Strategies of the Development of Entrepreneurship and SME

7. Pand TECHNOLOGIES8. Amaranda9. Akhaltsikhe Business Centre, Regional Non-government Organization10.Business Centre11.Intellect-Company12.Shore-Bank Consulting Service13.Association of Business Consulting organizations-Georgia (ABCO-Georgiaincludes 15 organizations in different regions)14.Association “Woman and Business15.Scientific –Technical Information and Economic Research Institute(TECHNINFORMI)16.Business Communication Centre (BCC)17.Georgian Investment Centre18.Georgian Export Promotion Agency19.Business Incubator (Association “Woman and Business”)The International Finance Corporation and BP, the two largest investors in the Georgianeconomy, recently launched the Georgia Small and Medium Enterprise (SME) Policy Project.The project aims to improve the business enabling environment in the country by streamliningregulation of the private sector. The Project is a three-year, USD1.5 million initiative. BP and itsoil and gas partners have contributed USD750,000 under the Regional Development Initiative(RDI). The Canadian International Development Agency (CIDA) has contributed USD250,000,while IFC is providing USD500,000. 415.4.4. Financing SMEsIn Georgia the banking sector is booming. However, Georgian SMEs continue to sufferfrom a lack of credit access opportunities. SMEs hold a very modest share of the bankingsector’s credit portfolio GEL 2.7 billion in 2006 to be exact – an annual increase of 55.5%.Meanwhile the curve of SME sector development is barely growing as only 5%-10% of potentialSME borrowers get bank credits.Obstacles to SME credit access in Georgia include the country’s underdeveloped stockand capital markets. Despite the staggering development of the banking sector, still there is abig gap between supply and demand as the credit portfolios of Georgian banks fall far short ofbeing able to provide financing to all those who seek it.Ketevan Sutiashvili, Credit Access Manager of the US Agency for InternationalDevelopment (USAID) financed SME Support Project states, that capital turnover of smallbusinesses fluctuates at around GEL 100,000, occasionally reaching GEL 500,000 per annum.Credits access is a big problem for them due to several reasons including incompetence andlack of professional know-how.First of all, SMEs often have little or no financial collateral to back their credits at banks.Secondly, they are not sufficiently competent to keep proper track of their business activities,which is accordingly reflected in their financial reports.“Most of them keep financial accounts in notebooks. Sometimes they look quite funny,they just write: ‘I sold this item and bought that item.’ They lack systematization as a rule. Formany of them starting a business is a matter of survival for their families. Therefore many41 IFC and BP Spur Small and Medium Enterprise Sector Development in Georgia, Tbilisi, 17 April 2öö6.117