On 12 May, the World Bank Board of Directors approved a €85 million package in financing support to 6000 Georgian micro, small and medium sized enterprises who were impacted by the Covid-19 pandemic.
“Through this latest support package, the World Bank will boost job creation and support firms that are the backbone of Georgia’s economy and key to a resilient recovery,” said Sebastian Molineus, World Bank Regional Director for the South Caucasus. “This includes helping firms gain easier access to finance and funding investments in financial infrastructure that will promote technology adoption and the use of digital financial services,” he added.
The new “Relief and Recovery for Micro, Small and Medium Enterprises” (MSMEs) project by the World Bank is aimed to help businesses and create jobs by expanding and strengthening programmes that support MSMEs and by promoting digitalisation of Georgia’s economy. It also aims to alleviate the financial constraints of firms and help them adjust their business to a post-Covid-19 scenario.
One component of the project will strengthen and expand MSME support programmes implemented by Enterprise Georgia (EG). The direct support for micro and small firms would come in the form of grants offered by EG’s micro and small entrepreneurship support programme. Small and medium sized enterprises (SMEs), on the other hand, would be eligible for support through co-financing of interest payments under EG’s “Produce in Georgia” programme, which will reduce their borrowing costs and address immediate liquidity constraints. SMEs will also benefit from access to partial credit guarantees through financial institutions, which were designed to address high collateral requirements and heightened risk aversion of financial institutions.
The project will also help strengthen the country’s financial infrastructure and increase the use of digital financial services; will also support the design and provision of technical assistance to firms to adjust to the new normal, via the adoption of relevant managerial, digital and other Covid-proofing practices.
“The global pandemic has severely affected the private sector, especially micro and medium enterprises in Georgia, so to support them is vital, as well as to encourage the creation of new enterprises that will enable the country to accelerate economic growth,” said Georgia’s Finance Minister Lasha Khutsishvili. “The instant payment system, under the project by the World Bank, will facilitate instant access to funds for payees, including MSMEs, enabling better cash management, and helping firms manage day-to-day liquidity,” said the Governor of the Central Bank of Georgia Koba Gvenetadze. “Furthermore, financial institutions and fintech companies will be able to implement different payment initiation channels and offer them to end users in a cost-efficient way,” he emphasised.
