Tbilisi, Georgia, December 18, 2008—The
August 2008 conflict reduced the revenues of 77 percent of businesses in
Georgia, although most businesses are now optimistic that the business
environment will improve in the short term, according to a new study by
IFC, a member of the World Bank Group.
The study, presented to the government
of Georgia today, aimed to identify areas of the private sector that were
most affected by August 2008 events. It revealed that the conflict hurt
most severely the revenues of the firms operating in construction, transport
and trade sectors. The survey is part of IFC’s strategy to monitor business
environment in Georgia and provide recommendations for removing barriers
to business development.
IFC surveyed 400 enterprises in Tbilisi
and six other large Georgian cities. According to the businesses
surveyed, the conflict resulted in an average reduction of 3.3 percent
in their work forces.
More than half the businesses—55 percent—do
not expect revenues to change in the next six months, while 33 percent
believe that revenues will increase. Two thirds of the firms expressed
high or medium optimism about short term business environment in Georgia.
“We believe that private-sector development
remains the most effective way to create jobs and ensure economic growth
in Georgia,” said Irina Kokaia, IFC Georgia Business Enabling Environment
Project Manager. “Therefore, especially in this challenging time, the
project will continue to help government agencies identify the key problematic
areas for the business activity in the country.”
To date, the project has conducted two
national surveys of small and medium enterprises in Georgia and has identified
the main administrative and regulatory barriers to the development of the
business sector. It has also helped the government draft a Decree on Procedures
for Licensing of Natural Resources, which is expected to have a $1.3 million
economic impact. The project has consulted or trained 160 government officials,
non-government and private sector representatives on improved regulatory
The IFC Business Enabling Environment
Project is supported with funds from BP and its oil and gas co-venturers
and the Canadian International Development Agency.
IFC, a member of the World Bank Group, creates opportunity for people to
escape poverty and improve their lives. We foster sustainable economic
growth in developing countries by supporting private sector development,
mobilizing private capital, and providing advisory and risk mitigation
services to businesses and governments. Our new investments totaled $16.2
billion in fiscal 2008, a 34 percent increase over the previous year. For
more information, visit www.ifc.org.
For more information about IFC’s
The Canadian International Development Agency, www.acdi-cida.gc.ca/index.htm