefecture of Vlora has a lation, estimates and proxy variables were lower HDI level than the district of Vlora. used for regional differences in GDP be- Although the differences are less extreme cause the complete data are not available. elsewhere, a similar pattern can be seen For example, in calculating the HDI at for most of the other prefectures. This is the local level, the net frequency of el- the reason why an attempt was made to ementary and secondary school attend- calculate and analyze the three HDI

14 The last census was carried out by INSTAT in 2001 and the data calculations were ready by August 2002. 15 The comparison is made with the classification of the Global Report on Human Development for 2002, in which Albania ranked 92nd for the year 2000. 16 As a result, these estimates serve only as a comparison within the country.

28 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

components: life expectancy, education and GDP, and to estimate the level of Population and HDI human development at the district level Population groups according to the level of human development and, on this basis, to make a district categorization 19. As can be seen on the map Low HDI 23.35% showing the results of this categorization: Medium HDI 44.65% 11 districts were classified with a low level High HDI 32% of human development, 22 districts had a medium level and 3 districts had a high do not enable us to establish the values level. of this index at the local level because the quality of information, in particular on Measurement of Human Poverty access to drinking water and on children To supplement the HDI - a more spe- underweight, is much lower when com- cific Human Poverty Index (HPI) has also piled at the prefecture level. been calculated which captures more ac- Development Level and Gender curately the aspects of income poverty, Empowerment - the Gender and social exclusion, child development (nutritional status) and provision of serv- 23.35% ices - all important correlates of human deprivation. The HPI levels for Albania 32% were calculated with the data from 2001 and a result of 8.2 was obtained, which Graph 4-Population according the HDI is a value characteristic for countries with a medium level of human development. This is the first time that the HPI has been calculated in Albania, but the data

17 Further details on methodology are to be found in Annex 1 of the report. 18 Cf. technical notes in the Annex 1. 44.65%

challenges of local governance and regional development 29 The human dimension of development

Map 1: HDI according to prefectures

30 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

Map 2: HDI according to district

challenges of local governance and regional development 31 The human dimension of development

Map 3: Classification of prefectures according to GDP index

32 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

Map 4: Life Expectancy by prefectures

challenges of local governance and regional development 33 The human dimension of development

Development Index salaries are generally much lower than During the transition period, Albanian those of men. women were confronted with the revival of old phenomena of discrimination and A measurement of the level of gender de- of new phenomena which did not previ- velopment were carried out for the first ously exist in Albania. time in Albania by means of a calculation When most of the state enterprises closed of the Gender Development Index (GDI) down in the initial stages of transition, and the Gender Empowerment Measure women were among the first to lose their (GEM), in order to give a clearer view of jobs, and finding a new job became quite a gender issues and to enable a basis for difficult challenge for them. Some old tra- comparison with other countries. None- ditions, supported by the stipulations of the theless, the GDI and GEM deal only with Kanun, began to make their presence felt measurable aspects and do not yet include in the countryside, in particular in the other dimensions of gender inequality northeast of the country. At the same time, such as the level of participation by the weak government and society are still women in community life and in deci- powerless or remain indifferent to these is- sion-making, resource consumption sues. The trafficking of girls and women within the family, and the personal dig- for prostitution has also become a serious nity and security of women, etc. These problem in Albanian society. dimensions are decisive, too, for determining the status of women in society and Women still face difficulties in taking part the quality of their lives. and making their voices heard in politics, According to calculations, the Gender in decision-making processes and in the Development Index for Albania, based higher echelons of public administration. on data for the year 2001, is 0.758, and At the present time, women make up only Albania ranks 61st in the classification 5.7% of the members of parliament, 10% of the United Nations Development Pro- of the members of the government and gramme for the 173 countries comprised 24 % of the directors of public adminis- in this index. 20 At this GDI level, Alba- tration division. The low-level jobs which nia ranks among the countries with a they usually hold has meant that women’s medium level of gender development.

The calculation of the Human Poverty Index Status of women in development The HPI measures human deprivation in three basic dimensions: life No particular attention has been paid expectancy - measured in terms of the probability of not living over over the last decade in Albania to the the age of 40; knowledge measured in terms of exclusion from the role of women in society although world of writing and information as expressed in the norm of illiteracy women make up over half of the in the adult population; and an adequate standard of living - population. Issues linked to gender measured as the percentage of the population with no access to equality have not yet become an clean water and the percentage of children under the age of 5 who element of many government policies are underweight. The HPI calculation is more direct than the HDI and strategies in the period of calculation since the indicators involved are expressed in percentages transition. They are not included in and there is no need to create an intermediary index. the National Strategy for Economic Note - The calculation above refers to the HPI-1 index used for developing and Social Development, passed in countries. For Albania there is some justification in using the HPI-2 measure 2001. which includes an index for long-term formal unemployment, probability of not surviving to the age 60, adults lacking functional literacy skills, and percentage of population below the poverty income line (less than 50% of median disposable household income). 19This categorization has only been made for comparisons within the country.

34 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

The measurement of gender inequality In order to appreciate the contrasts in development among the various regions of Gender Development Index (GDI) the country, a GDI compilation was pre- The GDI measures equality between men and women, from the point 21 pared according to prefectures. (See Ta- of view of their basic abilities and living conditions. It relies on the ble 1.5). In this calculation, the income same variables as the HDI: life expectancy, education and income. variable derives from the relationship be- The levels of life expectancy take into consideration the biological tween women’s wages and men’s wages, fact that women live longer than men. The most difficult component under the supposition that this relation- to measure is income, and this not only for Albania. In most countries, ship is constant throughout the country. there is an evident contrast between mens incomes and womens In the future, once information sources incomes, but exact data are lacking or have not been published. have improved, consideration may be given to the relationship between men’s and women’s wages specifically for agri- (GEM) has also been calculated at the culture, the informal economy and the national and prefecture levels. In these non-agricultural private sector at the sub- calculations, the variable of female par- national level. ticipation in political decision-making is The prefectures were divided into three reflected in the scale of female participa- categories on the basis of the GDI results tion in parliament, which is currently 23. The results show that the prefectures 5.7%, as opposed to 20.4% in 1991 24. of Tirana, Fier and Durres have the high- In the compilation of the GEM accord- est level of gender development, while the ing to prefecture, it was not possible to prefectures of Kukes, Dibra and Shkodra utilize the scale of female participation have the lowest level. In most of the pre- in the elected organs of local government fectures, the ranking according to the due to the lack of data. For this reason, GDI is the same as the ranking accord- only the scale of female participation in ing to the HDI, or a bit lower. parliament was taken into consideration. Access to employment based on their pro- Womens empowerment fessional skills and participation in eco- The Gender Empowerment Measure nomic decision-making were calculated by

challenges of local governance and regional development 35 The human dimension of development

means of the percentage of women with 173 countries which were included in the important administrative and managerial index. 25/. With this GEM level, Alba- jobs. At the national level, an average of nia ranks among the countries with a me- 29.2% of women from the active popula- dium level of human development. The tion are self-employed, employers or hold- results show that the prefecture of Tirana ers of decision-making positions in the has the highest level of gender empower- public administration such as heads of de- ment, while the prefectures of Kukes, partments or of higher units in public ad- Vlora, Dibra, Shkodra, Gjirokastra and ministration. These statistics vary consid- Lezha have the lowest level. erably according to prefecture. They reveal a level of 25.1% for the prefecture of Kukes, In most of the prefectures, the ranking 24.9% for the prefecture of Dibra and according to the GDI is the same as the 24.1% for the prefecture of Vlora. The re- ranking according to the HDI, or a bit sult at the national level is that an average lower. These results demonstrate that, in of only 33% of jobs classified as profes- general, much remains to be done in Al- sional or technical are held by women. The bania to expand the scope of participa- lowest level is 23.2% for the prefecture of tion of women in political and economic Dibra and the highest level is 39.6% for life because the level of participation is the prefecture of Tirana. much lower than their development and their real capacity to contribute. They According to calculations, the GEM for have comparatively few opportunities to Albania, based on the data available for exercise their skills. The difference is the 2001, is 0.422 and Albania ranks 58th in most significant in the prefectures of the classification of the United Nations for Vlora and Gjirokastra. Map 5: GDI according to prefectures Map 6: GEM according to prefectures

20 The comparison was made using the classification of the Global Report on Human Development for the year 2002, which ranks Albania at number 74. 21 This estimate was only made for comparison within Albania. 22 Development is divided into three levels:: high (H), medium (M) and low (L) 23 The methodology used is the same as for the HDI categorization. 24 INSTAT, Women and Men in Albania, December 2001.

36 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

Measurement of Technological The measurement of womens empowerment Achievement (TAI) The Gender Empowerment Measure (GEM) The TAI is an attempt to measure the ex- The GEM focuses on the opportunities given to women to show their tent to which a country is taking on board skills and to take part actively in political and economic life and in modern technological developments for decision-making. In particular, it investigates the participation of human development - and is a proxy women in political, economic and professional life. This indicator is measurement for modernization trends. focused on three variables which reflect the participation of women The TAI level for Albania was calculated in political decision-making, access to exercise their professional on data from the year 2001 and gives a skills and womens disposable income. result of 0.304. This places Albania among the countries which are dynamically adapting themselves to modern tech- tional organizations. Of particular inter- nology. The TAI calculation has been est is the HDI classification in higher level, made for the first time but data limita- which would seem to be a more logical tions do not enable any specific conclu- position for a country with such an obvi- sions to be made at the local level. ous inclination to join the European Un- ion. The other indices have also shown 1.5 THE CHALLENGE OF progress. LOCAL DEVELOPMENT Comparison of Albanias human de- Lessons of transition velopment position within the region The development of Albania over the last ten years of transition has been complex Compared to several other Balkan and comprehensive. In the last few years countries, Albania has shown the low- 26 in particular, lessons have been learned est level of human development. (See from the bitter experience of the past and Table 1.6) This result is complex to reforms in the field of economic devel- analyze. It has to do with a combina- opment have been coupled with more tion of historical, political, economic profound institutional reforms, with and social factors. The Albanian tran- greater demands for strengthening of re- sition has been negatively affected by spect for the rule of law and with an im- the long drawn-out crisis in the region, provement in political goodwill and sta- in particular the war in former Yugo- bility. This process has been led and sup- slavia and especially the Kosovo crisis. ported by the national and sector poli- Not to be overlooked, too, are the ups cies and strategy with the help of Alba- and downs which have characterized the nia’s international partners. Measurement of technological progress Technological Achievement Index (TAI) Outcomes of the reforms The TAI measures every countrys level with regard to the creation Progress in reform of the economic sys- and utilization of technology at the service of human development. tems and of governance has, inter alia, had This indicator measures the achievements in four principal directions, a major influence on human development. which are considered to be the most important: the creation of This has been clearly reflected in a rise in technology - measured in terms of the per capita number of patents; the standard indicators of human devel- the spread of modern technology - measured in terms of the per capita availability of the internet and of technology exports of a opment. What is more, the levels calcu- high and average level; the spread of conventional technology - lated for these indicators classify Albania measured by the per capita number of telephone customers (line higher than the levels which were estimated connections and cell phones) and the per capita consumption of and published by a number of interna- electricity; and the level of human potential - measured in terms

25 The comparison was made in accordance with the clas- of the level of schooling of the population over 15 years of age and sification of the Global Report on Human Development the gross level of attendance at institutions of higher education. for the year 2002, which lacks a GEM value for Albania.

challenges of local governance and regional development 37 The human dimension of development

Albanian transition, in particular the not yet considered by decision-makers to profound political and social crises of be a significant basis for planning and for- the year 1997 and 1998. mulation of real and implementable strategies under Albanian conditions. Likewise Regional disparities in they are deemed inadequate for verifying development the effects of measures affecting the lives Beyond the global and average estimates, of people and for continually updating progress in human development does and improving priority interventions. not give the same result throughout the They are also not considered to be instru- country and suggests that major in- ments which can initiate and stimulate equalities exist. In some districts, devel- debate on the basic issues of national and opment has been quite slow and, in gen- local development. eral, all the indicators show a strong degree of correlation, and in particular Not much attention has been paid up to those linked to income or regional GDP now on the reporting system and report- per capita. ing culture at the local level and they have not been integrated into the many re- The current development policies and forms undertaken at the national and sec- strategies don’t take this fact directly into tor level. International partners promot- consideration. The common approach ing reforms in Albania have also ignored they take has meant an improvement in them. It is necessary for this system to the indicators at the national level which be put in place again and to be supported will inevitably have positive effects at the by a requisite legal framework, modern local level. The experience of this decade statistical reporting and analytical meth- of transition has shown that this approach, odology and supporting computer when implemented carefully and under equipment. conditions of political stability, promotes economic growth and global development More emphasis could be placed on sup- in the country. But its effects on human port for deriving indicators relating to development, in particular at the local human development, in particular to is- level, are less and very slow to appear. sues such as personal income, education, health care, social services, gender equal- Statistical information on national ity etc. Existing support programmes and regional development could be accelerated and at lower cost if Development policies and strategies in Al- specific measures were undertaken in ar- bania continue to neglect the importance eas where these indicators have deterio- of statistical information. Statistical data are rated most - and especially at the sub-national level.

Improvement of regional data Much more attention should be paid to local development by all the interested actors, in particular by decision-makers and the international partners who are helping Albania. After this stabilization period, local development will constitute a new challenge for Albanian transition, i.e. a new vision for the development of the country.

26 For this comparison, use was made of data from the Global Report on Human Development, 2002. UNDP. New York

38 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

What is needed most to deal with this Statistical information as an instrument of development challenge is a new mentality of governance which would give more importance The ministries, central institutions and local government are not to local governance and to the role of peo- assuming their requisite responsibilities in managing the data ple in governing than it has in the past. collection system at the various levels of administrative division This requires profound changes in rela- in the country. As a result, some data are missing and there is tions between the central and local gov- inadequate and even inaccurate reporting from year to year, ernments, the development of human ca- resulting in figures which are lower than reality 27. A typical example pacities and local institutions to fulfill the demands of governance, as well as clarity is that of administrative statistics on births and deaths. In some and a thorough knowledge of experience districts, no reports are made at all, or they are inaccurate. The and, in particular, of trends towards data on infant mortality at the national level are lower than in regionalization in the European Union. most of the countries of southeastern Europe and at least twice as low as the data from the census for the same period. 28 Closely connected with this challenge would also be a review of existing devel- Goals. They are concerned with the elimi- opment strategies. Regional influence is nation of poverty, with education, gender neither clear nor evident in existing na- equality, a lowering of the rate of infant tional and sector strategies, and in almost mortality, health care for mothers, the fight all cases, the effects on an intervention against dangerous contagious diseases, contained in them are the same for every environmental protection and the promo- region. What is therefore needed is a tion of global partnership. Each of these translation of the national objectives into goals includes specific targets and meas- local objectives, accompanied by a selec- urable indicators to that they can be ful- tion of the priority interventions for every filled within 25 years between 1990 and region, a calculation of implementation 2015. costs and a reorientation of funding. The adaptation of the specific targets contained in these goals and the identifica- 1.6 HUMAN DEVELOPMENT tion of indicators at the national level rep- AND LINKAGES WITH THE resents an important phase of work which MILLENNIUM DEVELOPMENT must be carried out to encourage progress GOALS and to create the requisite conditions to measure and evaluate them. The neces- The challenge of the MDGs sity of setting indicators at the local level, The focus of international development in particular those connected with pov- efforts has changed course significantly erty, education, health care and gender since the signing of the international agree- equality has already been accepted too. ment on the global Millennium Develop- This can give an opportunity to prepare ment Goals (MDGs). The recommenda- more specific action plans to fulfill nations of the global conferences of the tional and regional goals, to calculate United Nations held over the last ten years costs, to identify sources of funding and were further synthesized and adapted in to orient and coordinate this funding to- the Millennium Summit Declaration of wards priority interventions. September 2000. Eight main objectives were formulated on the basis of political Building linkages with human pledges made at this summit. These are development known as the Millennium Development It is clear that the main components of

27 Further details are to be found in the Technical Notes in Annex 1 28 Infant mortality reported for the years 2000 and 2001 is 13 per thousand whereas the survey carried out by UNICEF for the same period gave 28 per thousand.

challenges of local governance and regional development 39 The human dimension of development

the MDGs correspond closely with those closer with an emphasis on forging a com- of the HDI. One of the tasks of the UN mon vision and strategy with accompa- system and the Albanian government and nying programmes for attaining the people will be to bring this relationship MDGs.

Albania and the Millennium Development Goals Progress reports and monitoring in every country on these goals is considered an important process to help focus national debates on priority questions and to serve the fulfillment of the political pledges made by each country. Within this framework, an initial attempt 29/ has been made in Albania, in support of the United Nations, to analyze the progress made and to evaluate what can be done to fulfill these political pledges. The adaptation of the specific targets and indicators to the real conditions in the country, identifying the indicators at the local level, their integration into national and sector strategies, promoting partnership in civil society, coordinating interventions by international partners, improving the monitoring and reporting system and raising the level of information and public participation are all primary recommendations deriving from this analysis. The drafting of strategies for regional development and of action plans for specific problems at the local level in harmony with the medium-term goals of national development are considered priority measures to combat the high level of inequality in development among the various regions of the country. According to this general assessment, Albania, in order for it to fulfill the Millennium Development Goals, needs better development policies at the local level, stronger institutions and further funding. The idea that Albania can achieve these goals without such steps and without support from international partners is unrealistic.

29 HDPC, Albanian Response to the Millennium Development Goals, Tirana, May, 2002.

40 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterone

challenges of local governance and regional development 41 42 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapter II

The local mosaic and local governance

2.1 TRENDS IN LOCAL GOVERNANCE Governmental forms since independence Declaration of independence in 1912 and the first government. Historical traditions of local Protectorate 1913-1914. governance Lack of government institutions 1914-1920. The relatively short history of the Alba- Parliamentary republic 1920-1928. nian state does not provide much conti- Constitutional monarchy 1928-1938. nuity with regard to local autonomy. The Various governments during the Italian and German occupation main characteristic of government by the 1939-1944. classes in power over the course of his- Communist state 1944-1990. tory was centralism, in which priority was Parliamentary democracy since 1991. given to the construction of a modern state, though of a state very much deter- competence in the field of public serv- mined by regional forces, tribes and clans. ices. The territorial divisions were prefec- Compromises were made to take into tures and sub-prefectures, and the units consideration local realities and the con- of local government were town and rural cerns of interest groups in these realities. municipalities.

