The FINANCIAL -- The goal of USAID’s four-year $40 million Economic
Prosperity Initiative (EPI) is to serve as a catalyst to spur
investments and increased employment and productivity in agriculture and
high-export manufacturing and services sectors.
“Currently we focus on providing technical assistance in eleven value
chains and sectors, such as open field and greenhouse vegetable
production, mandarins, and hazelnuts in agricultural sector, as well as
apparel, wine and Meetings Incentive Congresses and Exhibitions (MICE)
tourism, packaging and perlite value chains in manufacturing and
services sectors,” Tina Mendelson, EPI Chief of Party said.
Mobilized in October 2010, the EPI team engaged in dialogue with
numerous Georgian firms, government of Georgia officials, business
associations and think tanks to understand the business trends and
analyzed any available data to identify sectors with economic potential
Based on this initial analysis, EPI conducted deeper sector analysis and feasibility assessments to identify several value chains with the highest development impact potential to achieve long-term sustained economic growth and meet project result targets, such as increased foreign investment, domestic finance, increased employment and productivity.
"In addition to the sectors we focus on", Tina Mendelson said, "we are also supporting targeted activities in transport and logistics and ICT sectors, recognizing these two sectors’ tremendous importance for other value chains. In partnership with businesses and Georgian business associations, EPI also supports activities aiming to address target policy constraints and opportunities for further improvement of the economic environment, such as tax and customs, regulatory environment, procurement, privatization and property rights. To help our value chains succeed, EPI provides services to selected value chains in the areas of workforce education, access to finance, investment promotion and management services, jointly with GNIA, business acumen/economic knowledge development and gender and youth integration.
Q. What would you claim as EPI’s biggest achievement in Georgia?
A. It is not easy to focus on just one achievement, as the project is complex, incorporating different tasks and activities. During this very first year we enjoyed successful beginning of many initiatives: last year we supported export of Georgian agricultural products worth of 3 million USD, mainly hazelnuts and fruits; recently, the leasing law, on which we had been working hard together with Georgian government and business associations, has been adopted and we are very proud of it.
The whole reform and the new law will help both, the leasing companies and businesses, especially in agriculture, to succeed. We have supported number of reforms in Customs and Tax: together with private sector stakeholders, EPI initiated the amendments and the law was passed in the spring of 2011, freeing transportation of “foreign goods” and related services from VAT. This not only brought Georgia in line with the best practices, but supported competitiveness of Georgian transport and logistics sector as well. We have made steps forward in apparel sector: helped Georgian manufacturers to establish contacts with large manufacturing firms in Turkey, improved apparel business environment through supporting number of reforms pertaining customs and tax. We have been successful in wine tourism - finally Georgia is starting to appear on the worldwide wine map. All these achievement are important not just for a particular sector, but for Georgia’s economy as a whole. I think we had a very good start, but these three years we will be doing much more to achieve our main goal: help Georgia prosper.
Q. The EPI Project will be implemented through four components in Georgia. What are they and how these components were chosen?
A. The project is designed as a four-component entity to support Georgia’s economic growth. The first two: Agricultural and Manufacturing & Services components are targeting private sector development in these sectors. EPI considers agriculture and manufacturing/services sectors as key drives for Georgian economy. That is why the project has those two components. Agricultural and Manufacturing & Services components are oriented toward alleviating current bottlenecks in these fields, implementing best international practices, increasing productivity and sales. However, the business environment in which these value chains operate is just as important as productivity increase. That is what our third, Business Enabling Environment, Component focuses on. The BEE Component’s main goal is to deepen and expand the policy and regulatory reforms, recently passed by Georgian government. And finally, EPI’s Crosscutting Component is designed to provide respective resources and tools to the other component teams to ensure proper program delivery. This component is committed to upgrade workforce skills in target value chains, integrate youth/women into increase access to finance, improve the quality of economic information in Georgia and create a sustainable capacity of Georgian organizations to implement a targeted approach to investment promotion, while attracting foreign investments in target value chains.
Q. EPI aims to expand market linkages and improve the competitiveness of Georgian agriculture and agri-businesses. How well EPI is implementing this?
