In 2015, Albania undertook one of the largest institutional reforms of the transition: the administrative-territorial reform. From a highly fragmented system with 65 municipalities and 308 communes, the country went down to just 61 municipalities. The logic of the time was clear: small local units were highly fragmented, with limited administrative capacities, insufficient financial resources and often unable to provide quality public services.

In other words, they were considered “too small to survive” as functional units of local government.

But today, more than a decade later, Albania is faced with another question: are the existing municipalities really more functional, more powerful, and closer to citizens? Or have we gone from one extreme to the other: from units too small to survive, to municipalities too large to govern well?

Here it is worth using, analytically, the principle of “too big to fail”. In economics, this principle is used for institutions or companies so large and so important to the system that their failure would have serious consequences for everyone. In public governance, this principle can be read differently: some reforms, institutions or services become so important to the lives of citizens that they cannot be allowed to fail.

Albanian municipalities after territorial reform are exactly like that: too important to be left to fail, but not necessarily larger to be better governed.

Demographic and territorial data clearly show the scale of the change. According to the 2023 Census, the resident population of Albania is 2,402,113 inhabitants, a decrease of about 420 thousand inhabitants compared to 2011, while the average population density is 83.6 inhabitants per km². Albania today has 61 municipalities and 12 counties, with an average municipal population of about 39,379 inhabitants and an average area of ​​about 471 km². This places Albania among the countries with very large municipalities on average compared to the countries of the Western Balkans, Southeastern Europe and the European Union.

But the average hides very large inequalities. The population range goes from very small municipalities, such as Pusteci, to the Municipality of Tirana, which carries the main demographic, economic and administrative weight of the country. Likewise, the territorial differences are significant: there are municipalities that are small in area and very large municipalities, with urban, rural, mountainous, agricultural and peripheral areas within the same administrative boundary.

This means that the Albanian domestic system is formally symmetrical, but in reality very asymmetrical.

This is where the main problem begins. The territorial reform of 2015 partially solved the issue of fragmentation, but did not completely solve the issue of the real power of municipalities. Municipalities became larger on the map, but not realistically more powerful in terms of finances, staff, services and proximity to citizens, control of territory, etc.

Fiscal data make this argument even clearer. In 2024, local own revenues accounted for about 1.7% of GDP and about 5.7% of public revenues, while local government expenditures were 3.06% of GDP and 10.21% of total public expenditures. So, even though municipalities have become much larger in territory and responsibilities, their financial weight in the national economy still remains limited. Fiscal reports even show that compared to 2015, expenditures for financing local functions have increased significantly.

But this is only one dimension of the debate. The other dimension is the structure of expenditures and the distribution of financial capacities between municipalities.

If we look at where the municipalities' money goes, the picture becomes more problematic. According to 2024 data, 45.6% of the expenditures of local self-government units from their own resources go to salaries and insurance, 29.3% to operating and other expenses, while only 19.5% to capital expenditures. So, less than a fifth of the expenditures actually go to investments. At the same time, it is evident that expenditures for salaries and insurance have increased by 14.7%, while capital expenditures have decreased by about 10.8% compared to the previous year.

This is a very important data for territorial reform. It shows that municipalities, even when they have an increase in total revenues or expenditures, do not necessarily have sufficient space for development, investment and territorial transformation. A municipality that spends most of its budget on salaries, insurance and operating costs has limited opportunities to build rural roads, maintain drainage canals, invest in water supply, strengthen fire protection, support agricultural areas or improve community services.

In other words, many municipalities are large in territory, but their budgets are structured more to keep the administration afloat than to actively govern the development of the territory.

This reinforces the thesis that territorial reform cannot be measured solely by the number of municipalities, average area, or nominal revenue growth. It must be measured by the real ability of municipalities to invest, provide services, and be close to citizens.

The distribution of income also shows great inequality. The Municipality of Tirana collects almost 60% of all local government revenues. Meanwhile, 21 municipalities with under 20 thousand inhabitants, which constitute about 34.% of the country's municipalities, collect only about 3-4% of their total local revenues.

This shows that territorial size, alone, does not automatically create fiscal capacity, economic development or real autonomy. A municipality may be large in square kilometers, but small in tax base. It may have a lot of territory, but little economy. It may have many villages, roads, canals, forests and needs, but little income to meet them.

This is why today's debate about a new territorial reform should not start from the question: how many municipalities should we have? The real question should be: what municipalities do we want to have?