In general terms, Albania does not have The local authorities were selected on the any long-standing or continuous tradi- basis of a combined system of appoint- tion of local government upon which pro- ment and election, in which appointment gramming or the implementation of re- played the main role. The members of lo- form in the field of local autonomy could cal councils (for town and rural munici- rely, as is the case in Western democratic palities) were elected, whereas the may- countries. ors and heads of such municipalities were appointed by royal decree upon a proposal Key features of local government from the government. The level of ad- - pre war ministrative autonomy was moderate, Before the Second World War, the main whereas the authority of the state, exer- characteristics of the units of local gov- cised by the prefectures, was strong. Com- ernment were a low level of political in- petencies for economic and social duties dependence, a moderate level of fiscal were wide-ranging. Local units, in par- autonomy over revenues, and extensive ticular town municipal authorities, of-

challenges of local governance and regional development 43 The Local Mosaic and Local Governance

fered a series of public services, adminis- of the district executive council was ap- tered a budget which was partially fi- pointed by the Council of Ministers nanced by local taxes, owned property and (CoM) and received formal approval by assets, and administered natural resources. the district council, which also elected Local taxes were set forth by specific laws, the district executive committee. The but were collected and used by local units. main duty of this committee was to im- The state ensured the financing of the plement the production plans of state units of local government by means of enterprises and agricultural co-operatives mostly conditional transfers of funds. in the district in question. The executive Local administration had little staff and committee had authority in dealing with there existed a system of careers and re- daily issues of family life such as hous- cruitment. ing, employment, schooling, health care and municipal services, etc. Post -war changes in local governance structures Changes to local governance in During the 1944-1990 period, local gov- the transition period ernment was characterized by a predomi- During the first decade of the transition nantly vertical chain of dependence. The (1991-2001), the central government legal and constitutional framework re- authorities and the international organi- stricted it to being “local organs of gov- zations supporting them, concentrated ernance” and not to “organs of local gov- their attention on political, institution ernance,” and considered it to be a part of and economic reforms. Less attention the central government dominated state was paid to local governance, and some pyramid. As a consequence, it constituted initial steps were taken to improve the in essence a deconcentration of executive legal framework, more to fulfil the de- duties, while decentralization and self-gov- mands of international organizations ernance were quite weak. A parallel gov- than to create real autonomy at the local ernment made up of the organizational level. Albanian society was changing structures of the Party 30 exercised ideo- from centralism and imposed collectiv- logical control over the activities of the ism to extreme individualism, and pub- administration, and also had a strong in- lic and interest and participation in these fluence on decision-making by these or- processes were very much influenced by gans. political considerations.

The local organs of governance consisted The first changes in local government of district councils and town/village coun- came about following the passing by Par- cils. In the towns, there were smaller units liament of a Law on the Functioning and called neighbourhood councils. Local Organization of Local Government in June councils were elected by formal vote once 1992. For the first time, politically au- every four years, but there was no admin- tonomous units of local government istrative or political autonomy. The vari- were set up, and organs of local govern- ous economic and social duties involved ment were then created by means of di- in decision and policy-making were part rect vote. The duties of municipal au- of a vertical separation of executive duties thorities, as the first level of local gov- in a centralized state. Their budgets de- ernment, were strengthened with a rived totally from the state budget, and number of direct responsibilities and were divided into specific items, with de- more autonomy. At the same time, the tails on utilization and procedures set forth role of the district councils was modi- by the central government. The chairman fied, giving them primarily coordination

30The Albanian Party of Labour was the only political party allowed during this period.

44 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chaptertwo roles for the town and rural municipali- review and updating processes, in particu- ties in the districts in question. lar following elections. The strategy lacks monitoring and evaluation instruments The reform of local government pursuant which could foresee and help avoid fail- to this law was influenced and formed by ures. It also foresees no obligatory or com- interests and political relations at the cen- pulsory rules for the actors involved in tral government level. As such, after the the process. local elections of August 1992, in which the parliamentary opposition won a large A Law of the Organization and Function- number of local seats, there was a sharp ing of Local Government32 was prepared decline in the will of the central govern- in order to carry out this strategy. This, ment to continue implementing local gov- at the same time, became the basic law ernment reforms in line with the law which for the creation of local autonomy and had been passed two months earlier. the decentralization of responsibilities from the central government level to that A new strategy and vision of local of the local authorities. autonomy In 1999, the Albanian Government created a National Committee for Decen- 2.2 CURRENT TERRITORIAL tralization which was authorized to give AND ADMINISTRATIVE political direction, to set forth the prin- DIVISIONS ciples involved in the reform of local government and decentralization, and to Two levels of local government monitor implementation. Under the di- According to the Constitution of the Re- rection of this committee, a Strategy for public of Albania33, the units of local gov- Decentralization and Local Autonomy 31 ernment are (a) the town and rural munici- was worked out for the first time. This palities and (b) the regions. The territorial strategic document offers a new and long- administrative divisions are set forth by law term vision for the development of local on the basis of common economic needs government in line with the European and interests and on historical tradition. Charter of Local Autonomy. It sets forth The representative organs of the basic units the general structure and levels of gov- of local government are the councils which ernment, the territorial divisions of the are elected every three years by universal local units, their main duties and respon- vote. The executive of a town or rural mu- sibilities, and the steps involved in trans- nicipality is the chairman, who is directly ferring duties from the central govern- elected by the people. ( See Diagram 1.) ment to the local authorities. The region is the unit in which regional The strategy document was prepared in policies are carried out and harmonized with the wake of a comprehensive process in- state policies. The representative organ of cluding the consent and approval of the the region is the regional council. The town political parties, local elected officials, lo- and rural municipalities send members to cal communities and civil society. Some the regional council in accordance with the observers, however, regard this process as portion of their population, each sending a not having brought about a complete po- minimum of one member. The heads of litical and institutional understanding. the town and rural municipalities are per- The strategy also suffers from too much manent members of the regional council. rigidity, which can be seen in the lack of Within this framework, the Republic of

31 This strategy was passed by the Council of Ministers in its decision No. 651, dated. 29.11.1999. 32 Law No. 8652, dated 31.07.2000. 33 The Constitution of the Republic of Albania was passed on 21 October 1998.

challenges of local governance and regional development 45 The Local Mosaic and Local Governance

46 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chaptertwo

Local Government Structure - 2002

The units of local government34 are: The Region (qarku), which is a territorial administrative unit usually comprising several town and rural municipalities with a geographical, traditional, economic and social connection, and common interests. The district (rrethi) is a subdivision of the region. A region has about 2-4 districts. The Town Municipality (bashkia), which is a territorial administrative unit and a community of inhabitants primarily in an urban setting, though in some cases in a rural setting. In urban areas, the municipality is divided into neighbourhoods (lagje) which cover a territory with more than 15,000 inhabitants. If the town municipality also includes rural zones, the subdivision in question is called a village (fshati), which has over 200 inhabitants. The town is a centre of population which evolves in line with an urban development plan. Albania has 74 towns, of which 65 are town municipalities. A municipal council consists of 13 to 45 members, depending on the number of inhabitants. The municipal council of Tirana has 55 members. The Rural Municipality (komuna) is a territorial administrative unit and a community of inhabitants who normally live in a rural setting, though in some cases in an urban setting. The rural municipality is divided into villages and in some cases into towns.

Albania is divided into 76 town munici- public order, education, health care, em- palities, including the 11 zones which ployment services, and justice, etc. form the Municipality of Tirana, and 309 rural municipalities. This is the first level Legal responsibilities of local of local government. The town and rural authorities (towns and rural municipalities are grouped into 12 re- municipalities) gions, which represent the second level According to the Constitution, the units of local government 37. The law also sets of local government are legal entities forth the district as a subdivision of the which have the right to regulate and in- region. A district has no elected organs dependently administer local issues of local government, but is still involved within their jurisdiction, to exercise prop- in decentralized state services, such as erty rights, to administer independently

Size and composition of the regions Table

34 In accordance with Law No. 8652, dated 31.07.2000 On the organization and functioning of local government 35 The Constitution of the Republic of Albania was passed on 21 October 1998. 36 In accordance with Law No. 8652, dated 31.07.2000 On the organization and functioning of local government 37 This division is based upon Law No. 8653 date 31.07.2000 On administrative territorial division and on the Law No. 8654 dated 31.07.2000 On the organization and functioning of the Municipalities of Tirana. 38 According to the data of the last Census. Auguast 2002.

challenges of local governance and regional development 47 The Local Mosaic and Local Governance

revenues acquired, to exercise economic Discrepancy between legal activities, to collect and spend revenues authority and capacity of local which are essential for the exercise of their bodies duties, and to impose local taxes and the Not all responsibilities foreseen under the level thereof in conformity with the law. law on town and rural municipalities are in effect since the transfer of duties from The town or rural municipalities bear full the central government to the local au- responsibility for the exercise of their du- thorities is due to take place step by step. ties, whereby their administrative compe- An important date for this transfer was tencies for services, investments and regu- 1 January 2002. The law foresaw that af- latory issues are unlimited and are not to ter this date, the town and rural munici- be shared with any other local or central palities would be entirely responsible organ or institution. Town and rural mu- themselves for the carrying out of their nicipalities have been given, at least by law, duties. This means that the units of lo- a long series of duties and competencies, cal government have to have funds of as well as freedom in the exercise thereof. their own, and must create their own This gives one the impression that the first regulatory, administrative and service au- level of the local government has been thority to exercise these duties. given top priority. A considerable number of these compe- This is also perhaps a direct result of the tencies have not yet been transferred to fact that in the Constitution, and in all the town and rural municipalities in ques- legislation deriving from it, town and ru- tion, even though this is technically ral municipalities are regarded as the ba- “against the law”. One reason for this is sic unit of local governance. Thus, other the lack of specific laws and a regulatory units, such as the regions and anything framework. Nonetheless, legally, they en- else which might be created by law, are joy a wide spectrum of competencies not basic units, and may therefore be con- which will gradually be transferred to sidered secondary. them. At the regional level, things are different. Legally, the regions have been given The organs of the units of local governance39 few duties which, with regard to the manner of composition and to relations with the town and rural municipalities in par- Every rural municipality, town municipality or region has ticular, are not entirely clear. representative and executive organs of local government. The representative organ of the rural and town municipalities is the Clear physiognomy of the first municipal council and the executive organ is the Mayor and the level of local government Chairman of the rural municipality in question. These are elected by The first level of local government has direct universal suffrage and by secret ballot. The representative already assumed a clear physiognomy organ of the region is the regional council, and its executive duties and authority. This transition has been are carried out by the chairman of the regional council and head of assisted by tradition, by a clearer specifi- the region. The representative organ of the region is composed of representatives of the elected organs of the town and rural councils The legal rights of in question, and the chairman of the regional council and the head of local government the region is elected by the council in question. The units of local government enjoy legal rights to govern, to own property, to co-operate, and to be legal entities. They carry out their own functions, 39 In accordance with Law No. 8652, dated 31.07.2000 On the organization and functioning of local government. joint functions and delegated 40 In accordance with Law No. 8652, dated 31.07.2000 On the organization and functioning of local government. functions.

48 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chaptertwo

The functions and competencies of the town and rural municipalities 41

Own functions Joint functions The rural and town municipalities have been given full The rural and town municipalities shall carry out joint legal authority in matters of administration, services, functions with the institutions of central government in investments and regulations, to be carried out in the following fields: observation of national and regional policies, in the Pre-school and pre-university education following fields: Primary health care services, protection of public Infrastructure and public services: drinking water, health and environmental protection sewerage, local roads, sidewalks and public squares, Social assistance and the mitigation of poverty lighting, urban public transport, parks and greenery, Public order and civil defence waste disposal, urban planning, land management, etc. In such cases, responsibilities and relations between the Services of a social, cultural and sports character: units of local government and central government local cultural and historical monuments, sports events, institutions are regulated by laws and regulations. leisure and entertainment, social services and the administration of day-care centers, senior citizens Delegated functions homes, kindergartens, etc. The town and rural municipalities are authorized to carry Local economic development: economic development out functions delegated to them by central government programmes, commercial infrastructure, small institutions, with specific implementation and control business, veterinary services, forests, pasture lands and procedures. These are obligatory when set forth by law. natural resources of a local character. Public order and civil defence. cation of duties and by a relatively rapid not entirely based on a clear electoral assimilation by local administration of mandate and have no direct link with the these duties. Also of influence was the fact electorate. They also lack clear competen- that the town and rural municipalities are cies spread uniformly and in a balanced run by chairpersons elected by direct manner throughout the territory of the popular vote. As a consequence, the town unit in question, clear sources of eco- and rural municipalities are often re- nomic, financial and natural resources garded as the only real and effective in- funding, and suffer from a lack of clear stitutions of public administration at the separation of competencies from other local level. When one speaks to normal units of local government. citizens, and even to the chairpersons of the town and rural municipalities, one has Too little time has gone by to determine the impression that this level of govern- precisely whether the regional councils ment is the one to be approach for all will be in a position to fulfill the only problems. clear competency they have: drafting and implementing regional policies. An ini- Restrictions and image of the tial view has it, however, that the regional regions councils reflect all the confusion and hesi- As a second level of local government, the tation which have arisen during the proc- regions were created after the local elec- ess of creating the second level of local tions of 2000, with duties differing from government. those of the districts, i.e. the units which preceded them. The regions have not yet This main duty has not been detailed and succeeded in creating a physiognomy and supported by any particular legal regula- authority of their own because they are tory framework. It finds no equivalent in

41 Law No. 8652, dated 31.07.2000 On the organization and functioning of local government

challenges of local governance and regional development 49 The Local Mosaic and Local Governance

local units concerned, i.e. made by their The functions of the region representatives on the regional council. This clash of visions has been made worse The drafting of regional policies and harmonizing them with state by a number of badly drafted initiatives policies at the regional level; from the central government adminis- Functions which are delegated to them by the town and rural tration. Under pressure to decentralize municipalities on the basis of a mutual agreement; and influenced by the traditions of the Competencies delegated to them by central government, which former district councils, this administra- are obligatory when set forth by law. tion has often found the easiest solution to be that of transferring duties to the the existing laws which regulate specific region. As a consequence, there has been duties, such as in the law on urban plan- a trend to create administrative structures ning and territorial management (it was at the regional level with duties similar only at the beginning of 2002 that the to those of some municipalities taken to- Council for Territory Adjustment of gether, similar to the former administra- Tirana constituted). Under such circum- tive structures of the district councils. stances, it would still seem quite difficult to foresee precisely how the regions will Confusion on the relationships evolve in the future as the second level of between regions and local government, and even less to iden- municipalities tify the advantages they have at their dis- The town and rural municipalities have posal to promote regional development. misunderstandings with regard to their relations with the regions and do not yet Enhancing the role of the regions consider the latter to be an instrument The regional council and administration, which they can use to solve their com- faced with the realities of governing, are mon problems. quite naturally exerting pressure to attain the duties they should have, and as such, From the point of view of funding, the a certain conflict has arisen between their budget of the region, compared to the demands on the one hand, and their du- budget accorded to local government, ties as set forth in the Constitution and in and its competencies with regard to re- the law setting forth local government on gional economic development and the the other. The regions are endeavouring harmonization of regional policies with to get more competencies and specific le- those at the national level, has not yet gal regulations for its competencies. A stra- been the object of any in-depth study. tegic constitutional vision for the region There are also tendencies and mis- has already set forth that its physiognomy, understandings which equate the imple- duties and power will have to be the prod- mentation of regional policies at the pre- uct of a decision-making process by the fecture level with the implementation of procedures for concrete projects. Pressures for reform of local governance Right after the collapse of the communist system, almost all the transition countries gave priority to reforming local government. 2.3 ASSESSMENT OF THE NEW This phenomenon involved a reduction or removal of competencies LOCAL GOVERNMENT ADMIN- at the intermediate level of government 42/, which had earlier ISTRATIVE STRUCTURE played an important role. It also created a gap in governance. Recently prepared legislation has not entirely filled the gap and According to the new administrative di- has been more concerned with setting forth clearly the duties of vision passed under the law of 2000, Al- the first level of local government and in ensuring that the second bania has 374 units of local government level not threaten these duties. at the first level (urban and rural municipalities) and 12 units at the second

50 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chaptertwo level (regions). Although there has been The new administrative division little time to gain enough experience to Under the new law 43, almost the same administrative division was permit a complete analysis of this divi- maintained for the first level of local government as existed in the sion, a preliminary comparison of duties past, but the responsibility for the administrative division passed can be made. from the CoM to Parliament. The new regions were set up with the same borders as the old once, which were not units of local In general, the administrative territorial government but nonetheless had created a clear traditional, cultural, division at the first level of local govern- demographic, and economic division of Albanian territory. Albanian ment has responded well to the legislation, although not particularly liberal with regard to fulfillment of its duties in serving the procedures for changing the administrative divisions, specified that population. Limited funding available to the population (electorate) of the areas in question would be the local government has not enabled it to main players for any changes in the divisions or any eliminations or expand services and further improve the creations of local units. quality thereof. But there already exists a belief that local government at this level is consolidating and is in a position to nicipalities vary considerably. They all have take over more responsibilities for gov- less than 10,000 inhabitants, about half erning its territory. Or rather, there is a of them have less than 5,000 inhabitants belief that the failures noted are not re- and 12 rural municipalities have less than lated to the size of the administrative ter- 1,000 inhabitants. The sizes of the town ritorial units at the first level of local gov- municipalities also vary considerably: 55 ernment. town municipalities have less than 25,000 inhabitants and 9 such municipalities have The lack of demand that the administra- between 25,000 and 100,000 inhabitants. tive division be reorganized leads one to Although the administrative division is not believe that the division is, in general, in intended to create a uniform size for the functioning order and has been accepted units of local government, some duties and by the population. Nonetheless, the true responsibilities linked to education, health, test of the efficiency of the units at this environmental protection, economic de- level will come with the expansion of fis- velopment, the mitigation of poverty, and cal competencies. urban development, etc. are better fulfilled in larger communities. Requirement for further adjustments The size of the units also has a substantial Major demographic changes as a result influence on the efficiency of local admin- of domestic migration 44, the reform of istration itself. The administration in a local government, the new scale of its au- town municipality of about 100,000 in- tonomy, the many duties and higher scale habitants has about 1 employee per 1,000 of responsibility with which local govern- inhabitants, whereas in a small rural mu- ment has been charged, will make a more nicipality of about 3,000 inhabitants, the in-depth analysis of the existing admin- relationship is four times higher45. In small istrative territorial division at the first level municipalities, there is a lack of human of local government necessary. resources and about 80% of administrative staff does not have proper training, Albania has an average of about 8,200 in- and this in an age when the administra- habitants per unit of local government at tive duties in these municipalities are as the first level. The sizes of the rural mu- great as they are in the larger ones.

