EU and UNDP help rural businesses respond to pandemic crisis

Promoting rural development and strengthening rural economy are among the EU’s top priorities in Georgia. In the wake of the COVID-19 pandemic, support for rural people and local businesses has become fundamental. Country lockdowns, closing markets and economic slowdown have had a particularly severe impact on vulnerable rural communities. The pandemic has posed a threat to human health as well as to livelihoods and income.

Considering the situation, the EU and the United Nations Development Program (UNDP) have revisited their agenda in order to tailor their interventions and projects to the challenges of the pandemic. In order to promote small rural businesses and create sustainable jobs, the EU and UNDP, together with the Rural Development Agency (RDA) of the Ministry of Environment and Agriculture of Georgia, have launched a joint rural development grants program with a total budget of GEL 9 million.

According to Nodar Kereselidze, UNDP Project Manager, since May 2020, UNDP has been implementing a grants program that is part of the EU-funded ENPARD III initiative and aims to diversify and strengthen rural economic opportunities, create jobs, improve social conditions, and promote energy efficiency and renewable energy. The program is designed to support livelihoods that have been endangered by restrictions and the lockdown associated with the pandemic.

“In the context of the pandemic, grant programs of this kind are particularly important, because rural businesses, including entrepreneurs involved in the tourism sector, have been hard hit by the lockdown. Thus, the grant program providing up to 80% co-funding is an important incentive for rural businesses to survive in the pandemic and post-pandemic period, to maintain production, keep jobs and even expand in the future.”

Since the onset of the pandemic, the EU has mobilized all possible resources to help Georgia effectively handle the crisis. One of the important policies is diversification of the rural economy and development of non-agricultural businesses. To date, the EU/UNDP rural development grants program has approved 31 out of the 347 applications. Below we bring to you the stories of two beneficiaries who are now finalising their projects and can already experience and share the results.

Energy Efficient Production by Bioras in Tetritskaro Municipality

Bioras is a company founded years ago by a team of people sharing similar views, and has implemented numerous agricultural projects. In 2018, the team purchased a 22-hectare plot of land and arranged a walnut plantation on an area of 12 hectares in the same year. In 2019, the company began cultivating iceberg lettuce on 5 hectares of land to supply it to the McDonald’s restaurant chain.

Bioras needed energy supply for efficient production development. There was an old power line near the land plot, but it would take an investment of about 100,000 GEL and logging of a long forest area to restore the line, which would be economically challenging and environmentally damaging. Another option for the company was to use an electric generator operating on diesel fuel, which was costly and would cause environmental pollution. Instead, the company decided to create an alternative energy source.

“We knew that it would be impossible to develop our business without an alternative source of energy supply. In 2019, we purchased a small solar panel and several solar lamps, and decided to test the idea. After analysing the results and consulting with experts, we concluded that solar panels with the capacity of 10 kW / h and accumulation of 40 kW could fully meet the requirements of the business. Our next step was to apply for the EU/UNDP grant program,” Giorgi says.

We installed 60 solar panels and 24 batteries at the enterprise using the grant money. The new alternative energy source can help Bioras reduce production costs to GEL 6,000 per year. With the savings, the company plans to improve the working conditions of employees and create new jobs. Importantly, the team managed to develop the business as well as reduce its impact on the environment.

‘Introducing solar panels, we want to shift to renewable energy consumption, and would not use up to 2 tons of diesel fuel per year that we would overwise need. We also gave up the idea to build a transmission line, and saved a 1.5 km long forest line,” commented Giorgi Pkhakadze.

This grant was especially important for Bioras in the context of the economic and social crisis amid the pandemic. The company emphasizes that introduction of the energy efficient production is important not only for their business, but also for the municipality and the country as a whole.

“EU support was vital for us amid the pandemic. It is hard to make an investment decision in challenging times, but the support we received changed our reality and helped us move to a new stage of development. This change would enable us to employ more people, and thus would economically benefit many families,” noted Giorgi Pkhakadze.

Equipment for Furniture Factory in Akhalkalaki Municipality

Agvan Mosoyan also applied for the grant competition. Agvan owns a factory producing home and office furniture in the Akhalkalaki municipality since 2016. The main competitive advantage of his business is quality and reasonable prices. As the demand for the furniture increased on the market, the company put the idea of expanding their business on the agenda, but efficient production was impossible with obsolete equipment.

“During our existence in the market, we have accumulated knowledge and experience, and gained trust as a company producing quality products. The demand grows by 15-20% every year, so we need to take right steps. We applied for the EU/UNDP grant competition, and were approved for the co-funding. We used the money to buy new equipment for furniture production, a compressor and a vacuum cleaner. As a result, our production efficiency has increased and we have ensured sustainable furniture supply in the region,” says Agvan Mosoyan.

The expansion of the business has significantly empowered many families in the municipality, both economically and socially. The pandemic caused many local people to lose their livelihoods, and reduced remittances coming from abroad. The grant helped Agvan Mosoyan expand his business as well as offer jobs to people from local communities.

“With the EU support, we have been able to improve the quality of our furniture, decrease time for the production and assembly, and employ more people, which has been especially important amid the pandemic. One can say we have achieved our main goal of offering our local population a quality product so that they no longer have to look for alternatives in Tbilisi and other big cities. The grant has changed a lot for the better,” commented Agvan Mosoyan.

Today the company has many orders, and expects the business to expand further, which gives them a sense of stability and hope for a better future. The company plans to make an income of up to GEL 200,000 annually from the increased furniture production.

“Grants are an important support for any business. For example, we planned to buy new equipment for quite a while, but could not afford it because of the high prices. The EU project has helped us develop, and we will move on!” said Agvan Mosoyan.