Researchon Economic Potential and Opportunities in IDP and Host

Research on Economic Potential and Opportunities in IDP and Host Communities in Adjara, Samegrelo and Imereti Regions

Final Report Version: 1.2

Prepared by ACT Research For Danish Refugee Council and Charity Humanitarian Centre “Abkhazeti”

November, 2015 Tbilisi, Georgia

The research has been prepared in the frames of the project From Dependency to Self-Sufficiency: Innovative, effective and scalable livelihood solutions for Georgia. The project is funded by European Union and is implemented by Danish Refugee Council (DRC) and Charity Humanitarian Center Abkhazeti (CHCA)

ACT is responsible for the content of the report and it does not necessarily reflect the position of European Union or DRC and CHCA.

Content

Executive Summary ...... 7

1. Introduction ...... 17

2. Study Aim ...... 18

3. Study Methodology ...... 20

4. Study Results ...... 25

4.1 Potential of Economic Development in Adjara AR, Imereti and Samegrelo-Zemo Svaneti Regions ...... 25

4.1.1. Imereti Region ...... 25

4. 1.2 . Samegrelo-Zemo Svaneti Region ...... 34

4.1.3. Autonomous Republic of Adjara ...... 41

4.2 Supporting Micro and Small Enterprise Development/Expansion and Legislative Benefits ...... 46

4.3 Labor Market Analysis and the Problems of Employers in Relation to the Workforce in Adjara, Imereti and Samegrelo-Zemo Svaneti Regions ...... 49

4.4 Small and Medium Enterprises Survey Results ...... 57

4.4.1. Assessment of Business Potential in the Target Cities for Strengthening the Economic Activities of IDPs and Eco-migrants ...... 57

Activities, Financial Conditions and Personnel of the Surveyed Organizations in Target Areas of the Study 57

Field of Activities of Enterprises Studied in the Targeted Cities ...... 57

Financial Conditions of Enterprises ...... 59

Impeding Factors for the Operation of Enterprises ...... 61

Enterprise Personnel ...... 62

Professional Development Activities in Enterprises ...... 65

Employers’ Demand on the Workforce ...... 67

Selection of the Workforce ...... 67

Cooperation with Educational Establishments ...... 68

4.4.2. Opportunities for Business Expansion and the Creation of Employment ...... 69

Enterprise Expansion Plans if Financial and Technical Support is Provided ...... 70

Market Demanded Economic Activities ...... 72

4.5 Legislative Base on the Provision of Livelihoods to IDPs and Eco-migrants in Georgia ...... 74

Legislative Regulation of Issues Related to Internally Displaced Persons ...... 74

Legislative Regulation of Issues Related to Eco-migrants ...... 76

4.6 HH Survey Results ...... 78

4.6.1. Age – Gender Structure, Economic Activity, Professional Composition, Qualification and Employment Capacities of IDPs and Eco-migrants ...... 78

4.6.2. Living Conditions and Property of IDPs and Eco-migrants ...... 80

4.6.3. Sources and Structure of Income of IDPs and Eco-migrants ...... 83

4.6.4. Main Needs and Structure of Expenses of IDPs and Eco-migrants ...... 86

4.6.5. IDPs’ and Eco-migrants’ Accessibility to Financial Resources ...... 87

4.6.6. Purpose and Effectiveness of Loans Taken by IDPs and Eco-migrants ...... 89

4.6.7. Business Activity and Experience of IDPs and Eco-migrants ...... 90

4.6.8. Capacities of Solving Main Problems of IDPs and Eco-migrants ...... 95

4.7 Ongoing or Planned Governmental/Non-governmental and International Programs that Implement Livelihood Projects in Target Regions and the Results of the Consultations with Program Representatives .... 99

Livelihoods for IDPs and Eco-migrants in Target Regions Considering the Local Industrial-economic Potential ...... 104

5. Findings and Recommendations ...... 109

Chart 1 – Beneficiaries of Preferential Regimes from 2011-2015 ...... 47 Chart 2 - Do you Experience a Lack of Qualified Specialists in Poti? ...... 54 Chart 3 – Which Professions are Lacking Specifically? ...... 54 Chart 4 – Field of Activities of Interviewed Enterprises ...... 57 Chart 5 - Registration Years of Enterprises ...... 59 Chart 6- Number of Employees in Enterprises ...... 59 Chart 7– Perceived Profitability of Enterprises ...... 59 Chart 8– Economic Conditions of Enterprises ...... 60 Chart 9 – Change in the Volume of Production ...... 60 Chart 10 - Main Reasons for a Decrease in the Volume of Production ...... 61 Chart 11– Main Reasons for Production Growth ...... 61 Chart 12 –Personnel Employed Throughout the Last Two Years ...... 62 Chart 13 – Satisfaction with the Level of Qualification of the Hired Workforce ...... 63 Chart 14 – The Levels that Need Retraining ...... 64 Chart 15 – Entrepreneurs’ Assessment of Employed Specialists in Enterprises ...... 64 Chart 16 - Entrepreneurs’ Assessment of Employed Workers in Enterprises ...... 64

Chart 17 – Staff Motivation Schemes ...... 65 Chart 18 – Work Schedule of Workers and Specialists ...... 65 Chart 19 – Personnel Professional Development Activities ...... 66 Chart 20– Professional Development Activities Funding Schemes ...... 66 Chart 21 - Enterprise Activity Expansion Plans ...... 69 Chart 22 – Attitudes Towards Financial Support ...... 71 Chart 23 – Factors of Competitiveness ...... 72 Chart 24 – Age Structure of the Population ...... 78 Chart 25 Professional Recruitment and Professions ...... 80 Chart 26- Ownership of the Residential Area ...... 80 Chart 27 – Housing Conditions and Problems ...... 81 Chart 28 – Objects of Long-term Consumption ...... 82 Chart 29 - Received Assistance Excluding Subsistence Allowance and Pensions ...... 84 Chart 30 – Sources of Consumed Products ...... 86 Chart 31 – Structure of Spending the Existing and Doubled Incomes ...... 87 Chart 32- Attempts to Take a Loan ...... 88 Chart 33- Selected Financial Institutions for Receiving a Loan ...... 88 Chart 34– Institutions that Issue Loans ...... 89 Chart 35 – Willingness of 10% Participation in Case of Awarding a Grant ...... 91 Chart 36– Factors that Prevent the Implementation of Business Ideas ...... 93 Chart 37- Top Three Most Important Problems ...... 97 Chart 38 - The Most Effective Assistance ...... 97 Chart 39- Preconditions for Improving Integration ...... 98