43 Law No 8653 dated 31.07.2000 On administrative territorial division. 44 10% to 75% of the population has moved in about 70% of the rural municipalities and in about 90% of the town municipalities. 45 Ministry of Local Government, On the necessity of reviewing administrative divisions, Tirana, September 2002.

challenges of local governance and regional development 51 The Local Mosaic and Local Governance

Redefinition of urban areas and still insufficient for the management of responsibilities this important policy function. Consideration should be given to review- Underlying the need for further considera- ing the classification of towns, in particu- tion of the regional structures and functions lar those with a relatively small popula- is the issue of the optimal size of units at tion 46, to finding ways of adjusting the the second level of local government. The number (74) to correspond to the number present division was made on the basis of of town municipalities. The decision to criteria such as geographical, traditional, review the existing division of the mu- economic and social ties, as well as interests nicipality of Tirana into 11 different mu- held in common by the town and rural nicipalities, a division which was not municipalities. These are of course impor- thought through convincingly. Data from tant but vague criteria and cannot be eas- the new census point to changes in the ily transformed into measurable criteria number of inhabitants in the municipal- which would make an objective and, in ity of Tirana, in the population density particular, efficient division possible. The and in the social and economic indicators main reason for this dichotomy is that it of the municipalities which would war- was not possible from the start to deter- rant further adjustments to the adminis- mine which criteria would be the more trative boundary of Tirana. important for the division. This is linked The smaller towns Table 2.2 to one very simple question: to make the division, should one look towards the tra- Town Population ditions of the past or towards the future?

Kam 43 Need for regional planning to be Kurbnesh 181 based on pan-European criteria Ulez 495 It is evident that the existing division has been strongly influenced by traditional Shortcomings in the new regional criteria. But regional development is a structure more recent concept and it is difficult to The issue of optimal size for the units of link it to valuable experience from the local government must be further dis- past. Therefore other, more suitable and cussed at the regional level. It has now more modern criteria should be taken become evident, about two years after the into consideration. creation of the second level of local government, that the regions are not yet ful- As an example, one could use the criteria filling their basic duty of drafting regional of approximation with European struc- policies and harmonizing them with state tures. Albania strongly aspires to integrate policies. The reason lies not in the duty and be part of the EU and this, of course, itself, which is very important and neces- cannot be done simply by signing a docu- sary. At the moment, this duty is not even ment, but by preparing the country gradu- being fulfilled by central government. ally to “catch up with the pace” of the EU, which would then make signing the logi- Two main arguments serve to justify this cal consequence of a successfully com- state of affairs: first, the second level of pleted process. In this connection, a new local government has just been created and and important dimension must be added it is still too early to confirm the success to the efforts made for the rapid develop- or failure of the structures; secondly, the ment of the country, that of regional de- human capacities at the regional level are velopment, which today is still lacking.

46 The term town is not a legal status involving administrative or financial changes, but a pre-condition making it easier to obtain the status of a town municipality.

52 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chaptertwo

Nonetheless, this is only one of a selec- ion attaches to regional policies have led tion of criteria for moving forward. There to this new vision of development being may be other criteria which are equally included in its entirety in the reform agen- important and for which a full analysis das of the candidate countries. Most of will be needed. This would seem to be these countries have already passed spe- the right moment for a forward-looking cific laws on regional development and discussion with those who wish to plan have created regional and central struc- the country’s future. tures to formulate and monitor the implementation of regional development policies. Some of these countries have al- 2.4 REGIONALISM - A NEW ready begun adapting their territorial or- VISION FOR DEVELOPMENT ganization to the duties involved in this type of development. EU approach to regional development Application of regionalism to Regional development has now become Albania part and parcel of local government and The adoption of a regional focused ap- of territorial division in the countries of proach is a new concept for Albania. Up the European Union. It has become the to now, this concept has not been con- reason for a review of territorial organi- sidered in the national and sector devel- zation and for the creation and strength- opment strategies nor in the strategy for ening of institutions at the regional the reform of local government, in ini- level.47. tiatives to modernize the legal framework, or in the new administrative territorial di- The necessity of adapting to western vision itself. International partners who standards of democracy and the particu- are orienting, supporting and monitor- lar importance which the European Un- ing the development of reforms in Alba-

The EU and regional development funding

Questions of regional development and the social, development is based on a unified territorial division at economic and financial effects of investments in the three levels. An optimal division for each level, poorest regions dominate political debate on EU funding guaranteeing the efficient utilization of development funds for member states, and are at the focus of negotiations is considered to be that for a population of 3-7 million with the countries which are applying for membership. inhabitants at the first level, 0.8-3 million inhabitants at This is linked to the importance attributed to the growth the second level, and 0.15-0.8 million inhabitants at the of social cohesion between these countries and the third level. The second level is considered the optimal assistance given to the less developed countries to size for regional development planning. This system is being increase their per capita revenues. Structural funds are applied gradually not only to the member countries of the the mechanism designed to bring about the process. European Union, but also to countries wishing to become One regulation of the EU 48 sets forth the financing criteria members. This territorial configuration is being pursued for structural funds which are accorded at the regional by the creation of institutional, administrative and level to each country, and which depend upon statistical capacities to support this new vision of development indicators in each region. This is nothing regionalism. Particular attention is being paid to the new because in Albania, too, it is becoming all the more creation of programming and management structures for apparent that international partners tend to provide development programmes which guarantee optimal financial assistance through regional bodies and that there absorption capacities for funding, but which require time is a lack of enthusiasm to finance central governments. to be set up and operate efficiently. The level of funding According to this regulation, the analysis of regional depends directly upon these capacities.

47 Institute for an Open Society, Regionalism for development and acceptance in the European Union, a comparative perspec- tive, Budapest, June 2002. 48EU Regulation 1260, June 21, 1999. According to this regulation, the structural funds give priority to the development of regions which over the last three years have had a per capita GDP of less than 75% of the EU average.

challenges of local governance and regional development 53 The Local Mosaic and Local Governance

nia have not included this concept in the a division of the territory into little bits, agenda of their priority reforms either. The as is the case in the administrative divi- European Union, for its part, seems to sion of Albania, puts substantial limits have defered such initiatives for the mo- on opportunities available for implement. menting regional development policies.

Need to address regional An active policy for regional develop- inequalities ment also needs institutional support at In fact, as the analysis of indices calcu- the local level. This means a legal and lated at the national and regional levels regulatory framework, administrative reveals, there exists in Albania substantial structures and human capacities. regional inequality in human development, and in particular in economic de- It does not seem that this very impor- velopment, which is continuing to widen tant and indeed essential process can be rapidly. Thus the GDP contribution of the realized with the current institutions, le- four prefectures of central Albania is gal basis and the existing administrative greater than the contributions of all the division. The present-day regions, bur- other eight prefectures. 49 In addition, the dened with regional development duties, GDP contribution of five districts50 makes have difficulty responding to this proc- up about 62% of the total contribution ess and it is not simply a question of ex- of all the 36 districts in the country. But perience. Consequently, Albania which the basic issue is that few possibilities ex- regards its membership in the European ist to include the lesser developed regions Union as its main objective, will very in the process of economic development shortly fall behind with this reform. and, in general, there are no clear ideas or plans as to how to change the situation. Building the foundations for an active regional strategy For this situation to begin to change, spe- Now is the right time to review legisla- cific regional activities must be stimulated tion and determine the optimal size for with a view to mobilizing the economic and units of local government at the second human potential of each region with low level in a forward-looking fashion. This indicators. Such activities, concentrated in would lead to a substantial reduction in regional policies, should help to encourage the number of such units and would be a domestic and foreign investors not to limit pro-active approach, conforming to the themselves to the central regions of Alba- future needs of the country as a part of nia. Special concessions must be given to Europe, rather than resulting in a doctor- business for the creation of jobs etc., but ing of existing structures. This approach they must also have an influence on the would also anticipate any subsequent rec- allocation of state funding. ommendation that the division be reviewed in line with the criteria of the Eu- Criteria for a successful regional ropean Union because, at that moment, policy everything would otherwise have to start The success of regional development poli- from scratch: preparations for a new legal cies depends to a large extent on the size framework, the setting forth of a body of of the region, which must offer real op- regulations, the reorganization of regional portunities for development by making administration, administrative proce- available a combination of natural, eco- dures, and the strengthening of human nomic and human resources. In general, resources, etc. Preparations for a regional

49 The prefectures of Tirana, Durres, Elbasan, and Fier cover about 65% of GDP (HDPC calculations). 50 Tirana, Durres, Elbasan, Lushnja and Fier (HDPC calculations).

54 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chaptertwo

Role of the Prefect at regional level The representatives of the units of local government have expressed criticism about their relations with the prefects. They consider a surfeit of monitoring on the part of the prefects with regard to the utilization of budget funds as an impediment, in particular when the law clearly states that these units of local government decide themselves on how to use all funds which are not transferred from the central budget with specific conditions attached. However, rather than a legal or political issue, this would seem to be a question of how the prefect exercises his or her authority. strategy of social and economic develop- over the transition years. Local government would have to start from scratch, too, ment in reality implies organs which are and experience has shown that this type of elected democratically, i.e. which arise process in Albania drags on and on, and is from electoral processes held by means very costly. of the free and honest elections of local officials. This form of election has now A special law and a special government been set forth by law and Albania is cur- structure for regional development, which rently in its third mandate of local gov- have shown themselves to be very effec- ernment in the transition period. tive in most of the transition countries, would be important instruments to ini- Mandates of local government Table 2.3 tiate this process. Mandate Period

The prefecture: monitoring or 1 1992 - 1996 tutelage? 2 1996 - 2000 The regional level involves an institution 3 2000 2003 headed by a prefect who is the representative of the central government at local level and is appointed by the Council of Min- Despite the fluctuations of relations be- isters. He or she is responsible for ensur- tween the main actors in the field of poli- ing that government and national policies tics, it can be said in general that there is and programmes are implemented at the no essential difference of opinion on the local and regional level. The prefect and nature of local government in the plat- the prefecture have a twofold role involv- forms of the political parties. This is ing both monitoring at the local level of something quite unique in Albanian po- state services which are not the responsi- litical life during the transition period bility of local government, and ensuring because it has been very difficult to that legal regulations promulgated by the achieve political consensus on most of the organs of local government are in line with reforms. The reform of local government the law. In reality, the influence of the pre- has been a common element in the plat- fect is much greater on the structures of form of all government administrations central government authority at the local created in Albania over the transition pe- level than on local government itself. riod. Local governance - a casualty of 2.5 BEYOND CONSENSUAL the political process POLITICS Nevertheless, it can also be said that the reform of local government, indeed its ef- Democratic basis for effective fectiveness and functioning, has been the local governance victim of the bitter fighting and conflicts Local government has been closely influ- which have characterized political life in enced by electoral processes and politics the country throughout most of the last

challenges of local governance and regional development 55 The Local Mosaic and Local Governance

decade. Since local elections in Albania level, there were also signs of new matu- have always taken place after national po- rity and responsibility on the part of the litical elections and since the results voters with regard to the value and sig- thereof have not always accorded with the nificance of local elections. In fact, in results of the national elections, the cli- these elections for the first time the can- mate of political confrontation has meant, didates showed their profiles, not sim- for its part, that the central government ply as representatives of political parties, has looked upon the local authorities with but at the same time as representatives suspicion and refuses to expand their com- of programmes and solutions which they petencies. On the other hand, the local themselves were offering to solve con- authorities have often aligned themselves crete problems in the interests of their with the opposition as a political instru- communities. This brought about a ment to contest and block the implemen- change in the electoral campaign, in- tation of policies and the expansion of creasingly away from issues of national various reforms at the grassroots level. politics towards a discussion of problems which were linked to the interests of the As a result, one can state that Albanian voting communities in question. There politics have had difficulty getting used was also a series of highly publicized tel- to cohabitation between the central gov- evision debates in which the candidates ernment and local authorities, and the lat- for the main town municipalities in the ter have often been deprived of the com- country confronted one another with the petencies accorded to them under law. In programmes and solutions they were pro- fact, what happened for years on end can posing to their communities. As a con- only be described as a mutual checkmate sequence, even the parties themselves be- by the main political actors in the coun- gan to concentrate their advertising more try. The elections of 1996 resulted in a and more on issues of local government. short period of co-operation between the central and local governments, but reforms Constraints to further which were initially undertaken were very developments in local soon interrupted by the profound crisis government structures of 1997 and by the change in the political The status of local government and the spectrum of the country as a result of early major gaps noted in the application of elections in June of 1997. laws showed clearly that it was not only the conflicting election results that had Political influence over local government Box 2.11 been in the way. There were other components of the so-called “political will” The central government has a substantial political influence over which were impeding and slowing down local government. This influence will remain unchanged for as long the pace of progress. as local government is limited with regard to the legal, administrative and monetary instruments at its disposal to fulfill its duties and This can be seen clearly in the delay in competencies as recognized by law. getting final legal approval for the model of local government. It is also seen in the Post 2000 - new initiatives in lack of goodwill on the part of central support of local government government to meet its obligations as The local elections of October 2000, how- foreseen in the laws which the majority ever, were accompanied by a series of posi- had passed. Relations between it and the tive changes in the Albanian political land- local government authorities continue to scape. Aside from the fact that the politi- be bumpy, and often influenced by poli- cal parties considered these elections as an tics and emotions. As a result, it is still important electoral test at the national not entirely clear whether the steps taken

56 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chaptertwo in the process of consolidating local gov- The trend of local elected officials to take matters ernment are the fruits of political good- into their own hands will, even partially, or of well-prepared The first local government based organization to arise concerned strategies involving contributions from with improving the position of local government was that of the the majority and the minority, i.e. for the mayors of town municipalities, when in October 1993 they founded central and local government authorities, the Association of Mayors of Municipalities, which in 2000 was or simply the fruits of persistence on the renamed the Albanian Association of the Municipalities and was part of international organizations and of headed by the mayor of Tirana. Later, during the second term of recognition by the central government office, an Association of the Regional Councils and an Association that it must, in the end, fulfill its obliga- of the Rural Municipalities were also founded. This phenomenon of tions under agreements with these organi- founding associations increased the public profile of local officials, zations. raised interest at the national and local levels on the process of The scale of division between political decentralization, encouraged and improved debate on alternatives duties and managerial duties at the local and reform processes, and is helping to make these processes more level is another indicator of political in- independent or at least better balanced. Government and legislative fluence in local government. The law makes the exercise of council duties in- structures at the central level have shown interest in co-operating compatible with the exercise of executive with these associations. The fact that, from a legal aspect, no duties from the level of mayor down to instrument for the permanent and organized consultation of local that of the administrative staff. This in elected officials was foreseen, has had a strong influence, too. itself is a positive step, but many weaknesses have been seen during practical implementation in connection with the authorized a substantial rise in civil serv- complete and clear separation of the du- ant salaries, but did not include local ad- ties of elected officials from that of local ministrations. This was justified by the administrators. The improper exercise of fact that the existing legal framework ena- duties on the part of local councils leads bles salary scales to be fixed similarly by to abusive interference over this repre- the municipalities, too, in accord with the sentative body on the part of the execu- principle “same responsibility, same pay,” tive, and indeed to a confusion of duties. independent of the type of institution The absence of a clear separation of com- (ministry or municipality) in question. petencies in existing legislation has often Thus the municipalities can decide for forced councils to come up with indi- themselves fully as to whether they wish vidual solutions of their own, on occa- to provide supplementary benefits to the sion to make a profit, and exercise their basic salary for achievements at work. But substantial political influence over the the central government is fully aware that work of the administration. the municipalities are not able to do this Lack of recognition of status of local government officials The status of the staff of local administration The law on the status of civil servants 51/, and other decisions taken The non-application of civil servant sta- by the Council of Ministers in implementation thereof foresee equal tus in local administration makes the ad- treatment for civil servants at the central and local levels. But in ministration very susceptible to political practice, this law has only been applied at the central level. A influence. Another impediment to the regulatory framework for admissions, promotions and dismissals is separation of these duties is the lack in local administration of high-level staff in lacking completely. The Civil Service Commission set forth under the civil service who, in addition to the the law, is focused on the central government administration and individuals elected as heads of the execu- lacks vision to extend its activities to local administration, too. As a tive, are necessary as a liaison between result, the employees of local administration are very much exposed politics and local administration. to political influence, which has a substantial influence on their work. At the beginning of 2002, the government

challenges of local governance and regional development 57 The Local Mosaic and Local Governance

because of the limited funds they have at solved and, as a result, in 2002 some of their disposal. The Association of Munici- the municipalities succeeded in raising palities has demanded that funding be salaries substantially for their adminis- made available in order to raise salary lev- trative employees. Nonetheless, there re- els for their administrative staff. Negotia- mains an obvious inequality, which con- tions between the municipalities and the stitutes a serious impediment for the em- central government have made it possible ployment of skilled and qualified special- for the legal and procedural aspects to be ists in local administration.

58 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapter III

Centralized decentralization

3.1 DECENTRALIZATION WITHIN THE FRAMEWORK OF CENTRALIZED GOVERNANCE

Decentralization is a reform which requires equal commitment from the central and local governments by means of a process of broad participation. It cannot achieve success if one of the governments in question considers itself in the role of the leader and leaves the other government simply to implement the process.

