An image of the country's flag.

Albania has significant natural resources, including fertile agricultural land, an Adriatic/Ionian coastline, abundant water resources with hydropower potential and valuable mineral deposits. Since the fall of communism in 1991, the country has made significant progress toward establishing a multi-party democracy and has implemented numerous economic reforms. Albania‘s economy is one of the fastest growing in Europe (averaging 5.5% in the 2006 – 2009 period) and the percentage of the population living in poverty fell from 25% in 2002 to 12% in 2008.

However, despite its progress Albania remains one of the poorest countries in Europe. Per capita income was US $4,070 in 2009. Of its labor force of about 2 million people, an estimated 1.2 million work abroad; remittances are responsible for an estimated 30-40% of GDP. The country faces high unemployment (13% in 2010), low foreign direct investment, poor infrastructure and rising trade deficits. Albania applied for European Union membership in April 2009. In November 2010, the European Commission‘s assessment recognized the progress that Albania has made but concluded that Albania‘s democratic institutions have not yet achieved the effectiveness and stability required for membership.

One area called out by the European Commission in its assessment was Albania‘s persistent land tenure insecurity. Land reforms implemented after the fall of communism provided hundreds of thousands of people with smallholdings and urban residences but failed to address the rights of pre-1945 landowners. The estimated 41,000 claims to restitution and compensation remain largely unresolved and undermine tenure security and the development of functioning formal land markets. Almost 70% of all civil cases pending in Albanian courts involve land disputes. The courts suffer from an inadequate legal framework, inefficiencies, and corruption. Albanian citizens have resorted to bringing property claims against the Government of Albania (GOA) before the European Court for Human Rights (EctHR) – where initial decisions are going against the GOA. The GOA is taking steps to strengthen property rights, including continuing a national project to register all property and to regularize the significant number of informal landholdings in urban and peri-urban areas. Creating a plan to address the claims for restitution and compensation from pre-1945 landowners is proving most challenging.

The GOA is also targeting the agricultural and mining sectors with initiatives designed to promote growth and good governance of natural resources. Albania‘s agricultural sector, which accounts for over half of employment but only about one-fifth of GDP, is limited primarily to small family operations and subsistence farming. GOA strategies to improve agricultural performance will require support for modern equipment and extension services, sufficient high-quality inputs, continued rehabilitation of irrigation infrastructure, and the development of farmer associations and a functioning rental market for agricultural land. In the mining sector, the GOA is in the process of revising the legal framework and developing systems to support its candidacy for an Extractive Industries Transparency Initiative county.


  • Address pre-1945 restitution and compensation claims. The European Commission has called for the GOA to develop a national action plan on property rights that includes a strategy to address the pre-1945 landowner claims for restitution and compensation that takes the emerging EctHR case law into account and includes a broad stakeholder consultation process. USAID and other donors could provide technical assistance to the GOA design a stakeholder consultation process work with the Property Restitution and Compensation Fund to develop processes that utilize the pool of assets already identified by the GOA, as well as assist in identifying possible new assets, to continue resolving claims.
  • Address informal settlements in urban and peri-urban areas. Approximately 25% of the urban population lives in informal settlements and the settlements constitute 40% or more of urban construction. The GOA has struggled with methods of managing the illegal settlements and at times has resorted to demolishing residences in order to avoid recognizing informal rights and thus creating parallel land tenure systems. In 2006, the GOA created the Agency for the Legalization, Urbanization and Integration of Informal Areas/Construction (ALUIZNI) to spearhead the regularization of rights in informal settlements and the integration of those settlements into urban planning. USAID and other donors could support the efforts with technical assistance to help create a comprehensive legal framework that integrates the process of formalization with resolution of competing claims and development of urban plans and zoning regulations that address needs for affordable housing needs.
  • Enhance dispute resolution mechanisms for land conflicts. Land conflicts remain a significant obstacle to secure land tenure and property rights because of real and perceived corruption and lack of capacity within an overwhelmed court system. In addition, although there is evidence that village elders, municipal officers and other local leaders are called upon frequently to mediate disputes, a formal system of mediation does not exist and the law does not authorize judges to transfer cases from the courts to mediation. USAID is beginning a five-year Justice Sector Strengthening Project to assist the GOA in increasing court transparency, fairness, and efficiency and strengthening the judiciary and legal profession. In conjunction with this project, USAID and other donors could create a component focusing specifically on the backlog of land dispute cases, including developing appropriate mechanisms and institutions to help resolve pending cases and build capacity within the judiciary and informal and alternative dispute resolution tribunals on land rights.
  • Develop initiatives to improve productivity of smallholdings. Smallholders dominate rural agriculture and their productivity is constrained by limited use of modern inputs, outdated technology, and poor infrastructure. The rural land market (rental and sale) is weak. Some observers also identify the relatively small size of farms and a number of plots as inhibiting efficiencies. USAID and other donors could build upon current EU analysis of how Albania will fit into the Common Agricultural Policy and support initiatives that promote rural economic stability and growth. Donors could help to develop appropriate policies, mechanisms and institutions that will help small farmers improve productivity and develop linkages with local and regional markets.
  • Strengthen local management of natural resources. Poor management of water and forest resources have compromised water quality and resulted in overexploitation of forests for fuelwood and grazing. The legal framework provides the foundation for community-based natural resource management, and USAID and other donors have played significant roles in helping the GOA develop institutions and capacity for local management of natural resources. The GOA contemplates devolving more authority over natural resources to local governments and communities, including ownership rights to forestland. USAID and other donors could help local government and communities prepare for increased authority by reviewing existing legal frameworks and identifying areas for strengthening and amendment; evaluating the performance of local governments and users groups and collecting and disseminating best practices and lessons learned; and creating pilot projects to develop experience managing new levels of authority and rights.


