The FINANCIAL — BP and its co-venturers’ support under the Community Development Initiative (CDI) has resulted in over 550 small business projects and up to 700 people being employed. Since 2003 BP and its co-venturers have already spent USD 17 million under the Community Development Initiative, one of the components of which envisages providing support for small business development. Today the state authorities use the model introduced by CDI in Georgia. The programme is aimed at enhancing harmonious relationships with the people residing in the villages located within a 2 kilometre radius of the oil and gas pipelines through the introduction of capacity building opportunities and the support of business start-up.
BP on behalf of its oil and gas partners has launched the Community Development Initiative for Local People in the villages located along the Baku-Tbilisi-Ceyhan oil pipeline and South Caucasus gas Pipeline. The programme includes several components. These are: support for agriculture, development of the reconstruction process of the rural infrastructure, and support for the development of small business. Through the above initiatives, the company is trying to improve the living conditions of the local people.
“Management of the programme is very important. Several groups are involved in it, including the company BP itself. In addition, there is the implementing organization that prepares and executes the projects – the Advisory Council of the Program, whose members are the representatives of international organizations authorized to regularly assess the programme and prepare recommendations. We also engage independent evaluators for mid-term and final evaluation of the programme. Members of the group help us in the intermediary and final assessment of the programme as well as provide the recommendations that we consider in further work. The role of the local people and local governments is important,” said Rusudan Medzmariashvili, Manager of Social Responsibility at Company BP.
Medzmariashvili believes that the payment of a grant alone fails to ensure the success of a programme. In her words, it is a long term process, which involves the announcement of an initiative, review of the proposals, applicant training, selection, funding and monitoring.
“Our system of control and monitoring is very thorough. We are in very close cooperation with the local people. We study every stage of the development of the programme through monitoring. If necessary, we make corrections to the Programme even during the implementation period. We are not in a hurry. Sharing knowledge and experience requires time. We are very happy that the local people are interested in learning as much as possible. They cooperate with us in the implementation of the programme. They study all the details. They consider the advice that ends in good results. Development of the programme fully accords to the initial plan of its implementation,” said Medzmariashvili.
The Community Development initiative was introduced and funded by BP and its oil and gas co-venturers. The ideas of the business projects belong to the local people. In order to get funding, the people have to pass through several stages. The first stage is about the selection of ideas, the second – about presentation of the business plan developed in close cooperation with the programme’s implementing partners. Success comes from the close mentoring and monitoring process. The implementing partners work intensively, monitoring the development of any business idea.
Q. BP on behalf of its oil and gas partners operates three pipelines in Georgia. Why has the oil company decided to fund a project that is quite different from the core activities of the company?
A. The story is rather long. Before we started construction of the pipelines, we conducted impact assessments on the natural and social environments. Company policy envisages the establishment of good relations with local people as well as help in support of the development needs they have. We planned from the very beginning, prior to the start of construction of the pipelines, that the company would implement the initiative of development of the local communities.
The community development initiative targets communities within the four-kilometre corridor along the route of the pipelines. Programme structure reflects community needs based on the needs assessments we have conducted.
We announced a tender for selection of the local implementing partner organization for the programme’s implementation. Development of small and medium businesses is one of the components of the programme. After the results of the tender, two domestic organizations were selected: the Regional Development Association and the Center for Training and Consultancy (CTC). The Regional Development Association develops the project for communities in the western part of the pipeline and the corridor. CTC works in the eastern part – in Gardabani, Marneuli and Tetritskaro. It is very important for us, because such a programme first of all helps us to establish good relationships with the people.
Q. The oil pipeline by itself is very important for Georgia. What kind of benefits does your company get from such social and economic projects?
A. Well, this project is aimed not only at the establishment of good relations, but at improvement of the social and economic conditions of the local people, our neighbours. It is a part of the global policy of the company, because BP runs a very responsible business. In all its countries of operation, BP takes care of the people associated with it. Let me mention specially that the activities are not aimed at PR.
Q. The development of small businesses in Georgia has been an important task for a long time. We have seen a lot of good enterprises operated by individuals, groups, etc. How many people have already been employed?
A. Several hundred people have started private businesses in the frames of CDI. People have been very interested in the programme.
Q. How many enterprises have been established? Specifically, I mean registered enterprises operating up until now.
A. There are about 500 registered enterprises along the BTC and SCP pipelines. Besides the owners of these enterprises, additional people have also been employed. Thus, additional jobs have been created. Support for small businesses, development of agriculture, rehabilitation of the infrastructure in the villages, and support for the community organizations are all components of the programme.
Q. The state also tries to use the model of BP in supporting small and medium-sized businesses. The model does not imply cooperation with banks, while the difference to other state models is that direct monitoring is implemented during the entire period of several years. You control the process of their business, prevent them from spending the money unwisely, so unintentionally is that what leads to your guaranteed success rate of at least 99%?
A. Upon submission of the first application after announcement of our competition, our representative visits the place, studies the situation and makes a conclusion. He provides a report to the committee that discusses the ideas. Acceptance of business ideas is the main initial action. The selected business ideas are improved and included in business plans. Trainings are aimed at correct reporting on financial and accounting statements. After that, the applicants submit an improved business plan. Systematic monitoring is carried out simultaneously. Photo material is also collected to show and to compare the situations before, during funding and after the funds are provided. Monitoring lasts up until the end of the project. When a project is announced as a winner, an action plan is prepared referring both to the start of the business and the development of services. We support the businessmen during the entirety of the above-mentioned period. We often visit them for the purpose of advice and control. We visit them at least once a week, but if necessary we visit more often.
Q. How do you help them specifically?
A. We give them money for the purchasing of equipment for example. The co-funding is to reach at least 50%. The co-funding implies either money, or labour share, it makes no difference. What they must spend the funds on is fixed. We control everything and always request justification. By this I mean that they must provide documents certifying that the equipment was officially bought and all taxes were paid.
Q. Do Georgian labourers really need support?
A. Support is necessary by all means. Frequent visits by us are very important. They give them stronger motivation and charge them with greater responsibility. First of all the people get the chance for self-realization. Many entrepreneurs have started businesses according to their professions. They changed their minds and remained in their villages instead of moving to the towns. A good example is several dentists’ clinics that have opened within the framework of the programme where skilled dentists are now working. In the past they had no choice but to move to the towns and work as hired workers there. However, now they have their own clinics in the villages. One dentist provides their service to the residents of at least 2-3 villages.
Q. Can you please tell us about the areas of the activities?
A. There are two types of businesses: agricultural business and non-agricultural. The non-agricultural businesses include dentists’ rooms, carpenters’ shops, mobile service of sanitary technician by phone order, stone-cutting business, etc. We also want to encourage women, and we ensure that privilege is granted to the businesses that have the participation of business women.
Discussion about this post