Table 1- Brief Research Methodology ...... 20 Table 2 – Distribution of Sampling...... 22 Table 3 – Number of Conducted Interviews ...... 24 Table 4 - Main Enterprises in the Region According to Export Turnover ...... 26 Table 5 – Volume of Agricultural Products in Imereti ...... 28 Table 6 – Figures of Cheap Agro Credits – Second Component ...... 29 Table 7 – Figures of Cheap Agro Credits – Third Component ...... 30 Table 8- Agricultural Capabilities of Imereti Municipalities...... 30 Table 9 - Main Enterprises in the Region According to Export Turnover ...... 35 Table 10 - Industrial Potential of Samegrelo-Zemo Svaneti ...... 36 Table 11 – Volume of Agricultural Products in Samegrelo-Zemo Svaneti ...... 37 Table 12 - Figures of Cheap Agro Credits – Second Component ...... 38 Table 13 Figures of Cheap Agro Credits – Third Component ...... 39 Table 14 – Agricultural Capabilities of Samegrelo-Zemo Svaneti Region ...... 39 Table 15 - Main Enterprises in the Region According to Export Turnover ...... 43 Table 16 – Volume of Agricultural Products in Adjara AR ...... 44 Table 17 – Figures of Cheap Agro Credits - Second Component ...... 45 Table 18- Figures of Cheap Agro Credits - Third Component ...... 45 Table 19- Higher Education Specializations and the Vocational Professions that are Limited in Each Region ...... 50 Table 20 - Vocational Professions that are Limited ...... 51 Table 21 - The Reasons for Not Finding Necessary Staff According to Region, Percent ...... 51

Table 22 - Most Lacking and/or Demanded Professions in Georgia’s Professional/Vocational Education Institutions According to Region (Professions ranked according to demand) ...... 52 Table 23 – Specialities Remaining In-demand for the Next Few Years, percent ...... 56 Table 24 - Number of Enterprises Operating in Adjara AR, Imereti and Samegrelo-Zemo Svaneti Regions by Activity, 2014, Unit ...... 58 Table 25– Impeding Factors for the Operation of Enterprises ...... 62 Table 26 - Desired Assistance from the Government ...... 70 Table 27 – Necessary Condition for Sustaining the Existence of Enterprises ...... 70 Table 28 – Demanded Activity on the Market ...... 73 Table 29 –Type of Business, Percent ...... 92 Table 30 – Plans in Case of Having Sufficient Financial Resources ...... 94 Table 31 – HH Problems, Percent ...... 96

Executive Summary

Under the EU-funded project “From Dependency to Self-Sufficiency - Innovative, effective and scalable Livelihood solutions for Georgia”, the Danish Respondent Council (DRC), in partnership with Charity Humanitarian Centre Abkhazeti (CHCA), commissioned research company ACT to carry out research and analysis on livelihood barriers and opportunities of IDPs and other vulnerable groups. ACT also analyzed and evaluated the current and potential human capital as well as business and investment environments in and around specified IDP settlement areas.

The target area of the study included five cities (Kutaisi, Tskaltubo, Zugdidi, Poti and Batumi) in three regions of Georgia (Imereti, Samegrelo and Adjara AR) where IDPs were resettled in new long-term settlements over the last few years.

Due to the complexity of the study objective, data was collected within the scope of the study via several methods. Desk research, qualitative, and quantitative survey methods were used in the study. For desk research, the economic development potential of target regions supporting small and microenterprise (SME) development and expansion, as well as the legislative benefits for micro and small enterprises was analyzed. The desk research focused on the legislative basis for the provision of livelihoods to IDPs and eco-migrants in Georgia, and also on the ongoing or planned governmental/non- governmental and international programs that implement livelihood projects in target regions. For the qualitative aspect of the study, 40 in-depth interviews were conducted with relevant government employees, representatives of international and local NGOs and other related stakeholders. Another 500 face-to-face interviews were conducted with IDP and eco-migrant households, and another 100 representatives of small and medium-sized enterprises operating in the target areas of the study.

According to a report on SME support in Georgia (Japaridze, D., 2012), the reforms focusing on economic liberalization during the past 10 years did not result in an increase in private sector competitiveness as earlier thought or planned. The polarization tendency of unequal economic development of regions is also increasing; the level of industrial development and its exporting potential is low, and therefore employment possibilities are even lower.

In the analysis of the labor market, it was observed that in Georgia, the current imbalance between the supply and demand of labor exists not only in quantitative terms, but also in structural terms: the required labor resources are not being generated by the country’s professional training and higher education institutions. It is acknowledged that the system for higher education is still evolving in the country. The list of study programs for vocational learning, revision and/or qualification for the adult population is limited, the labor market database is not comprehensive, and issues on purposefulness, related financial provisions and territorial accessibility also remain unsolved. Aside from the quantitative and structural imbalance between the supply and demand of labor, the inadequacy of qualification is also a challenge. Specifically, the qualification level of the labor force prepared in Georgia often does not satisfy employer requirements.

According to this study, the number of workers employed in the sampled SMEs is not large. Only 8% of enterprises had more than 20 employees per entity. In the last two years, SMEs recruited a total of 63 employees. For 66% of SME employers, the qualifications of their personnel were completely satisfactory. It is worth mentioning that the survey revealed a low inclination towards professionalism – 69% of enterprises do not take any measures to improve the skills of their workforce. Among the difficulties faced by respondents with regard to upgrading personnel skills apart from financial challenges are: a lack of interest from workers and a discrepancy between the skills of employees with the requirements of the enterprise. Based on survey results, it can be observed that the mechanisms of work incentives in the enterprises are not efficient. Enterprises are characterized with a poor organizational culture, and there is also a need to improve the vocational training system and educational programs in the country.

The results from sampled SMEs indicate that the turnover of casual workers and the low-skilled employees (at 17%), was much higher than that of specialists/skilled employees. This can be explained by the intentions and efforts of low-skilled workers to gain better work conditions and better pay by changing jobs. The foregoing reason of high employee turnover is worth looking at critically in terms of maintaining the stability of job opportunities created under grant programs. These programs normally create jobs that require low qualifications, and it is therefore necessary to define and agree on work terms and conditions in advance in order to maintain the opportunities for a long period of time.

The study also showed that 50% of the interviewed business owners plan to expand their operations within the next two years. The majority of respondents seemed to understand that the state has a major role in developing the business environment. Additionally, to facilitate business expansion, 43% of entrepreneurs asked for tax benefits, 31% asked for assistance in getting low-interest credit, and another 15% indicated that the state has the responsibility to maintain macro-economic stability, etc. Among the respondents, 41% think that macro-economic stability is the key for business stability, 30% think that investing additional financial resources is of extreme importance, and 16% mention that the expansion of consumer markets is key. Interestingly, only 2% think that the improvement of the qualifications of their personnel and the development of new skills will guarantee business success.

