EBRD’s Director for the Caucasus: We will continue to support the Georgian people, private sector

Investor.ge sat down with Alkis Drakinos, the Director for the Caucasus at the European Bank for Reconstruction and Development (EBRD), to discuss the organization’s strategic priorities and ongoing initiatives in Georgia. Drakinos shared insights on the bank’s vision for the future and the impact of its latest projects.

What are the main sectors the EBRD is currently supporting in Georgia?

Our starting point is private sector support, and under the private sector umbrella, the first priority is supporting Georgia’s small and medium enterprises. We extend our support through direct financing or via credit lines provided to our partner banks for further on-lending to the real sector economy. Besides that, we also work in the renewables sector in Georgia. We will continue supporting renewable energy production in Georgia. Another area of focus is the country’s connectivity, which we have supported in the past and continue to view as a key priority. Last but not least, we continue to finance municipality infrastructure projects to improve infrastructure for water supplies, wastewater and general waste management.

Which sectors does the EBRD see as promising for investment in Georgia, and what new trends have you observed?

The EBRD is already involved in the most attractive sectors for investments. For example, a high potential area is the banking sector, through which we support private sector companies. In addition, investments in infrastructure to enhance Georgia’s potential to become a regional hub—as well as in the renewable energy sector and any other climate change-related investments—are key to Georgia’s future for growth and an opportunity for the EBRD to do more business in Georgia.

How has the EBRD’s strategy in Georgia changed due to recent global issues like geopolitical tensions and inflation?

Geopolitical tensions, like the war in Ukraine, have influenced the EBRD’s policy practice, such as being more diligent in observing the international sanctions imposed on Russia and Belarus and the sanctioned entities that are registered in those countries. Another consequence of these geopolitical tensions is the emergence of the Middle Corridor. The positioning of Georgia, as well as the whole of Caucasus, in the Middle Corridor makes a difference for us and places Georgia in the priorities as a key stakeholder in the success of the Middle Corridor. Supporting the resilience of Georgia’s economy, trying to find ways to maintain economic growth, and helping the country navigate through the pressures created by these geopolitical tensions are also priorities for us. Continuing to support the private sector and Georgia’s small and medium enterprises is the obvious response to this, and this is what the EBRD does best.

What challenges does Georgia face in trade and investment partnerships, and how does the EBRD view the current investment climate?

The investment climate in Georgia has been evolving over many years in a positive direction. There is more economic openness, a quite diversified economy and many reforms, which make the investment climate positive in Georgia. We have not seen any serious backtracking in this area in Georgia, but observing the current situation—given the EU’s reservations on Georgia and obstacles on the path to EU membership—we are concerned and worried that Georgia’s progress in this international integration may be at risk. We keep monitoring the developments; we would like to assure the readers of this interview that the EBRD will always support Georgia and the population’s wishes: the vast majority of Georgia’s population wishes to join the EU. So, we will be responsive to every opportunity that comes along in this regard.

What opportunities do you see for foreign investors in Georgia in the near future?

We haven’t talked much about the hospitality sector, for example, which is one of Georgia’s advantages. Private sector players can play a big role in that industry. Positioning the country in the tourist market is an important area. Other opportunities we see are in the large infrastructure projects to bolster the country’s connectivity as well as responses to the global challenge of climate change. We see Georgia playing an important role and capitalizing on these strategic advantages; we see these opportunities and we stand ready to support them with investments.

What financial tools does the EBRD offer to support businesses in Georgia, especially small and medium-sized ones?

We have three products: one is lending EBRD funds to local or international players that invest in Georgia, helping them realize their investment plans. Another involves equity: becoming a shareholder, supporting a private business with funds in their capital. Third is technical assistance, which is to provide expertise and help raise the capacity of local players or provide expert advice on the most efficient ways to implement projects. In terms of technical assistance, we also provide support to local companies to bring their capacity up to standard. We often have the support from our donors, such as the EU, UK. Japan, Sweden, etc., which generously provide the funds for technical cooperation.

Are there sectors in Georgia with untapped investment potential, and how can local entrepreneurs use the EBRD to grow?

Georgians are good and open-minded entrepreneurs; they know very well where the opportunities stand, so there are no untapped sectors. There are new sectors with large potential, and Georgia has an opportunity to tap into these opportunities and accelerate investment or performance in these sectors. One of them is renewables, for example. There is a lot of growth. Another area that can bring businesses to Georgia is all these infrastructural projects. Local businesses can join the process of carrying out these infrastructure investments by being subcontractors to foreign investors.

How does the EBRD view Georgia’s role in the South Caucasus region for economic cooperation?

Given the recent conflicts between its two important partner countries, Armenia and Azerbaijan, Georgia is a catalyst to economic solutions for the region. It can bridge these two neighbors with its capacity for connectivity, especially as Armenia and Azerbaijan are also making efforts to cooperate.

How is the EBRD helping Georgia improve its position as a logistics hub between Europe and Asia?

We have a few projects that we are working on, and we hope to have the opportunity to work on in the future. The EBRD is working on enhancing the ports’ connectivity in the region. For example, the ports of Georgia and Azerbaijan are working to connect through a simple information system that will be able to support trade across the region. We are also working on cross border centers in Georgia, as well as in Armenia, which means that we are working on a number of projects that move toward connecting the region and promoting its position as a hub between Europe and Asia, particularly in transport and logistics. We are also considering our participation in the Black Sea cable project.

How much has the EBRD invested in Georgia to date, and in which sectors?

We have done about 300 projects with €5.2 billion in investments. Of this, 82 percent is in the private sector, and the remaining 18 percent is in the public sector: municipal infrastructure and energy distributional related projects. In the private sector, a big portion goes to local partner banks because we support small and medium enterprises in Georgia through them. The new, growing trend is projects in the renewables sector.

What are the EBRD’s long-term goals in Georgia, and what support can the country expect in the future?

We plan to refresh our long-term goals in Georgia; the process of drafting the new country’s strategy will start in 2025. I can foresee that we will continue supporting private sector development in Georgia, as best as we can, across many sectors: industry, trade, production, renewables, agribusiness, tourism, etc. We will try to address some infrastructural gaps. We will continue our green city’s program to upgrade municipal infrastructure in Georgia’s regions: improving the water supply, sewage system, waste management, and, most importantly, supporting Georgia’s green ambition and climate change compliance.

Given the challenges in the political landscape, how does the EBRD plan to navigate potential changes in Georgia’s political environment, particularly after the upcoming election?

We will not be backing out from supporting Georgia’s population. We will continue our support for the private sector. As an institution, we have extensive experience operating in many difficult circumstances and supporting the population of these countries. A notable exception is an aggressor country, like Russia and Belarus. We cannot work with them as an institution. I remain very optimistic that we will find space to keep supporting Georgia.