Supporting Women’s Businesses Past COVID-19

Banking on Women’s Businesses

The Bank of Georgia (BoG) is a staunch supporter of small businesses. In 2007, BoG leveled up its onlending to small businesses when it took its first ADB loan of $25 million. Its second loan of $50 million in 2010 cemented BoG’s commitment to the growth of Georgia’s micro, small, and medium-sized enterprises (MSMEs) sector.

Today, these small enterprises dominate the business environment in Georgia and serve as the backbone of the economy. They comprise 99.7% of all private firms in the country, employ many throughout the economy, and contribute over 60% to the country’s gross domestic product. And BoG has become a key financier in the sector.

Small businesses in Georgia have limited access to finance. Many have insufficient savings and resources needed for investments and often cannot meet the high collateral requirements of bank loans.

Women-owned MSMEs (WMSMEs) face even greater barriers to accessing finance. Often, financing institutions offer limited credit for start-up capital and loans to women-led enterprises. Women entrepreneurs in Georgia face greater challenges in growing their business and improving productivity. They own minimal properties and assets and have fewer business connections.

Despite these challenges, many women own small businesses in Georgia, often to increase the family income. As of 31st December 2022, BOG has a client base of 60,957 MSMEs, of which 16,501 are owned by women.

The government’s SME Development Strategy of Georgia, 2016–2020, has encouraged the growth of these small enterprises by boosting their access to finance. The COVID-19 pandemic, however, further hindered MSMEs’ growth and exposed their financial vulnerability. BoG is keen to support the government’s thrust by extending greater financing opportunities to small businesses, particularly women-owned enterprises.

Partnership for Women’s Enterprises

In 2020, during the COVID-19 pandemic, ADB approved the Georgia: Bank of Georgia COVID-19 Response to Support Micro, Small, and Medium-Sized Enterprises Project to provide much-needed financing for small businesses while supporting the country’s economic recovery.

The project consists of a $100 million loan to the BoG by ADB and a $100 million parallel loan from the Japan International Cooperation Agency (JICA). The project will allow BoG to finance business loans to the MSME sector to overcome the economic difficulties brought by the COVID-19 pandemic and strengthen and expand their businesses.

BoG has an MSME portfolio of GEL3.8 billion ($1.4 million equivalent; GEL refers to the Georgian lari) as of 31 December 2022, of which close to GEL2 billion ($731 million equivalent) represents loans to microenterprises. This makes BoG a key financial supporter of Georgian MSMEs.

On the road to COVID-19 pandemic recovery, Georgia is focused on expanding its economy. Small businesses, particularly women-owned enterprises, are crucial to economic growth.

Gema Perezsenior investment specialist and project team leader, ADB

The project’s gender action plan has specific measures for BoG’s operations and investments to address the financial distress of women-owned enterprises and increase their resilience to future shocks. The plan includes enhanced communication campaigns on mental health and addresses other relevant gender-specific issues, including gender-based violence and harassment. At the same time, BoG will also proactively improve gender equality in its work environment.

The partnership among ADB, JICA, and Bank of Georgia will allow women-owned enterprises to have greater access to longer-term financing. BoG is fully committed to promoting women entrepreneurship and has grown its WMSME portfolio steadily since 2015.

“On the road to COVID-19 pandemic recovery, Georgia is focused on expanding its economy. Small businesses, particularly women-owned enterprises, are crucial to economic growth,” said Gema Perez, ADB senior investment specialist and project team leader.

Women’s Businesses on the Rise

ADB’s COVID-19 response project will increase the Bank of Georgia’s capacity to support the MSMEs sector. Financing in both local currency and United States dollars will be made available.

“About 50% of ADB’s financing will be disbursed to women-owned enterprises to improve their business resilience,” Perez said.

Most WMSME clients of the BoG operate in the informal sector and services segments, and therefore are more vulnerable to economic shocks. They are often less resilient in securing income and take longer to recover.

To address WMSME’s financial distress, BoG has designed a “COVID-19 Women in Business Program.” The program is a pilot case study that would provide more repayment flexibility for women-owned enterprises and expand their access to nontraditional markets such as online commerce. These two factors have been identified as potential solutions to help WMSMEs cope with the effects of the pandemic, increase their resilience, and contribute to Georgia’s economic recovery.