Survey results also show that 40% of respondents would expand their business only if they have donor funding and a grant as a major share. 25% would agree to take a loan with preferential interest rates; 10% of enterprises would expand their business with any type of assistance (financial or technical equipment). 25% would not accept any offer for business expansion because they know that finding new markets for the realization of excess goods comes with certain risks. Here, we see high risk aversion at play when it comes to making new business investments.

Among entrepreneurs, 58% think that as a result of enterprise expansion, new work places will be maintained if the market conjuncture is considered; 29% think that it is hard to ensure long-term employment and sustainable development of the workforce with the background of economic crisis in the region (NB: 3% didn’t respond to this question). The enterprises that are concerned with maintaining their employees have already established themselves on the market and have tailored their services to

consumer demands. By improving the range of products/services and their quality, the respondents believe that their products will always be in-demand.

According to the 500 IDP and eco-migrant households sampled, 19.9% of family members with working ability are employed, while 80.1% are unemployed. This latter group was asked whether they would like to be employed, with 71.9% answering in the affirmative. These numbers indicate a major gap in employment within households.

Notwithstanding the fact that for years, various donors as well as state organizations planned and implemented special programs in the domain of professional education and skills upgrading of IDPs, only a small part of IDPs and eco-migrants residing in the target areas of the study (8.4%) confirm their participation in a professional education training. This can be linked to geographical inaccessibility and a low level of inclusion of the mentioned programs.

The study confirms that the efficiency of IDP professional training programs is quite low with regard to meeting labor market requirements. After participating in trainings, only 17% of the beneficiaries were employed, and only one of them mentioned currently being employed at the time the study was carried out. Others were not able to retain the jobs they found after vocational training. The majority of training participants were satisfied with the quality of teaching at the vocational trainings; however 35.7% of them expressed a desire to upgrade their qualifications in the same field, which indicates the necessity of developing and providing long-term education.

With regard to housing, the study found that residential premises were generally transferred to IDP family ownership after 2011. The housing registration process per city varies and depends on the speed of construction and purchase by the state. The situation is difficult with regards to the registration of residential premises for Khelvachauri eco-migrants: 31.1% of them have not received ownership of the houses in which they reside. Only 4.2% of the interviewed respondents own agricultural land. It is mainly Khelvachauri eco-migrants, however, that own the land. Additionally, only 4.4% of Khelvachauri households own cattle.

It must be mentioned that 43% of the interviewed households have received various types of assistance from state and non-governmental organizations over the last few years (besides livelihood assistance and pensions). The majority of respondents mentioned that the support had a positive effect on the economic situation of their families. Among beneficiary households, 25.1% experienced improved family conditions, 28.1% saved money on utilities, 6.1% saved money on medicine, and 15.2% managed to save money and use it for other needs. With the provision of food products, 1% of families were able to pay off debts. Part of the respondents (6.8%), however, highlighted the low efficiency of support in the form of food products. Among respondents, 16.9% also considered financial support to be ineffective, as its amount did not correspond to the required sum for satisfying household needs.

It was also observed that the relationship of the respondents with financial institutions (banks, micro finance organizations, pawn shops) was rather intense, while access to credit is rather high. Loans, however, are mainly small and short-term, which in turn substantially preconditions the purpose of the

loan. Loans are generally taken for household/consumption expenses (purchase of household appliances, medical treatment, provision of food products, private debt payoff, renovations, etc.). Only 7% of respondents (10 households) received a loan with the aim of starting a business.

A large number of respondents wish to have their own business enterprise (58% of interviewed households). Only 4% of the interviewed households owns a business, and respondents name a lack of financial means as the main reason for not having the desired business activity. It must also be taken into account that only 51% of interviewed respondents agree to a 10% co-partnership in case of receiving a grant from a donor organization to start a business. Others either refuse due to insufficient experience and lack of skills or want to avoid risks connected with financial co-partnership.

It was observed that the potential for business activity is rather high among respondents. Respondents were asked the question, “If you received sufficient money to fulfill one of the wishes listed below, how would you use the amount?” Among those respondents, 34.8% answered that they would start a business, and 49.5% consider that along with financial resources they would also require training in order to implement their business ideas.

Also indicated by the study are that respondents do not have considerable problems with adapting to new residential areas or to the local population. Some problems of adaptation and integration still exist, however, and these problems are generally linked to the availability of finances. Only a small part of respondents reported the existence of psycho-social problems. The main problems mentioned by IDPs and eco-migrants are related to unemployment. Accordingly, interviewed households see income growth (58%) and help in finding employment (22%) as a precondition for their integration into society in a new place of residence.

IDPs and eco-migrants do not see the possibility of leaving the category of dependent persons in the near future. Among respondents, 58.7% consider that the most effective assistance for families at this stage is still monthly stipends.

Recommendations

Taking into account the study findings including challenges, it is recommended to implement the following activities in order to achieve adequate and sustainable accessibility to livelihoods for IDPs, in order to improve their socio-economic conditions and also ensure self-reliance:

Social Protection

- Providing long-term dwellings for IDPs and eco migrants. This action carries not only residential, but also psychological, social and economic importance. The living standards of dwellings provided in private property should be at least of minimum standards and repair costs should not become a burden for internally displaced families.

- For the formation of IDP self-sufficiency, it is most important to have revenue sources from work or self-employment. Achievement of this goal is possible by distributing agricultural land in private ownership (wherever possible) and by supporting the creation and development of small businesses. To achieve the latter, it is necessary to improve accessibility to the necessary financial resources for the creation and development of the business (e.g. to establish a targeted fund to disburse interest-free or low-interest credits). It is also important to develop skills for business organization and management (through individual or group consultations) and to develop a risk insurance system, etc.

Business Environment

- Besides improving the general business environment in the country, it is important to create an enabling environment for newly established IDP-owned and other enterprises, and also to formulate and implement policies that would motivate employers to create new jobs. This may include tax breaks or moratoriums, etc.

- For development and providing support to small and medium-sized businesses (firstly in regions and IDP settlements), it is important to provide a relevant consultation system (including legal, marketing, business organizations and management, other topics). It is also important to improve accessibility to financial resources (subsidised/concessional interest rates, simplification of procedures, and so on). A similar mechanism of business support ‘Produce in Georgia’ already exists (Government of Georgia, Decree 365, 2014), although the program is not tailored to the vulnerable population. At the same time, for supporting the business start-up initiatives of IDPs, it could be reasonable to create a special fund within the IDP Livelihood Agency that would accumulate financial resources coming from donor organizations and state structures. This fund, after discussing business proposals in a commission setting, would issue concessional loans.

- There is a need to address regional economic development, especially at the municipal and host community level from a central government perspective. Policies that direct financial and human resources to stimulate programs in favor of IDPs and other vulnerable populations should be formulated and implemented.