Characteristics of the local sire among politicians to introduce forms governance reforms in Albania of governance which would be the same The decentralization reform programme as those in the western democracies, than which commenced in the early 1990’s as an inevitable form of responsible demo- comprises one of the most important in- cratic governance. But decentralization as stitutional reforms of the transition and a process very soon gained ground politi- constitutes a comprehensive redefinition cally and helped create a class of local poli- of not only local, but also central govern- ticians who could formulate their own ment institutions. It is linked to a rise in demands and options to the benefit of the level of democracy, to efficient gov- local government. However, while they ernance, to the optimal generation and were busy solving the urgent problems of utilization of resources, to transparency the day, the local authorities were not able in government and to a reduction of corruption. Its strategic vision and the pace WHAT decentralization IS 52... of its implementation are conditioned by Decentralization is important factors such as historical tra- ..... the opposite of globalization, by bringing the level of decision- dition, the resources at hand, changes in making down to the regional and local levels. behaviour patterns of the major actors and ..... an integral part of democratization, by giving the people in the preferences of interest groups and the right to decide on the type of government, representation, the public at large, as well as the influ- policies and services they want ence of the international community...... a wide-ranging process involving many actors and sectors, including the national, regional and local level actors and The decentralization reform in Albania stakeholders: government, the private sector and civil society, as was initially conceived of more as a de- well as political, social, cultural and environmental affairs...... the logical application of the basic characteristics of good 52 Decentralized Governance Monograph. Management Development and Governance Division of UNDP. governance, including responsibility, transparency, September 1998

challenges of local governance and regional development 59 Centralized Decentralization

the implementation of and respect for the law, and accountability. flexibility in dealing with the difficult .....a combination of three duties: administrative, fiscal and problems they were faced with during a 54 political. time of national calamity . The municipalities in particular served as partners .....the combination of four dimensions: institutional and legal not only for the central government, but forms and procedures, civil culture, proper behaviour on the part of also directly for international institutions individuals towards institutions, governments, the private sector and and organizations which were helping civil society, mindset, vision and individual intuition. the refugees from Kosovo. The stabilizing role of local government has also been to concentrate their forces, instruments evident at moments of domestic politi- and funds on fulfilling the pledges made cal crisis such as 14 September 1998 or by politicians. during the rapid succession of governments from 1997 to 2002. Gradually, the necessity of decentralization began to be seen as an internal proc- Decentralization as a process of ess. The central government’s inability to democratization effectively administer most services made The necessity of decentralization of serv- its influence felt in local circumstances, ices and functions of governance has also which varied considerably from one area been encouraged by the need to raise the to another, with very limited funds avail- level of democratization and account- able. Experience in governing also made ability in government institutions and to evident, in practice, the irreplaceable role bring decision-making closer to local of local government in raising the level communities, which are both contribu- of stability of government systems. Dur- tors to and beneficiaries of the process. ing the 1997 crisis, some local leaders Bringing decisions closer to the people played an important role in minimizing encourages a growth in consensus in the the social costs of the crisis in their re- decision-making process. The necessity 53 gions . The local heads of town and ru- of decentralizing also derives from a clear ral municipalities were the only public fig- regional sense of local identity inherited ures who were able to appeal to the public from the past and, to a certain extent, to keep calm and avoid conflict, which revived in the transition period, which would have had devastating effects. Dur- does not constitute a risk which could ing the Kosovo crisis, which saw an in- jeopardize the unity of the Albanian state flux of refugees, local governments dem- or create barriers and friction between onstrated their vitality, effectiveness and regions.

Decentralization began to be felt more WHAT decentralization IS NOT 55.... and more as a necessity and as a conse- ..... An alternative to centralization, because both central and local quence of public awareness of the im- governments are necessary. They complement and do not exclude portant role to be played by local gov- one another. The complementary roles of the actors at the national, ernment in raising social and public ac- regional and local levels must be combined in the most effective countability. This accountability is part ways and means to attain common goals. of the process of creating a feeling of ..... A reform of the public sector alone, but rather a reform of the community in a country in which social administration and the civil service as a whole. fragmentation and anarchy have been identified as two of the critical impedi-

53 One important event in March 1997 was the visit of a group of mayors to Vlora. Prominent among them was the mayor of Shkoder. This highly symbolic visit helped maintain national unity and avoid exacerbating a nascent north- south conflict. 54 The handling of the crisis in the town of Kukes was held in high esteem both within and outside of Albania. 55 Decentralized Governance Monograph. Management Development and Governance Division of UNDP. September 1998

60 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree ments to the country’s modernization. WHY is decentralization necessary 56...... Decentralization is a form and process of governance. Good The wish to decentralize has grown pro- decentralized government depends on good government at the gressively under pressure from politicians, national level. Good government at the national level includes local administration, civil society and lo- mechanisms and processes which enable society to attain a more cal business communities. It is, however, sustainable development with man at the heart of all these also influenced from time to time by tran- endeavours. Good decentralized government includes forms and sitory and often immediate interests, and procedures which enable society, at the regional and local levels, to is still expressed institutionally in a con- attain objectives such as mitigating poverty, and securing stable living fused and weak manner. It should be standards, environmental regeneration and gender equality. noted that pressure to decentralize often outdoes the real possibilities for implementing a reform, as in the motto “de- ernment, the units and organs of local mand as much as you can if you want to government, and the duties, competen- get anything at all.” The actors in fa- cies, forms of organization and financ- vour of decentralization sometimes un- ing thereof. It is a progressive piece of leg- derestimate the great difficulties involved islation which meets the highest interna- in carrying out decentralization reform, tional standards. It is also practical to im- which must be implemented at the same plement because it sets forth clear dead- time as other important reforms, in par- lines for all the phases of transfer of com- ticular in a crisis-prone country with a petencies from the central government to low level of economic and social devel- the local authorities. opment. Main legislation concerning decentralization in Albania 3.2 PROGRESS IN 13 May 1998 - DECENTRALIZATION Amendments to the Law of 1994 on the Taxation of Assets in the Republic of Albania; The decentralization reform programme 28 November 1998 has advanced at two different speeds. A The Constitution of the Republic of Albania; legal framework was prepared relatively 29 July 1998 quickly, whereas implementation has, by Law on the Drafting and Execution of the State Budget of the Republic comparison, fallen behind. The deadlines of Albania; for implementation set forth in the basic 28 December 1998 law on local government have not been Law on the Taxation System of the Republic of Albania; adhered to. Nonetheless, it is generally 28 December 1999 held that the deadlines were more opti- Law on Taxation Procedures in the Republic of Albania; mistic than the concrete possibilities for 8 May 2000 implementing the reform. The Electoral Code of the Republic of Albania; 31 July 2000 Progress in establishing the legal Law on the Organization and Functioning of Local Government (basic law); framework 31 July 2000 The process of decentralization was based Law on the Territorial and Administrative Division of Local Government upon ten major laws passed in the 1998- in the Republic of Albania; 2001 period, of which the Law on the 31 July 2000 Organization and Functioning of Local Law on the Organization and Functioning of the Municipality of Tirana; Government is considered to be the fun- 12 February 2001 damental legal basis for the process. It was Law on the Inventory of State-owned Real Property and the Transfer passed by parliament by a 3/5 majority. of Property to the Units of Local Government This law sets forth the role of local gov-

56 Decentralized Governance Monograph. Management Development and Governance Division of UNDP. September 1998

challenges of local governance and regional development 61 Centralized Decentralization

Progress in implementation of the Laws which would transfer duties, and action The Law on the Organization and Func- on the part of the units of local govern- tioning of Local Government has pro- ment. moted self-initiative on the part of the local government, in particular in the Relationship of decentralization larger town/urban municipalities which in Albania to the European were among the first to attempt to make Charter use of the opportunities created by the law. According to a study published in In these municipalities, there has been a 199857, when Albania first began to dis- substantial rise in revenues from local taxes cuss signing and ratifying the European and duties, and a complementary rise in Charter of Local Autonomy, it was con- investment initiatives. They have demon- cluded that 7 paragraphs of the Albanian strated more autonomy in decision-mak- legislation were in conformity, of which ing and more resistance to interference on only 3 belonged to the group of most the part of the central government authori- essential paragraphs of the Charter. This ties. study dealt only with formal conformity of legislation and did not check the scale However, most of the units of local gov- of implementation or feasibility thereof ernment, in particular the rural munici- of the decentralization path chosen in Al- palities, continue to hesitate because they bania. do not yet sufficiently understand the advantages they have to gain from this law. Currently (2002), it may be said that Al- They often justify their inactivity by the banian legislation is in full or sufficient need for regulations and directives from compliance with the 22 “important” the central government, at a time when paragraphs of the Charter. Of these, at they have not even passed regulations least 12 are from the group of essential themselves to specify the administrative paragraphs. This shows that substantial processes necessary to carry out their func- progress has been made in fulfilling the tions as foreseen under this law. legal framework for decentralization, and that there exists political will in parlia- At the same time, the ministries and cen- ment to approximate it with basic Euro- tral government institutions continue to pean legislation. act with the inertia characteristic of the past. They have not yet passed regulations The issue of local funding has been one abrogating the functions which are no of the most controversial issues relating longer theirs. This is normal practice be- to the non-conformity of legislation to cause old regulations continue to be used the Charter. This is partially because the at various levels of the central government articles in question from the basic law administration in order to block initiatives were to enter into force in two stages, on 1 January 2001 and on 1 January 2002. The European Charter of Local Autonomy This is also linked to sources of fund- The European Charter of Local Autonomy is a multilateral treaty of ing, to equity principles required to pro- the Council of Europe which assembles the best principles of local tect local authorities which are financially self-government and serves as a model to be adapted by each country. weak, to the manner of distribution of Important to be fulfilled in particular are the first 11 articles of the funds, to the minimization of condi- Charter which contain 30 paragraphs. Of these, 14 are considered to tional grants, and to the right to make be the most essential. The signatories must fulfill the criteria of at loans. The consultation mechanisms be- least 20 paragraphs, of which 10 must be from the group of most essential articles. The Albanian parliament ratified the full text of 57 Pigey and Banks (Urban Institute), The Republic of the Charter on 11 November 1999. Albania: possibilities and directions for municipal reform, January 1998.

62 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree

tween the central government authorities Alignment of Albanian and European legislation and the organs of local government and on decentralization a number of aspects of administrative Although the new legal framework adopted in 1998 has begun control are other problems which must aligning Albanian legislation more clearly to the European Charter be dealt with in order to comply with the of Local Self-Government, the implementation of the laws in Charter. (See Table 3.2) question actually only began in 2001, and the process is still not complete. As a result, conformity is actually lower than originally Other gaps which must be filled are those anticipated. relating to the constituting of regional councils, the solving of differences between the head of the unit and the local be the fruit of systematic and well-stud- councils, and protecting local units from ied consultations with local elected offi- the exaggerated tutelage of the prefec- cials and their associations. tures. The units of local government must acquire their own requisite funds and Delays in transferring duties to property which must be in proportion to local government60 their competencies. The town and rural The process of transferring duties and municipalities, in particular, must enjoy responsibilities from the central to the the right of so-called “general compe- local government authorities has proven tency,” i.e. to exercise initiatives and their to be slower than the potentially achiev- mandate over all issues 58 which are not able rate and much slower when com- excluded from their competencies or have pared to the deadlines set forth by law. not been attributed to another authority. This can be clearly seen in a detailed analysis of the status of the transfer of Consequently, the process of further duties as foreseen under the basic law on modernization of local governance and local government. (See Table 3.3). its full conformity with the principles of the Charter makes a number of constitu- The transfer of duties related to infrastruc- tional amendments and additions to the ture and public services has only been ac- basic law necessary. It also requires the complished in part. The reform has ad- creation of conditions to bring about lo- vanced for roads and local public transpor- cal competencies in practical terms by tation, in particular for the rehabilitation means of financial backing. This means and maintenance of roads, the regulation an ever increasing transfer of fiscal com- of urban public transportation offered by petencies into the hands of the local au- the private sector, and for street lighting. thorities. The process in question must The classification of roads into national,

58As opposed to the constitutional provision under which they exercise initiatives and their mandate for all government duties. 59 As opposed to the constitutional provision under which they exercise initiatives and their mandate for all government duties.

challenges of local governance and regional development 63 Centralized Decentralization

The level of compliance with the basic provisions of the European Charter of Local Autonomy Table 3.2

* This level means full compliance of legislation with the principles of the Charter

64 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree regional, town and country roads is to be sion to be lawful. As a result, in practice, completed during 2002, as is the process not only the decisions, but also the func- of registering property rights. tioning of this body depend entirely upon the central government. The Council for For drinking water supplies and sewerage, Territory Adjustment is a body which a joint administration is still in force by enables the central authorities to take de- the central and local government authori- cisions even when the political majority ties, but the investment budget, which is in this government is not the same as in the main issue in this sector, continues local government. to be administered exclusively by the central government. Delays in transferring The transfer of duties related to social the duties foreseen by law are linked to a services has not yet been completed. Ac- number of decisions which still have to cording to the basic law on local govern- be taken for the commercialization or pri- ment, as of 1 January 2001, rural and vatization of waterworks, for competency town municipalities bear full responsibil- regulations between the units of local gov- ity for carrying out social services and ad- ernment and the Water National Regula- ministering public institutions such as tory Committee, and for the difficult kindergartens, housing for the elderly and technical problems in the sector as well orphanages, etc. The level of responsibil- as the debts accumulated by the water ity and the separation of duties between supply utilities. The distribution of prop- the local and central governments for so- erty rights where the water utilities sup- cial welfare, poverty‘ alleviation, and the ply water to more than one local unit is administration of related institutions should another question which remains to be have been set forth by a special law be- solved. General opinion has it that a de- ginning in January 2002. However, so- finitive decision must be taken on the cial services carried out by public organi- transfer of duties to the local authorities zations continue to be administered by and that the technical problems should the Ministry of Labour and Social Affairs. be solved later. The same applies to policies and funding for social assistance for poor families. The Unsolved are problems linked to the ap- municipal authorities are supposed to proval of construction sites and urban plan- draft the list of beneficiaries, but the funds ning. The duty of approving construction continue to be distributed by the central sites and issuing building permits was to government. be given exclusively to the town municipalities as of January 2001. It is assumed that these duties have now been transferred to the local authorities. In reality, these duties continue to be carried out by a body called the Council for Terri- tory Adjustment, the composition and duties of which are in contradiction to the concept of decentralization. It is a mixed body with representatives from central and local governments and is headed by the mayor of the municipality, but the central authorities hold the majority of votes. Two-thirds of the members of the council must take part in the meetings in order for the council’s deci-

challenges of local governance and regional development 65 Centralized Decentralization

Status of the transfer of duties to local Government Table 3.3

61Deadline set forth in law no. 8652, dated 31.07.2000, On the Organization and Functioning of Local Government.

66 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree

Progress in the transfer of duties linked but in fact, the municipal authorities can to local economic development, public offer no practical assistance. order and civil defence, and to the separation of duties held jointly by the local and central authorities in the fields of edu- 3.3 LOCAL ADMINISTRATION cation, health and environmental protec- CAPACITY - REASON OR tion has also been slow. PRETEXT

Maintenance of public order by prevent- Alleged reasons for delays in ing administrative infractions and guar- transfer of functions anteeing the implementation of local The alleged weakness of local government regulations is a duty which is foreseen to capacities and the attendant risks serve as be transferred to the local authorities in the main reasons of the central government January 2002. The local authorities have for delaying the transfer of duties and for been legally charged with creating a mu- the slow progress made in decentralization. nicipal police force as part of the reform This view is particularly widespread among of the state police. This means that the officials in the central government admin- number of people and related funds for istration. In fact, the local authorities have salaries, equipment, uniforms, etc. for the traditionally never been held in high es- municipal police must be financed by a teem by the central government. The low corresponding reduction in the state po- level of proficiency and the financial con- lice force. In fact, the central government straints, as compared to the central authori- authorities have transferred their compe- ties, have served as a basis for this lack of tencies but have not given the munici- esteem. But today, after a decade of demo- palities the funds needed. As a result, a cratic transition, and in particular after sub- municipal police force was set up in stantial progress in the legal framework for Tirana with a very small staff (about 30 the setting up the local administration, individuals of the 900 needed to conform there has been much positive experience to recognized standards) and with funds to counteract these arguments and opin- of its own, but in practical terms, it has ions and has often shown them to be noth- not been able to fulfill its duties as fore- ing other than pretexts for slowing down seen by law. Attempts have also been the normal and logical process towards de- made in other major municipalities. At centralization. the same time, there has been no corresponding reduction in the size and budget In fact, the low level of human capacities of the state police force. is typical not only of the local government authorities. It is evident at a com- Another typical example is that of illegal parable level in the central administration, buildings. The municipal authorities can- too. The approach of first strengthening not act themselves if they find out or are these capacities and then transferring re- informed about illegal construction activi- sponsibilities to them cannot be a rational ties. They must inform the Directorate of solution for local government and con- the Construction Police, based in Tirana, tradicts the decades of experience gained which is an organ of the central government in reform at the central government level. acting at the national level. This directorate decides whether or not to intervene on the Need to concurrently enhance basis of its own priorities, which are often capacity of local government not those of a municipality in a far-off dis- The strengthening of human capacities trict. Thus, the public informs the munici- must be closely linked to the exercise of pal authorities on infringements in the be- responsibilities, and the process of reform lief that the latter will carry out their duties, implementation should itself give impe-

challenges of local governance and regional development 67 Centralized Decentralization

tus to raising standards. What is more, as the types of transfers from the state a structure much closer to the local com- budget by raising the proportion of munities in question, the level of account- unconditional transfers, and in trans- ability and transparency in local govern- fers of funds from the ministries to ment has been seen to be quite satisfac- the units of local government. All tory. The local government structures are these processes must be developed now being viewed as increasingly reliable hand in hand with the transfer of by the public and by international organi- duties. zations, some of which have expressed their clear preferences to work directly Determinants of progress in fiscal with the units of local government and decentralization thus avoid bureaucracy at the central gov- Progress in fiscal decentralization is ernment level. closely linked to the general macro-economic and fiscal situation in the coun- Nonetheless, whether they are reasons or try, to the capacities of local government pretexts, it is clear enough that the quali- to offer public services locally and the tative rise in local government and, in level of development of the appropriate particular, in local administration is some- legal framework for local taxation. thing which must be taken seriously as a component of the decentralization reform Incompatibility of taxation laws and something which demands concrete Considerable progress has been made action. over the last few years in completing basic legislation on tax decentralization. But although the basic law on local gov- 3.4 ISSUES IN FISCAL ernment has clearly set forth the main DECENTRALIZATION elements of the system of local taxes and duties and has foreseen 1 January 2002 Dilemmas in fiscal decentralization as the date of takeover by the local au- Fiscal decentralization, which involves the thorities, existing tax legislation is not assignment of the major responsibility for yet fully adapted to allowing these pro- resources mobilization, budgeting and vision to be implemented. The Law on management of local services from the the Taxation System in the Republic of central to local authorities in accordance Albania 62 is an example of this incom- with the basic principles of sound local patibility. It sets forth the basis, level, government has been one of the more con- sanctions and collecting agent for all troversial issues in the area of decentrali- taxes. Some of the local taxes described zation over the last few years. The root of in this law are not yet in accord with the this controversy has been the delay in basic law on local government. Similarly, transferring fiscal responsibilities from the the basic law on local government gives central to the local government, in order full freedom of action to the units of lo- to allow the latter to achieve: cal government in choosing the tax agent, • A rise in revenue autonomy, where whereas, under the tax law, the munici- there must be improvements made in pal councils only have the right to choose local taxes, fiscal duties and tariffs, and other agents under special conditions. in opportunities for the units of local Another controversial issue is the rela- government to get loans; tively low level of authority in the tax • A rise in decision-making autonomy law, and the fact that it is the same for with regard to expenditures, where all units of local government, at a time there must be improvements made in when local conditions vary among them.

