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While until 2020, Georgia experienced a period of economic growth, the county’s SME sector underperforms relative to others. In 2018, Georgian SMEs accounted for only 29% of employment and 33.2% of value addition compared to global averages of 71% and 67% respectively.
A key source of weak competitiveness can be found amongst rural SMEs. Heavily oriented toward low valued-addition activities including agriculture, agri-processing and trade, rural SMEs contribute only 16% of total SME output. This underperformance in the rural economy is itself both a cause and effect of unequal access to some of the key services and resources upon which a thriving SME sector depends. The COVID pandemic has also underlined the importance of a better capitalised and supported SME sector.
A long-term and systemic approach to the challenges facing the sustainable financing of the rural SMEs in Georgia is needed. The Rural SMEs Development Project focuses on sector resilience and offers a potentially critical lifeline as the sector adjusts to a post-pandemic reality.
Through its MSD approach, it promotes building a more effective and resilient system of rural SME services and support based on a realistic assessment of the capacity and incentives of market actors and project partners to guide and sustain those services.
The Rural SME Development project aims at increasing rural income and employment in Georgia. The project will support the both the supply and demand-side of the market in order to improve financial and business support services to rural SMEs.
The direct beneficiaries of the project will be SMEs and market players (national agencies, business associations and consultancies) providing business advisory services to rural SMEs. The end beneficiaries will be women and men in rural areas of Georgia, who are SME owners or employees.