Employability

- In tandem with the implementation of an economic development strategy, there is a need to address the quality and relevance of training (including that of IDPs) to ensure employability. For this, it is necessary to have a labor market assessment in place to capture trends on the current and future demands in the labor market. This is a quite acute and complex problem and if not addressed, it will be difficult to overcome problems existing in the field of unemployment and increasing business efficiency. This function is within the competence of the Ministry of Labour, Healthcare and Social Affairs of Georgia.

- During the planning and implementation of vocational development programs for job seekers (including IDPs), it is important to study and analyze regional and local opportunities for

employment. Vocational development programs should provide programs for specialties relevant to potential employers. In addition to the development of general skills (office software programs, foreign languages, skills for job searching and self-presentation), it is important to provide courses for acquiring specific professional knowledge. Attention should be paid to the inclusiveness of these programs, their geographical and financial accessibility (including coverage of transportation and foods costs). It is important to prepare IDPs in advance for infrastructure and investment projects. To obtain relevant information in this area, the IDP Livelihood Agency should cooperate with relevant governmental and private organizations.

Coordinating Mechanisms

- For increasing IDP support program effectiveness, it is important to establish a coordinating mechanism for livelihood resources. This function is within the competence of the IDP Livelihood Agency. For the purposes of coordinating the work of state agencies and the non- governmental sector in the area of providing IDPs with livelihoods, a special interagency coordination group (MRA, Decree 317, 2013) was established within the agency. This group is composed of representatives from various ministries, national and international NGOs, and donor organizations. The agency, as a coordination mechanism for policy-making, management, development, and implementation of the livelihood policy, shall ensure the consolidation of the efforts of state agencies, municipalities, the private sector, non-governmental and international organizations, as well as the collection, systematization and analysis of information about the needs of the internally displaced population (Government of Georgia, Decree 257, 2014).

- It is recommended to establish a database that consolidates all livelihood programs. Justice, impartiality, transparency and accountability, being the guiding principles of the IDP Livelihood Support Strategy (Government of Georgia, Decree 257, 2014), could be achieved through providing timely and complete information about planned and on-going projects and the provision of public reports on implemented activities. This will prevent donor organizations from duplicating assistance programs. It will also promote the usefulness, transparency and fairness of target projects. In addition, this database can serve as a source of baseline information for future projects. The database should be easily accessible to IDPs as well. For ensuring the timely involvement of IDPs in on-going projects, the IDP Livelihood Agency should take responsibility for providing information about implemented projects in due time and also identify candidates so that they can be involved. The regional branches of the MRA and the staff of relevant programs and projects will help the Agency accomplish this function. - It is of utmost importance to create a confidential IDP personal information database with restricted access, which will contain information about all services and support (state and non- state assistance including compensation, one-time assistance, grants, preferential funding, etc.) provided. The diversity of social and other types of support causes a reduction in the effectiveness of the donor organizations’ as well as the Government’s budgetary assistance. In addition, it creates difficulties with management, difficulties with the control of the fair distribution of support, and difficulties with monitoring the usefulness and impact of support.

The systematization of provided assistance will increase the effectiveness of support and simplify administration processes. The creation and management of such a database falls under the competence of the IDP Livelihoods Agency.

- For the establishment IDP livelihoods, it is necessary to conduct regular household livelihood surveys. Surveys will enable the identification of individual and household needs and the selection of assistance activities in a way that will increase HH revenues and reduce poverty- related risks. The so-called “phase approach” (A phased approach to livelihood programing: 1. Providing livelihood; 2. Protection of livelihood; 3. Development of livelihood) (Government of Georgia, Decree 257, 2014) shall be used to plan how to move from one phase to another (simultaneous planning/implementation of various phase activities) in order to improve the social-economic conditions of families and to contribute to the development of self-sufficiency of IDPs. Also, criteria should be elaborated that will enable the provision of needs-based assistance instead of status-based assistance. Assistance should be directed to groups with high socio-economic risk. This will promote the economic activity of employable beneficiaries, reduce assistance dependency and increase motivations for self-sufficiency.

- The social allowance system requires reform, as a person’s economic activity and livelihood assistance, as well as IDP and livelihood assistance correlation remains a challenge. In particular, the influence of legally defined conditions for receiving social assistance have on the beneficiary’s motivation to work and receive income. The small amount of social allowance and its incompatibility with other sources of income does not promote overcoming poverty in the population, in particular among respondents.

- The study showed that IDPs do not see the possibility of leaving the category of dependent persons in the nearest future and that they consider monthly financial support as the most effective assistance for families at this stage. It is unacceptable to support the establishment of IDPs as a special group of “socially disabled” by providing exceptions, exemptions and favouring. Interventions should be designed that encourage the transition of IDPs from dependency to self- reliance.

IDPs and Host Communities - During the planning and implementation phases of assistance programs for internally displaced persons, maximum attention should paid to the utilization of cooperation and integration opportunities between internally displaced persons and local communities. In IDP support projects, involvement of the private sector and host communities should be based on mutual needs, interests and benefits. In this respect, the type of projects that allow cooperation and that result in development can be generated. In particular, a project focusing on gaining joint benefits should be planned and implemented. (e.g. in villages where animal farming is not well developed, projects supporting the development of necessary infrastructure for producing and utilizing bio-gas; supporting and stimulating the establishment of joint businesses or

cooperatives, etc.). This will promote integration processing with local communities and will also enable the effective utilization of resources.

Establishment of Value Chains

- In addition to IDP individual support schemes, in order to improve market efficiency projects that are based on a “multiplication effect” and/or on the combination of scattered resources for achieving better outcomes, a value chain approach should be adopted and promoted. This means the development of implemented projects requiring various economic entities to be linked to each other so as to derive more economic benefits. For ensuring IDP involvement in value chains, the IDP Livelihood Agency needs to cooperate with the Ministry of Economy and Sustainable Development of Georgia and its legal entities of public law.

- For increased value chain efficiency, the consolidation of enterprises should be promoted. Specialists recommend creating a unified sale/bulking system for enterprises that produce goods for export. The creation of such a system (for example, by establishing cooperatives, supporting enterprises engaged in purchasing final products and distribution, etc.) requires a lot of effort. If proper management and coordination is achieved, however, it is possible to implement and also to attract government and private sector interest. - It is of utmost importance to provide support for the development of the country’s agrarian sector. This support should not be based on Government compensation schemes, but rather provided by ensuring access to agricultural equipment and other agrarian supplies (using leasing, price subsidies, etc.), disseminating agricultural knowledge, insuring risks, and providing support for the storage and realization of produced goods. The establishment of a business development support mechanism to provide a range of services to farmers could be done in coordination with NGOs and the private sector.

