Georgia: Microloans offer new starts in war-torn regions
With funding from the European Union (EU), the United Nations Development Programme (UNDP) teamed up with seven local microfinance institutions to assist displaced persons, women entrepreneurs, small-scale farmers, and other socially and economically vulnerable communities to start up small businesses.
“These loans were the perfect instrument to rekindle dragging local economies, using energy and creativity that were already here,” said Inita Paulovica, deputy head of UNDP Georgia. “From growing lilies to farming trout, start-ups have sprung to life by tapping into existing resources to create new opportunities.”
From July 2009 to June 2010, the programme issued more than 3,000 microloans to people living in the three regions of Georgia hit hardest by the armed conflict: Shida Kartli, Samegrelo and Mtskheta-Mtianeti.
The micro businesses – primarily in agriculture, trade and services – were financed with loans ranging from US$400 to $3,000. Altogether, the microloans totalled some $2.6 million.
For three-quarters of recipients, these were the first loans they had ever received, offering their first chances to succeed professionally and move forward to better lives.
More than half of the microloans went to women, and some 70 percent to small-scale farmers – a tenth of whom were internally displaced persons, uprooted during the war and unable to return to their home villages.
Dali Chilachava lives in a small town in Samegrelo, the region that borders breakaway Abkhazia and is home to more than 80,000 displaced persons. She fled from her village in Abkhazia in 1993 when the first separatist conflict broke out there. Unable to find a stable source of income, Chilachava’s family struggled in extreme poverty for 12 years, until they found their rescue in growing lilies for sale.
With a loan of $400 from the EU/UNDP programme, Chilachava and her husband improved the production of lilies in their greenhouse. The small family business now has a strong client base, shipping flowers in cigarette boxes to customers throughout Georgia, and they are thinking of applying for another loan to buy more land and build a cooling facility to store their flowers.
“We started four years ago with one little stem, and now you can see the result,” Chilachava said. “It is good to know you have a guaranteed income and your work pays off.”
More than 3,500 people – including many of the microloan recipients – have also taken part in hundreds of skills trainings and business consultations organized under the programme to assist them in designing and launching their own small businesses.
After fleeing her home village of Tamarasheni, which was almost completely destroyed during the conflict of 2008, Tea Babutsidze received her first loan of about $400 to open a small office in Gori, Shida Kartli.
The UNDP-sponsored training helped Babutsidze to design and launch her business, which provides other small businesses with online tax-declaration and bill-paying services, and helps them to photocopy documents.
“I feel more confident about my future,” Babutsidze said. “My business is small now, but it is getting on very well, and I am sure I will find ways to make it a really successful enterprise.”
The microfinance project was part of a broader, joint EU/UNDP program providing early recovery to impoverished households in conflict-affected parts of Georgia.
Launched in January 2009, that umbrella program also involved vocational education and training, as well as restoration of small- and medium-size infrastructure critical to creating economic opportunities, utilizing $5.7 million of EU funding over the course of 18 months.