Building an inclusive future for Albania's informal sector

New York, 15 June 2007: The Prime Minister of Albania, Sali Berisha, and the renowned Peruvian economist Hernando de Soto met with Kemal Derviș, Administrator of the United Nations Development Programme (UNDP), in New York today to advance discussions on how to bring the majority of the Albanian population into the rule of law and an inclusive market economy.

Between 80 and 90 percent of property and business assets in Albania are ‘extralegal'--outside the formal economy--according to preliminary results from a UNDP-backed diagnosis of the country's economic and legal systems by de Soto's Institute for Liberty and Democracy (ILD), which is being carried out at the request of the Albanian Government.

These figures, according to the research team's preliminary findings, indicate that many people in Albania operate outside the formal legal system. This means they cannot get loans, enforce contracts, expand their business beyond a personal network of familiar customers, or buy insurance to protect against risk.

The aim of this analysis is to establish the basis for a reform programme that would give the people currently locked out of the market economy an active role in their country's economy future. The 35-person strong research team of Albanians and Peruvians has been carrying out research for over six months to determine the best way to ensure this happens. The final report of the diagnosis will be submitted to the Government of Albania in October 2007.

"The Albanian government should be congratulated for recognizing the significance of the extralegal economy, for its courage in responding to this issue head on and for focusing on it not as a law and order problem but as an opportunity for economic growth," said de Soto.

In addition to his work at ILD, de Soto co-chairs the Legal Empowerment Commission, which is supported by an independent secretariat hosted by UNDP in close partnership with other UN agencies and international financial institutions.

"Prime Minister Berisha has made fighting extralegality a priority both for economic prosperity but also for the building of democracy. Because if there is extra-legality, then democracy cannot really function," said Dervi_.

"A sizeable part of any developing country's economy is the informal or extralegal sector," said Olav Kjorven, Director of UNDP's Bureau for Development Policy, who coordinated the New York gathering. "Young entrepreneurs and investors need a fair chance to put their stamp on the market. To do so, they need real proof of their existence - proper identity cards, access to loans, the deeds to their property. Helping them to help themselves is the best way to create an inclusive society," he said.

________________________________________________

Media enquiries: Please contact Stanislav Saling, UNDP, New York, +1 212 906 5296, or +1 212 906-5382, stanislav.saling [at] undp [dot] org or Victor Endo, ILD, Lima, +51 1 616 6100.

About UNDP: UNDP is the UN's global network to help people meet their development needs and build a better life. We are on the ground in 166 countries, working as a trusted partner with Governments, civil society and the private sector to help them build their own solutions to global and national development challenges. Further information can be found at www.undp.org

About ILD: Four billion people in developing and post-Soviet nations -two thirds of the world's population- have been locked out of the global economy: forced to operate outside the rule of law, they have no legal identity, no credit, no capital, and thus no way to prosper. The Institute for Liberty and Democracy (ILD), based in Lima, Peru, has created a key that can open the system to everyone - a time-tested strategy for legal reform that offers the majority of the world's people a stake in the market economy. Further information can be found at www.ild.org.pe