Mayors for Economic Growth Engages Georgia’s Local Governments
Mayors for Economic Growth (M4EG) is a European Union initiative that began in January 2017. It is implemented in the six countries of the Eastern Partnership, including Georgia. The initiative’s overall goal is to support mayors and municipalities to become active facilitators for economic growth and job creation at the local level.
M4EG is founded on several key concepts, including a focus on the private sector as the key driver of economic growth and development, harnessing the unique comparative advantages of municipalities, and a community-centered, bottom-up approach. The initiative considers as “building blocks” the factors that stimulate growth and employment: regulatory and institutional frameworks, access to finance, land and infrastructure, skills and human capital, inclusivity, and external positioning and marketing. There is also an emphasis on improving the internal motivation, preparedness, and capacity of municipal authorities to manage local economic growth.
GEORGIA TODAY spoke with Peter Korsby, team leader of M4EG. Korsby has 16 years’ experience leading international technical assistance projects in Eastern Europe, and profound experience in the public administration bodies of Denmark at the national, regional, and local levels, as well as in private sector business consulting.
Currently, 294 municipalities are signatories of the M4EG Initiative, including 42 Georgian municipalities, of which 103 municipalities across the region and 14 in Georgia are Acting Members, having submitted Local Economic Development Plans, which have been evaluated and approved by the World Bank. Korsby admits that sometimes it can be a challenge to convince municipal governments to participate in the M4EG initiative. As an incentive, M4EG offers capacity building trainings, international exchange visits, and access to a network of the region’s most active and engaged mayors. The idea is to phase the initiative into “an extensive professional community across the region, which will require certain commitments from its members, but which offers solid expert and peer-to-peer support, assistance in broadly sharing successes, as well as other significant economic, political and reputational gains.”
Another benefit of the initiative is networking. Mayors need to be reminded that “you cannot do this on your own,” said Korsby, that even the most enthusiastic leaders need a strong, capable team behind them, and that cooperation with local interests, the business community, civil society, technology, and education institutions, is essential to success. Networking is a key activity, and municipalities are encouraged to learn from their neighbors. There are five thematic groups in which representatives from all six countries participate: business support services, agriculture, tourism, IT, and wine making.
Korsby outlined some of the challenges of working in Georgia, specifically the weak economy, high unemployment and poverty, unreliable statistical data, and of course, the Russian occupation of Georgian territory. The capacity of local government authorities in Georgia is also quite low, but, Korsby explains, there are “a lot of people, very intelligent, very enthusiastic, committed, who really want to do something...it’s a question of finding the right people” to lead the charge and to partner with: “I’ve been in many municipalities here [in Georgia], and I see a lot of potential.” He noted that it is also essential to create the right conditions for people to grow and develop their strengths and talents, especially young people.
Of course, the biggest challenge in working in the Eastern Partnership countries, all of whom were formerly part of the Soviet Union, is dismantling the legacy of a centrally planned economy. The word “plan,” says Korsby, can send shivers down the spines of some government officials, recalling memories of Soviet five-year plans, endless pages of detailed recommendations and suggestions that were largely just for show. What M4EG requests, however, is a much simpler plan. Meeting local governments where they are, the local economic development plans are recommended to be around 15 pages, broadly outlining the steps the municipality plans to take to improve economic conditions and increase growth.
The heavy centralization of the Georgian government is another challenge, as most major economic development projects are undertaken on orders from the central government and the vast majority of municipal budgets are allocated directly from Tbilisi. Aligning the incentive structure for municipal governments to invest in local growth is not easy. Korsby also tied this issue to good governance, saying, “if you want to create a strong, democratic local government system, you have to have, of course, the financial basis,” but even with a limited budget, meaningful action can be taken.
M4EG, however, does not work directly on legal and policy issues, instead focusing on how local governments can serve as models for each other and facilitating networking between mayors in participating municipalities. They have also directed European Union funding to 16 “Pioneer Projects” in five countries, with a combined planned budget of 8,355,750 EUR. Three of those projects are being implemented by Georgian municipalities: “Spark” Business Accelerator in Tbilisi, “Empowering Local Economic Opportunities for Sustainable Growth” in Gori, and “Establishing a Platform for Efficient Flow of Business Activities” in Bolnisi. The three projects total 2,089,265 EUR (6.3 mln GEL).
Georgia also has many things in its favor. Compared to other post-Soviet countries, Korsby emphasized, Georgia has managed to strip away a lot of its Soviet baggage in anti-corruption initiatives and in decreasing bureaucratic hurdles to doing business. The National Association of Local Action Groups (NALAG) in Georgia is very strong, representing the interests of local populations, particularly in the regions.
In terms of developing Georgia’s regions, Korsby stressed that rural development is a global challenge without a clear solution. “Our task is not specifically to look at the rural areas,” he hedges, “all over the world, rural areas constitute a problem, people are drawn from rural to urban areas...rural areas are dying, more or less.” Aspects of the M4EG initiative do address the challenges of rural economic growth, however, by developing a municipality’s comparative advantage and identifying the unique “DNA” of a community. “To support development in rural areas, you must modernize agriculture, winemaking, etc. to meet growing demand – “feeding the world,” so to speak – and you must develop tourism and other promising businesses. M4EG helps the communities to do that,” explained Korsby. Economic development should focus on helping ordinary people, developing a big middle class, not only reducing poverty for the poorest of the poor or helping rich business owners operate more smoothly.
Despite Georgia’s challenges of decentralization and economic growth, particularly in rural areas, the program and its leader are optimistic. Korsby added, cautiously, “it is better to do something, than nothing.”
By Samantha Guthrie
Photo: Peter Korsby, team leader of M4EG. Source: Mayors for Economic Growth