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 procedures.
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.
About IFC
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
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