The FINANCIAL — According to United States International Development program (USAID) experts – the total amount of support allocated for Georgia in 2010 and 2011 is nearly 98 million USD which includes: FY 2010: 45,870,000 USD. The support is aimed to help Georgia in economic growth and democratic reforms.
In addition Millennium Challenge Corporation (MCC), which has already supported Georgia with 395.3 million USD since 2006, will ensure additional support for the country since being named as eligible for a second compact together with Ghana on January 5, 2011.
Although the exact amount of support is unknown till the final development of the second compact, as Prime Minister Nika Gilauri said, it will be in the 150-250 million USD range for Georgia and will be spent on the construction of American universities, improvement of healthcare infrastructure in addition to the Samtskhe-Javakheti-Batumi highway project.
The awarding of a second compact is contingent upon successful completion of Georgia’s first compact, development of proposals that have strong potential to promote economic growth and poverty reduction in Georgia, continued good policy performance, in particular with regard to MCC policy criteria, and availability of funding, according to Jim McNicholas, Resident Country Director.
Results of the first compact
“In terms of the results of the first Compact’s investments in infrastructure and rural economic development, the full suite of economic benefits will take years to materialize. Before claiming success, MCC is trying to verify preliminary monitoring results with rigorous longer-term evaluations after the project closes. However, in programmes such as the Agribusiness Development Activity, which finances improvement and expansion of existing agribusinesses and farming operations, preliminary monitoring results are promising. Each quarter, field monitors travel to the ADA-financed businesses (283 projects at the Programme’s end in November) to document the jobs created and increases in firm and household net income related to MCG’s co-financing,” McNicholas told The FINANCIAL.
“As of October 2010, grant recipients report over 2,600 additional jobs across the entire agricultural value chain, and that figure is expected to grow. Households thus far report an increase in household net income of almost 3.2 million USD and businesses report an increase in firm income of over 2.7 million USD. MCC has financed an impact evaluation to determine the initial employment and income benefits resulting solely from MCG’s agricultural investments exclusive of other changes in the Georgian economy and its sub-regions. The report is due in spring of 2013 to enable post-compact data collection,” he said.
“For the 220 km Samskhe-Javakheti Road project, MCG is using the national household survey from Geostat, the National Statistics Office of Georgia, plus additional data collections on traffic to capture the ways communities economically benefit from improved transportation access and regional connections. The road opened just a few months ago and already people will be accessing savings from reduced vehicle operating costs and travel time (2 hours and 42 minutes down from the baseline of 8 hours and 13 minutes),” McNicholas told The FINANCIAL.
“MCC’s impact evaluation researches somewhat longer-term benefits such as: employment, farmers having improved access to markets, access to social services, and how all these developments affect household incomes for residents along the road. The impact evaluation will be collecting data on household income effects after compact closure and reporting results in 2013,” said McNicholas.
New Compact Features
“In terms of the second Compact, based on past experience with Georgia and other countries, MCC anticipates that the Compact development process will take up to 18 months and currently Georgia is in the very early stage of development. As the first major step, Georgia’s Compact Development Team is preparing an economic analysis identifying priority constraints to economic growth in Georgia.
From this analysis and working with MCC, the Georgian Government then identifies project proposals that ease those identified constraints and also have a high economic rate of return for the MCC investment. MCC places strong emphasis on achieving and measuring results. This applies in the Compact Development process where the Georgian Government will be required to conduct quantitative beneficiary and economic rate of return analyses for all proposed projects,” said McNicholas.
“Prime Minister Gilauri met with MCC CEO Daniel Yohannes in Washington in the first week of February to hold initial consultations, and members of the lead compact development staff participated in a full day of consultations at MCC’s headquarters to discuss and plan for the second compact proposal development.
Another important aspect of the compact development process is public consultations. As part of the early proposal development process, MCC counterpart governments are expected to take into account perspectives from rural and urban poor, and solicit feedback from relevant sector experts, the business community, voluntary associations and donors active in the country. We expect this process to begin in the coming months as the initial economic analysis is prepared,” said McNicholas.
Transparency and Monitoring
“With regard to transparency and monitoring, MCC requires that all key reports, Board minutes, procurements, and contracts be made available to the public. In this first Compact, MCG’s public affairs office is responsible for making those documents available to the public and posted to MCG’s website, as well as responding to requests for information from civil society and the Government. A similar level of effort for reporting and openness would be required for the second compact.
