Issue 1, 2014. February-March

   

GEORGIAN ENTERPRENEURS: AN INTERVIEW WITH NATIA TURNAVA

Investor.ge is launching a new series of interviewss exploring the biggest trends in Georgian business innovation and entrepreneurialism. In each issue, the best and brightest minds in Georgian business will discuss their ideas, market trends, and the obstacles that face Georgian entrepreneurs today. In the third interview of the series, Investor.ge's Maia Edilashvili spoke with Natia Turnava, the deputy director of the Partnership Fund, Georgia's state-run investment fund.

From seven years as deputy economic minister to six years as one of the top managers in one of Georgia's largest mining corporations, Natia Turnava has had a unique view of how Georgian business has evolved.

And, today, as the deputy head of the government's investment fund, Turnava will have a role in how business in Georgia develops further.

Established in 2011, the Partnership Fund's asset base exceeds five billion lari (approximately $3 billion). The company participates in projects as co-investor—minority shareholder.

Georgia's business community, Turnava noted, has proved strong and able of survival. But to encourage investment in strategic areas, some extra support is necessary.

The fund, she said, will provide "more comfort and assurance" to private investors or banks who are interested in developing large projects in areas the government has deemed to be strategically important.

"Since Georgia, as an emerging economy, still has high risks, just the commercial appeal of a project is not enough to persuade foreign investors into putting millions of dollars in our country, so the fund's involvement is important," she said.

Industry, energy, agriculture, real estate and hotel construction & infrastructure are the fund's key interests and Turnava describes them all as "dynamic." Also, she noted that the area where interests are least actively represented is in agriculture.

"The underdevelopment of financial-insurance tools hinders the development of this field but I think it's a temporary problem and over time will be resolved," she said.

"We would like to increase our involvement in this sector. For instance, we have already completed and withdrawn from a project for a pig farm, Kalanda, in the village of Koda."

While the Partnership Fund will provide an important new source of financing, Turnava noted that access to credit is not the only challenge facing Georgian business.

"[T]he problem with financial resources has been removed but now we see a shortage of good sustainable projects, where it's clear how and when the investment will be returned," she said. "The real estate sector of the Georgian economy is still insufficiently developed, which prevents investors from diversifying their risk across different industries and regions."

Better education, she stressed, is key for Georgian business to develop further - in particular, the labor supply needs to come closer to meeting market demand. Currently, many employers complain that while the supply on the labor market is in excess, the supply of well qualified and experienced professionals is poor.

As a former management board member of the largest Georgian private industrial group (GIG) and CEO of its subsidiary, the Georgian International Energy Corporation (GIEC), Turnava knows firsthand the issues facing the labor market.

"If someone's education was meeting the demand five years ago, unless he/she kept updating their knowledge, their qualifications may not be sufficient now, in particular, in the technical fields. For instance, in Georgia the demand is big for energy engineers and mining industry specialists but there is the lack of proper workforce," she said.

"If education level and access to quality education improves, this would create a real precondition for higher employment."

It should also lead to more innovation from business and investors, which is vital to keep the Georgian economy competitive.

For instance, in January the Partnership Fund started construction on a combined cycle thermal power plant (CCPP) in Gardabani, Kvemo Kartli region. The 230 MW Gardabani CCPP will supply the local market with additional 1.7 billion kW/h of electricity. Additionally, if any problem arises with electricity supply in the country, the plant will have a reserve capacity to supply Georgia's energy grid for a certain period, guarantying sustainability of the whole system.

"This plant is the first of its kind in Georgia, but its innovativeness is relative because in the neighboring countries such plants are already operating," noted Turnava, adding that the Partnership Fund can help foster more innovation.

"Most of the big projects in Georgia are financed by outside sources. Those international financial institutions tend to finance projects with low risks and guaranteed commercial viability," she noted.

"However, we would like to increase our participation in high-tech projects in the future and I expect that the fund will have its say in terms of developing innovativeness in Georgia as well."