Georgia

The SME Policy Index: Eastern Partner Countries 2024 – Building resilience in challenging times is a unique benchmarking tool to assess and monitor progress in the design and implementation of SME policies against EU and international best practice. It embraces the priorities laid out in the European Union’s SME Strategy for a sustainable and digital Europe and is structured around the ten principles of the Small Business Act for Europe, which provide a wide range of measures to guide the design and implementation of SME policies. This report marks the fourth edition in this series, following assessments in 2012, 2016, and 2020. It tracks progress made since 2020 and offers the latest key findings on SME development and related policies in the countries of the Eastern Partnership (EaP). It also identifies emerging challenges affecting SMEs in the region and provides recommendations to address them. The 2024 edition benefits from an updated methodology that also offers a deeper analysis of policies to support the digital transformation of SMEs.

Georgia’s reform trajectory has been nothing short of remarkable. In less than two decades, successive structural, regulatory and economic reforms have propelled Georgia from one of the poorest post-Soviet states to an upper-middle income economy. Georgia ranks among the best performers in the world according to international indices on doing business and openness to foreign investment – achievements many countries look to for inspiration. Yet in recent years, the Georgian government has reflected on why these reforms have not facilitated more broad-based economic growth. FDI attraction has been strong relative to the size of the Georgian economy, but the positive benefits of investment have not been fully realised. Mobilising investment in sectors that can enhance job creation, exports and productivity will be key for Georgia’s recovery from the COVID-19 pandemic. This Investment Policy Review takes stock of recent achievements in improving the investment climate and assesses areas for the government to consider in strengthening its reform efforts to attract FDI that can have a positive impact on inclusive, sustainable growth.

The COVID-19 crisis has had a profound impact on SME access to finance. In particular, the sudden drop in revenues created acute liquidity shortages, threatening the survival of many viable businesses. The report documents an increase in demand for bank lending in the first half of 2020, and a steady supply of credit thanks to government interventions. On the other hand, other sources of finance declined, in particular early-stage equity. This paper, a special edition of Financing SMEs and Entrepreneurs, focuses on the impacts of COVID-19 on SME access to finance, along with government policy responses. It reveals that the pre-crisis financing environment was broadly favourable for SMEs and entrepreneurs, who benefited from low interest rates, loose credit standards and an increasingly diverse offer of financing instruments. It documents the unprecedented scope and scale of the policy responses undertaken by governments world-wide, and details their key characteristics, and outlines the principal issues and policy challenges for the next phases of the pandemic, such as the over-indebtedness of SMEs and the need to continue to foster a diverse range of financing instruments for SMEs.

The SME Policy Index: Eastern Partner Countries 2020 – Assessing the Implementation of the Small Business Act for Europe is a unique benchmarking tool to assess and monitor progress in the design and implementation of SME policies against EU and international best practice. It is structured around the ten principles of the Small Business Act for Europe (SBA), which provide a wide range of pro-enterprise measures to guide the design and implementation of SME policies. This report marks the third edition in this series, following assessments in 2012 and 2016. It provides a comprehensive overview of the state of play in the implementation of the ten SBA principles, and monitors progress made since 2016. It also identifies remaining challenges affecting SMEs in the Eastern Partnership (EaP) countries and provides recommendations to address them based on EU and international good practice examples. The 2020 edition also features a novelty: An assessment of three new dimensions going beyond core SME policy (competition, contract enforcement and business integrity) looking at key structural reform priorities that are critical to establishing a level playing field for enterprises of all sizes and ownership types.

Small and medium-sized enterprises (SMEs) play an important role in Georgia’s economy. SMEs provide more than 67% of employment and about 62% of gross value added. Although the environmental footprint of individual SMEs may be low, their aggregate impact in many respects exceeds that of large businesses. Commercial banks have an important role to play in providing access to green finance, particularly for SMEs. This report reviews the experience with green lending in the SME sector in Georgia. The analysis identifies the main challenges with lending to SMEs for green projects and discusses possible solutions. The report, in particular, looks at the role of the government and the policy instruments it can use to stimulate higher demand for green lending in the SME sector.

The SME Policy Index is a benchmarking tool designed for emerging economies to assess SME policy frameworks and monitor progress in policy implementation over time. The Index has been developed by the OECD in partnership with the European Commission, the European Bank for Reconstruction and Development (EBRD), and the European Training Foundation (ETF) in 2006.For the Eastern Partner Countries, the assessment framework is structured around the ten principles of the Small Business Act for Europe (SBA), providing a wide-range of pro-enterprise measures to guide the design and implementation of SME policies based on good practices promoted by the EU and the OECD. It is applied to the Eastern Partner Countries for the second time since 2012.The Index identifies strengths and weaknesses in policy design and implementation, allows for comparison across countries and measures convergence towards good practices and relevant policy standards. It aims to support governments in setting targets for SME policy development and to identify strategic priorities to further improve the business environment. It also helps to engage governments in policy dialogue and exchange good practices within the region and with OECD and EU members.