Since Georgia started on-going development towards the formation of a free and competitive economic system, various areas of private sector have achieved significant results. Nevertheless, owing to various factors, numerous small and medium enterprises are experiencing difficulties in terms of access to finance. According to the 2010 UNDP survey, 43% of businesses failed due to the absence of free capital, when 66% of respondents reported that a bank loan was the main option for start-up and expansion.
The USAID-funded Economic Prosperity Initiative (EPI) is a 40.4 USD million, four year program designed to strengthen country’s economic development and ensure its sustainability. The overall goal of the project is to improve enterprise, industry, and country-level competitiveness by identifying and targeting key external and internal factors to enhance the growth rates and efficiency of enterprises in the economy. A subset of that goal is to increase capacity of the Georgian financial market.
Within the pool of generally renowned non-banking financial institutions, investment funds, factoring companies and asset-based companies are those which have not achieved tangible growth in Georgia. On the other hand, financial institutions like MFIs, leasing and insurance companies as well as private pension funds can be considered relatively well-developed segments of the non-banking financial sector,
which despite legislative and other constraints.
In order to map the inventory of financial products available for SMEs, EPI closely cooperated with key players of the non-banking financial sector. EPI conducted meetings with representatives of Georgian National bank (regulatory board) and chairpersons of key associations (GSMEA, AMI, GIA, LAG). This report was prepared through of the examination of related legislation and other materials, as well as through interviews of key participants in the market. The selection of organizations was based on the following criteria: assets, market share, experience and awareness, geographical coverage, and number of employees.