In order to extend Georgian domestic production and reach a trade balance European Investment Bank in cooperation with ProCredit Bank Georgia announced having decided to fund Georgian small and medium-sized enterprises. EIB has also funded Georgian wastewater collection and treatment facilities building to improve infrastructure in the country.
One of the challenges that Georgian economy is facing today is a lack of domestic production. Consequently, Georgia has a trade deficit and remains dependent on import. Moreover, on condition that national currency – Lari – is expected to fall dramatically, it is vitally for Georgia to reach a trade balance.
The only possible way to accomplish this balance is to create appropriate conditions for small and medium-sized enterprises (SME) development. In this case, European Investment Bank (EIB) has offered its funding for Georgian SME and Midcaps totaling €15 million. The private sector funding is supposed to be delivered by EIB in cooperation with ProCredit Bank Georgia.
According to Asmus Rotne, General Director of ProCredit Bank Georgia, small and medium-sized enterprises should be intensively developed in order to reduce import. Many companies, which were previously involved in import, are nowadays crossing over to domestic production of those products, which have been imported before.
Rotne is also sure that every Georgian entrepreneur is able to establish a company to provide local market with necessary goods of high quality. That is why Georgian economy desperately needs European funding of local SME.
There are several branches, which have great production capabilities, but feel a lack of financial backing. The one among them is agri-food production sector. For instance, in May 2015 European Investment Bank announced that it was going to fund almost half of all the eligible projects in wine industry or horticulture.
In order to simplify its economic cooperation with Georgia, EIB opened a South Caucasus regional representative office in Tbilisi in April 2015. One of the office main goal is to enhance SME and Midcap development support in this country and in the whole region as well.
Another reason is that Georgia signed Association Agreements with European Union on 27 June 2014. It has become a background for the creation of Deep and Comprehensive Free Trade Area (DCFTA). That is to say, that small and medium-sized enterprises funding by European Investment Bank is delivered in terms of this project.
In this case, European support of key Georgian economy sectors, such as food and beverage production, is delivered not only by European Investment Bank, but also by European Union grants and its Neighborhood Investment Facility. It will give possibility for Georgia to benefit all advantages provided by DCFTA.
Since Georgia started its partnership with European Investment Bank in 2010, it has got loans in amount of €548 million. Approximately 30 per cent of the total volume – €165 million – was to fund SME and Midcap sector. Practically the same amount of money was devoted to this sector in 2014.
Moreover, in October 2015 European Investment Bank announced to loan €100 million in order to build wastewater collection and treatment facilities in Georgian city Kutaisi – the second biggest one. The similar projects were implemented all over the country. They were co-financed by the Asian Development Bank, Neighborhood Investment Facility and the Eastern Partnership Technical Assistance Trust Fund.
European Investment Bank is the European Union non-profit bank established in order to represent interests of EU member states and those states, which are closely connected with EU. This bank was founded in 1958, and nowadays it is one of the biggest international public lending institution.
ProCredit Bank is a member of ProCredit Group, which renders its services in 19 countries of the Eastern Europe, Africa and Latin America. ProCredit Bank was the first bank in Georgia, which replaced paper documents with an electronic signature pad.