Larger municipalities, or more functional municipalities? Larger municipalities in territory, or municipalities more capable of providing services? Municipalities further from citizens, or administrations closer to communities?

If today there is a tendency to further enlarge municipalities, we must be careful. The same logic of 2015 cannot be repeated, where the map was placed at the center of the reform, while financing, functions, representation, services and capacities were left behind. A reform that expands the territory without increasing financial autonomy, without strengthening local administration - not just increasing the number, without building clear service mechanisms in urban and rural areas, without a balanced electoral system, does not produce stronger municipalities. It produces larger, but also more distant municipalities.

In this sense, the challenge is no longer just fragmentation. The new challenge is the governance of the large territory.

After 2015, many municipalities inherited former communes, villages, agricultural areas and vast rural territories. The traditional urban administration of the municipality was faced with the responsibilities previously covered by the communes. But the territorial expansion was not always accompanied by a proportional expansion of funding. Also, unstable and non-meritocratic staff, real and unclear means and competencies were evident during the 10 years of this reform. But fragmentation remains - 312 administrative units (former communes) fanatically maintain the fragmented model.

This is especially evident in functions such as irrigation and drainage, forest and pasture management, rural road maintenance, waste management, fire protection, preschool education, civil emergencies and social services, etc. These are precisely the services that citizens touch every day. And when they fail, citizens do not ask about the territorial map. They ask why the road is not maintained, why the canal is not cleaned, why the village has no service, why the administration is far away, why the municipality does not respond.

The Institute for Municipalities reports highlight that the provision of public services remains unstable and faces quality challenges, particularly in areas such as environmental management, local infrastructure, agricultural services, irrigation and drainage, flood and fire protection, water supply and the development of the circular economy. The reports also highlight the need to increase financial autonomy, strengthen administrative capacities and improve coordination between central, local and regional governments.

This brings us back to the core issue of decentralization. It is not enough to have larger municipalities. You need to have capable municipalities with more real powers, more finances, more qualified staff and more exercisable responsibilities. Otherwise, decentralization remains formal: the functions are in the law, but the capacity to exercise them is lacking.

The European integration process also makes this discussion more urgent. Around 70% of EU legislation has a direct impact at the local level, requiring municipalities to implement standards in areas such as the environment, public procurement, transport, social policies and local development.
Therefore, before we talk about a new territorial map, we need to take an honest stock of the existing map.

What worked? What didn't work? Which municipalities were actually strengthened? Which remained dependent on transfers? Which rural areas were further removed from decision-making? Which services were improved and which were weakened? Did citizen participation actually increase, or was decision-making centralized within the municipality itself?

If these questions are not answered, any new reform risks being simply a mapping exercise. And Albania does not need a reform that merely changes borders. It needs a reform that changes the relationship between citizens and local government.

A new reform must start from a few simple principles.

First, funding must follow function. Municipalities cannot be given major responsibilities without sufficient resources. Each transferred function must have a calculated cost, service standard, and a sustainable source of funding.

Secondly, the territory must be governed by structures close to the citizen. Administrative units cannot remain just names on a map or offices without competences. They must be reorganized in the provision of services, in informing citizens and in administering community needs - with elected structures and decision-making power.

Third, decentralization must be asymmetrical where reality is asymmetrical. Tirana, Pusteci, Himara, Shkodra, Kamza, Fushë-Arrëzi, Këlcyra or Hasi cannot be treated the same. Municipalities have different demographic, economic, territorial and institutional profiles. Therefore, financing, capacity building and support policies must be differentiated.

Fourth, municipalities should not be expanded without first analyzing why they are not functioning. If a municipality is failing to provide services for its current territory, its expansion may deepen the problem, not solve it.

Finally, reform must be built on the citizen, not on the map. The goal is not to have fewer or more municipalities on paper. The goal is to have municipalities that provide services, that represent communities, that have real autonomy and that can be held accountable for their decisions.

In 2015, Albania moved away from the model of units too small to survive. But today it should not move towards the model of municipalities too large to govern. Territorial reform should not be a process of continuous enlargement. It should be a process of strengthening local government.

Albanian municipalities are today too important to fail. But this does not mean that they should always be made bigger. It means that they should be made more functional, better funded, more capable and closer to citizens.

Because the biggest risk is not having too many municipalities. The biggest risk is having municipalities that are large on the map, but small in capacity, large in territory, but weak in services, large in responsibility, but dependent on finances and perhaps incapable of governing and controlling the territory.

The model of local government over the territory, the model of service sharing, the financing model and the electoral model constitute a real challenge for reform.