- A new report identifies key sectors to boost Georgia's private sector-led growth.
- Broad adoption of digital technologies could help the country reach high-income status.
- E-commerce and fintech are among the most promising sub-sectors.
Tbilisi, Georgia, December 20, 2023—Tapping Georgia's vast renewable potential, developing its transport and logistics infrastructure, and supporting digital businesses could boost the country's productivity and economic competitiveness, helping the country reach high-income status, according to a new IFC and World Bank report. The Georgia Country Private Sector Diagnostic (CPSD)—the country's first—aims to support private sector growth by identifying opportunities and pinpointing constraints.
Despite positive trends, structural challenges persist, including weak productivity growth and the limited creation of high-quality jobs. In addition, while the country's business environment is favorable, low digitalization levels hamper broader business innovation. The report identifies the key sectors to accelerate private-sector-led growth and provides policy recommendations to unlock that potential.
"Georgia's economy has proved resilient during the pandemic, but the country is striving to do more. Reforms in key sectors could help Georgia realize its renewable energy potential, increase its participation in global value chains, and drive productivity. Attracting private sector investment would be key and IFC is ready to underpin these efforts," said Alfonso Garcia Mora, IFC's Vice President for Europe, Latin America, and the Caribbean.
"Georgia has the potential to further unleash private sector development. As the report shows, this could be achieved by increasing the enforcement and predictability of laws and regulations as well as by supporting connectivity and logistics, digital transformation, and green investments as catalyzers of growth," said Rolande Pryce, World Bank Regional Director for the South Caucasus.
Renewable energy: Georgia boasts a substantial renewable energy potential of 18 gigawatts, with less than 20 percent harnessed. To tap into this potential, the country would benefit from a clear and reliable policy, regulatory, and permitting framework, and sustainable incentive schemes.
Transport and logistics: As the gateway to the Caucasus and Central Asia, Georgia aspires to become a regional logistics hub. To accomplish this, the country will need to expand the capacity of seaports, strengthen information flows and data accessibility, and improve the reliability of railroad operations, among others. Enhancing connectivity along the Middle Corridor would facilitate the integration of Georgia into the global economy.
Digital business: While Georgia excels in some areas, such as ranking among the top three countries worldwide for contactless payments, the development of digital businesses needs to be accelerated. E-commerce and fintech are among the most promising digital subsectors. To drive productivity and competitiveness, key challenges, such as a lack of digital skills, will need to be addressed. For example, only about 1 percent of the population possesses basic programming skills. The country will need to foster programming skills and address challenges related to technology and early-stage finance.
The full Georgia CPSD can be downloaded here.
More information about the Country Private Sector Diagnostics can be found here.
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