Six days in Georgia: A tour of the projects OPIC supported to help rebuild this young nation
(Part One in series on OPIC’s work in Georgia)
By Judith Pryor
Vice President, OPIC Office of External Affairs
I’ve visited several OPIC project sites from Kenya to the West Bank, but nothing quite compares with my recent visit to Georgia where, over the course of six days, I was able to visit 18 OPIC-supported projects spanning a range of industries from agriculture to tourism to franchise chains. These projects illustrate how private investment has played a central role in rebuilding a young nation seeking stability in an unstable part of the world.
Georgia, a country about the size of South Carolina, sits on the southern border of Russia, with Turkey to the east and Armenia to the south. Iran is less than 200 miles away. This country is both a unique development story, and a kind of microcosm for the work OPIC supports around the world.
Georgia faces many of the same challenges that are common in developing countries, from high unemployment and poverty to insufficient infrastructure. But as a former Soviet Republic that gained independence just 24 years ago and then endured many more turbulent years, Georgia has presented a great need for private investment to rebuild war-torn buildings, modernize its industries and position itself for a more stable and prosperous future.
In an age of information overload and multiple ongoing world conflicts, it can be easy to forget even some relatively recent history. So here’s a brief synopsis of the dramatic events that have unfolded in Georgia in the past few decades. The country gained independence from the Soviet Union in 1991, but a year later, civil war broke out between government and separatist forces and continued until a ceasefire agreement was signed in 1994. It wasn’t until 2003, when President Eduard Shevardnadze was toppled in the peaceful Rose Revolution, that the era of Soviet leadership really ended and even then the country had many more unstable years in store. Just seven years ago, in 2008, Russian ground and air troops invaded Georgia, razing villages and displacing almost 200,000 people before a ceasefire was reached a month later. President George W. Bush pledged $1 billion to support Georgia’s economic recovery and humanitarian needs in a package that included $150 million from OPIC.
By 2008, OPIC was already supporting development in Georgia. We committed to our first project, providing political risk insurance to a local microfinance lender, and shortly later we committed financing to a project in Georgia to help support the country’s nascent tourism sector. While Georgia is widely known as a former Soviet republic, it has a rich history dating back centuries before the Soviet era – and before the Russian empire – and remains today the site of several UNESCO-protected monasteries, churches and other historic structures that are once again attracting visitors as Georgia becomes recognized as a safe international tourist destination with comfortable lodging.
OPIC has played a key role in supporting the construction of hotels and other infrastructure for tourists, and has helped foster development across many other sectors. To date, OPIC has committed $500 million across 48 projects, including financing that has supported the construction, rebuilding or expansion of three hotels, an office plaza, middle-income housing, and university buildings; and a loan to a local bank to support lending to small businesses that had not been able to obtain commercial loans.
More than any other place I’ve visited, Georgia offers a showcase of the way private capital can make a positive impact and the critical role OPIC has played in helping businesses invest. Because of the country’s small size, it is possible to land in the capital of Tbilisi and be a short drive from many of the hotels, franchise operation, and agriculture projects that have been built with OPIC’s support.
Exhibit Number One, in fact, was the hotel where I stayed. Today, the Tbilisi Marriott Hotel looks like any other comfortable hotel in a European capital city. But as these images show, its history is different. The hotel was gutted during the 1991 Civil War. When OPIC provided financing to support its rebuilding in 2000, it was one of the first development finance institutions to work in this newly independent country. This Marriott later reopened as a hotel centrally located on Rustaveli Avenue, just around the corner from Freedom Square, which was renamed after the country gained independence, and is where its sister property, the OPIC-supported Marriott Courtyard Hotel, is located. Today these hotels serve tourists, and international business and government travelers, which are all critical to job creation and economic growth.
As Georgia’s relatively rapid ascent from conflict zone to tourist destination shows, private investment can be a stabilizing force in turbulent times. Yet for all the progress I observed, my visit underscored how development requires time, commitment and the flexibility to address multiple challenges in rural and urban areas in sectors from agriculture to infrastructure.
Officially, Georgia’s unemployment rate is 14.9 percent, but unofficially, it is believed to be much higher since many so-called self-employed people are in reality selling small amounts of produce from their land but not really getting by. Likewise, while the capital city has many modern buildings and tourist destinations, travel to the countryside is challenging on deteriorating roads that have not been repaved since Soviet times.
Today, agriculture remains a major part of Georgia’s economy but much of the food is produced on very small farms that have only a tenuous connection to larger food transportation and production networks. In my next post I’ll discuss about OPIC has supported a dairy producer, helped it vastly expand its product line, and in the process helped generate income for thousands of small family farmers.