- As an important part of value chain activities, it is crucial to regenerate ecological, traditional and innovative crop production by supporting the seed and nursery industry. Particularly, such enterprises shall be encouraged and motivated through grants and state subsidies; funding shall be provided for scientific-research works in these areas; informational-consultation materials shall be developed and provided to farmers; and the seeds and plants of environmentally friendly, traditional and innovative cultures shall be provided to farmers at a reasonable cost (if needed, the price subsidy shall be provided by the state or a donor organization). It is worth mentioning that the Agency of Agricultural Projects plays a very important role in this direction.

- According to the social economic development strategy of Georgia (Government of Georgia, Social Economic Development Strategy 2020, 2014), in order to speed up economic development and increase business effectiveness, it is of utmost importance to introduce innovative technologies, disseminate information about them to the population, develop relevant informative and consultative infrastructure, and provide geographical and financial accessibility to them for every stakeholder (including small businesses and farmers). The National Agency for Development of Innovations holds an important role in this direction.

- Sufficient attention should be paid to IDP and local community education in the field of ecology, so that this group understands the risks associated with environmental pollution faced by individuals and the society. The effective use and management of natural resources is very important for livelihood sustainability. To this end, it is important to stimulate the introduction of innovative technologies that will help avoid environmental pollution.

- The introduction of climate resilient innovative technologies such as greenhouses, irrigation systems, solar systems, and zero grazing units can serve the expansion of the export potential of non-seasonal vegetables for small farmers. It will be beneficial to support the establishment of relevant infrastructure (e.g. to subsidize the production of materials necessary to build greenhouses and to provide the possibility of instalment payments for the purchase of technical equipment to introducing innovative technologies, etc.).

International Best Practices

- It is important to use international best practices and approaches for livelihood programs. For example, the integration of market development, Disaster Risk Reduction, Adaptive Social Protection and Climate Change Adaption, etc. Even though international best practices should be used, the driving principle should be the consideration of local peculiarities according to regional and national opportunities, as well as the needs of different categories and social demographic groups of IDPs. International experience and an analysis of the best intervention practice shows that in their efforts to ensure the self-sufficiency of IDPs at their temporary place of residence, the government and donor organizations mainly apply activities aimed at ensuring jobs for IDPs:

- Recommended activities include:

o Provide grants for self-employment (e.g. to buy tools and/or products for commercial purposes); o Support self-employment programs, particularly, grants for the start-up or expansion of small and medium-sized businesses; o Provide interest-free or micro credits (at a lower rate than on the market or interest rate subsidies) for developing a family business; o Employment of vulnerable populations in the companies that have already achieved success but want to expand their business through a grant/loan; o Prepare potential workers for employment through providing scholarships for the professional training of pupils and students, as well as training job-seekers in the specialties that are most in-demanded on the labor market; o Support the employment of the most vulnerable IDPs through the development of their professional skills; o Assist the community mobilization/capacity building efforts of communities: involvement the local government in order to identify common problems, identify additional needs and resources to ensure self-sufficiency, prevent the overlapping of

work carried out by projects and municipalities, and ensure the functioning of social enterprises, etc; o Support efforts to strengthen corporate social responsibility: encourage the direct participation of businesses in the economic activities of IDPs (social enterprises, cooperatives, etc.).

It is important to establish an appropriate monitoring and evaluation system. This activity is part of the responsibilities of the IDP Livelihood Agency. The evaluation results should be used as a basis for planning and implementing development strategies and assistance programs for IDPs.

1. Introduction

The given document is the final report of Research on Economic Potential and Opportunities in IDP and Host Communities in Adjara, Samegrelo and Imereti Regions.

Under its EU-funded project “From Dependency to Self-Sufficiency - Innovative, effective and scalable Livelihood solutions for Georgia”, the Danish Refugee Council (DRC), in partnership with Charity Humanitarian Centre Abkhazeti (CHCA), commissioned research company ACT to carry out research and analysis on the livelihood barriers and opportunities of IDPs and other vulnerable groups1 in specified settlements, collective centers and their vicinity areas in Poti, Zugdidi, Batumi, Tskaltubo and Kutaisi. ACT will also analyze and evaluate current and potential human capital as well as business and investment environments in and around specified IDP areas.

This report is based on the information collected via various data collection methods such as desk research, as well as on quantitative and qualitative research. The report also includes expert assessments and recommendations.

1 Eco-migrants

2. Study Aim Study aimed at identifying the accessibility of IDPs and other vulnerable groups to livelihoods.

To create a relevant environment for the self-sufficiency of IDPs, the households of 455 IDPs and 45 eco- migrants2 in new long-term settlements in Poti, Zugdidi, Batumi, Tskaltubo and Kutaisi were studied. The survey aimed to analyze the barriers that vulnerable groups face in terms of accessibility to livelihoods, their capacity and work potential for economic activities, the opportunities for them to access financial resources, and their capacity for income generation.

For the purposes of researching the potential of the businesses operating in the target cities, the conditions in which the companies would increase their production capacity or offer more services to their clients was studied. Also, the survey enquired about the capacity of companies to recruit additional personnel in case of business expansion (in our case, IDPs).

The specific tasks of the study were:

1. Analysis of the socio-economic conditions in IDP buildings (settlements, collective centers) and an analysis of the socio-economic conditions of eco-migrants: o Structure and sources of income; o Types of expenditures; o Demand for assets and products; o Current financial and tangible assets; o Access to financial resources and services; o Prevalence and the types of credit used. 2. Evaluation of human capital in IDP buildings (settlements, collective centers) and an evaluation of the human capital of eco-migrants: o Economically active adults and their ability to work; o Persons with disabilities, including children and the elderly; o Education and skills; o Employed inhabitants and their spheres of employment; o Income generation/business activities; o Existing business employment of IDPs. 3. An analysis of the business environment: o Businesses in IDP buildings; o Businesses in host communities; o Demand for goods and services in targeted regions; o Demand for labor in targeted regions; o The competitive business environment;

2 Initially, it was planned to conduct interviews with the Eco-migrant households on the territory of Dream City, Batumi, but since the interviewers could not find a sufficient number of respondents (total 50), additional eco-migrants were identified with the help of a CHCA representative in Batumi and also, by the snowball principle, which means finding additional respondents through current respondents.

o Potential for business development; o Upcoming business/employment trends; o Economic potential of targeted regions. 4. An analysis of Stakeholder Impact: o Private sector: The investment environment; existing and potential investors; o Government: Ongoing or planned State programs in the targeted regions and/or for targeted population groups; o Civil Society Organizations/Donors: Mapping of ongoing or expected livelihood projects for targeted population groups; o Synergies: Mechanisms for effective synergies between different stakeholders.

3. Study Methodology

The research methodology was compiled of desk research, as well as qualitative and quantitative research methods. The table below presents a brief description of the research design for the Research on Economic Potential and Opportunities in IDP and Host Communities.