A key policy criteria that MCC considers for eligibility is the economic business environment, drawing on indicators developed by the World Bank Institute, IFC, and the Heritage Foundation to name a few. New investors in general, not just American investors, look to see whether there is a level playing-field for small and medium-enterprises to grow and that policies affecting businesses, such as tax policy and enforcement, are transparent,” concluded McNicholas.
USAID continued support to Georgia
Since 1992, USAID/Georgia has invested over 800 million USD (excluding the USAID portion of the 1 billion USD pledge). Including the pledge, it is nearly 1.5 billion USD. USAID is an agency of the U.S. Government and represents a significant, but not the entire, assistance provided to Georgia. A number of other agencies are actively contributing to Georgia’s development, including in the areas of economic growth and democratic reform.
According to USAID experts – total amount allocated for FY 2010 and 2011 is nearly 98 million USD. It includes: FY 2010: 45,870,000 USD. The total amount signed into agreements for projects during FY10 totals 339,871,474 USD (including funds from the 1 billion USD and supplemental). The FY10 amount does not include funds from the 1 billion USD pledge and other supplemental funds. The objectives mentioned above will continue to be financed in fiscal year (FY) 2011, which runs from October 2010 through September 2011.
USAID assisting Georgia to succeed in international ratings
“Since 2005 Georgia has moved up from 112th to 12th place among the 183 countries ranked on the World Bank’s annual Doing Business survey. USAID assisted the Government with 18 out of the 23 reforms responsible for this improvement. However, we recognize that many challenges remain.
In the 2010-2011 report, Georgia ranked 93 out of 139 countries, according to USAID.
Reaching high economic growth
“USAID’s economic growth projects are helping Georgia transform into a vibrant market driven economy. For example, USAID’s Economic Prosperity Initiative (EPI), which commenced on September 2010 and will end in September 2014, will improve Georgia’s overall economic competitiveness through assistance designed to: 1) Expand and deepen the country’s economic governance capacity; 2) improve agriculture sector productivity; and 3) Strengthen targeted non-agricultural value chains that have the highest growth potential,” wrote USAID in answer to The FINANCIAL.
“We expect that USAID programmes, like EPI, will improve private sector competitiveness and create jobs by: implementing a wide variety of activities focused on competitiveness in tourism, IT and agriculture among other sectors; providing credit guarantees to increase access to credit for small and micro-enterprises; Building sustainable trade capacity by providing assistance to enterprises that produce exportable products; Supporting agricultural services and high-impact agricultural investment promotion; access to agricultural credit and other financing; farm productivity etc.”
“Additionally, our economic growth programme will strengthen business and trade associations and create partnerships between government and nongovernmental organizations. There have been a number of significant achievements stemming from our projects. Georgia has been named number one business climate reformer based on the World Bank’s “Ease of Doing Business”. USAID helped the Georgian Government to implement needed reforms.”
“In both strengthening the capacity of civil society actors and promoting dialogue between government and civil society. The largest of these projects is the most recent, beginning several months ago, which along with a major media project should assist significantly in Georgia’s development into a more mature democracy,” USAID wrote to The FINANCIAL.
USAID supporting job growth
“One of the main goals of all activities in USAID’s economic growth portfolio is to create jobs. We plan to continue to target assistance to some of Georgia’s most vulnerable populations. We recently provided grants to several local NGOs to assist IDPs, women, and other target groups to develop microenterprises. This year we expect to initiate a large programme designed to assist some of the poorest regions of Georgia to improve household incomes and economic opportunity.
In addition USAID supports “Vocational Education Project”, which established employment centres in four target vocational centres. These centres provide consultations to graduates regarding professional development and successful employment, including developing resumes, completing employment applications and preparing for job interviews. The project also conducts training on finding sources of job vacancies and opportunities, provides access to the Vocational Education Project employment database, conducts consultations on business start-ups, and markets graduates to targeted private sector companies through advisory board meetings, job fairs, and open houses. Since 2008, the project has assisted 3,320 graduates in finding and securing employment,” claim USAID experts.
USAID’s Job Consultation Project
“The project established seven Job Consultation and Placement Centres across Georgia. The centres register job applicants and match their application with available vacancies, provide individual job consultation and group training in job search and career development, refer applicants for interviews, provide access to vocational education courses designed to meet job market demands, and partners with employers, businesses, and government agencies.
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