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Population reduction changes business plans, "blocks" investments

2024-08-10 08:45:00, Aktualitet CNA

For entrepreneurs, the results of the 2023 Census are negative signals that in the country there will continue to be a decline in the demand to buy, consumption and the lack of workers will be high.

Consequently, they anticipate revising business plans that will be accompanied by a decline in production and investment.

For many of them, the expansion of export markets to increase the efficiency of investments encounters obstacles from the loss of competitiveness, which comes from the increase in the cost of missing human capital and high taxes.

The results of the census showed that the population of Albania in October 2023 was 2.4 million inhabitants, or 420 thousand less than in the 2011 Census, while the average age of the population reached 42.5 years, 7 years more than in 2011.

After the end of the counting process, it is noticed that there is a high decrease in the number of young people, while the population with people over 65 years old has increased.

When the 2011 census was conducted, there were 268,756 young people in the 15-19 age group across the country, but in the 2023 Census, their number has halved to only 142,943 people, a 47% decrease.

This age group had the largest decline in the period between censuses, both in number and percentage. The general population decreased by 14.8%, while in young age groups, this ratio was more than twice as high.

Statistics experts explain this decline with the high emigration of young people and families with children after 2016, through the new form of emigration, economic asylum. The age groups 10-14 years old (41%) and 20-24 years old (41%) also suffered a drop of over 40%.

On the other hand, the 90-year-olds had the strongest growth in the general population. The population group aged 85-89 reached 26,443 people in the 2023 census, from 14,738 in 2011, with an increase of 79%. The population structure shows a double-digit decline in the ages 0 to 54.

While the growth starts for the age group 55 to 100 years old. The retirement age groups have grown at very high rates (see graphs). The 80-84 age group was the second largest with a 75% increase between the 2011 and 2023 census.

The retirement age population over 65 reached 473 thousand people, according to the 2023 census, with a 49% increase from the 2011 census.

Population reduction changes business plans, "blocks" investments

The exodus of young people has reduced consumption

According to businesses, young people make up the main part of consumers for food basket products, including meat by-products, such as sausage, ham, soft drinks and alcohol.

Nikolla Tona, head of the "Tona" meat processing factory, in the area of ??Korça, has raised several times the concern about the decrease in the consumption of meat by-products due to the emigration of young people.

Taking into consideration the data of the 2023 Census, expect only a worsening of the demand. Therefore, according to him, the only solution to operate in a reduced market and with an aging population over the years, as the export routes to Europe are "closed", remains the reduction of investments.

"We predict storms, dark days, because a population reduced by 420 thousand inhabitants, and an older population are indicators that the most vital age of the population has left, which has a direct relationship with both the labor market and consumption.

Consequently, for the next 2-3 years, we will hesitate to make new investments, since we have nowhere to sell the production, but above all, the number of young people has decreased.

Despite the positive progress of tourism, it is impossible to maintain the activity with 2-3 months of the tourist season", - says the manager of the meat processing factory "Tona", Mr. Our Nicholas.

Even for Mr. Kristo Naçi, administrator of the company "Agna Group", one of the largest producers and distributors of food and beverages, demographic changes are pessimistic signals for the continuation of the downward trend of consumption and purchasing power. Necessarily, this will bring a new business plan, which will be accompanied by a decrease in investments.

"In a reduced market, we will produce or import less, therefore, we are expected to reduce investments. We do not expect an increase in consumption, when the number of the population has decreased.

The improvement would only come if the purchasing power of consumers increased with the increase of the average salary to the level of 1,000 euros. Only the increase of purchasing power, through the increase of wages, would manage to improve consumption in a reduced market".

In a market with fewer consumers, other producers are expected to be many times more cautious about new investments.

"Those of us who invest in the industry or in the supermarket chain, should measure twice before deciding on investments", affirms Luan Leka, founder and CEO of EHW GMBH.

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In a market with fewer consumers, other producers are expected to be many times more cautious about new investments.