Prior to 1944, landholdings in Albania were highly concentrated. When the communist government came to power in 1944, the state confiscated and nationalized all land and formed large-scale cooperatives and state farms. When communism collapsed 46 years later, the post-communist government introduced a system of individual property rights. In an effort to avoid re-empowering pre- 1945 landowners and returning to a feudal system, the government passed legislation allocating the land held by agricultural cooperatives on an equal per capita basis to cooperative members. Land was allocated without reference to the pre-1945 boundaries and landowners. In addition, land held by state farms was distributed to the workers and urban residents were given ownership of the apartments and individual houses they occupied and a minimal amount of land around the dwelling.

In much of the north and mountainous and hilly areas, the legislation was ignored and land was distributed to former pre 1945 owners based on the former boundaries. In the other areas, including fertile lowlands, farm families received ownership rights to smallholdings, usually split among several parcels. Since the 1990‘s, the average farm size has slowly risen to about 1.2 hectares per family.

The initial land distributions were followed by legislation recognizing the rights of pre-1945 landowners to restitution of their land or compensation. However, much of the land claimed by pre-1945 landowners had already been granted to new owners, creating disputes over ownership rights and undermining tenure security. Efforts to compensate landowners for the value of the land they lost (estimated at US$ 5 billion in 2010) have been stalled by the lack of adequate funds. Internal migration from the northern and mountainous regions of the country to urban and peri-urban areas has been steady, which has strained urban water and sewage systems and caused to health and environmental problems. Approximately 25% of the urban population lives in informal settlements. Residents of these settlements often lack secure tenure and are subject to eviction.

Under formal law, women have rights equal to those of men, including the right to own property. However, during privatization agricultural land was primarily titled to men as heads-of-households, even when women were heading the household in practice, reflecting a continuing dominance of men over productive assets. Customary law (the Kanun), which continues to govern issues of personal law and land rights in many areas, supports paternalistic practices. Under customary law land is considered owned by the extended family rather than by individuals, but male family members tend to make decisions regarding the land and its production, and land commonly passes to male heirs. Women obtain access to land through their husbands.

Albania is rich in water, forest and mineral resources. Despite its water abundance, Albania has significant problems with reliable household access to water and contamination of water sources. Agriculture relies on irrigation during dry months, and local government and water user groups face challenges to repair and build infrastructure and provide access to water on a sustainable basis. About 28% of total land in Albania is classified as state-owned forest land. The state is devolving responsibility for the use and management of forestland to local governments (communes), which in turn enter into use agreements with local communities. The state contemplates an eventual transfer of ownership rights to forests to local governments. The current legal framework does not adequately address local use rights to forest products, including timber. The mining sector, which accounted for a high percentage of total exports in the communist era, suffered a sharp decline in the decade that followed. The country has significant reserves of chromite, copper, and iron and is home to Europe‘s largest on-shore oil fields. The GOA recognizes the role that the sector can play in stimulating the economy; the Ministry of Economy, Trade and Energy has drafted a new mining law, which is under internal review, and is consolidating mineral rights holdings to encourage new investment. Albania is an Extractive Industries Transparency Initiative candidate country.

Published / Updated: February 2011