Microfinance organizations overtake banks
17 March, 2011
Microfinance organizations overtake banks

Micro-financial organizations will be handling USD 4 million-worth credit portfolio that banks failed to disburse in the frames of The Rural Development Project aimed to support agriculture sector.
To support Georgian scarcely funded agriculture, the World Bank (WB) disbursed a USD 16.2 million-worth preferential credit to banks and microfinance organizations in frames of The Rural Development project (RDP) out of which USD 10.4 million was redistributed on four Georgian banks [TBC Bank, BasisBank, Kartu Bank and Bank Republic], and USD

5.8 million on four micro-finance organizations [Credo, FINCA, Finagro, and Lazika Capital]. 
The credit maturity period is ten years however Georgian financial institutions have to disburse it completely till July of this year or the remained money will be diverted on other countries supported by the World Bank and it will be lost for Georgia.
Microfinance organizations joined the RDP project launched in 2007 only during the last two years of its implementation but succeeded [unlike banks] to handle with more than required volume of credits [they disbursed USD 7. 3 million instead of USD 5.8 million demanded by project timetables] within a year-and-a half period.
But banks failed to use the World Bank’s targeted credits completely. They could handle with disbursement of USD 5.6 million alone before financial crisis of 2008. But they stopped crediting in 2008 due to crisis impact as far as economic activity reduced and it was impossible to meet credit demands. According to the World Bank credit terms built in contract with the banks, the target of the bank-financed credits was focused on funding investment projects and the questioned credits were allocated on procurement of main technical means. And now banks are stumbled by a task how to use the remainder USD 4 million in fixed timetables unless they will be lost forever.
Based on calculations of the Microfinance Organizations Development and Support Association reported by GHN, the loss can be even higher than that. In frames of the RDP project banks disbursed 24 credits totally in 2007-2008, failed to use the World Bank supported credit line in 2009-2010 and returned USD 3.2 million on the circulation account of the RDP project. Therefore the total sum that must be used for crediting agriculture by July of 2011 makes USD 6.5 million not USD 4 million in fact.
The sum looks impressive to be lost if we take into account the yet scantly funded Georgian agriculture sector. To save the money for Georgia project participants negotiate microfinance organizations to take the remained sum off hands of banks and use it before the scheduled deadline. Initiators of the idea believe it will be easier to microfinance organizations for they unlike banks are not restricted by World Banks crediting terms and can disburse credits on different purpose including purchase of circulation sources. 
However microfinance organizations also face certain restrictions in frames of RDP project. According to project terms, microfinance organizations cannot disburse more than a USD 2 million worth loan, on the other hand they have to co-finance the World Bank’s credit line by 50%.
But statistics and practice speak in favor to microfinance sector that is an indispensible part of financial system globe over and facilitate to small business development in urban and rural area alike by funding small and start-up farming businesses. In Georgia this sector apparently appears more willing to finance agriculture snubbed by banks that finds funding agriculture too risky.
In 2010 agriculture made just 3% in total banking credit portfolio, while its share makes 27.2% in credit portfolio of microfinance sector. Meantime all the 19 banks operating in Georgia disburse agriculture credits, when out of 51 microfinance organizations operating in Georgia only 11 is crediting agriculture sector.
The volume of credits lent to agriculture accounted for GEL 47.2 million in banks’ credit portfolio while total volume of loans lent to agriculture makes GEL 62.2 million. Meantime total assets of microfinance sector make just 2.9% of total assets of banking sector. In 2010 microfinance sector disbursed credits to 49 526 borrowers.

Print
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.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
19.09.2018
20.09.2018
USD
1
USD
2.6188
2.6179
EUR
1
EUR
3.0593
3.0606
GBP
1
GBP
3.4414
3.4517
RUB
100
RUB
3.8673
3.9087
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
USD
1
USD
2.6179
EUR
1
EUR
3.0606
GBP
1
GBP
3.4517
RUB
100
RUB
3.9087
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