MICROCAPITAL BRIEF: Georgia Seeks to Ease MSMEs’ Adjustment to COVID-19 with World Bank Funding for Fintech, Loan Guarantees, Grants

The World Bank recently approved EUR 85 million (USD 103 million) for a project called “Relief and Recovery for Micro-, Small and Medium Enterprises (MSMEs),” which will support businesses in Georgia that have been affected negatively by the COVID-19 pandemic. The project includes funding to expand Georgia’s financial infrastructure, such as to support online banking, know-your-customer (KYC) protocols and support for “the use of movable collateral, such as vehicles, equipment and intellectual property.” MSMEs also will gain access technical assistance relating to “managerial, digital and other COVID-proofing practices.” This is to include a particular focus on digitalization support for female entrepreneurs and entities working to minimize climate change and its effects.

Other elements of the project direct funding to MSMEs. For example, local financial institutions will be offered partial credit guarantees for loans to MSMEs. Businesses also will be able to apply through Enterprise Georgia, an agency of the government of Georgia, for assistance making interest payments due on prior loans. In addition, Enterprise Georgia will issue grant funding to approximately 6,000 MSMEs.

Governor Koba Gvenetadze of the National Bank of Georgia, the nation’s central bank, said, “the instant payment system, under the project by the World Bank, will facilitate instant access to funds for payees, including MSMEs, enabling better cash management and helping firms manage day-to-day liquidity. Furthermore, financial institutions and fintech (financial technology) companies will be able to implement different payment initiation channels and offer them to end users in a cost-efficient way.”

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2021, it has 189 member nations. The group encompasses: (1) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (2) International Finance Corporation; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During the 12 months ending June 2020, the World Bank Group disbursed funds totaling USD 54 billion.

By Sophie Fiala, Research Associate

Sources and Additional Resources

World Bank press release
https://www.worldbank.org/en/news/press-release/2021/05/11/world-bank-pledges-eur-85-million-to-support-job-creation-and-firms-affected-by-the-pandemic-in-georgia

Enterprise Georgia homepage
http://www.enterprisegeorgia.gov.ge/

National Bank of Georgia homepage
https://www.nbg.gov.ge/

Previous MicroCapital brief on World Bank Group
https://www.microcapital.org/microcapital-brief-government-of-madagascar-ifc-local-insurers-partner-on-agricultural-insurance-seeking-to-lower-risk-of-lending-to-farmers/

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