62 Law No. 8435, dated 28 December 1998.

68 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree

Legal progress in fiscal decentralization

1999 2002 Approval for the first time by the central government Agreement upon a legal formula for the distribution of a grant 63 for local government, which was used to of grants; cover operation costs and for several of the latters Transfer of functions to the local authorities in own or distributed functions, concerning which the accordance with the requirements of the basic law (with local government decided itself. the exception of drinking water); Full transfer to the local government of revenues Substantial rise in grants for the local authorities in from property taxes and full administration thereof line with the duties transferred to them. by this government. Forecast for 2003-2005 2000 Complete revision of legislation in the field of local Passing of the basic law on local government. taxation; 2001 Application of a tax on farmland; Inclusion of decentralization in the Medium-term Transfer of taxation on small business as a local tax Economic Framework for 2002-2004; under the direct administration of the local authorities; Transfer of taxation on small business as a local tax Transfer of the remaining exclusive duties (such as without direct administration thereof by the local drinking water, some capital expenditures for local authorities; infrastructure, etc.); Removal of the restriction on the utilization of grants Improvement in the financing of distributed duties to cover only operation costs. with the central government.

The amendment to the tax law in the fis- Regulations in support of fiscal decentralization cal package passed in 2002 gave more The Law on the Organization and Functioning of Local Government, freedom of action only to the municipal- No. 8652 dated 31.7.2000, considered to be the basic law for local ity of Tirana. government, The Law on Public Real Property and the Transfer of Property to Another example is the Law on Taxation the Units of Local Government, February 2001; Procedures in the Republic of Albania 65, which is implemented to administer na- The Law on the Territorial and Administrative Division of Local tional and local taxes. The concepts of Government in the Republic of Albania, no. 8653 dated 31.7.2000; the taxes and fiscal duties foreseen by this The Law on the Organization and Functioning of the Municipality of law reveal several incompatible elements Tirana, no. 8657 dated 31.7.2000 and in some cases open contradictions The budget laws for the years 1999, 2000,2001,2002 with the provisions of the basic law on The Law on the Taxation System in the Republic of Albania, on local government. There also seem to be taxation procedures, for the taxation of property contradictions in the definition of taxes between the Law on the Taxation of Assets in the Republic of Albania 66 and the Law on Taxation Procedures 67.

63 A grant here means funds transferred form the central government to the local authorities, which utilize the funds independently. 64 Law No. 8435, dated 28 December 1998. 65 Law No. 8560, dated 28 December 1999. 66 Law No. 8344, dated 13 May 1998 amended by Law No. 7805, dated 16 March 1994. 67 Law No. 8560, dated 28 December 1999.

challenges of local governance and regional development 69 Centralized Decentralization

Status of the transfers of Fiscal Competencies Table 3.4

The main components • Conditional funds, which are trans- of the local budget ferred to the local authorities in the Funds are spent at the local level from the state form of a grant for a specific purpose budget and from own revenue of the local au- which may not be altered by them. thorities. The funds derived from the state Such funds are utilized to finance their budget are the major source of financing. own or delegated functions of the local There are two types of funds which are government authorities and to carry out transferred from the state budget to the specific duties of the central govern- local authorities: ment in order to attain national objec- •Unconditional funds, which are trans- tives. Conditional funds make up the ferred to the local authorities in the form greater part of local government fund- of a grant and are spent by them ac- ing. In 2001, they represented about cording to their priorities. Every unit 80% of local budget expenditures. This of local government has full authority year, local government covered only to decide on the purpose and manner about 8% of its expenditures from its of utilization of these funds, in accord own income, which amounted to about with the duties it has under law, and 67% from fiscal revenues. which endeavour to utilize the funds in an effective manner.

68 Deadline set forth by law no. 8652, dated 31.07.2000, On the Organization and Functioning of Local Government

70 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree

Local revenue sources Revenue from local sources (own revenues) includes: Revenue from local taxes; Income from local fiscal duties and economic activities, rent, and the sale of assets, etc.; Loans for local public purposes; Aid and donations

Revenue from national sources Revenue from the distribution of national taxes, Unconditional transfers (grants) by the central government to the local government authorities, Conditional transfers by the central government to fulfill all the standards and demands it has made for distributed or delegated functions.

Funds from the state budget are also spent come in 2001 was 2.8 times higher than at the local level through the ministries, it was in 1998 and in 2002, it is forecast such as through the Ministry of Public to be 3.6 times higher. Local government Works, the Ministry of Transport, the grants in 2001 were 1.5 times higher than Ministry of Education, the Ministry of they were in 1999, and in 2002 they will Culture, the Ministry of Health and the be twice as high as they were in 2001. Ministry of Local Government. Similarly, expenditures from the unconditional budget in 2001 were 8 times Composition of the Local Budget higher than they were in 1998. From the data on the local budget (see Table 3.5 ), one can clearly see that the Implementation problems in fiscal revenues and expenditures of local gov- revenue decentralization ernment have grown from year to year, While basic legislation with respect to lo- along with the take over of responsibili- cal revenue has created requisite room for ties for revenue and expenditures from the meaningful fiscal decentralization, at the national level. Thus, local government in- same time, there are substantial problems

69 The 2002 data are forecasts.

challenges of local governance and regional development 71 Centralized Decentralization

lows for it, there is still no clear channel for applying distributed taxes and for the right of local authorities to utilize loans as a supplement to local revenues, even for capital expenditures.

The taxes on small business and on assets are still collected by the central government administration and, since the 2001 budget year, all income deriving from these taxes serves to finance unconditional transfers from the state budget to the local authorities. There is a major imbalance among the various munici- Graph 5: Sources of funding for expenditures by local Government in 2001 palities in revenues resulting from the tax on small business. About 38% of rev- in actual implementation. Local taxes enues from this tax at the national level which correspond mainly to basic revenues are collected in Tirana and in the other are, at the moment, regulated in the basic large and medium-sized town munici- law on the taxation system of 1992, which palities, whereas very little revenue is col- has remained unchanged despite the fact lected in the smaller municipalities. Ac- that the concept of decentralization is now cording to the medium-term budget pro- completely different than it was at the start gramme, revenue from the tax on small of the transition. There is also a law on the business is forecast for 2004 to be about taxation of assets, which, since 1999, has 2.5 times higher than it was in 2000. This authorized the transfer of funds from this assumes that this form of taxation will source to the exclusive administration of remain a national tax and will continue local government. It is a tax which applies to be collected by the central taxation only to construction activities. The tax on authorities. small business has also been considered as “local” since 2001, though it is not directly administered by local government and is The tax on assets is another important distributed in the same manner as an un- source of income which continues to be conditional grant. Although legislation al- collected by the central government administration. This includes taxes on farmland and on buildings. The tax on farmland was suspended by Presidential decree and the possibility of reapplying it on 1 January 2003 is under review. On this basis, revenue for 2004 deriving from the tax on assets is forecast in the medium-term budget programme to be about 16 times higher than in 2000. But even if these revenues are achieved, there will only be a very modest increase in total revenues from this tax for the units of local government (from local and national sources), about 5% and 9% for 2003 and 2004 respectively, in compari- Graph 6: Revenue from the tax on small businesses son with 2001.

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The decentralization strategy sets forth that personal income tax and profit tax are also to be part of the distributed taxes. Provisional studies have been made for these elements to determine the transfer capacity to local administration. The problems involved in this transfer have led to it being realized over the medium- term. And the distribution of these revenues is disproportional. Over 50% of personal income taxes and about 80% of profit taxes are collected in Tirana alone.

Patterns of Local Expenditure Local expenditures consist of current expenditures and capital expenditures. These serve to carry out own functions, joint functions and delegated functions. An analysis of local expenditures according to sector (See Table 3.6) has shown that, at least over the last five years, there has Graph 7: Revenue from the tax on Assets been a trend to substantial growth in expenditures for local government administration and for infrastructure. The reasons for this can be explained in part by the expansion of the functions of local government and the great need to improve local small scale infrastructure. Worrying is the extremely modest rise in expenditures in the field of health care, although this is considered one of the priority sectors for the country’s develop- Graph 8 : Growth in total expenditures for the period 1998-2001 ment. The same is true with regard to expenditures in the field of education.

70 Forecast

challenges of local governance and regional development 73 Centralized Decentralization

The local budget - not yet tion has not made any real progress in re- decentralized lation to the national budget. An assessment of questions related to fis- Similarly, an analysis of the total sum of cal decentralization relies generally on an state budget funds and of own funds of awareness that it is a long process closely the local government, which are spent at linked to the fiscal consolidation of the the local level (in the districts) 71 , shows country in general and to the development not only that the main portion of ex- of the banking and financial sector. As a penses has remained in the competency consequence, despite progress which has of the central government administra- been made, the level of fiscal autonomy tion, but also that the portion of funds for the local government authorities has unconditionally spent by the local gov- remained rather low. ernment 72 has indeed diminished compared to the total of funds available. (See An analysis of the main indicators for the Table 3.7) local budget shows clearly that, despite the fact that local government expenditures At the national level, the total sum of have grown from year to year, they have unconditionally transferred funds for hardly changed at all with regard to share local government corresponds to 100% of total expenditures in the state budget. of revenues deriving from the small busi- This demonstrates that fiscal decentraliza- ness tax, plus 100% of revenues deriving from personal income tax, plus 19% of revenues deriving from the company profit tax. This means virtually that quite a high level of distribution of national taxes has been attained. But the absolute sum (in leks) which results from this calculation is rather low. For 2002, it represented only about 5.5% of total revenues in the state budget. This is linked to the high level of tax evasion in the collection of these taxes, compared to value-added taxes and customs duties. This should be considered as a further reason why they should be collected by the local authorities. Graph 9. Local Government expenditures compared to state budget

Graph 10: Distribution of unconditional transfers

74 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree

Distribution of unconditional Criteria for the distribution of unconditional transfers transfers (in 2002) The distribution of unconditional trans- Population fers was initially made in an empirical Surface area (for rural municipalities) manner, without using the same rigorous Urban services (for town municipalities) criteria for all the town and rural munici- Geographical criteria (for prefectures) palities and, as a result, there was inter- A fixed and equal sum for all town and rural municipalities and ference and political influence. Distribu- prefectures tion was carried out on the basis of his- Special criteria for Tirana: 9.5% of the total sum transferred to the torical data which were corrected to con- town and rural municipalities. form with the general increase in the budget and with the rise in inflation, but here, too, there was a good deal of sub- adopted. This relationship is more in line jectivity. This static method was not able with the guidelines set forth in the Na- to reflect the considerable economic and tional Strategy for Economic and Social demographic dynamics underway at the Development. local level, and led to significant imbalances in per capita allocations. The 2002 scheme for distribution of unconditional transfers, although it is a step A distribution scheme involving several forward compared to the arbitrary budget equal criteria for all was first applied to distribution carried out in previous years, the 2002 budget. (See Box 3.10). Thus, does not take sufficient account of un- from the distributed budget for 2000 and equal regional development. It simply 2001, most of the rural municipalities re- relies on a limited number of “technical” ceived a per capita sum of less than 1000 factors, which do not account for varia- leks, whereas a substantial portion of the tions in the level of human development town municipalities and some rural mu- or the “needs”. nicipalities received a per capita sum of more than 4000 leks. Under the new dis- For the fiscal year 2003, a fundamental tribution scheme, almost all the units of rise in fiscal authority has been predicted local government enjoy a per capita sum for the units of local government, in par- of between 1500 and 3500 leks. (See Ta- ticular with respect to local taxes and fis- ble 3.8). The average difference in per cal duties. The major improvements are capita transfers between the rural and related to the re-application of a tax on town munici palities is about 1:1.7, as farmland as a local tax, the transforma- compared to the 1:3 it was before the new tion of the tax on small business into a scheme for unconditional transfers was local tax, the change of 11 of the 13 local

challenges of local governance and regional development 75 Centralized Decentralization

taxes into local tariffs, and a classification try’s population lives, and these funds of the tax basis and of the method of tax have been diminishing from year to year. collection. For 2001, about two-thirds of the population, inhabiting about 86% of the territory of the country, received less than 3.5 REGIONAL FUNDING half of the fund nationally available for POLICIES AND STRATEGIC expenditure. Funds remain concentrated DEVELOPMENT in the districts with a high HDI. Also of note is the considerable rise in funding Lack of a strategic vision for for districts with high HDI during 2001, regional development support which might have a political connota- An analysis of the total expenditures and tion if one takes into consideration the sectoral composition of expenditure at the fact that parliamentary elections were district level considering the state budget held in Albania that year. (See Tables 3.9 funds and their own funds of the local au- and 3.10). thorities, suggests that there does not seem to be any particular national to sub-na- The difference in funding discrepancies tional financial allocation policy linked in is even more evident if a detailed analy- any way to a strategy for medium-term sis is made of allocations from the na- national or regional development. Thus tional budget to the districts via the line there is a disconnect between the needs of ministries (See Table 3.11). Here it can regional development and the provision be seen not only that the vast majority of funds for this purpose. This is particu- of funds are spent in districts with high larly noticeable when an analysis is made HDI, indeed with a growing tendency, of the relationship between the level of but that funds for districts with low and human development attainment and re- medium HDI have been cut back by the gional financial provisions. line ministries.

Linkage of financial allocations to Towards a rational and equitable human development needs fiscal machinery for regional Over the last ten years, insufficient funds development have been applied for development in the The lack of resources, low investment ef- regions with low indicators of human deficiency and absorptive capacity, and im- velopment, where about 22% of the coun- portant emigration trends, etc could be

76 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree

the objective reasons for the low level of gration policies and by making develop- funding for districts with low HDI. But ment funds for the physical and social in- it now appears evident that it would be frastructure available in advance for those essential to define a strategic approach for zones of the country which might be re- that part of the population which suffers garded as more suitable to accommodate from various forms of human depriva- them. This would constitute the basic el- tion. ement of an active rather than reactive or benign migration policy. It would sup- Linkages of fiscal policy with a port both out and in-migration zones of migration policy and strategy population movement as a core feature If part of the population is to be encour- of regional development planning. aged to remain living where it is, it must In-depth studies for at least the medium enjoy preferential financial policies at least term must be carried out to decide which over the medium-term level in order to of these options, or which others, would give it a chance to advance and develop be most suitable. This type of study is where they live. It would be particularly much easier to carry out now that the re- important to deal, inter alia, with the sults of the national census have been question of sustainable employment gen- made available. The data it offers give an eration because these districts have a high exact idea of migration trends which have percentage of young people and workers occurred over the last decade. looking for jobs. Nonetheless, it is clear that, with fund- However if a proportion of the popula- ing policies as they are at the moment, tion is to be encouraged to migrate, it no solution is going to be found to the must be assisted therein by proper mi- major problem of rural depopulation and deprivation.

challenges of local governance and regional development 77 Centralized Decentralization

3.6 THE CENTRALIZING IN- with a local impact. This type of co-op- FLUENCE OF INTERNATIONAL eration has been considered by interna- ASSISTANCE tional donors as simpler but mainly from an administrative point of view. As a Features of recent international result the regional development needs assistance have become subservient to administra- Beginning in 1991, Albania received a tive convenience in the distribution of considerable amount of international as- aid throughout the country. sistance in the form of humanitarian aid, food aid, technical assistance, develop- The central government and its adminis- ment aid and support to the balance of tration for their part have endeavoured to payments. Over the last decade, donors present themselves not simply as coordi- have committed a total amount of about nators but also as the only possible inter- US$1.45 billion to Albania.73 locutors for foreign aid, and have tried carefully to maintain their responsibilities. Neglect of local government in aid As a consequence, partnership with in- allocations ternational donors is considered the ex- In general, the approach taken by inter- clusive right of the central government, national donors in programming and im- and this has not contributed to decentrali- plementing their assistance, has been that zation. set forth by the central government in Al- bania. The coordination of priorities, the Centralist tendencies negotiations for and signing of agree- accentuated in the types of ments, and the setting up of joint struc- foreign assistance tures for the implementation of pro- The contents of international aid have grammes and projects have been carried also revealed clear centralist characteris- out in co-operation with the central gov- tics. Most of the aid is directed to large ernment, and only rarely have the local infrastructure and development projects authorities been considered as direct part- in various important sectors at the na- ners for the international donors. tional level in order to achieve the stability and rapid economic development of the This is not simply because the legal frame- country. Partnership with the central gov- work in Albania has encouraged such a ernment has been a prerequisite for such phenomenon. The central government has programmes, in particular those involving been seen as the most reliable and stable loans which the state must pay back. partner, the central administration as more capable and easier to work with, and as- Even in most of the cases of projects des- sistance with a national impact as more tined for local development, there has fruitful and more visible than assistance been a tendency for the management thereof to be in centralized hands. This procedure is so ubiquitous that even for the rehabilitation of a road in a distant village, decisions for the priorities of the project, and for the rehabilitation con- tracts and for the supervision of the implementation phase are all taken by

73 The data on international assistance have been taken from Foreign aid by donors, Ministry of Economic Co-operation and Trade (now the Ministry of Economy), Graph 11: Governance and reforms support as part of the total aid 4 January 2002.

78 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterthree centralist structures or by those strongly influenced by the central government. These procedures foresee decision-mak- Graph 12: Local governance ing on the part of the local authorities as part of the total aid for and communities in question, but in governance and reforms practice the latter are excluded from any Total aid for governance and decision-making. A typical example of reforms this approach is the manner in which funds for the development of local communities are managed.