"Those of us who invest in the industry or in the supermarket chain, should measure twice before deciding on investments", affirms Luan Leka, founder and CEO of EHW GMBH.

Milk processors also expect deterioration of consumption from population reduction, as they also feel concerned about additional investments initiated for the automation process.

"Currently we are in new investments, but we are worried about it. As a company, we expect a decrease in sales in the future, as a result, a reduction in production", affirms Mr. Saimir Begaj, the head of the "Erzeni" milk processing factory.

The 2023 Census of Population and Housing provides data on the official population count in a country, in the smallest geographical unit, together with information on a selected number of demographic, social and economic characteristics of the population.

Similarly, the Census of Housing provides the official count of all dwellings in the country, in the smallest geographic unit, together with information on a selected number of housing characteristics.

After being postponed three times in a row, the Population and Housing Census started on September 18, 2023, and the field work lasted 6 weeks for the complete identification of the population and housing.

The 2023 Population and Housing Census is the 12th Census, since Albania was declared an independent state in 1912. The first Census was carried out in 1923 by the government of Noli, which resulted in 823 thousand inhabitants. After the first census in Albania, a total of 11 population censuses were conducted with periodicity once every 10 years.

While the last census of the population during the communist period was done in 1989. In that period, the number of inhabitants ever registered within the official territory of Albania reached 3,182,400 inhabitants, with an expansion of 23% in a decade.

Since the 1989 Census, its methodology has increasingly followed international recommendations for the population enumeration process. In the 30 years of the transition, only two censuses were carried out, the one in 2011 and the one in 2011.

Population reduction changes business plans, "blocks" investments

The decline of the population in the counties, how did it affect consumption?

Between 2011 and 2023, the population has decreased in all regions of the country, while for Tirana there is an increase of only 1.2%.

From the Census data, the largest population decrease in percentage occurred in Shkodër, with 28.3% fewer inhabitants compared to the 2011 data, and in Kukës, with 27.3%, while the population of Tirana, during this period, it increased by only 1.2%.

The increase in the population in Tirana and the decrease in other counties results in the increase in the percentage of the resident population in Tirana, from 26.8% in 2011 to 31.6% in 2023.

Approximately one third of the Albanian population (31.6%) lives in the District of Tirana.

The second district with the highest percentage of the population is Fieri, with about 10.0%, followed by the District of Elbasan, with 9.7% of the total population. Kukësi and Gjirokastra have the lowest percentage, with 2.6% and 2.5% of the respective population.

Another factor that shows the depopulation of Albania is the composition of families. In 2011, most families had 4 members (23.1%). Meanwhile, in 2023, most families have two members, 28.5%.

For experts, this shows that young families have reduced the tendency to have children or/and in Albania, parents have been left without their children who have emigrated.

Since importers of cereals, food basket products, including rice, sugar, sunflower oil, producers of soft drinks, bread, sweets, bars and restaurants have often raised concerns that emigration has worsened in recent years. progress of the request.

The downward trend for purchases, due to immigration, especially in the districts, has also been felt by the producers of bottled drinking water.

"In the last 2-3 years, it has been established that in many districts during the winter months, with the exception of Tirana, consumption has dropped significantly. The reason for the drop in demand remains the increase in population emigration to the districts", says Thanas Siveri, administrator of the "Lajthiza" water factory.

For the president of the Albanian Export Center, Mr. Alban Zusi, the results of the 2023 Census showed that the downward spiral of consumption will continue to deepen.

"The decline in population will continue to reduce the demand to buy, will reduce consumption and will reduce the number of employees. Businesses will be forced to produce less, as they have less market to sell their output. Also invest less. But less production and investments means that we will have fewer employees."

PREDICTION

Alban Zusi: "The decline in population will continue to reduce the demand to buy, it will reduce consumption and the number of employees will decrease. Businesses will be forced to produce less, as they have less market to sell their output. Also invest less. But less production and investments means that we will have fewer employees."

A decrease in purchases of cheap clothing is not expected, while the designer clothing market is expected to be reluctant to invest

The market for stylish yet affordable clothing, despite demographic changes, expects positive sales growth. But the entrepreneurs of the well-known firmato clothing brands are expected to be hesitant about new investments.

