georgia case studies

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb)

Case studies

Financing Georgian economy’s growth - 2008

With two crises one after the other, 2008 was not the best year for the Georgian banking sector. The August 2008 Russia-Georgia conflict, followed by the global financial crisis, left investors nervous with the Georgian banking system under pressure as depositors withdrew money. So vulnerable was the country after the August conflict that foreign governments and international donors pledged US$ 4.55 billion to aid Georgia’s recovery.

A long-term investor in Georgia, the EBRD is standing by its partner banks in difficult times. Over the last four years, the EBRD has invested over US$ 150 million in the Georgian banking sector through equity, long-term funding and trade facilitation guarantees.

In December 2008, the EBRD teamed up with the International Finance Corporation, a member of the World Bank Group, to provide a financial package of US$ 200 million to the Bank of Georgia. This is Georgia’s largest bank as well as the first Georgian company and the second bank in Eastern Europe and the Caucasus to be listed on the London Stock Exchange. The finance helps the Bank of Georgia maintain sufficient liquidity during the financial crisis and continues to assist retail clients and small and medium-sized businesses, two key client sectors that drive economic growth in Georgia.

After several years of successful integration into the world economy, Georgia was also affected by the impact of the global financial crisis. The impact was felt by local banks and businesses when access to international and local finance tightened.

The EBRD-IFC investment into the Bank of Georgia is helping to promote a stable and healthy banking sector. The financing is EBRD’s largest transaction to date in the financial sector in the early transition countries.

The EBRD is one of the largest investors in Georgia. It has financed over 80 projects with a total project value of €780 million in major sectors of Georgia’s economy from agribusiness to energy. About 85 per cent of investments are in the private sector.

Bank of Georgia’s first factoring transaction - Donor Report 2008

In August 2007 Bank of Georgia became the first Georgian bank to sign a factoring transaction under the TFP. The agreement with Magoili Ltd, worth €136,000 and covering the supply of raw materials for road construction, allows the company to immediately get funds for its deliveries instead of waiting for payments from its clients.

Factoring is a fast and flexible method of improving a company’s cash flow and providing working capital, and the EBRD has included it within the TFP as a further means of transferring trade finance know-how and encouraging innovation.

With funding from the European Union, Bank of Georgia engaged Ben Hosh, a consultant and partner of Triangle Trade Finance, to advise on factoring principles and service provision. Upon the successful conclusion of the agreement with Magoili, Mr Hosh said: “It is exciting to see Bank of Georgia introduce factoring and to take its place in the rapidly expanding global factoring community… I am confident that this is the first of many such transactions that will take place to support the growing SME sector in Georgia.”

Bank of Georgia was the first Georgian institution to become an issuing bank under TFP in 1999, and has since used TFP facilities for financing almost 300 foreign trade transactions worth €135 million.

Bringing clean drinking water to cities in Georgia - Sustainability Report 2006

Water supply is a serious problem throughout Georgia. Built in the 1930s, the network of water pipes and wells in Georgia’s main cities is in serious need of repair. Today, around 80 per cent of Kutaisi’s water pipes are rusted and unusable while Poti’s 45,000 inhabitants have access to running water for only three hours a day on average. Almost half the water that enters the cities is lost through leaks, and less than a third of water consumption is billed.

To modernise the supply network and to provide a 24-hour water supply to local people, the EBRD is lending €5.5 million to the cities of Kutaisi and Poti. The EBRD’s loans will be used to improve well fi elds and transmission pumping stations in Kutaisi and to construct a new 47-kilometre water pipeline for Poti. In both cities, fi nancing will also be used to install meters for every household. This will improve payment collection and encourage careful use of water.

The EBRD’s projects will result in cleaner water for around 150,000 people. The investment will reduce water-borne illness, lower the pollutants discharged into the Black Sea and cut energy costs by one-third.

The EBRD’s loans are being boosted by donor funding (provided by the ETC Fund and the Swedish International Development Cooperation Agency), which will partly finance implementation of the projects.