Institutional programme and policy development support International donors have attached particular importance to technical assistance to strengthen government, to programme and implement comprehensive reforms, to draft national and sector policies and strategies, to prepare a legal framework and the approximation thereof to international standards, and to promote other components which support government functions. This importance is clearly presented in the fact that donor commitment in these fields has constituted about 29% of all funding accorded to Albania over Graph 13: Local governance as part of the total aid the period of transition. Almost all this assistance was accorded to the central government, and only about 4% was given the main international donors. Their con- to the local authorities. tributions to the strategic conception and implementation of decentralization re- Support for local governance form have been modest and very much Direct assistance to support local govern- delayed. They have been addressed ment capacities, to raise the level of local mainly to the ministries and central gov- administration and to increase public par- ernment institutions whose activities are ticipation in governance represents about linked to the process of decentralization. 1.2% of total financing by international donors. The number of projects ad- In the course of the implementation of dressed to elected local officials, local ad- aid programmes, thinking in the central ministration and the communities in government and among international do- question is actually very small. And this nors has changed with regard to the ef- assistance has been given almost entirely fectiveness of funding. Attention is now to town municipalities, where it is diffi- more focused on the inclusion and con- cult to see any contributions at the rural tribution of local communities in municipality or regional level, with the projects, to partnership with interested exception of the activities of non-govern- actors at the local level and to ways of mental associations. avoiding impediments caused by bureaucracy and corruption in the central Decentralization reform plays only a small government administration. Progress in role in the structure of programmes by decentralization, a growing commitment

challenges of local governance and regional development 79 Centralized Decentralization

on the part of the central government au- central and local governments with re- thorities to transfer responsibilities to lo- gard to the most basic issues of the scope cal government and efforts on the part of of decentralization reform, in particular elected local officials and the local admin- to local funding, remains one of the fields istration to fulfill their duties have all con- in which stringent regulations and per- tributed to raising interest among inter- manent standards are needed. In the case national partners in cooperation directly of Albania, such relations could also be with local government. The positive ex- sanctioned by special laws. perience of a number of projects by non- governmental organizations, carried out Political commitment on the level and directly with local government and local pace of decentralization ought to be clearly communities has had a great influence, as reflected in the existing decentralization have the projects of various donors, among strategy by bringing it up to date and tak- which mention can be made of UNDP, ing account of actual decentralization ex- USAID etc. The contribution of the Soros perience over the last few years. It must Foundation to promote competent spe- also be reflected more clearly in the Na- cialists to work in municipal administra- tional Strategy for Economic and Social tion is considered a successful experience. Development in order to harmonize it with the pace of reform in all the other sectors. 3.7 THE MAIN CHALLENGES in DECENTRALIZATION Conformity of the law to reality Another important question which Building political commitment must be answered rapidly and resolutely The process of decentralization is in es- with respect to the progress in decen- sence one which involves two parties on tralization, especially fiscal decentrali- equal terms, at least politically: central gov- zation, what has already been accepted ernment which accords the responsibili- for implementation and what is clearly ties and local government which takes over reflected in laws already passed actu- the responsibilities. As a result, these two ally conforms to reality. This would re- levels of government must both be deeply quire a reconfirmation of political will involved in this process. The current idea to implement the elements which have that the decentralization reform is the con- been decided upon, as well as some ur- cern of the central government alone, and gency in reducing the confusion created that it is promoted, programmed and im- by discrepancies in the laws. plemented by it at a pace which is set forth and adjusted by the central authorities on The first step would be the transfer of the basis of evaluations it makes for itself, duties in accordance with the stipulations has substantially jeopardized progress in in the various laws relating to local gov- this important sphere of reform. ernment and fiscal decentralization in particular. Then, it would be necessary Certainly, the decentralization process is to arrive at a clear position as to how far by no means simply the concern of cen- fiscal decentralization should go, what tral or local administrations which have steps are involved and when each step demonstrated, at the one level, conserva- should take place. This position and the tism about transferring responsibilities establishment of appropriate time lines and, at the other level, a lack of will or for action would have to be harmonized readiness to take over these responsibili- with the country’s overall economic and ties. As a consequence, the establishment financial policies, which as a rule are pro- of an institutional dialogue between the grammed for the medium term.

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one hand, revenues can be better col- The key role of fiscal lected and, on the other hand, funding decentralization for public services can be guaranteed The achievement of meaningful fiscal throughout the country at a nationally decentralization is without doubt the prescribed standard. greatest task and most difficult problem of decentralization. This is linked The legal distributive formula for grants to a number of important steps which must be improved by taking into account must be taken to bring it about. At the further factors related to the indicators outset, a forecast of revenues and ex- of local economic, social and human de- penditures (from all sources) for local velopment and which promote domestic government for at least the two follow- and local sources of funding. All the prob- ing years, as set forth in the basic law lems related to issues of distributed taxes on local government, would be neces- must be solved step by step. sary. This is a duty which has not yet been carried out and which must be Transfer of assets taken into consideration, beginning in The process of decentralization cannot be the medium-term budget programme understood properly without a transfer for 2003-2005, in order to harmonize of assets from central to local government. fully and once and for all the budgets The law on the transfer of real property to of the central and local governments. the local government authorities, passed in 2000, has begun to be implemented The application of a tax on farmland and but in a haphazard manner. Respective the transfer of the tax on small business regulations have been prepared, respon- to the full administration of the local au- sible institutions have been set up, and thorities will make necessary an investi- work as begun to identify and register gation of compensatory elements be- property. It is essential that work con- cause of the very unequal geographical tinue until all the provisions of this law distribution of businesses, so that, on the have been finalized.

challenges of local governance and regional development 81 82 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapter IV

Civil society participation in local governance

The removal of barriers to the free movement of people in Albania in the early 1990s was accompanied by a huge wave of migration from villages and smaller towns to Tirana and other large cities by people in search of a better life. The Albanian state, which was much more focussed on issues of political and transition reforms, was unprepared to deal with this mass movement of people. The local authorities were not in a position either to deal with this new and unforeseen situation. As a result, the cost of unplanned urbanization has been borne, up to the present, by the migrants themselves, but also by the inhabitants of the towns they settled in. All the while, the local government authorities continued to maintain the same administrative and financial form they had had earlier, without taking this basic change into account. They thus found themselves one step behind in matters of urbanization.

4.1 URBANIZATION Urban infrastructure neglect PHENOMENA IN ALBANIA The housing problem was and remains one of sheer catastrophic proportions. Albania - The most rural society in With an average of 7 square metres of ac- Europe commodation per person, Albania ranked Historically, Albania has been the country last in Europe in 1990, far behind Ro- in Europe with the largest proportion of mania which had 17 square metres per rural population. On the eve of World War person 74. As a result, the authorities at II, only about one-fifth of the country’s the time used all the means at their dis- population lived in towns, and on the eve of the political changes at the beginning of the 1990s, the urban population represented about 35% of the population. This model of development was linked both to the characteristics of historical development in the country and to the restrictive urbanization policies which had been in force over the four to five decades of totalitarian rule. The rather dreary economic situation had a substantial influence on that compulsory model of urban development in Albania over the whole period. 74 Government of Albania, National Habitat II Report, 1996.

challenges of local governance and regional development 83 Civil Society Participation in Local Governance

posal to restrict the urbanization of society, and during the period 1979-1989, the The drastic cutbacks in the state budget rate of urbanization was only about 2% over the 1980s forced the authorities to per annum - roughly comparable to the concentrate mainly on the central region average population growth rate. Policies of Durres-Tirana-Elbasan. This region for the rural areas of the country were de- accommodated about one-fourth of the vised along the motto “Let us make our country’s population, but it was also re- village like the town!” sponsible for almost 40% of the national industrial output, over half of the national output in light industry and al- 60 most 60% of all the mechanical indus- Urbanization Trends Urban share of total population try. The indicator for per capita social 50 and public health services here (kindergartens, nurseries, schools, cultural cen- 42 40 tres, movie theatres, hospitals and ma- 35 31 33 ternity wards) was at least twice as high 30 28.8 as it was in the other regions of the country 75. 20 21

Urbanization Trends (%) 15.3 15 16 Relaxation of controls on rural- 10 urban migration

0 In the summer of 1990 a decree was is- 1919 1929 1939 1949 1959 1969 1979 1989 1999 2009 sued giving freedom of movement and official recognition to the private sector in the construction industry, primarily to promote housing construction. Sym- bolically, this act may be compared to opening the dike of a huge lake without having made plans or taken any measures to channel the deluge of water accumulated in the lake in the right direction to avoid mass flooding. In Albania’s case, the stringent controls and restrictive policies against urbanization and the freedom of movement for people for several decades during the communist regime were abolished without consideration being given to what should be done to deal with the extraor- dinarily high demand for housing and employment, or how to cope with the aspirations of the people for a better life. This happened at a time when there were virtually no possibilities for investment. The collapse of the centralist economy and of the scheme of subsidies for the un- productive regions of the country had created a hopeless situation for the local

75 Berth Danermark, General Description of the Hous- ing and Urban Development Sector in Albania, 1993.

84 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterfour population. Unemployed, isolated (the Differential patterns of rural migration: road and communications infrastructure From an analysis of the changes in population density for the period was antiquated), and far from the atten- 1990-2001 it becomes obvious that: tion of the central government authorities, The population density fell substantially in the districts of Saranda, people had no alternative but to seek a Tepelena, Gjirokaster, Korca and Vlora, etc, and the main reason better life in the more developed regions for this was seen to be the high level of emigration, in particular to of the country: the Western Lowlands (i.e. Greece. The population density also fell in the districts of Tropoja, the coastal region between Shkoder, Tirana Skrapar, Diber, Kukes, Mat, Mirdita and Puka, etc, and the main and Vlora) and, in particular, the region around the capital city (the area of Tirana, reason for this was seen to be migration towards the Tirana-Durres Durres and Fushe-Kruja), which offered region. the best opportunities at least to find work The population density rose substantially in the Durres-Tirana- and to live a more normal life, especially Kruja region despite the high level of emigration from these districts for children and young people. Encour- because of the great influx of people from almost everywhere in aged, too, by the political chaos caused by Albania, in particular from the north-eastern part of the country. the changes in the country, people took the initiative and moved to these zones urban population turned an important which offered greater chances of survival. part of the rural population into city- dwellers, without giving them time to Uncontrolled and unplanned adapt to the change. Local government migration in urban regions was faced with an unu- The historic dimensions of the political, sual mixture of population from the vari- social and economic changes dictated pri- ous rural areas of Albania, a melting pot orities in the fields which were consid- of mini-cultures and professions which ered critical and most urgent, such as dis- were substantially different from the rest mantling the dictatorship, founding of the urban population. democratic institutions, and creating and promoting a market economy, etc. A balanced demographic development and a 4.2 THE PLANNING OF URBAN reduction in the effects of the mass move- AND REGIONAL DEVELOPMENT ment of people were not considered to be among these priorities. Unplanned urban development - unlawful buildings The demographic changes brought with Unlawful buildings began to appear im- them major alterations in the distribution mediately after the political changes of and density of the population in the vari- the early 1990s as a phenomenon which ous regions. This could be shown with often accompanies rapid urbanization. precision only after the national census Later, they became even more common had been carried out. 76. Whole villages and were very soon identified as one of were deprived of all but a few families the most typical characteristics of the and the population of the major cities transition. With the beginning of pri- grew at a rapid rate. But administrative vate business activities, there soon ap- divisions, in particular with regard to the peared a myriad of poorly constructed first level of local government (munici- buildings in the town centres, mostly in palities), were not able to adapt to these the form of simple kiosks. Soon thereaf- changes. ter, more solid multi-storied constructions began to appear, although these, too, In addition to this, the sudden rise in the were illegal. Tirana became a typical ex-

76 The national census was carried out by INSTAT in 2001 and the final results were published in August 2002. 77 In the first group, urban planning regulations are not respected, and in the second group, even property rights are infringed.

challenges of local governance and regional development 85 Civil Society Participation in Local Governance

ample of this phenomenon. At the end of clear expression of the weakness of pub- 2001, in Tirana alone there were about lic administration and, in particular, of 20,000 illegal buildings, most of which local administration to ensure that laws were informally or illegally constructed.77 are obeyed. They also reflect a lack of Every year, Tirana’s built-up and fringe vision and of development policies by area expansion occupies an average of the local authorities, especially in the about 200 more hectares of farmland, field of urban development and housing mostly for such buildings. As a result, the over the years of transition. They bear density of building and population in witness to the lack of connection between some zones of the city centre has surpassed the local authorities and the communi- the legal limits of urban planning. Public ties in question. They are also a reflec- spaces have disappeared and the construction of the negative influence of the tion industry is making a profit at the ex- centralist policies drafted at the ministe- pense of the existing infrastructure. The rial level. other major cities are in a similar state. Planned but haphazard urban Illegal buildings are not simply an expres- development sion of the low level of development in The concept of illegal construction in Al- Albanian society, nor are they simply a bania must not be seen as unlawful build- question of culture. They are primarily a ings only. There are also a great number

Should the illegal constructions be torn down or not?

The dilemma on what to do with the illegal question were demolished within a relatively short constructions in major urban areas first occurred in period of time and there was little resistance. But there 1998 when the Albanian authorities began to exercise were considerable economic losses involved. A survey control after the civil unrest of 1997. Before that, carried out by the students of the Polytechnical virtually all buildings were built without planning University of Tirana showed that along a four-kilometre permission and it was quite unthinkable that anyone stretch of the Lana in Tirana, there were about 550 would ever tear them down. The first demolitions unauthorized buildings, the equivalent of a physical began rather as an attempt by the state authorities to investment volume of US$6 million, not counting the demonstrate their resolution in the matter. They economic spin-off effect of the economic activities started in Tirana where there was a great concentration carried out, employment and tax revenues. This of illegal buildings. The demolition work was welcomed constitutes quite a large profit which might have gone by the population. Encouraged by this, the central and to the local authorities if the investments had originally local government authorities in the main towns of the been carried out in a legal manner. country then instigated a mass campaign of demolition. In the case of Bathorja, where the buildings are Public confidence in the seriousness and resolution of primarily private homes, the local authorities have the authorities to set forth zoning regulations depends hesitated to undertake any action to demolish them. on the attitude the authorities take for the major zones Similar attempts made in 1995 and 1998 failed and of illegal building in the capital city, such as in the degenerated into social conflict with the inhabitants Rinia Park and along the banks of the Lana River, where of the area. As such, the authorities have preferred to much green space in the city centre was destroyed in take a softer approach, that of improving and the last few years by well-off informal business integrating the zones in question. Indeed, in the last enterprises, or in the region of Bathorja which has the two electoral campaigns for local government and for most illegal buildings in the country, with a surface parliament in 2000 and 2001, the subject of area of about 400 hectares. legalization, which had been taboo up to then, was In the former case, in which the illegal buildings consist brought up for the first time. The municipal authorities primarily of business premises, the authorities were of Tirana recently created a special unit to study the extremely harsh in their reaction. The buildings in possibility of legalizing buildings on a case to case basis.

86 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterfour of unauthorized buildings which are “le- The costs of unplanned and gal” from the point of view of urban plan- indiscriminate urbanization ning, though they do not respect even the As a result of the great movement of peo- most elementary rules of urban develop- ple to the suburbs of the main cities, new ment, for instance because they are built areas of inhabitation have arisen which on green spaces between existing build- are deprived of even a minimum of in- ings and provide accommodation only, frastructure and services, of planning and without the other important functions re- of funds for public investment. The mi- lated to urban existence. The building grants often find themselves living in plans drafted by architects and reviewed worse economic conditions than they had by the urban planning authorities are re- known in their regions of origin. Many garded only as instruments for getting a of these new areas have no schools and building licence. The main criterion is social service facilities, and illiteracy is profit, as interpreted by the constructor becoming a growing problem. The mis- himself. In many instances, they are not erable state of hygiene has promoted the the fruit of in-depth studies comprising spread of contagious diseases. All these all the factors needed to be taken into con- factors have made the phenomenon of sideration to guarantee not only the pro- rapid urbanization a critical and harmful vision of housing as living space, but also process accompanied by high economic all the other components of human ex- and social costs. istence under normal living conditions. Is massive migration in the This phenomenon also shows that the national interest? specialists in this field did not have suffi- Migration processes are phenomena cient knowledge to offer decision-mak- which do not occur only in Albania. The ing institutions concrete and pragmatic most highly developed countries on earth solutions. In Albania, urban planning also have high rates of urbanization 78/. does not exist as a profession which can Population movements, although spon- deal with the subject as a comprehensive taneous and chaotic, are considered posi- social, economic and political process tive because, in essence, they correspond rather than just as a question of blueprints to the will of the people and the human and graphs. Urban planning and devel- right to strive for a better life in more opment is dominated by the architect- highly developed regions. The negative planners who plan design private build- view held on migration has arisen as a ings. In this conflict of public and private interests, public interests have not The case of the new urban municipality of Kamza been able to win out in finding adequate Kamza is one of the new municipalities of Albania and is situated to solutions. the north of Tirana. The town municipality was founded in 1996 by the amalgamation of five villages with the rural municipality of Kamza The local authorities, for their part, have (formerly a state farm), and with Bathorja, the largest area of illegal had difficulty adapting to their new re- housing in Tirana. sponsibilities, which were previously very much central government responsibilities. Up to 1990, Kamza was a rural zone of about 7,000 inhabitants. The They have not succeeded in orienting territory of this municipality was subjected to unchecked urbanization construction to a strategy for urban de- and a wave of illegal construction from early 1991, right after freedom velopment because, on the one hand, such of movement was authorized and reforms were undertaken to a strategy has not been worked out yet, privatize land. At the present, the population of the municipality is and on the other hand, the local authori- about ten times what it was in 1990, the highest rate of urban ties do not enjoy full competency to pro- expansion anywhere in the country. hibit illegal building.

challenges of local governance and regional development 87 Civil Society Participation in Local Governance

Most of the new inhabitants of Kamza settled on the territory of nel spontaneous urban developments by drafting development plans and making the municipality informally and, for this reason, there was a very some strategic investments for the basic high incidence of illegal construction. Many of these areas have no elements of the infrastructure. or very little public land, and infrastructure and municipal services are virtually inexistent. In some of the administrative units, such Faced with these unprecedented challenges as Bathorja (400 ha.) the newcomers are almost all unregistered or on the management and control of urban illegal. Poor and isolated, without any services or infrastructure, growth, the local authorities are helpless to these people find themselves ignored and abandoned. The act and feel abandoned and without the municipality has only been able to register about 60% of them, and technical support and in particular the fi- the population grows and grows. nancial support they need from the central government. On the other hand, they The local authorities have hardly had a chance to keep up with this are under pressure because of the continu- overwhelming growth rate. Their budget has been extremely small, ous and uncontrolled growth of the their competencies rather limited, and they have insufficient number of newcomers, at a time when no experience and training. The scale of local autonomy in this initiatives have been forthcoming from the municipality has been the lowest of all the local authorities. Yet, central government authorities to balance the experience gained in the administration of this municipality out regional development so that the rural constitutes an interesting example of how a municipality, working areas of the country and the more isolated towns are not abandoned even more by under extremely difficult conditions, can mobilize positive energies their inhabitants. to put good government into practice. Urbanization is a necessary process to the result of unwillingness, for several decades benefit of the country’s development. But now, to accept the existence of this phe- the main issue is the fact that, up to now, nomenon, as well as of politically moti- no one feels responsible for this process. vated abuse at certain moments of the There is no one who has shown a willing- transition in Albania. ness to give it direction by means of decisions of a strategic nature which could at In fact, the newcomers to the cities have least have a medium-term effect on chan- had a positive economic effect on urban nelling the process. As a result, the costs development, in particular in housing of development are very high and must construction, in the construction mate- be borne almost entirely by the local com- rial industry and in services. They have munities, in which expenditures up to also had a substantial influence on the now are but an insignificant amount com- evolution of people’s thinking and, with pared to what will be needed to create the exception of certain excesses at times normal living conditions for the newcom- political, economic or social unrest, they ers. It is the responsibility of the central have helped to strengthen social cohesion. government to include urbanization on Despite such analyses, this new and, until its agenda and to share its responsibilities recently, quite unimaginable situation, with local government for the costs in- does constitute a difficulty and further volved in this process. burden on local government. Most of the essential services which are needed by the newcomers are linked directly to the du- 4.3 THE MANAGEMENT OF ties and responsibilities of the local gov- URBANIZATION ernment authorities. On the one hand, they must urgently begin to solve the prob- Urban management lems created by the lack of basic living Urban planning is still part of the old conditions, including basic infrastructure, logic of centralism. The Law on Urban health care services and schools, and on Planning has been reviewed at least three the other hand they must begin to chan- times over the last ten years and, on every

