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IFC and BP Spur Small and Medium Enterprise Sector Development in Georgia


In Georgia:
Tamara Razmadze
Georgia SME Policy Project
 Email: trazmadze@ifc.org

Tbilisi, April 17, 2006 – The International Finance Corporation and BP, the two largest investors in the Georgian economy, recently launched the Georgia Small and Medium Enterprise (SME) Policy Project. The project aims to improve the business enabling environment in the country by streamlining regulation of the private sector. The SME Policy Project will work closely with the Georgian government to improve two regulatory issues in particular, inspections and permits/licenses.
 
Implemented by IFC, the Georgia SME Policy Project is a three-year, $1.5 million initiative. BP and its oil and gas partners have contributed $750,000 under the Regional Development Initiative (RDI). The Canadian International Development Agency (CIDA) has contributed $250,000, while IFC is providing $500,000.

The project has the following objectives:
  • Reducing the regulatory burden to businesses. The project will work directly with key regulatory agencies to improve their practice of conducting business inspections and issuing operating permits/licenses, by streamlining their procedures according to international best practices. This will increase the efficiency and transparency of the regulatory system.
  • Monitoring the business environment for SMEs. The project will conduct surveys of entrepreneurs in Georgia, providing first-hand information on administrative barriers hindering SME development. The IFC SME survey reports will present clear recommendations for improvement to the government. The survey instrument will also be used to measure the effect of administrative reforms on businesses against a baseline established by IFC’s first survey in Georgia, conducted in 2004.
  • Improving SME access to information. The project will produce easy-to-read materials aimed at helping Georgian SMEs comply with government regulations. These materials will raise this awareness of small businesses about their rights and responsibilities as participants in a market economy.

A developed SME sector is critical for Georgia to ensure future economic growth and stability: SMEs constitute 97% of the country’s active firms. However, SMEs’ share in GDP remains extremely low – only 10% in Georgia as compared to more than 60% in most European Union countries. Although the Georgian government has taken a number of steps to streamline the regulatory framework for businesses, further improvement, in accordance with best international practice, is necessary.

Tania Lozansky, IFC’s Principal Operations Manager for SME Policy, emphasizes, “IFC has contributed to a more hospitable environment for SMEs in a number of CIS countries, by leading the drive to implement regulatory reform. I believe that our extensive experience can now be applied successfully to improving the business climate in Georgia.”

David Glendinning, Communications and External Affairs Manager of BP Georgia, added: “BP and its partners in oil and gas pipeline projects have committed more than $100 million to social investment projects. SME development is one of the most important areas of BP’s social investment initiatives, which we believe will help the country maintain its rapid progress in social and economic development.”

IFC and BP signed an agreement to conduct the Georgia SME Policy Project on March 2, 2006, at the Invest in Georgia Forum in New York City.

The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C.  IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent.  Its 178 member countries provide its share capital and collectively determine its policies.

The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. For more information, visit www.ifc.org

BP is of one of the world's largest energy companies. Its main activities are the exploration and production of crude oil and natural gas; refining, marketing, supply, and transportation; and the manufacture and marketing of petrochemicals. BP also has a growing presence in gas and power and in solar power generation. For more information, visit www.bp.com

BP first came to Georgia in 1996, where it has spent the last 10 years building up a business that includes construction and operation of strategic oil and gas pipelines, fuelling operations through Air BP, and exploration in the Black Sea.

BP and its partners have an established track record of implementing major social investment projects in Georgia. The company seeks to complement the direct contribution made through its core business operations with social investment and community programs focusing on a range of themes. As a major long-term investor in Georgia with an interest in fostering social and economic development, BP and its oil and gas partners established Regional Development Initiative. This is an innovative mechanism to provide a long-term contribution to sustainable socioeconomic development across Azerbaijan, Georgia, and Turkey. It will combine the experience, skills, and resources of BP and its partners with the expertise of development organizations. Projects will contribute to the achievement of national and international development goals.

BP's partners in the Regional Development Initiative are: Statoil, SOCAR, TPAO, Total, LUKAgip, NICO, Chevron, ExxonMobil, ITOCHU, Devon, Amerada Hess, ENI, ConocoPhillips, INPEX.