Rural Small and Medium Enterprises Development in Georgia

Georgia’s small and medium enterprises (SMEs) are poorly performing in terms of productivity and job creation. The project aims at enhancing accessibility for rural business support services and affordable financing, which are the major causes of underperformance. With improved capacities and competitiveness, rural SMEs will increase productivity, diversify markets, be resilient to external shocks (such as COVID-19 crisis) and create jobs and income opportunities for rural women and men.

Country/region Topic Period Budget
Employment & economic development
Business support & economic inclusion
SME development
01.07.2020 - 31.12.2024
CHF  4’599’650
Background Georgia’s SME sector is poorly performing in terms of productivity and job creation. Rural SMEs mostly operate in food processing, tourism, trade, and agriculture sectors. They are run by women and men with no formal financial, or business management training, lacking awareness of finance products and expectations of financial service providers. These systemic weaknesses negatively impact on access to financial products. The resulting undercapitalization limits innovations and productivity increase among rural SMEs, which trigger higher level of rural poverty and youth outmigration. This has been further compounded by the COVID-19 crisis, especially in rural areas.
Objectives The goal of the project is to increase income and employment for rural women and men. Overall, 12’600 rural women and men will get tangible benefit from the project, contributing to the reduction of poverty and inequalities in Georgia.
Target groups

The project will directly target market players providing business advisory services to rural SMEs and start-ups (i. e. national agencies, business associations and consultancies). Their capacities will be enhanced for increasing the effectiveness of their services and thus facilitating SMEs’ access to finance.

The end beneficiaries of the project will be women and men in rural areas of Georgia, who are SME owners or employees. Enhanced access to finance will allow rural SMEs to upscale and diversify their business operations that stimulate job creation. 1’500 SMEs (of which 450 owned by women, 75 owned by ethnic minorities, 500 small-holder farmers) will increase their net additional income by CHF 5.5 million, creating 175 full time equivalent jobs. At least 30% of those having new or improved employment will be women and 5% will represent ethnic minorities.

Banks will benefit indirectly from the project (in Phase 1 Liberty Bank and Credo Bank), reaching out more effectively to their clients in rural areas.

Medium-term outcomes

The project will pursue the following two outcomes:

  1. Rural SMEs sustainably grow through better access to finance. At least 1’800 SMEs will take up business support services and file 2’500 loan and grant applications with success rates of 80% and 30% respectively.
  2. Market players have improved capacities to respond to the needs of rural SMEs for access to finance. At least 10 agencies will provide sustainable, including fee-based, services to rural SMEs resulting in total CHF 5.7 million net additional volume of loan/leasing grants approved for them.

Expected results:  

  • Enhanced awareness and access of rural SMEs to appropriate finance and BSS; 
  • Enhanced financial literacy and management capacities of rural SMEs; 
  • Capacities of national agencies, business associations, consultancies and other sector players increased and aligned with rural SME needs and demand; 
  • Communication mechanisms are in place among market players to better understand and lobby for rural SME needs.

Results from previous phases:  

  • The implementing partner conducted studies including market and stakeholders’ analyses to obtain the necessary data on rural SME sector (in particular baselines and targets). 
  • An intervention strategy was elaborated and target rural SME sectors were defined. 
  • The entry points were clarified for the capacity building of the key stakeholders. 
  • The Project Document package was developed for the Main Phase.
  • Organization, steering and monitoring arrangements were established.

Directorate/federal office responsible SDC
Credit area Swiss cooperation with Eastern Europe
Project partners Contract partner
International or foreign NGO
Private sector
Swiss Non-profit Organisation
  • Other international or foreign NGO North
  • Foreign private sector North
  • Swisscontact

Other partners
The consortium of Swisscontact (lead), Mercy Corps Europe and the Springfield Centre for Business in Development was awarded this mandate through an open tender procedure
Coordination with other projects and actors The project will work in synergy with the European Investment Bank (EIB), which recently became very active with its on-lending operations earmarked to SME support in Georgia. Through its Outreach Program and Eastern Partnership Technical Assistance Trust Fund, the EIB will concentrate its efforts on commercial banks active in rural areas, providing finances and technical assistance to improve SME lending practices and products, such as under its recent agreement with Liberty Bank and Credo Bank. The project will build on results of the SDC-financed ALCP, WEE VET and SECO IFC projects in Georgia, which worked with rural SMEs and female entrepreneurs to improve their technical and business skills.
Budget Current phase Swiss budget CHF    4’599’650 Swiss disbursement to date CHF    4’069’824
Project phases Phase 1 01.07.2020 - 31.12.2024   (Current phase)