The FINANCIAL — during the U.S-Georgia Business Forum at Tbilisi Courtyard by Marriott, Lasha Shanidze, CEO of the Millennium Challenge Georgia (MCG) Fund, the person in charge of management of the biggest US grant (Modern Marshall Plan), ever received by Georgian Government, officially announced his resignation.
The FINANCIAL interviewed Mr. Shanidze about the experience gained during 3 years of hard work at MCG, since its inception, starting from drafting proposal, conducting successful negotiations for the grant amount and even more successful implementation of the program, the reason for his sudden resignation, and his future plans towards engagement in private sector.
Q. From October 2007, MCG will have a new CEO. What was the reason for your resignation in the third year of a 5-year compact?
A. Work at MCG has been truly exciting; especially during an initial phase, which has proven to be the most difficult and challenging. The program itself has a very complex corporate governance structure and diversity of project activities which took our most efforts to design and get running. Four, out of five projects have successfully launched and work process became more smooth and stable.
The pace of development of our country is so high, that I think it’s already time to streamline my knowledge and this unique experience towards responding to new challenges and attracting new investments. I plan to continue my career in private sector.
Q. Quoting your words from The FINANCIAL’s special edition last year dedicated to U.S business in Georgia: “Georgia’s economic policy is aimed at the creation of a favourable investment and business climate for sustaining and increasing the economic growth of the country which is a key goal to the Millennium Challenge Program in Georgia,” how prepared do you think Georgia is for hosting the U.S investors and holding the AGBDC forum?
A. The AGBDC business forum is held for the 10th time already. The basic difference between the first and the most recent conferences is that the investment environment in Georgia has been undertaking dramatic changes.
Since the Rose Revolution, the approach of Georgian government towards attracting foreign investors has become radically different. As a result, Georgia’s investment climate indicators topped international development charts and reached highest gauge in country’s history. Georgia ranked 18th in the world in terms of the ease-of-doing-business index, according to the World Bank report Doing Business 2008. It was 37th place last year.
Absence of even one suspicion or accusation about inappropriate spending of a single penny from somewhat $300 million administered by MCG, itself speaks of governmental support in highest standards of transparency. Therefore, willingness of local authorities to create such positive precedents builds confidence of international community towards Georgia. This strategy, in a long run, will mitigate the risk of business failure and provoke additional FDI flow to the country.
I want to be in the right place at the right time and do the right thing – by supporting these changes in private sector, while MCG continues successful reduction of poverty through growth.
Q. How would you promote and introduce Georgia as a brand to international society?
A. Georgia of today is a country of newly restored highways, established and constructing hotels of world famous chains and millions of invested dollars in infrastructure projects of crucial importance. Once only anticipated in the past, Georgia today is already becoming a business hub on a regional and continental scale. My country is not difficult to promote, well known Georgian hospitality and genuine people with rich mix of unique Euro-Asian traditions – speak for themselves.
Q. "MCC is becoming a catalyst within the country of not only organizing and bringing a more focused approach to particular projects, but bringing more financing into a country – and that is visible even without having this compact signed,” you told Eurasianet in April, 2005. What were your arguments for making the statement?
A. MCG compact itself is an ultimate guarantee for U.S investors that have already incited lots of American private businesses to invest in Georgia.
As a result, the U.S is the lead investor in Georgia, which is another opportunity for the country to develop a civilized approach to private business management in Georgia.
MCG’s biggest success story since 2004 could probably be drawing of $300 million which was followed by establishment of the fund with unique team of Georgian professionals attracted from Europe and the U.S. When making decision on return, these people were led by aspiration to build a successful institution that would boost their country’s economy and reduce poverty.
MCG employs about 60 professionals at present; additionally, about 300 people have been recruited by our contractor organizations that were hired by us for implementation of Millennium Challenge projects.
I would especially emphasize investments provided for large-scale projects like N-S gas pipeline rehabilitation and water supply to Poti and Kutaisi, tens of awarded agribusiness grants and several equity investments – in the framework of which hundreds of jobs and thousands of beneficiaries are being created in rural Georgia. The impact of the program spreads on multiple layers of beneficiaries by chain reaction. It would be very difficult to measure the actual benefit catalysed by the program.
Investments within the Millennium Challenge Georgia program have been doubled; additional almost $300 million co-finance has been attracted from EBRD, CIDA, World Bank, BP and private investors.
At present, MCG fund investment is over USD 40 million and volume is increasing day by day.
Q. MCG opened its first regional office in Telavi on June 27, 2007. What’s the basic target of opening offices in the regions? Which other regions will MCG offices be built in?
A. Since the compact anticipates development of primarily regional part of Georgia I think the establishment of regional offices will draw us closer to our beneficiaries, the people.
Telavi was first to open due to the fact that majority of agribusiness grants were issued in Kakheti. This induced the increased need of additional resources and flexible location for rendering of better service. I would like to remark the vigorous approach and support of Mr. Gia Natsvlishvili, the Kakheti Governor in establishment of our first regional office.
Akhakltsikhe, followed by Kutaisi and Batumi are the following destinations for expansion.
Q. “A minimum of 3 to 4 years have to pass after compact completion, but I’m trying to change this law in a way that the maturity of the program (which is now 5 years) is extended. I think this amendment will now apply to Georgia, and by the end of this program, which is, undoubtedly, being successfully implemented, you will be able to start with new projects”, said the Ambassador Danilovich in his interview with Business Courier at Rustavi 2 TV Channel. Do you see the necessity to start a new MCC compact?
A. We’ve had talks with MCC on attracting additional grants to Georgia. I hope there will be no complications in this respect and Georgia will be the first country to sign an additional compact in near future for new projects.
Q. In mid-April 2007 you visited the headquarters of the Millennium Challenge Corpora-tion (MCC) in Washington DC to negotiate the completion of bidding documents for the selection of construction companies for MCG's Samtskhe-Javakheti Road Rehabilitation Project. How positive was the view of the MCC officials on the progress and achievements of the program to date?
A. Georgia is a role-model for MCC, the U.S. Congress and Senate, along with Georgian Government and Parliament, regard Georgia program as the best example of implementing the compact worldwide.
Q. In the course of the visit, you attended a BISNIS (Business Information Service for the Newly Independent States) conference to further increase international interest in co-financing opportunities in Georgia. Which international donors or local organizations do you cooperate with in terms of co-financing?
A. The BISNIS conference aimed at making U.S private investors interested in Georgia. My personal focus is to attract as many finances as possible, get more people employed and finally see economic revival of our beautiful country.
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