EPI Annual Report: Year 3

The results of the parliamentary elections that took place on the first day of EPI’s third year profoundly changed the political landscape in Georgia and with it EPI’s priorities for economic policy reforms. As the priorities of the new government became clear, a number of EPI’s policy initiatives were suspended. EPI’s support to newly elected leaders across key ministries became transitional, focused on securing buy-in for ongoing reforms and identifying new opportunities to bring Georgian policies in line with international best practices.

Many of EPI’s relationships in government organizations endured after the election, and they ultimately served as a foundation on which to build ties with new senior leaders. Through this period, the quality of EPI technical assistance, the strength of ties EPI has forged between public and private stakeholders, and results in targeted value chains continued to demonstrate EPI’s value as a neutral, supportive partner in Georgia’s economic development. EPI was able to immediately engage with new Government of Georgia (GoG) counterparts as early as two months after the elections.

As a result, in the first quarter of Year 3, EPI was able to support USAID as an advisor to the new government. EPI continued to focus on building sustainable structures between the public and private sectors, strengthening economic governance through dialog and engagement. A focus on mechanisms to engage the public and private sectors together has resulted in tangible, far-reaching policy improvements, and it has catalyzed a sea change in the way the public and private sectors interact in meeting Georgia’s toughest economic and policy challenges. Among them, three activities especially stand out:

  • EPI facilitated the development of an agrarian land registration strategy and implementation plan, bringing together three ministries in an effective interministerial dialogue.
  • EPI supported the Minister of Finance to establish a sustainable public-private working group to simplify and clarify the Tax Code, a long awaited initiative by the Georgian businesses and taxpayers.
  • EPI designed a state property management and privatization strategy and implementation framework. With EPI support, GoG management of state property will become more efficient and transparent, and unproductive assets will be freed or repurposed to support growth.

EPI support also resulted in tangible improvements to the economy in target value chains, where new mindsets and business practices promoted by EPI are taking root. Georgian producers and enterprises have seen improved productivity and revenues, and a new focus on quality and high-value markets as keys to economic prosperity has begun to take hold.

Through the end of Year 3, EPI facilitated a total of USD 196.5 million in domestic finance, including investments and commitments, loans, leasing and other financial products. EPI activities supported a total of USD 280 million in exports, almost doubling the target of USD 150 million. Results included 10,459 new jobs in target value chains, of which close to 90% are in M&S sectors. M&S companies have seen average revenue increases of 35%, or USD 266 million across 593 businesses. EPI’s assistance in Year 3 focused on enabling value chain enterprises to take more ownership of their own capacity building. In addition to the various sector associations that are emerging as focal points for policy advocacy and sector strengthening activities, the seeds of other organizations—like the Georgian National Convention Bureau in MICE tourism or a chapter of the Supply Chain Council in transport and logistics (T&L)—have been sown for development in Year 4.

In the agricultural sectors, estimated revenue increases averaged 63%, to USD 61 million, across 8,577 farms and 301 agribusinesses, and 2,068 new hectares are now being cultivated under improved technology or management practices as a result of EPI assistance. EPI supported the formation of 46 informal farmer groups, and EPI advisors effectively linked agricultural training at EPI’s Knowledge Plots to some 2,000 farmers. The resulting improvements to their access to finance and quality inputs have markedly improved overall productivity and quality, and during the Year 3 mandarin and hazelnut harvest periods these groups have already seen commercial benefits. EPI specifically focused on directly linking the informal farmer groups with processors to create the right market incentives for Georgian producers to increase quality. For the first time, farmers have seen tangible, financial benefits, and the changing mindset that is resulting is one of the most significant achievements facilitated by EPI in its agricultural activities.

In the hazelnut sector, these quality improvements resulted in direct commercial linkages for processors with Ferrero, which is now sourcing an increased amount of hazelnuts from Georgia under quality standards that exceed European Union (EU) benchmarks. EPI also focused on connecting processors, packing houses and greenhouse operators to high-value markets in Ukraine, Belarus, and the EU that increased their incentives to improve management of their operations, adoption of standards, such as GlobalGAP by a mandarin grower association and its packing house, and build trust at the sector level. This level of trust has now manifested in an increased interest by agricultural actors to create associations or cooperatives that will be the focus of EPI’s assistance during Year 4 of the project.

EPI continued to facilitate commercial linkages between value chain enterprises and buyers in domestic and export markets. EPI also focused on strengthening the skills of workers through successful workforce development, especially in the apparel and wine tourism value chains, and support to four vocational colleges (VoCs) introduced public-private partnership models into the workforce development space. EPI training built the skills and improved customer service in tourism and hospitality, and more Georgian educators will seek to acquire internationally-recognized certifications for continuous delivery of courses after EPI ends.

In the T&L sector, EPI supported the GoG to improve the competitiveness of the Caucasus Transit Corridor (CTC), and stakeholders across the public and private sectors have ramped up the development of a national trade data exchange. EPI also supported these same public and private stakeholders’ international linkages at the third regional conference on trade and transport facilitation.

Finally, EPI has itself evolved in important ways. True to the values of “Georgians for Georgia,” Deloitte transitioned leadership of the project and its components to Georgian leadership. These professionals will be among the most powerful agents of sustainability that EPI leaves behind, as they take the skills and experience they have gained under EPI and advance their careers in the public and private sectors.

Further Reading