SME Agency will support start-up projects
28 November, 2013
SME Agency will support start-up projects
To boost entrepreneurship and exports, Georgian Government plans to set up Agency for Small and Medium Sized Enterprises that will somehow enable start-ups during incubation. Development of entrepreneurship will be the top priority for the new economic team of Georgia, Giorgi Kvirikashvili, Minister of Economic and Sustainable Development of Georgia, stated on 19 November at Parliament. Agency for Small and Medium Sized Enterprises (SME) will be set up starting next year, to this end.
In fact the share of the SME
in Georgian business is just 17%, when it should be 60-70% in order to conform to world best practices. Experts in international economics know well that SMEs are the driving force of an economy, and a key job creator.
On the other hand, start-up businesses are less enduring. World Bank research of 2012 reports that out of 42 thousand start-up businesses registered in 2012, only two thousands may survive. The figure may be even lower in Georgia, as far as there is no stimulating mechanism, and financial resources are almost unavailable to beginners. The reasons are simple: beginners frequently lack required skills and knowledge to prepare relevant business projects for banks. SME Agency is expected to raise awareness of fledgling businessmen and improve access to loans.
According to Kvirikashvili, the major function of the Agency will be to support start-up businesses. The Professional staff of the Agency will filter ideas of aspiring entrepreneurs and shape them into viable business plans; and they will work out business projects in order to prepare them for banks, to get financing. Government is intent on shaping a mechanism that will enable it to share risks with banks. Collateral requirements will also be preferential.
Within three years USD 150 million with which to finance start-ups will be at disposal of the Agency.
But Lia Eliava, a financial analyst, disapproves of the Agency idea. She believes USD 150 million will in fact be an aid to banks, not entrepreneurs. According to her, the proposed Agency-supported funding duplicates the preferential agriculture loan program launched this spring. Banks do not cut rates to the target group but the state finances interest rates for agriculture loans and entrepreneurs pay less interest. Thus banks will enjoy a yield as high as it has been in the past.
As a result of the agriculture credit program, the volume of agriculture loans doubled since May (when the project started), from around GEL 55 million to around GEL 120 million. However, the number of enterprises that started operation based on these credits is few.
Eliava expects similar results from the suggested SME Agency idea. She believes the state has to address other well-probated mechanisms: to set up state banks disbursing preferential credits to the SME and start-ups; or simply reduce the ceiling of micro credits from the currently active GEL 50 thousand to GEL 15 thousand. This will bring results in a week, she believes.
“According to the best international practice, micro-finance organizations, not banks, are financing SME and start-ups. The reason this tool does not work in Georgia is the high cap on micro loans. The UN formula of calculating micro loans suggests that the upper limit of this loan should not exceed the tripled amount of GDP per capita in the country. For Georgia this comes to around GEL 15 thousand. Let’s introduce this limit, and micro-financial organizations will be finding clients in a week,” she said, and also noted that the reduction of micro loans does not require any support from the state budget.

Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
September 2018
Mon Tue Wed Thu Fri Sat Sun
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30