How EU4Business Helps Georgian SMEs
Launched in 2009 as a joint policy initiative, the Eastern Partnership (EaP) aims to deepen and strengthen relations between the European Union (EU), its Member States and its six Eastern neighbors: Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine. This initiative includes various supporting programs to help the EaP countries develop their economies and overall standard of living.
Commitment to a stronger economy through economic development and support for market opportunities is one of the key priorities of the European Neighborhood Policy framework, which focuses on increasing the stabilization and resilience of the EU's Eastern neighbors. The European Union’s EU4Business initiative is an umbrella initiative that covers all EU activities supporting small and medium-sized entreprises (SMEs) in the Eastern Partnership countries.
Taking a look at the statistics, the SMEs are indeed a key ingredient of economic life. In Georgia, Armenia, Azerbaijan, Belarus, the Republic of Moldova and Ukraine, SMEs represent between 83% and 99% of all firms, and account for 50% of all jobs, according to the OECD in 2017. This, however, still lags behind EU countries, where SMEs account for over two-thirds of employment, and 85% of new employment created in the past five years. The EU, with its programs, aims to realise the full potential of SMEs in EaP countries, to create further jobs and to drive economic growth. To accomplish this, the EU claims that “dangerous” obstacles to growth must be tackled: limited access to finance, red tape, and difficulties entering new markets.
“EU4Business includes 43 projects in the Eastern Partnership region, implemented both on a regional and bilateral level. The overall active portfolio amounts to almost €320 million of EU support under EU4Business, and has triggered a total of more than €1.96 billion in loans granted by partner banks to SMEs in the region,” reports the official website of the EU4Business project.
In Georgia, the EU4Business program supports SMEs and BSOs (Business Support Organisations: organizations such as Chambers of Commerce, sectorial and other business associations). The EU4Business gave out over 39,000 loans worth over €1 billion to SMEs in Georgia over 2009-2018.
With the help from EU, small and medium-sized entrepreneurs can have special access to markets, finance and training. It was exactly this part of the project that helped Levan Eristavi, a 27-year-old entrepreneur, give new life to an abandoned building in Telavi, Kakheti. Having received €2.6 million through the EU4Business-EBRD credit line in 2017, near the end of 2019, Eristavi and his partners had already completely renovated a derelict building. Holiday Inn Telavi is now an EU-standard hospitality business, generating 65 new jobs and attracting thousands of tourists to the region.
Holiday Inn Telavi is fully adapted to EU standards, both in terms of infrastructure and in the training of its professional staff.
“By investing in upgrades of basic components, such as heating and cooling, communications, sewage, water and electric systems, Holiday Inn Telavi increased its product and service quality while exercising environmental responsibility and decreasing operating costs: the new machinery consumes less energy and emits less carbon,” writes EU4Business about the recently-opened hotel in Telavi.
What’s more, Eristavi claims that after carrying out their plans successfully, the hotel co-founders got a 15% cash-back funded by the EU, which they later reinvested in business growth.
The open calls for applicants for the various EU4Business projects can be viewed online on their website.
The EU-funded EU4Business Facility Project ensures a coherent and coordinated approach to the implementation of EU4Business, as well monitoring and reporting of projects and programs, and communication and visibility for the initiative.
The EU-funded EU4Business Facility Project is implemented by a GFA-led Consortium, GFA being one of the leading European consulting firms active in the development cooperation sector, consisting of four partners – GFA Consulting Group GmbH, Action Global Communications, CARSA (service provider for businesses and public sector organisations), and ECORYS (one of the oldest economic research and consulting companies in Europe)
By Nini Dakhundaridze
Image source: EU