Mehmet Memo, manager of the company "LC WAIKIKI Retail AL Sh.pk" for Albania and North Macedonia, told "Monitor" that despite the decrease in the number of the population, referring to the last census after the pandemic, the trend is in growth.

"Even though the number of the population has decreased, the progress of sales in the first 6 months has resulted in an increase in volumes by 20%. This positive sales performance after the Covid-19 pandemic has not changed the company's plans for further expansion, for new sales points.

Currently, the first 6 months of 2024 are among the years with the best historical performance of the company. Even the forecast for the second half of the year remains that sales will continue with stable growth rates".

According to him, this positive progress is influenced by several factors:

First, the formalization of the economy, as a continuous but slow process where there is a transfer of sales from the traditional market to the organized one.

Second, the increase in family income, which has led to an increase in consumption expenditures.

Thirdly, the increase in the number of tourists, who have an impact that is estimated at 7-10% of the sales volume.

Fourthly, the reduction in sales prices has led to the expansion of our target group and has had a positive impact on sales performance.

Era Xhabafti, the deputy general manager of the company "Mini Invest Albania", which markets the clothing of the luxury brand "Boggi Milano", claims that even though the number of the population has been reduced in Albania over the years, supported by the results of official data, in the firmato clothing market, there was no decrease in demand.

According to Ms. Xhabafti, data on the number of the population are one of the main indicators, together with the data on the number of tourists that are required by foreign partners for business plan orientation.

"Considering the results of the 2023 Census, I think there will be a step by foreign partners for investments in the domestic market. So far, the demand has not decreased, influenced by the decrease in the population, but it is expected that after a year there will be a downward trend, as a result of the reduction of the market."

Fewer bars and restaurants are expected

In recent years, bar and restaurant businesses have raised concerns about a drop in consumption after the end of the tourist season, influenced by immigration and the decline in consumer purchasing power.

The emigration of the population, especially young people, has affected the attendance of bars by locals, while compensating with tourists only during the summer months is not seen as a sustainable choice.

Since the beginning of the 90s, the business of bars and restaurants remains one of the most favorite for Albanians. There are a total of 15,500 bars in the country, from 22,000 in 2015, being the second most preferred activity in the country, after the minority business.

The president of the Association of Bars and Restaurants, Enri Jahja, says that taking into consideration the data on the decrease of the population, especially with the high departure of young people and the economic difficulties of these structures, the reorganization of the sector is seen as necessary.

"The number of bars and restaurants should have been reduced 5 or 6 years ago, so as not to cause social drama among employees and investors. But this is not happening and there are many businesses that are stuck, but do not know what to do.

They stay in this business because they have debts and are waiting for some magic to come in the summer months, while things are getting more and more difficult".

The business of bars and restaurants reached its peak in 2016, when their number reached almost 19 thousand.

Then there was a continuous decline in line with the new cycle of immigration, which reduced their attendance, but also with the creation of larger lines of bars, which competed with small cafes.

In 2021, the number of bars and restaurants fell to 14.7 thousand, the lowest level since 2013. However, in 2022 there was also an increase in the number of bars and restaurants for the first time since 2016. Their number increased by 4%, reaching 15.3 thousand, from 113 thousand which is the total number of enterprises in the country.

Compared to some European countries, the activity of drinks and food service in Albania is among the highest.

In Albania, according to INSTAT, beverage and food service activities account for 13.5% of the total.

Spain and Italy, which are the two most touristic countries in Europe, have respectively 7.8% and 5.9% of businesses focused on beverage and food service activities.

The countries that pay less "attention" to the cafe business are Norway (2.2%), Poland (2.2%), Estonia (2.1%). While after Albania, Bosnia-Herzegovina is ranked, with 11.3%, followed by Switzerland with 8.9%, Greece 8.5%, Serbia 8.4%./ Monitor.al

Population reduction changes business plans, "blocks" investments