88 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterfour occasion, as soon as it was passed by par- other towns. Everyone agrees nowadays liament, it was contested at the local level on the need for planning regulations but, when it was to be implemented. This hap- under normal conditions, about three to pened because the drafts were not based five years would be needed to draft them. on a comprehensive process including the In the case of Tirana, which is under pres- actors interested in the law and related sure from continuous and intense urbani- developments. Real participation on the zation, they would not help very much. part of the people and the private sector is still dealt with in this law with reserva- The need for stringent planning regulations tions. The development of urban plan- The drafting of planning regulations by the local government should ning is regarded more as the exclusive pre- not be seen as an answer to all problems because there is no clear requisite of specialists than as a problem solution under existing planning regulations. But they would for society. increase transparency and would give more direction to local government in the process of creating a common vision for urban In fact, urban development in Albania has development. They would also improve the logic of development more need of management than of plan- and would set forth conditions for local government to minimize ning and a planning law. The concept of or prevent mistakes such as those already made. urban management has to do with the pragmatic handling of situations and In Tirana, at least for the moment, devel- funds, and with flexible operation on the opments are rapidly outpacing planning, basis of a set of laws which must once and any plans worked out would be out- and for all clarify issues such as the re- dated from the start because of the dy- turn of and compensation for property, namics of these dramatic changes. the administration and utilization of land, In addition, intermediate steps would the legalization or demolition of unlaw- have to be taken by local government to ful buildings, effects on the environment, fill the existing gaps in urban planning responsibilities for investments in the in Tirana. Such steps could include: main axes of the national, regional and • Defining a downtown zone for the city local infrastructure, codes and urban and placing it under restrictions with standards, the control and monitoring of regard to new building, and, at the same implementation measures in conformity time, paying more attention to improv- with law, and appeals against legal deci- ing, renewing and protecting buildings sions, etc. The need for such a set of laws of particular historical or architectural would seem to be self-evident now. interest. Any new buildings in this zone would have to fulfil clear urban plan- Issues related to urban planning have in- ning conditions and rigorous human creasingly been the object of public and standards set forth in advance. institutional debate initiated and pro- • Identifying new zones for development moted by a rise in the perilous level of with the help of contemporary urban- building density, in particular in the ma- planning parameters, and ensuring al- jor towns. The local authorities still feel ternatives for buildings by promoting too weak to come to terms with the situ- partnership between the municipal ation, and one of the major reasons for authorities and business in the inter- this is the lack of planning regulations. ests of the public. • Planning for requisite improvements Public debate on planning issues in the infrastructure and conditionally on Tirana legalizing unlawful buildings in the Most typical of all is the public debate suburbs, at least in some pilot areas, about Tirana where such negative phe- in order to gain experience, find more nomena are much more frequent than in effective models and create legislation.

challenges of local governance and regional development 89 Civil Society Participation in Local Governance

• Drafting rules for the implementation Tirana, Durres, Kamza, Vora and Fushe of urban planning regulations, and giv- Kruja, as well as a considerable number ing them legal attributes, with clear and of towns, rural municipalities and vil- transparent norms, standards and pro- lages which interact closely with one an- cedures. other, especially from a social and economic point of view. Despite the drastic Explosive rise in urban densities changes which have taken place in this region, local government remains at the In the last ten years, the urban population of the Tirana-Durres-Kruja stage it was, both from an institutional region has grown by about 45%. Over the same period, population point of view and with regard to meth- density in the district of Tirana has grown by about 40% and in the ods of government. The multitude of ad- district of Durres by about 43%. ministrative units making up this metropolis are all under the aegis of two pre- Initiating such a process in Tirana would fectures. help and encourage the complete refor- mation of urban planning legislation, Need for a new urban planning/ which would have to be improved as the management authority city continues to expand. The dividing up of government respon- Development of major urban axes sibilities in the metropolitan region has of growth begun to conflict with its harmonious Recent developments in the country have development. New structures must be transformed the Durres - Tirana - Fushe created which can ensure better govern- Kruja area into a metropolis, in which ment and the more efficient utilization there are two axes: the Tirana-Durres zone of funds and material. The metropolis in which most industrial activity is con- has an urgent need for one unified ad- centrated, and the Kamza zone, where ministrative structure to better coordi- thousands of newcomers have sought and nate and organize the problems of spa- found shelter. This region is the core zone tial development, of urban development for the country’s development. It com- planning and issues of environmental prises five main town municipalities: concern. This has not been foreseen in the strategy for decentralization or in cur- Current trends in urban population concentration rent legislation on local government and (Metropolitan Area) urban planning.

FUSHKRUJE Up to now, the local authorities of the administrative units comprised in this new urban conglomeration regard this concept as contrary to the movement for decentralization of governance and do RINAS not understand the importance of such GREATER TIRANA AIRPORT KAMZA a reorganization. In fact, it is not a question of centralization here, but of finding an adequate solution for metropo- lises such as those in other, more devel- DURRES TIRANA oped countries. Indeed, it aims at doing VORA away with the negative effects which occur when development is too closely con- fined by the administrative borders of local units and when the central authorities are unable to exert coordination at the regional or metropolitan level.

90 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterfour

4.4 THE CHALLENGE OF ings, profession, work and interests, in PROMOTING THE VALUES OF particular economic interests, etc. Aside CITIZENSHIP from this, there is a higher level of communication between communities in ur- Co-operation between the local authorities ban areas than in rural areas. and the community depends, first of all, on co-operation and social cohesion within the The revival of religion 79 has also influ- community itself. Such co-operation can be enced the configuration of communities attained by means of a long process of con- along confessional lines, even within local tinuous cultivation and improvement. Mass units. It must, however, be noted that, with migration and the high rate of urbanization the exception of traditional settlements, within the period of but a few years seem to these communities are not homogenous have slowed this process down. The new- and do not have clearly defined borders. comers stem from various cultures and tra- Although it cannot be said with certainty ditions, but they all need ties to connect them that community relations are not influ- and bring them closer to the population of enced by the elements which have created the towns where they have settled. Citizen- them, there seems to be an atmosphere of ship is the key element which can accelerate good will and co-operation between the the fostering of these ties. communities created by language, geographical origin or religious beliefs. Configuration of local communities Public participation in local government Communication between the depends substantially on the configura- community and the local tion of local communities. This must be authorities seen within the context of the political, The determining factors in the configu- institutional and psychological realities of ration of communities, with respect to re- Albanian society which define the deter- lations between citizens and local govern- mining factors making up such commu- ment, become more apparent in how and nities. The factors in question in Albania where the community and its individu- are culture, geographical origins, religion, als endeavour to solve their problems. profession or educational background, They often appeal for good will and for place of settlement, administrative rela- the solution of their problems with sa- tions, and place of residence in a particu- gacity. They will obey the decisions taken lar village or neighbourhood, etc. In some by their village leader, and then turn to cases, there is also community configu- the rural municipal authorities for help. ration along ethnic lines. The distance to the second level of local government (regions) or to the bodies of In local units in the countryside, where the central government seems much far- population movements have been less ex- ther away and they have no particular in- treme, villages, neighbourhoods and ex- terest in contacts with this level of gov- tended families (Alb. fis) have been the ernment. As such, public participation in determining factors in the formation of local government has begun to crystal- communities. Particularly characteristic lize around these communities, thus cre- is the configuration of communities along ating a direct link to the bodies of the regional lines, in particular within tradi- first level of local government. tionally recognized regional boundaries. In urban areas, these factors are less im- The citizen may die and the portant that others such as social group- individual remain 80

79 Religion was banned in Albania during the last two decades of the communist regime. 80 Saying by Montesquie.

challenges of local governance and regional development 91 Civil Society Participation in Local Governance

Society has been changing rapidly during tenance for demagogues who know how the transition period. Earlier norms, val- to please the masses. ues and convictions have been shaken deeply and society is still having difficulty The most obvious effect of this situation finding itself with regard to ethics and has been a deepening of the gap between morals. It is being faced with many di- the people and government policies. The lemmas. People are in search of new sym- most negative repercussion has, however, bols and institutions with which they can been the manner of public thinking identify. which has arisen, a new form of logic which is different from democratic rea- Questions arise such as: Which road soning. should we take? If the state does not even fulfil the basic obligations it has been en- Contradictions between trusted with, whom can we trust? If laws traditional forces and are contemporary and acceptable in spirit, democratic based modernism but are not implemented to the extent they According to this new logic, there are should be, whom can we then turn to, in a few individuals (foreigners and Alba- order to get, if not complete security, then nians) who own the truth and who hold at least a sense of security and social peace? the key to the future. The media, for their In many cases, the climate of anguish and part, have reinforced this type of think- insecurity has stifled the spirit of morals ing. The fall of the old regime and the and virtue. The overriding values which construction of a new democratic soci- remain are conformity and profit-making. ety are viewed more in terms of anony- The lack of security and clear perspectives, mous forces which have neither cause nor the weakness and corruption of the gov- purpose. It is a process “without a sub- ernment, and manipulation in terms of ject” in which the ruins of the old sys- militancy and meritocracy, have all cre- tem and the dynamic of the new eco- ated a situation of generalized irritation, nomic and political mechanisms coex- exhaustion and indifference. Very little, if ist. This serves in part to explain the at all, is said of citizenship and moral val- weaknesses of democratic institutions ues. and the difficulties involved in activat- ing them. The optimal form of future The individual and society government and the institutional regu- Thus, the problem of relations between lations which must be prepared to con- the individual and society has come in- solidate it are in open conflict with ten- creasingly to the fore. Under the dictator- dencies from the past and with a lack of ship, individuals had their own way of know-how in implementing western thinking and speaking, and a system of standards. This is why foreigners are not common values set forth by official ideol- seen as interlocutors who can convey ogy. Under these conditions, collective their experience with western civilization, freedom had priority over individual free- but rather as shields to protect the Alba- dom. As such, communism was not able nians from their responsibilities as citi- to educate the people to place an active zens. role as citizens. The transition from col- lectivism to individual freedom for the This mentality reflects the universe of population has been an urgent necessity, post-communist Albanian politics and but it has also proven rather difficult. has had a negative influence on the crea- Unfortunately, outdated ideas do not die tion of responsible citizens working ac- easily and, when economic and social tively for the democratic welfare of the problems are involved, they provide sus- country. It also reflects the fact that po-

92 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterfour litical discourse tends to gravitate towards Tirana, compared to the provinces, of- charisma, demagogy and personal loyal- fers more and more opportunities in the ties. The old way of thinking inherited fields of culture and business, and these from dictatorship continues to survive, opportunities have attracted most of the i.e. a polarization of politics between the artists to the capital, who previously were “we” (the convinced supporters of the true forced to live in other towns. political course) and the “they” (enemies of the people and of the Party). It contin- Centralist forces in society ues despite the fact that the now less acute There can be no doubt that one of the distinction is difficult to make. This type factors which has brought about the of thinking is what gives rise to anomaly that the vast majority of the peo- impassionate discussions between per- ple in the country have, so to speak, no sonal foes and causes conflicts involving direct contact with culture at all, has been real or petty interests. It is nourished, the policy of centralization which has above all, in the lack of citizenship. been and still is being pursued in the field of culture. The continuation of the Culture is one of the factors which can centralist policies which gave full deci- have quite an influence on promoting the sion-making power to the central authori- existence of a homo civicus, yet very lit- ties and deprived the local authorities of tle attention has been paid to culture at any competency or financial possibility the local level. Cultural institutions, af- for contributing to the development of ter years of isolation, had difficulty chang- cultural life or even for maintaining the ing their way of thinking and adapting cultural institutions they inherited, has to the new logic of a market economy. had a seriously detrimental effect on cul- What unfortunately characterized cultural life outside of Tirana. Despite a tural institutions for quite some time was number of changes which have taken confusion, which caused serious damage place over the last two years, now that to the country’s cultural heritage and ac- local government has been given a few tivities. more competencies such as responsibility for local libraries and district theatres Changing values and cultural - where the local authorities can now at mores in urbanization least appoint the directors - budgetary as- The mass migration of the village and pects and funding remain in the hands mountain population to the towns and of the central government. coastal plain together with the end to the extreme isolation and social immobility One can get a clearer picture of the dis- which lasted half a century and was char- proportionate share which continues to acteristic of the communist period, exist, even today, between Tirana and the caused a change in the whole system of other parts of the country from the in- values for many Albanians and set in vestment funds for cultural affairs. In movement a complex process of cultural 2002, about 3.6 million leks from these change. At the same time, from the be- investment funds were earmarked for ginning of the 1990s onwards, there was Tirana, whereas only about 1.8 million a tendency to concentrate virtually all leks were earmarked for the rest of the cultural activities in Tirana, and this has country. continued up to the present day. There are many reasons for this, taking into ac- Decentralization in cultural affairs by giv- count the important socializing role that ing the local authorities more competen- art and culture play. One important rea- cies, in particular financial competencies, son is, no doubt, linked to the fact that remains an urgent need in order to bring

challenges of local governance and regional development 93 Civil Society Participation in Local Governance

about a greater balance in cultural life lic. Lack of tradition would seem to have throughout Albania. This could be a great quite an influence on this state of affairs, contribution to strengthening the feeling and in particular, the negative experience of citizenship. gained over the decades of totalitarian rule. It is very difficult to convince the Albanian public to take part in commu- 4.5 PUBLIC PARTICIPATION nity activities in any form because, in the - A PROCESS, NOT AN EVENT public imagination, the concept of “working together” is coloured by the ideology of the communist past, and people are very sceptical, if not to say Public participation in local government means information, allergic to this concept. But what is lack- communication, inclusion and partnership between local ing, above all, are clear and unequivocal government and the community. procedures to implement public participation on a practical basis. Acute deficiency of public participation in civic affairs One very simplified concept for partici- In Albania, there is little public participa- pation in governance is related to the tion in governance decision-making. The right of the public to express its will dur- problem is two-fold. On the one hand, ing elections. Democracy in Albania, in- local public officials misunderstand the cluding democracy at the local level, is a importance of letting the public partici- system of representation. The citizens, as pate in governance and are not creating members of the community, delegate to the conditions for participation. On the their appointed or elected representatives other hand, the public itself does not un- the right to decide upon the fate of their derstand its role and responsibilities in the local units of government and to regu- process of local governance. late issues affecting the community. This concept also prevails in the basic laws on In general, the local government authori- local government, in which little or no ties are satisfied to implement only the mention is made of public participation minimal standard requirements set forth in governance. by law for communication with the pub- The lack of vision on public participa- Essentials of public participation tion in governance is also seen clearly in Public participation comprises a number of components, the the Strategy on Decentralization and Lo- realization of which becomes progressively more difficult in the cal Autonomy which does not deal at all following order: with this important aspect of local gov- Public information, which enables citizens to inform themselves ernment. This document refers only to about what the local government authorities are planning or doing; encouraging the role of non-profit or- Public participation, which increases the governments response ganizations in educating the local com- to the interests of the public by means of mechanisms for citizens munities to take part in governance, and does not contain any strategic guidelines to formulate the agenda of public debate and to set the priorities or concrete plans for the various com- which local government have to address; ponents of public participation. Partici- Public supervision, which increases the accountability of pation is not conceived of as a responsi- government by means of mechanisms for the public to monitor the bility held jointly by the local authori- actions taken and the results achieved by local government; ties and the community, but only as a Public-private partnership, which ensures the strengthening of public obligation towards governance. co-operation between government, the private sector and civil

society to achieve common goals. 82 The rehabilitation programme for schools. 83 The aid programme for Albanian regions.