The table below describes the methodology of the Research on Economic Potential and Opportunities in IDP and Host Communities in Adjara, Samegrelo and Imereti Regions. Below, information regarding the various research methods used in the study is discussed in detail.

Information regarding the field work of the qualitative and quantitative studies is described in detail in Annex #1.

Table 1- Brief Research Methodology

Qualitative Quantitative Quantitative Desk Research Research Survey Survey In-depth Face-to-Face Face-to-Face Technique Literature Review Interviews Interviews Interviews Reports/Legislative Government IDPs and Eco- SMEs Documents/Policy Officials/Local migrants Documents/Statistics/etc. Authorities/Local Target NGOs/International Groups Organizations/Banks, Micro Finance Institutions/Business Associations/etc.

Sample Size - 40 500 100

Sampling - Purposive Random (yet to Random (yet to Method be decided) be decided)

- Adjara, Samegrelo, Poti, Zugdidi, Poti, Zugdidi, Imereti Batumi, Batumi, Study Area Tskaltubo, Tskaltubo, Kutaisi Kutaisi

Length of - 40-90 Minutes 30-40 minutes 30 minutes Interview

Desk Research

The desk research focused on studying the local legislation and legal documents as well as State Development Strategies. In view of the study goals, the researchers looked at the surveys provided by the DRC (Danish Refugee Council) and CHCA (Charity Humanitarian Centre “Abkhazeti”), as well as the experience of other countries in the area of increasing access to livelihoods for internally displaced people. Within the framework of the desk research, statistical information provided by the National Statistics Office of Georgia was also analyzed. The information collected via desk research is the part of this report.

Qualitative Research

Within the framework of the qualitative research, in-depth interviews were conducted with central and local governments, the representatives of local NGOs and international organizations, and a few micro- finance organizations. Several in-depth interviews were conducted with IDPs who have some business experience. Since the qualitative research target group was structured by various types of respondents, the in-depth interview guide was tailored to the specifics of each segment, though all of the guides included main issues for all respondents. The major issues of the in-depth interview guide are attached to this report as an annex.

Forty in-depth interviews were conducted within the qualitative research. This report presents the information in an integrated form.

Quantitative Survey of Households

In total, 500 completed interviews were conducted within the scope of the survey. Information was collected using the face-to-face interview technique. In order to obtain the necessary information, the most informed person of the household was selected as a respondent. The duration of each interview was approximately 40 minutes. The given results describe the conditions of IDPs and eco-migrants living in pre-defined locations only.

Survey Instruments

In compliance with survey goals, the ACT analytical team developed a survey instrument on the basis of close cooperation with hired experts and the client. The quantitative research questionnaire consisted of several thematically organized sections:

- Information about family members including information about employment, income, obtained level of education and attendance of professional courses; - Information about living conditions; - Information about non-regular aid received from different institutions; - Information about expenses/access to finances; - Information about business experience; - Information about main problems and their solutions.

In order to test final draft version of the instrument, a pilot study was conducted. The results of the pilot study were discussed with the client. Inaccuracies revealed as a result of the pilot study were corrected and the research instrumented was finalized.

Sampling Design

In accordance with the client, we defined target cities and concrete locations of the survey. The study was conducted in five cities – Kutaisi, Tskaltubo, Poti, Zugdidi and Batumi of three regions: Imereti, Samegrelo and Zemo Svaneti and the Autonomous Republic of Adjara. The sampling frame consisted of information provided by the MRA about IDPs living in target locations.

Stratification

Within the scope of the study, we used a stratified sampling design. The stratification mark coincides with the target cities. In order to assess the size, we used the statistics of IDPs provided by the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia. Within the goal of the survey, which envisaged data analysis in the perspective of cities, the sampling size for each city was 90 families, while the number of families in the settlement of the concrete city was selected by means of the PPS (Probability Proportional to Size Sampling) method. The table below presents the number of inquired IDPs according to cities and target locations.

Table 2 – Distribution of Sampling

Sampling Point City Quantity Locations of Long-term Resettlement Batumi Abkhazia Street (Benze settlement) 95 Khelvachauri Eco-migrants’ settlement “City of Dream” 45 Peace Street (Collective Center “Ayet”) 6 Poti Abkhazia Street, Gagra Street, Guria Dead-end “New Settlement of 84 Maltakva” 9th April Street (New resettlement spot of IDPs) 76 Tskaltubo 9th April Street (former building of Statistics) 4 N6 Eristavi Street 10 Zugdidi Tabukashvili Street 90 Otskheli Street (former clinical hospital) 51 Kutaisi N58 Chavchavadze Street (former Music School 44) 39 Total 500

Sampling Size and Inaccuracy

The total sampling size was 500 units – with a 0.5 proportion of variable, 95% reliability and an average of 1.5 value of design effect. This provides a 10% sampling inaccuracy for each city (if P=0.5; Z=1.96; then =10%). In order to estimate the sample size according to the cities, the following formula was used:

√

Information about one of the locations (Tabukashvili Street, Zugdidi) could not be retrieved by means of the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia. Accordingly, the number of the population to be inquired was assessed based on information provided by the client and information obtained as a result of the regional coordinator’s visit to the location.

Quantitative Survey of Small and Medium Enterprises

The survey targeted small and medium enterprises present in five cities of Georgia (Batumi, Poti, Tskaltubo, Zugdidi, Kutaisi). The total number of such enterprises equals 7404, with revenue ranging from 1 to 1500000 GEL.

In the framework of the survey, a total of 100 complete interviews were conducted. The research company used the face-to-face interview technique for the collection of data. To collect required information, the heads of enterprises were selected as interview respondents. The length of each interview was 35 minutes. Survey Instrument

Based on the survey goals, the ACT analytical group elaborated survey instruments in close cooperation with an invited expert and the client. The quantitative survey questionnaire was comprised of several thematically organized sections and contained the following topics:

- Information about the enterprise - Information about the economic conditions of the enterprise - Information about enterprise personnel and the existing demand on human resources.

For testing the final draft version of the instrument, ACT conducted a pilot survey and discussed the results of the test with the client. ACT fine-tuned inaccuracies identified in the instrument and finalized the questionnaire.

Sample Design

ACT selected a random stratification sampling design for the selection of organizations included in the survey. For establishing the sample frame, ACT used a database provided by the National Statistics Office of Georgia in 2014.

The stratification mark coincides with the target cities. In order to select the proper quantity of the enterprises within cities, sampling was done according to the proportion of the square root of the total number of organizations and revised as proposed by the client.

