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Opportunities and barriers to promote SMEs’ resource efficient and cleaner production financing in Georgia

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National Policy Dialogue on “Improving Access to Green Finance for Small and Medium-Sized Enterprises in Georgia”
→ Opportunities and barriers to promote SMEs’ resource efficient and cleaner production financing in Georgia – Tatiana Chernyavskaya

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Opportunities and barriers to promote SMEs’ resource efficient and cleaner production financing in Georgia

  1. 1. Opportunities and barriers to promote SMEs’ RECP financing in Georgia Tatiana Chernyavskaya Tbilisi, July 16th 2019
  2. 2. Results of RECP Demonstration Project • 18 national experts were trained in RECP methodology; • RECP assessments conducted in 18 demonstration companies from food, chemicals and construction materials sectors • In-depth techno-economic assessments of RECP options were carried out in 15 companies. These assessments provided the basis for developing investment project proposals. • RECP clubs involving 35 SMEs were established in the Kakheti region and three municipalities: Kaspi, Kutaisi and Rustavi.
  3. 3. EaP GREEN Project Impacts annual energy saving 25 000 MWh annual water saving 136 000 m3 materials saving 2 000 t air emissions reduction 1000 t CO2eq waste water reduction 5 680 m3 solid waste reduction 7 t Economic benefits:  > 1 M EUR/yr saving after implementing only a first set of low cost RECP measures  Average payback period < 2 years Environmental benefits:
  4. 4. 0 20 40 60 80 Did you implement the project/options proposed by the RECP experts? Yes Yes , partially No I cannot answer 0 10 20 30 40 50 60 70 80 Lack of financial resources required for implementation of the proposed Project There are other priority problems to be resolved in the company which require… Lack of time required for implementation of the proposed Project The project is being implemented I cannot answer Other If you did not implement the project, indicate why? UNIDO survey on RECP Financing
  5. 5. SME Finance in EaP countries Example of Georgia SMEs EaP Source: EIB, Neighbourhood SME Finance in Georgia Observations • Banks are the main source of external financing • SMEs in agricultural sector have limited access to external financing • IFI credit enhancement programs are primary utilised by larger companies • Very few banks have made use of credit guarantee schemes developed by IFIs
  6. 6. Survey Result Demonstration 22% 2% 2% 37% 9% 4% 2% 13% 7% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% Yes Yes, partially No I cannot answer Did you implement the project/options proposed by the RECP experts? Micro (up to 10 employees) Small (10-50 employees) Medium (50-250 employees) Large (more than 250 employees)
  7. 7. 2% 5% 60% 2% 19% 6% 2% 5% 0% 10% 20% 30% 40% 50% 60% 70% The company plans to impement these projects by its own funds in 2017-2018 We have already implemented Lack of financial resources required for implementation of the proposed Project Lack of time required for implementation of the proposed Project There are other priority problems to be resolved in the company which require financial resources Too long‐term, we may change our business before payback If we received grants we would implemet the suggested measures I cannot answer If you did not implemented the project, indicate why? Survey Result Demonstration
  8. 8. 41% 4% 43% 8% 3% 1% 0% 10% 20% 30% 40% 50% Interest rates are high on business loans I would like to take a loan I do not want to take the risks, because the economic situation in the country is unstable I cannot answer I already have a loan It is difficult to communicate with banks If not, please highlight possible reasons: Survey Result Demonstration
  9. 9. Survey Result Demonstration 85% 4% 11% Are your decisions influenced by policy or regulation? Yes No I cannot answer
  10. 10. Survey Result Demonstration 28% 26% 26% 4% 9% 1% 3% 2% 1% 0% 5% 10% 15% 20% 25% 30% Adoption of Energy efficiency regulations Increase penalties for environmental pollution Tightening environmental legislation The law is strict and penalties are hight Encourage companies Financing Benefits / Privileges All Changes I cannot answer What expected changes in regulation would increase demand for RECP projects?
  11. 11. Summary • Environmental protection is important for the companies, but their decisions are influenced by government regulations, so tightening environmental legislation will help to increase demand for RECP projects • Most of the respondent companies are willing to finance the profitable projects, but they do not want to take a risk, because they think that economic situation in the country is unstable, also interest rates are high; They need help to take low rate debts and grants • Lack of financial resources was the main reason why only some of the companies implemented the proposed projects fully or partially.
  12. 12. Thank you! Tatiana Chernyavskaya International Project Coordinator| UNIDO t.chernyavskaya@unido.org www.recp.ge www.unido.org/cp

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