Enterprise Georgia Evaluated Positively

Audit and business advisory firm BDO Georgia released a report last week analyzing and evaluating the state program Enterprise Georgia. Enterprise Georgia is administered by the Ministry of Economy and Sustainable Development of Georgia. The program is a collection of initiatives that support investment, business development, and exports. It is the first Georgian government program “mandated to facilitate export and private sector development through a variety of financial and technical support mechanisms,” explains its website.

Enterprise Georgia uses a variety of approaches and mechanisms to support Georgian entrepreneurs. The support program “helps SMEs expand and enhance operations, become more market oriented, and turn new ideas into profitable businesses by offering them financial and technical assistance tools.” As of January 2019, Enterprise Georgia has supported 441 businesses with a total investment value of more than 1 billion GEL ($375 mln), through which 16,600 new jobs have been created – according to internal figures released by the program.

The BDO report looks at the efficiency of the financial accessibility and technical assistance components of the program. BDO followed 85 beneficiaries of Enterprise Georgia. These beneficiaries were at least two years out from their participation in the program, and included 30 startups and 55 more established companies who sought to reequip or expand their businesses through Enterprise Georgia.

Overall, BDO evaluated Enterprise Georgia quite positively, praising the program’s success improving beneficiaries’ production scales, quality, product diversification, and competitiveness against imports. Some of the report’s most interesting findings are that, from 2014-2018, the beneficiaries surveyed created more than 164 million GEL ($61.5 mln) in GDP, of which 54% was contributed by growing enterprises and 46% by startups. Of this sum, 79% came from Tbilisi-based companies – although only 60% were located in Tbilisi. This data shows that the startups included in the research are proportionately more revenue-generating than the established companies, and that companies based in Tbilisi are more revenue-generating than those in the regions.

The beneficiaries surveyed generated a total revenue of 390 million GEL ($146.3 mln). Among the surveyed beneficiaries, a total of 3,033 new jobs were added due to their participation in Enterprise Georgia, adding a total salary increase of 25.6 million GEL ($9.9 mln). The ratio of loans and capital payments in relation to gross investments made by the surveyed beneficiaries from 2014-2018 is approximately 38% – more than 247 million GEL ($92.7 mln). Surveyed beneficiaries paid more than 42.5 million GEL ($16 mln) in state taxes between 2014-2017.

One of Enterprise Georgia’s stated goals is to support Georgian companies to increase their exports. Between 2013 and 2018, the 85 surveyed beneficiaries’ export sales were recorded at 311 million GEL ($116.7 mln).

The report released last week is only the first phase of the research and consulting contract between BDO Georgia and the Ministry of Economy and Sustainable Development. Phase two will see BDO providing recommendations to the ministry on how to increase the program’s efficiency and how the program can increase beneficiary companies’ performance. BDO was hired to conduct the research following a tender announced by the Ministry of Economy and Sustainable Development. The contract amount was 298,481 GEL ($112,000).

By Samantha Guthrie

Image source: Enterprise Georgia

25 February 2019 17:05