Table 3 – Number of Conducted Interviews

City Number of Conducted Interviews Zugdidi 16 Poti 15 Kutaisi 28 Tskaltubo 7 Batumi 34 Total 100

Selection of Organizations

ACT used a simple random sampling technique for the selection of organizations from the existing strata (without replacement) of randomly registered organizations from the complete list of organizations. Each organization that could not be interviewed (non-response) was replaced by the next organization from the list.

4. Study Results

4.1 Potential of Economic Development in Adjara AR, Imereti and Samegrelo- Zemo Svaneti Regions

The main principle of the country’s economic development strategy is to ensure the freedom of the private sector under the effective and transparent activity of the government (Government of Georgia, Social Economic Development Strategy 2020, 2014). The main priorities of the regional development strategy are the stimulation of industrial activity and the support of small and medium-sized business as long as the activity of those enterprises defines the strength of the country’s social-economic system and represents the main source of job creation.

Based on an analysis of the regional development strategy for 2014-2021, (Regional Development Strategy of Adjara AR, Imereti and Samegrelo-Zemo Svaneti, 2013) as well as on information obtained from different sources, by taking rich natural resources, the geographic landscape and historic-cultural heritage into consideration, four main directions for the development of target regions were defined:

 Agriculture  Processing industry3  Tourism  Transport – logistics

4.1.1. Imereti Region

In terms of economic activity, an accent should be made on: development of manufacturing capabilities, in particular using natural resources and supporting the start-up of enterprises. Usage of agricultural potential; in particular the development of herb-growing/gardening/fruit-farming, and the development of greenhouse and cold storage facilities. Development of transport and logistics; in particular Kutaisi Airport and the central highway. Development of tourism; in particular the promotion of new and existing tourism sites, the development of infrastructure, and the organization of new tourism destinations.

Perspective of Industrial Development The level of economic development of the Imereti region and its capabilities are significantly defined by its rich natural resources.

Chiatura manganese, Tkibuli and Gelati coal, barytes, diatomite construction materials, clay supplies, bentonite clays (Gumbrin), marble, marbleized limestone, Teshenit and basalt mines contributed to the formation of Imereti into a traditional industrial region.

The main industrial enterprises employing the workforce of the region are:

3 In accordance with the official letter of the National Statistics Office of Georgia (reference number - 7/2-05/2251, date - 04/09/2015), the processing industry covers the following sectors: food production (including beverages); timber production and manufacturing of wood products; publishing business; plastic production; production of construction materials; metallurgy and manufacturing of metal goods; car and equipment manufacturing, electric appliances, electronic and cellular equipment; vehicles and machinery; other industries

 Chiatura manganese;  Zestaponi ferroalloy plant  Saknakhshiri;  Tkibuli hydropower plant

There are several ongoing investment projects in Kutaisi, namely:  Décor LTD – construction materials, producing decorative sand;  Kordi LTD – construction materials;  Thermo Water Georgia LTD – greenhouse;  Turkish company Kaya Group plans to launch textile dyeing, cotton thread and textile factories (total value of the project – USD 140 million; in case of successful implementation, 3000 people will be employed);  As a part of the state program “Produce in Georgia,” Georgia Industry Group plans to activate metal construction and complicated mechanical joint factories in Kutaisi – territory of auto mechanic factory.

As for other parts of the region:  GIG undertakes the construction of a semicoke factory in Tkibuli, which will use local coal as a raw material;  A new investment project is undertaken in Zestaponi by Ecometal LTD – a processing factory for used plastic material is being built in the village of Kvaliti.

Table 4 - Main Enterprises in the Region According to Export Turnover

Production Mining Top 10 License Holder Companies Top Companies (according Activity (active) According to Price of Mineral Resource Price of to export turnover) License License

Georgian Manganese LTD Ferro-silico-mangangese Georgian manganese LTD Manganese 6,050,000 Chiatur Manganum Ferro-silico-mangangese Georgia LTD Geocoal LTD Coal 1,650,000 Rusmetal LTD Ferro-silico-mangangese Rusmetal LTD Manganese 1,414,447 Ecometal LTD Ferro-silico-mangangese „Rodinauli Mining Co. LTD“ Manganese 1,263,350 Winery Khareba Wine JSC Minerals of Caucasus Minerals 990,000 Cables, aluminum scrap, JSC Sakkabeli copper scrap JSC Ado Georgian Mining Baritys 550,000 Representation of construction- industrial investment Geocoal GIG group Coal Sand 535,313.8 corporation Accord in Georgia “Accord Georgia” Sairme Mineral Waters LTD Mineral water 480,000 Silico- Chiaturmanganum LTD 445,320.1 mangangese Thermo Water Georgia LTD Thermal water 358,808

Industrial potential in the Imereti region can be used in the following directions: - A rich tradition of textile and leather production is to be taken into consideration: - The presence of tremendous forest resources and a tradition of wood production/processing – the capability of producing a competitive product for export on markets with high standards; - Due to the availability of forest resources, there is the capability to produce furniture; - In case of new investments and accessing new markets, the following can be produced: anti- corrosion paints and colors, anti-corrosion chrome, fillers and dioxide of powder manganese, copper blue vitriol, etc.

Imereti is rich with resource potential for the construction industry. Namely, clay lands and mineral stones, which can be used as materials for construction (brick, profile block, tiles, calcite, chalk powder, cement, etc.). There is a base of materials for producing the same product in Imereti, Tskaltubo municipality, namely, Ukaneti clay field with a 343 thousand m3 resource situated 1.5 km Southwest of Brotseula station. It is also worth mentioning that there is a demand and shortage in supply for natural tiles/material for surface finishing that creates a convenient export environment in this segment. Ceramic items can also be produced in this region.

Tskaltubo municipality is distinguished for being rich with the following natural resources:  Calcite - 5529000 t supply;  Basalt – 7797000 m3;  Bentonite clay - 12290537 t;  Chalkstone _ 2009000 m3;  Clay for brick- 425000 m3;  tuff - 3417000 m3;  Tuff breccia - 5973300 m3;  Fresh water- 438000 m3/d/n.

It is true that economists do not have a unanimous opinion about the profitability of a free economic zone, but for the given stage, it is positively evaluated by the government in terms of attracting investment and creating additional jobs. In compliance with the Georgian law on “Free Industrial Zones” dated July 1, 2009 and the decree of the Georgian government №106 (dated 05.06.2015), as well as decree №109 (dated 10.03.2015), Kutaisi free industrial areas have been created. The Egyptian company “Fresh” and its partner Georgian company “Georgian International Holding” entered the free economic zone July 21, 2009. Kutaisi Hualing FEZ will start functioning from the autumn of 2015, where “Georgian Huashun International Industrial Investment Group, Ltd” will be assigned as the administrator.

The following factories are currently functioning in Kutaisi FEZ:  Gas oven factory;  Washing machine production factory;  Water heater production factory;  Air conditioner production factory;  Textile factory;  Wood factory;  Furniture processing factory;  Stone processing factory;

 Metal construction and mattress factory.

