Eugeorgia.info interviewed Christian Danielsson, Director General at the European Commission’s Directorate for European Neighbourhood Policy and Enlargement Negotiations on the European prospects and support programmes for Georgian small and medium companies (SMEs).
We know very well that the EU makes enormous efforts to help Georgia on its path to enter EU markets and thus enhance DCFTA from both ends.
The Georgian economy like most economies are based on small and medium enterprises. To reduce unemployment, develop economy or capital, it is necessary to create optimal conditions for SMEs development. What is the situation in Georgia? We are closely watching this situation together with the Georgian government. The government’s priority should be the improvement of the business climate, In this context, there are several important issues. First, there is a need for technical support to SMEs enabling them to acquire potential to access the EU market. Another important issue is finances. SMEs can apply to banks for financial resources, but as we know, in this case specific tools are needed; SMEs have to meet specific conditions. In Georgia there definitely are prospects for their development. This encourages us to cooperate with the European Bank for Reconstruction and Development in order to make available the sources of external financing in local currency. In this regard, the stimulus for us is the government’s friendly policy. The local banks also try to create effective tools. I am confident that in both directions (technical support and access to finances) there is a lot to be done and I personally look forward to cooperation with relevant local organizations.
What are areas that EU is going to supports Georgian SME sector apart from already existing DCFTA Facility?
The Deep and Comprehensive Free Trade Agreement (DCFTA) establishes the framework of economic interaction between the EU and Georgia. This agreement almost completely opens the door for Georgia to the EU market. To effectively use this opportunity, it is necessary to create the abovementioned conditions in Georgia (availability of finance and technical support), as well as to identify competitive sectors and work to help them develop. It is also necessary for Georgia to show a significantly positive correlation between investments and economic growth. I see three directions the EU can support with different tools. First, it is transport and infrastructure. In this direction we have already had a joint project and we are still actively working. Second is the environment and its protection. Hazardous Waste Management is the matter that needs attention and we are firmly supporting Georgia in this direction. The third sector is agriculture. There is a reasonable possibility for Georgia to export agricultural products to the EU market. Georgia also has the ability to increase its product quality and production efficiency. These are the three main directions where the EU can be an important player supporting Georgia.
Do you think the whole concept of assistance delivery needs rethinking so that Georgian SMEs become stronger?
I think we always need to ask ourselves whether the policies we pursue are right or wrong. If you look at the current instruments through which direct and indirect EU support is implemented, you would notice that the financial and technical elements of the programs are already active. Our support is also channeled to the agricultural sector. We are trying to help the companies/farms operating in this sector to become more efficient, for instance, through creating cooperatives. In Georgia it is necessary to develop a skills and this issue is directly linked to your question, so the EU can also work in this direction; we can intensify support in the direction of developing the skill of the local workforce, which, in turn, is essential for SMEs development. It necessary to support young Georgians so that they receive qualifications to satisfy the market demand. It should be noted here that the development of skills is important not only at the academic level, but throughout the entire career; as we know, today’s demand for skill will certainly change in future.
Do you think that there is a stronger need to link ENPARD to the rest of the production sector, notably the SME sector to help cooperatives grow further and turn into sound enterprises with a strong value chain?
The ENPARD is limited to the agriculture sector and will continue to work in this field; I think this sector of economy has it clear specificities – it is necessary to support numerous farmers, in terms of their skills development and access to export markets. Other development needs were identified in the agriculture sector, for example, as we mentioned earlier, the farmers’ skills, infrastructure and so on. I cannot see that this particular program (ENPARD) can also cover other sectors, but we should not be limited to specific programs, the main thing is the commitment that the EU is showing in Georgia. Next year a special focus will be on business environment, current or potential human resources, how we can jointly develop their skills and finally develop these resources and integrate them into the economy. These three elements will be more or less useful for our cooperation. These are the directions of cooperation that we have discussed with the Georgian friends while discussing future relations, as well as the ways of effective implementation of these plans.
What practical advice would you give to help Georgia to see more progress in entering the EU market?
It is very difficult to answer this question. I can say that there are several Georgian companies that are successfully using the European market opportunities. Georgian wine is sold in Paris today. The Prime Minister of Georgia, along with other members of the government, is at the exhibition in Bordeaux, which means international recognition of Georgian wine quality, which was not the case 10-15 years ago. Today everyone in the European Union know that Georgian nuts are one of the best. So, there are specific niches on the EU market which the Georgian competitive products have a potential to reach with technological support in the course production . In addition to the consumer production, the role of tourism sector is also worth mentioning. I am amazed to see the number of tourists in Georgia. Investment in tourism infrastructure is needed to attract tourists not only from the region, but from all over the world, which will be bring enormous benefits to the Georgian economy.