Georgian SME association founded
16 September, 2010
Georgian SME association founded

Association of Georgian Small and Medium Sized Enterprises (SME) is set up with purpose to lobby the interests of discriminated SME sector.


SME sector dubbed as muscles of US economy and all developed countries economies generally lacks communication with government and is discriminated in Georgia. Even definition of small and medium sized business is still dubious and needs more precise stipulation of the concept. Gap in definition makes confusion and affects SME sector interests in relationship with taxation service. Georgian

official approach is to be in close cooperation with big business – government when communicating with business refers to big business usually and the voice of smaller entrepreneurs remains unheard and discriminated.

SME has poor access to banking loans – banks prefer to lend to big business that creates setbacks to SME sector development. And while at average 70-80% of western economies is made by SME sector, it is difficult to calculate the share of SME sector in Georgia. According to business turnover big business makes 84% of Georgian business, while from social and employment points of view big business cuts just 12% and the remainder 88% is made by SME. Meantime bigger part of SME representatives cannot join business associations in Georgia either due to their status or for high membership payment and they are staffed by big business actually.

The picture shows that the larger stratum of society remains underdeveloped and vulnerable to risks due to lack of coordinated approach and concerted action provided by business associations.
On the other hand big business cannot operate properly without well developed SME sector, it is the basement of all economies worldwide, and corporate solidarity is a well-probated and approved relationship in developed countries.
Georgian big business also faced reality that it cannot develop properly without SME development lately and decided to establish Georgian SME Association (GSMEA) on purpose to protect SME sector interest via joint efforts: to improve communication between SME sector and government, create better access to banking loans and to promote this sector ultimately.

Four big business associations operating in Georgia as following: Business Association of Georgia (BAG), American Chamber of Commerce, EU-Georgia Business Council, and International Commerce Chamber decided to found Georgian SME Association (GSMEA) on September 10, 2010.
GSME aims to protect SME sector, lobby its interest, as well as facilitate to creation fair competitive climate in the country, as well as boost communication of SME sector with official structures, financial institutes, and society at large. It offers several services to its member including to help in business planning, legal service, crediting business, marketing, out-storing, accountancy, training etc. They expect to have about 100 members by the end of this year. Negotiations with potential members are underway. The membership payment will be diversified in three categories, Levan Kalandadze, Executive Director of GSMEA, explained to Georgian Journal. Medium sized entrepreneurs will pay GEL 1000 per year, petty business will pay GEL-200-250 yearly, and non-business members like non-governmental bodies and associated members will be exempted from membership fee.

“The way that big business helps SME sector to pave it way is the best world experience, both Europe and America passed this way. It is a common truth that big business cannot operate properly without developed SME sector. All big businesses have their own petty companies providing different services and face problems. It was Georgian mentality that big business was under focus and key priority. But our big business also faced the reality now that there are plenty of petty companies around them like distribution and other intermediate chains that are substantial for big business operation. Georgian big business understood that SME sector development is of paramount importance and united over this idea today,” Kalandadze said.
According to him, GSMEA will be association of entrepreneurs and not amalgamation of famous public faces and individuals. All business entities including NGOs that identify themselves with the SME representative can join the association in question.
“Middle social stratum in any society is based on SME sector and if we do not promote this sector society will not develop properly.  Big business has no communication problem with government in Georgia and easily lobbies its interests. But government does not go on communication with SME. And this sector’s interests are dissipated and thus vulnerable. They need to be gathered under one umbrella and be promoted. GSMEA is supposed to implement this goal,” Kalandadze said.

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