94 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterfour

On the other hand, local government and are many, and has no interest in commu- the community in Albania nowadays are nity problems. But the basic issue would still very far from understanding these seem to be that there is a misunderstand- components. Many things have begun to ing about a series of mutual responsibili- change as a result of the needs of local ties between local government and the government for contributions from the community to keep one another informed. population. The experience gained in The local authorities are obliged to inform projects financed by international part- the community about every act they take ners has also had a positive effect. Among related to the rights and interests of the these are some projects funded by UNDP population. The people, for their part, once 81/, the Dutch Government 82 and the they have informed themselves, must Italian Government 83, etc. and a number clearly express their views and support for of projects financed by the Albanian De- the acts in question. The local government velopment Fund. Yet, there have been few and its administration are obliged to lis- results, and progress is still slow and in- ten to and take account of what the citi- termittent. zens tell them. But it has been a common phenomenon of Albanian transition for The new information culture and the citizens to adopt a passive role. The the right to participation local government must therefore encour- Public information is the most elemen- age, lead and educate the population with tary level of participation in government, respect to its responsibilities and contrib- and is identified only with the right to ute to transforming the people into ac- information, whereas the other compo- tive citizens. nents are taken far less into account in defining the scope of such participation. The discrepancies between these respon- The public’s right to information is clearly sibilities and reality show that much re- defined in the Law on the Organization mains to be done. In general, the people and Functioning of Local Government. know very little about the organization The meetings of municipal and prefec- and activities of local government where ture councils must be made public in ad- they live. Municipal council meetings are vance and must be open to the public so not regularly announced in advance and that any citizen can attend. The councils there are still no proper facilities for the must hold hearings with the community participation of the public. One step for- before passing acts, and such hearings are ward has been taken with the publication obligatory when budget funds, the expro- of municipal council decisions by the lo- priation or appropriation of property, the cal electronic media. setting forth of local taxes and tariffs, and the specification of representative sym- Informing the public on local bols are involved. These public hearings affairs must be open to the public, i.e. open to In some town municipalities, the authori- the inhabitants, specialists, and interested ties publish a monthly newspaper to inform institutions and non-government organi- the community about the activities which zations, or participation must be realized the municipal authorities and council have by means of a local referendum undertaken in the preceding month. Some municipalities now even have a public in- In reality, public information access and formation office, the main task of which is participation culture is a new phenomenon to inform the public with respect to the in Albania and it has been slow to spread. demands and requests the latter make of The slowness is justified by the opinion the municipal authorities. generally held that the average citizen is In the municipality of Tirana, the public only interested in his own problems, which is now notified on a regular basis about

challenges of local governance and regional development 95 Civil Society Participation in Local Governance

the meetings of the municipal council. ning, defining priorities for action, judg- The meetings in question are broadcast ing the achievements of local elected of- directly on local television. One pro- ficials and of the local administration etc, gramme, called Ekrani i Tiranes (Screen is an important component for its par- on Tirana), informs the public on a daily ticipation in government. The establish- basis about the activities of the municipal ment of the commissions of the municipal authorities, about projects which are be- councils and the citizens commissions as the ing implemented, the costs involved, who most wide-spread bodies at the munici- is financing, how the projects have been pal level in Albania, constitutes a step selected and what impact they will have forward in gathering together the opin- on the community. ions of the community and of technical specialists. This new information culture has been set up only at the municipality level, though, The municipal council commissions are and only the major municipalities have almost identical in all municipalities and made any advances here. At the rural are composed of about 10 local elected municipality level, things have been mov- officials. They serve to discuss issues in ing much more slowly. The situation at advance which will be dealt with and de- the regional level is also much behind. cided upon by the municipal council in question. In the course of their work they Non-governmental organizations are play- consult the voters and specialist for their ing an important role in this concern, by opinions. offering their expertise to assist the local authorities in opening up to the public, The citizens commissions are set up as but reality has shown that this type of co- permanent or temporary advisory bod- operation is still rare and insufficient. ies under the mayor or head of the municipality. They are composed of com- The public organs for civic munity experts from various fields, and participation and monitoring offer thoughts and suggestions on issues The integration of the public in basic is- which are for the mayor to decide or sues of local government, such as the proc- which are to be submitted to the mu- ess of drafting the budget, strategic plan- nicipal council. They exist in all town municipalities and the number of their Initial examples of partnership members varies, depending on the Partnership is the highest level of public participation. It is a mayor. For example, in the municipality modern approach and a dominant element of development. The of Elbasan, the public commission for actors in such partnerships at the local level who can accelerate the commemoration of public figures in development are: the town’s history, composed of 30 indi- The local government, locally elected officials and local viduals, chooses eminent figures who administration, by drafting and seeking the implementation of have made a contribution to the town. legislation and regulations, by seeking improvements in the In the municipality of Vlora, the town commission for urban development, physical and social infrastructure, and by striving to enshrine and composed of 25 representatives from the guarantee security; various classes of society, drafted an Eco- The business community, through business activities, nomic Development Plan for the city of investments, employment, the promotion of human resources and Vlora. There are similar examples in the provision of services; other towns. Civil society, through the work to promote social cohesion, education, culture, freedom of expression and the provision of The work of these commissions has of- services. ten made a pre-selection possible for is-

96 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 chapterfour

Partnership in co-operation replaces erendums and the obligation to gather conflict. The costs of conflict, be they local community opinions are still far in time wasted or in human and from legal and institutional realities in Al- financial resources, are always higher bania. than the costs of co-operation, even though it is often held that co- Scope for enhanced participation operation is more difficult to attain. The potential for partnership in Albania is, in general terms, still unclear, indeed many sues to be studied and decided upon by views on the subject are prejudiced. Part- vote. This pre-selection can be made here nership is seen more in terms of a sponta- without the pressure of official meetings neous relationship than as a means of de- and administrative restrictions. In many ciding together on what is most necessary municipalities, these commissions, how- and more suitable, to ensure transparency ever, still play a formal and rather col- and bring benefit to all sides. The vision ourless role. held of partnership is, however, distorted by negative phenomena characteristic of the Another form of public participation in transition period, such as corruption, dis- government decision-making is the ref- respect for the law, etc., in particular when erendum, as a direct expression of opin- business partnerships are involved. ion. At the local level it is rarely used, although it does exist under existing leg- A typical example is the attempt by the islation. The modalities for holding a ref- municipality of Tirana to create a part- erendum and what force the results nership with the country’s most power- should have, binding or facultative, are ful builders to construct an important important issues which have not yet been cultural monument in the capital. This set forth in a particular piece of legisla- resulted in a wave of debate and opposition. The obligatory character of local ref- tion in the media and, to a certain ex-

Measures to improve the level of participation The low level of participation in public life at the local level shows, among other things, that a number of measures must be taken into consideration, the most important of which are: Inclusion and elaboration in the Strategy for Decentralization and Local Autonomy of the concept for public participation in local governance; Improvement and creation of more room in existing legislation for promoting and allowing greater public participation in decision-making processes, for creating requisite instruments for the public to monitor the activities of local government, and for clear conditions of partnership among all the actors connected to local government; Growth and consolidation of the level of public awareness for the rights and responsibilities of the people to co-operate and take part in local governance processes; Encouragement for the public to co-operate and organize themselves in their communities in order to understand, support and fulfil the special interests of specific groups, to lead the way in administrative and institutional processes to guarantee public services for all citizens and to ensure an adequate level of representation; Altering the mentality of local elected officials, local administrators and, in general, the whole system of public administration to ensure more openness and transparency for the public; A clearer separation of duties and responsibilities between the central and local governments and raising the level of public awareness for them; 5 Improving the infrastructure of local government in order to ensure requisite preconditions for effective public participation in decision-making and to guarantee the implementation of regulations by the bodies of local government.

challenges of local governance and regional development 97 tent, some sections of public opinion op- from these projects which contribute to posed the initiative, believing that there solving the various problems and to sup- was corruption involved at the municipal- porting the main functions of local gov- ity level. ernment. In some cases, they are also making modest financial contributions Partnership in civil society, in particular themselves. The most typical examples with non-profit organizations, is some- of this type of partnership are projects in what more advanced. Local administra- the field of social services, those promot- tions are endeavouring to coordinate the ing good will between the various eth- activities of these organizations, to sup- nic or religious communities, those for port the projects which they are imple- child education and those for the mod- menting at the local level, and to benefit ernization of local administration.

98 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 annexes

ANNEX 1

TECHNICAL NOTE ON METHODOLOGY FOR CALCULATION OF THE HUMAN DEVELOPMENT INDICATORS IN ALBANIA

The HDI has been calculated for the first time at the national level and at the district and prefecture levels. This note describes the basic approach and methodology used in the calculations in accordance with the general methodology applied in the United Nations Global Human Development reports.

1.THE HUMAN DEVELOPMENT Methodology applied INDEX Life expectancy is calculated using the The HDI is a summary measure of hu- standard methodology used for abridged man development. It is a composite in- life tables by 5-year age groups up to 85+ dex which measures the average achieve- years and separate age interval for the age ment in a country in three basic dimen- 0. The probabilities of death (Qx) are de- sions of human development, namely rived from age group mortality rates (Mx) using the standard formulae: •Life expectancy at birth (years) – as a

measure of the longevity and the gen- Qx = n*Mx / (1+n*Mx), eral health of the population; where n is the width of the age interval. •The Adult Literacy rate (%age 15 years and above) and combined with the pri- All the other elements of the life table are mary, secondary and tertiary gross en- calculated according to the standard re- rolment rate (%) – as a composite meas- lations between them and probabilities of ure of the level of knowledge attainment; death. • GDP per capita (PPP in US$) as a measure of the average standard of For calculating life expectancy at the dis- living; trict level and to avoid the sharp deviations due to the problems of small popu- 1.1 Life Expectancy index lation size at the district level and poor data quality in Albania, the district life Life expectancy is defined as: Average expectancies have been smoothed with number of years a baby born in the refer- their prefecture’s value. ence period could be expected to live The Life Expectancy Index is calculated under the condition that mortality fol- as an index falling between 0 and 1 using low the pattern observed in the reference the international minimum (25 years) period. and maximum (85 years) values according to the the formula

challenges of local governance and regional development 99 Life Expectancy Index = (LEvalue – LEmin) Discrepancies in the Infant / (LEmax – LEmin) mortality rate. Life tables were constructed for the period 2000-2001. This means that mortal- A separate but very important problem ity rates were calculated with deaths for concerns the Infant Mortality Rate these 2 years and the denominator used (IMR). According to the officially pub- was the population as of April 1st ,2001. lished data it is relatively low in comparison to the average European rates. It Problems encountered is even lower than most of the Southeast European countries. At the same time, Influence of migration on the recent sample surveys among the popu- Period (reference date) lation show that the real IMR is much The annual estimated population for Al- higher (more than two times) than the bania for a given year suffers from huge registered one. For the years of study deviation from actual (reality) in relation (2000 and 2001) official data estimate to both size and structure of the popula- that the IMR is less than 13 per 1000 tion due to the effects of uncounted for while the MICS 1/ revealed an IMR of emigration between 1989 and 2001. Dur- 28 per thousand. The additional infor- ing this period annualized projections were mation about health care and living con- used instead of real values. ditions gives more reason to expect a higher IMR than that registered. Problem of the small populations. This refers to the small size of popula- Comparisons of population census tion in some districts which imposes re- figures and the annual population strictions on the calculation of life expect- estimations in 2000/2002. ancy on an annual basis. Thus life tables Some conclusions can be made compar- should be calculated based on deaths for ing data for the population at age “0” by at least two years. As a denominator a kind district with birth records in 2000/2001. of an average or mid-period population It is logical that both values should be should be used. close to each other with a tendency for the census figures to be a little less than Undercounting of number the birth records (due to infant mortal- of deaths. ity). In fact, this is the case in most of Some facts point to the problem of the districts. The excess of the popula- undercounting of total deaths: For exam- tion census figure recorded in some dis- ple, an examination of the total number tricts is acceptable with the hypothesis of deaths back to the 1970s shows that a of a small degree of migration in 2000/ significant decrease has occurred in recent 2001 or small methodological deviations years as compared to the previous decades on registering the residence in the cen- when the population was smaller in size sus and in the vital registration. How- and younger in age than now (also taking ever, there are some cases where the dif- into account the fertility drop in the last ferences are too big to be explained by decade). If we add the fact that some dis- this and they show some problems ei- tricts are missing from the earlier counts ther in the census data. at all, a significant undercounting of deaths can be hypothesized which exerts Missing district data on deaths a big influence on the mortality rates and Besides the expected undercounting, finally leads to a hard-to-explain higher there are some directly missing vital data than expected life expectancy. with which to verify the 2000/2001 cen-

1MICS is the Multiple Indicator Cluster Survey Report. UNICEF. December 2000.

100 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 sus results and vice versa. For example, deviation of the district from the regional those of deaths for the district of Kukes value, and (ii) correcting the regional value in 2000, and for Kukes, Shkoder and with the same deviation. The comparisons Vlora in 2001. For Shkoder and Vlora of the results from the point of view of the the breakdown of births and deaths in regional disparities showed more satisfac- 2000 was assumed to be the same for tory levels of Life expectancy when 2001; For Kukes, the total number of smoothing the district value using the Pre- deaths for both years was estimated. fecture Life Expectancy figure.

Gender breakdown (2000) Conclusion There was no gender breakdown of deaths in 2000 in the registration of vital statis- In general, it is obvious that life expect- tics. To restore it we used the pattern from ancy values are grossly overestimated for 2001 where it existed and for Kukes it the country and districts as well. How- comprised the breakdown of Has and ever, if it is assumed that there is no sys- Tropoje. For Shkoder the pattern of Lezhe tematic bias in the results (ie that districts was applied. with sizeable out-migration are the same as those with less out or in-migration) The sex distribution of births then the conclusions on the adjusted fig- also shows some registration problems. ures can be of value in studying the dif- Even at national level the male/female ferences between the districts. ratio of registered births seems too high (52.8) and would suggest that more male 1.2 Educational attainment babies are registered than females . This is the case again in Tropoje (56.4%). The Definitions opposite is also hard to explain. For ex- The Net Enrollment Index ample, in Kolonje, male births comprise only 45.7% of the total. The Net Enrollment Rate (NER) represents the percentage of persons aged 6-17 Age distribution of deaths. who attend a primary or secondary school Too many cases of death of “unknown as a proportion of the total number of popu- age” are recorded in 2000. In some cases, lation aged 6-17, i.e. like Tirana, it influences significantly the age specific death rates. To avoid this NER = Students6-17 / Population6-17 % problem and not to loose this number of deaths, it was broken down according to The NER is transformed into the Net the share of the deaths in each age group Enrollment Index (NEI) similar to the based on the national data. Life Expectancy Index with minimal value 0% and maximum value 100%. Problem of small population size in some districts. The Literacy Index The size of the districts in Albania varies from 10,000 to almost 400,000. In order The Literacy Rate (LR) represents the per- to check the reliability of the life expect- centage of persons aged 15 and overable to ancy estimations, calculations at regional read and write. level were done and the variation was analyzed. Then, at the district level, esti- Data for the calculation is taken from the mates of life expectancy were smoothed Population Census’ 2001. The transfor- in two variants: (i) using the value at dis- mation of the LR to the Literacy Index is trict level and correcting with the square done the same way as the NEI and the

challenges of local governance and regional development 101 same minimum and maximum values. Domestic GDP (in 2001) has been split The Educational Attainment Index into two components according to the (EAI) latest INSTAT figures (“Albania in figures ‘2002"): (i) Agriculture sector based is calculated according to the Global HDR GDP (34.2%) and (ii) Non-Agriculture recommendations as an average of the Net economic sectors GDP (65.8%). The Enrollment Index and two times Literacy GDP in the agriculture sector was then Index: broken down using as a regionalization Problems encountered factor the share of the active population in agriculture taken from the population As recommended in the Global Human census. The regionalization factor for Development Report, the better measure- GDP from non-agricultural activities ment of the education enrollment is the net used the share of the region in the total enrolment rate. If there is good quality in- sum of revenues from VAT and small formation it should be used instead of gross business tax. The regional GDPs were rate (the number of all students in an edu- adjusted with the respective CPI (con- cational level to the population at the “nor- sumer price index) based on figures for mal” age bracket). It seems that the data for towns in 12 prefectures. Albanian students fulfill this requirement. The national and regional GDP indi- It was also considered that for the regional ces were calculated according to the comparisons it is not necessary, even the methodology in the Global HDR ‘2002, opposite, to include in the calculations the i.e. third level – higher education, because such education establishments are lacking GDP Index = (log(GDPr) - log(GDPmin) in most of the regions. This will distort / (log(GDP ) - log(GDP )) the picture because the universities com- max min bine students from different districts but Where data will be addressed to only those where there are universities. GDPr is the adjusted GDP per capita At the national level, for comparisons rea- in PPP (purchasing power parity) US$ sons, the gross enrolment rate was calcu- in a region lated simultaneously with the net rate. GDPmin) is the international minimum Here, to be fully comparable with the val- GDP which is considered to be $100 ues in the Global report, the third level GDPmin) is the international maximum students were included. GDP which is considered to be $40000 Problems encountered 1.3. The Gross Domestic Product Index Poor data at national level Methodology applied It was a big challenge to breakdown GDP into the regional level. Even the officially GDP in PPP published GDP at national level is an es- The value of GDP in local currency and timation made with some assumptions. US$ comes from the Ministry of Finance. It has been transferred to GDP in PPP Best fit of data to regional US$ using the rate from the Global HDR circumstances ‘2002 A lot of tests and analyses were done in order to find the best fit to the available Calculation of regional GDP. and reliable data for the economic activity in Albania. For the evaluation of the

102 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 adequacy of each approach many addi- under age 5” comes from a UNICEF tional indicators were used such as: em- survey (MICS 2000). It refers to mod- ployment records, household budget erate underweight (minus 2 times stand- data, electricity consumption, number of ard deviation for the age) active companies and others. • A long and healthy life, as measured by the probability at birth of not surviving Use of household level data age 40 (P2). The probability is taken from Usually a good opportunity to derive re- the life table, constructed for the HDI. It gional variations in personal income is represents the share of those persons from household incomes/expenditures from the the respective cohort (in the observation Household Budget Survey (2000). Un- period) who are vulnerable to death be- fortunately, the sample of this survey is fore reaching 40. not designed to be representative at the • Knowledge-exclusion from the world of district and even prefectures level and can- reading and communications, as meas- not provide reliable data in the necessary ured by the adult illiteracy rate (P3). Il- detail. In addition to this, the small literacy equals 100 minus Adult literacy populations cannot ensure data without rate taken from the population census’ big deviations. 2001 and used for HDI calculation.

An attempt to use the contribution of The HPI-1 is calculated according to the employment in the different branch activi- formula ties to the national economy was made. a a a 1/a For this purpose, data for the number of HPI-1 = [1/3 (P1 + P2 + P3 )] active population by economic branch and average wage in those branches were HPI-1 is designed to measure poverty used to form a kind of a “National fund”. mainly in developing countries. Obvi- Later on, the share of each district/pre- ously, it does not describe well enough fecture in this “fund” was taken as a dis- the case in a country like Albania where tribution factor. most of the indicators do not adequately reflect the poverty situation.

2..HUMAN POVERTY A better measure could be HPI-2, which INDEX HPI-1 captures in addition social inclusion through the indicator for long-term un- The HPI-1 measures human deprivation employment, and improvements in the in three dimensions: decent standard of living by the indica- • decent standard of living, as measured tor for population below poverty line. by an unweighted average of the percent- Due to the lack of reliable data for adult ages of population using improved water functional literacy abilities this index is sources and underweight children under not calculated in this report. age 5 (P1). -Data for “Access to improved water sources” comes from the Population Census’2001 (dwelling question- naire). In comparison with similar data from other surveys (Living Stand- ards Measurement Survey - LSMS), the Census provides a better approximation to the common definition for this indicator in the Global HDR. -The “Percentage of underweight children

challenges of local governance and regional development 103 104 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 annexes

ANNEX 2

STATISTICAL DATA

I.DEMOGRAPHY

Demographic background Table 1

Source: Population Census, April 2001 - INSTAT

Mortality indicators Table 2.

*Deaths for 000 persons

challenges of local governance and regional development 105 II. LABOUR FORCE

Economic activity by sex Table 3

Source: INSTAT

III. POVERTY

Expenditure patterns according to main groups Urban Table 4

Source: Household budget surveys, INSTAT

106 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 Budgetary expenditure by main groups and by type of household, Urban (in %) Table 5

Poverty gap and poverty incidence by urban and rural Table 6

Source: Living Conditions Survey 1998, INSTAT

IV. GDP, INFLATION AND STATE BUDGET

Inflation, indebtedness and international assistance, aid and GDP per capita Table 7

Source: Ministry of Finance

challenges of local governance and regional development 107 Public revenue and expenditure (at current prices) Table 8

Source: Ministry of Finance

V. LIVING CONDITIONS

Inhabitated dwelling surface and number of persons (In %) Table 9

108 HUMAN DEVELOPMENT REPORT - ALBANIA 2002 Inhabitated dwelling by facilities (In %) Table 10

VI. HEALTH AND EDUCATION

Public revenue and expenditure (at current prices) Table 11

Source: Ministry of Finance, Ministry of Health, Instat

challenges of local governance and regional development 109 110 HUMAN DEVELOPMENT REPORT - ALBANIA 2002