A. We have been pretty successful in establishing partnerships between Georgian suppliers and foreign wholesalers. EPI has already connected number of Georgian hazelnut producers and fruit and vegetable processing firms with Turkish, Scandinavian, German, Hungarian and Chinese buyers. As I mentioned earlier, this effort turned into contracts of 3 million USD. EPI will continue to promote market linkages with potential international buyers or investors. In order to improve the competitiveness of Georgian agriculture products, EPI is implementing knowledge plots and knowledge centers, where farmers can receive practical trainings on production, post-harvest handling and storage techniques, using appropriate modern equipment. Apart from this, we have a comprehensive theoretical training program, which allows Georgian farmers and other stakeholders to learn about latest trends of an industry, best international practices and technologies. At the same time, our workforce development plan addresses the issue of having skilled labor to enhance productivity and ensure better yield management.
Q. What are the main worldwide opportunities for Georgian agriculture?
A. Georgia’s agricultural sector has tremendous potential, however Georgia still imports broad variety of agricultural products, especially vegetables and fruits during an off-season. There is unmet demand on local vegetable and fruit production domestically. I think this is the issue that needs to be addressed first. Greenhouse and cold storage facility development is very important for offsetting imports and increasing sales of agricultural products domestically. Proper management, certification and accreditation systems, access to finance, modern technologies and the best international practices – all these pave the way to the enhanced competitiveness of Georgia’s agricultural products, which in its turn, entails boosting exports in different countries at a later stage. If these systems work properly, Georgian agricultural products can be exported in many countries across the world.
Q. What would you say about manufacturing and services sector? How well is EPI operating in this sector?
A. The overall goal for EPI‘s Manufacturing and Services sector is to increase the export potential and competitiveness among a portfolio of manufacturing and services value chains. This is achieved by taking Georgian value chain representatives to the market – to investors, buyers and tourists –and by increasing skills and private sector capacity to meet market needs. We did pretty well to get foreign investors interested in the apparel sector. Through creation of market linkages, there are initial sample orders by foreign buyers there. We hope this will turn into a long-term partnership and more contracts for local apparel manufacturers. EPI also partnered with value chain groups and associations to raise international awareness of Georgian wine tourism, cultivated business interest by a nascent Georgian paper packaging value chain to support the demand of local – and possibly regional – agricultural producers and processors, and catalyzed ICT sector commitment to support development of new E-ID software applications. We will continue dialogue and advice in the areas of technology enhancement, sales and marketing, business management, and specific industry/technical skills, and promote cost-effective and targeted international and domestic promotion of value chain products to increase awareness, interest and motivation in procuring these products and services worldwide.
Q. What are the main activities EPI performs for?
A. We address several areas relevant to Georgia‘s business environment: business regulation and licensing, strengthening property rights, investment sector economic governance, trade and customs economic governance, tax administration, procurement/privatization, and agricultural policy. We think that these are the areas crucial for business development. EPI is rendering technical assistance to draft laws and policy regulations and supports e-Governance initiatives. Our approach is to deepen and improve overall investment environment through specific projects envisioning awareness building activities, legislative drafting, and increased public-private dialogue.
Q. What are the main challenges Georgia faces currently in terms of business making?
A. Streamlining production processes, improving services, using modern approaches and technologies, acquiring knowledge of best international practices, introducing certification and accreditation systems, facilitating access to capital, creating market linkages – all these are the challenges for private sector today and we hope we will be successfully addressing these challenges in next three years.
Q. What are the main tools and means EPI tries to grow worldwide awareness of Georgia as a place for doing business?
A. EPI has targeted specific value chains for promoting investments, as we believe that this sector-specific approach will bring more results. We are also using this approach when targeting potential investors. On the one hand, the profile, perceptions and the preferences of an investor serve as a basis for selecting our promotional tools. On the other hand, Georgia, as a country, has many characteristics that are very persuasive to potential investors. By matching these characteristics with investors’ needs and desires will make our investment promotion efforts successful.
For promoting Georgia as a favorable place to do business, our sector-specific approach utilizes standard promotional methods, such as featuring our value chains in international exhibitions, conferences and promotional campaigns. Additionally, we also promote these sectors with more creative marketing tactics, such as our recent activities where EPI invited international wine masters to visit Georgia. We expect this to have a significant impact because their opinions affect the preferences of wine tourists across the world. One of the most important activities that we undertake is building capacity of local investment promotion institutions, so that they can successfully promote Georgia as a preferable place for doing business and implement targeted investment promotion strategies. Building this capacity is vital for successful, long-term investment promotional activities.
Q. What is the main challenge for EPI and how are you trying to overcome the challenge?
A.I would say that the challenge for EPI is also the challenge for the whole Georgia. I would describe it by one word: “competitiveness”. Georgia is blessed with strategic location, beautiful landscape, numerous historical places, and talented, energetic people. It has many assets that can be utilized for achieving success. We believe that the project together with Georgian people can meet this challenge.