Perspective of Agriculture Development

Changes that occurred in the agro sector in recent years created a real opportunity to employ a workforce. Despite this condition, farmers’ work is still prevented by factors such as: incomplete and poor infrastructure, a shortage of processing factories in villages, damaged irrigation systems, inaccessible credit, growing prices on agricultural materials (irrigation, chemicals, fertilizers), and others. The region has the following capabilities in terms of agriculture development:

 Subtropical climate – convenient conditions for subtropical fruit, vegetable and garden crops;  Rich traditions of greenhouses;  Experience and infrastructure for producing non-seasonal vegetables, experience of exporting non-seasonal products;  Tradition of small farms (poultry, livestock);  Activation of regional and district-level agricultural agencies (“Mechanisator” LTD, Ministry of Agriculture LEPL Agency of development of agricultural cooperatives, state programs by agency of agricultural project management such as: agro insurance state program, “Plant the future,” project of co-financing for processing enterprises,” project of supporting spring works of 2015 for small-landed farmers, project of supporting apple sales, etc.);  Convenient investment environment and tax exemptions in agriculture;  Simplicity of agricultural land trade and land registration;  Convenient trade regimes for exporting agricultural products;  Positive influence of the global crisis on prices of agricultural products;  Stable high demand on high-quality products;  Strategic, geographical location of the region in terms of trade.

According to information provided by the economic council of the Prime Minister of Georgia, the table presented below shows the volume of agricultural products produced in Imereti:

Table 5 – Volume of Agricultural Products in Imereti

Production of Agricultural Products

2013 Country Gross Consumption Product % of Gross Production (thousand tons) (thousand tons, 2013) Plum 3,8 36.9% 10,3 Maize 99,6 27.4% 379,7 Beans 2,4 22.9% 16,2 Milk (million liter) 129,7 21.4% 606,3 Nut 2,2 20.4% 11,1 Pork 3,0 20.1% 29,5 Poultry 1,9 18.8% 52,5 Beef 3,6 17.8% 20,3 Subtropical fruit 4,6 16.5% 21,8 Grapes 36,6 16.4% 223,6

Vegetable 26,7 13.0% 259,7 Egg (million pieces) 47,3 9.5% 520,1 Area of Harvested One-year Crops (thousand h) 2009 2010 2011 2012 2013 Maize 44.9 37.0 39.1 35.3 43.9 Vegetables 3.0 2.8 3.3 2.4 2.0 Garden crops 0.6 0.6 0.9 0.6 0.7 Quantity of Livestock and Bee Hives 2009 2010 2011 2012 2013 Livestock (thousand heads) Imereti 192.7 192.6 197.9 194.3 208.6 Share of Region (%) 19% 18% 18% 17% 17% Pigs (thousand heads) Imereti 35.7 26.3 20.0 38.8 31.4 Share of Region (%) 26% 24% 19% 19% 16% Goats (thousand heads) Imereti 9.0 7.9 6.4 6.9 8.0 Share of Region (%) 13% 14% 12% 13% 13% Bee Hives (thousand hives) Imereti 27.6 27.0 26.4 15.2 13.9 Share of Region (%) 11% 9% 8% 4% 3%

According to 2014 data provided by the Agency of Agricultural Project Management of the Ministry of Agriculture, under the second component of cheap agro credits, 966 projects for medium and large farmers have been funded. The total value of the project was 13.3 million GEL (see Table #6).

Table 6 – Figures of Cheap Agro Credits – Second Component

Purpose Beneficiary Average Amount (GEL) for Funding N of Projects Amount (GEL) One Project Butchery 2 122,400 56,200 Livestock 86 1,324,600 15,402 Pig breeding 1 5,000 5,000 Fishery 6 93,600 15,600 Poultry farming 91 1,998,500 21,962 Beekeeping 44 578,600 13,150 Chicken incubator 2 85,000 42,500 Greenhouse 644 7,771,099 12,067 Fruit farming 3 18,500 6,167 Winery 4 143,384 35,846 Gardening 6 80,300 13,383 Olericulture 33 369,800 11,206 Production of cereals 8 239,500 29,938 Mixed 3 28,000 9,333

Purpose Beneficiary Average Amount (GEL) for Funding N of Projects Amount (GEL) One Project Sheep breeding 2 38,000 19,000 Mixed crop growing 8 105,000 13,125 Mixed livestock 8 126,801 15,850 Mixed farming/livestock 15 160,000 10,667 Total 966 13,288,084

Based on information from the same agency, under the third component of cheap agro credits, 70 projects were funded for agricultural production. The total amount of projects was 4.6 million USD (see Table #7).

Table 7 – Figures of Cheap Agro Credits – Third Component

Purpose Beneficiary Average Amount (USD) for Funding N of Projects Amount (USD) One Project Milk processing 2 73,000 36,500 Production of cognac 2 265,585 132,793 Fruit processing 1 60,000 60,000 Hazelnut processing 2 177,000 88,500 Production of forage for animals 1 102,000 102,000 Mixed 1 35,000 35,000 Dryers for crops 1 74,000 74,000 Livestock 10 703,500 70,350 Pig breeding 1 30,000 30,000 Poultry 12 503,000 41,917 Beekeeping 1 25,000 25,000 Greenhouse 30 2,205,500 73,517 Gardening 1 20,000 20,000 Winery 2 80,000 40,000 Mixed livestock 2 247,000 123,500 Mixed crop-growing/livestock 1 40,000 40,000 Total 70 4,640,585

According to information provided by the state governor in Imereti, each municipality of the region has different capabilities of agricultural production (See Table #8).

Table 8- Agricultural Capabilities of Imereti Municipalities

Municipality Perspective of Agricultural Production Municipality Perspective of Agricultural Development Production Development Zestaponi  Greenhouse Vani  Beekeeping

Municipality Perspective of Agricultural Production Municipality Perspective of Agricultural Development Production Development  Poultry  Livestock  Production of hazelnuts  Winery/wine production  Winery  Production of honey, dried  Beekeeping fruit, laurel, silk, garden crops  Production of lake fish  Greenhouses: vegetables, mushrooms Chiatura  Livestock Samtredia  Poultry  Beekeeping  Livestock Baghdati  Livestock  Beekeeping  Greenhouses  Production of maize  Winery/wine production Sachkhere  Arable farming Tkibuli  Tea production Kharagauli  Processing production – milk, fruit Tskaltubo  Gardening  Greenhouses  Tea production Terjola  Beekeeping Khoni  Production of hazelnuts  Livestock  Mulberry gardens –  Winery/wine production development of silk  Greenhouses production  Tea production

Within the last decade, the production and export of herbs has grown intensely – herbs are particularly prevalent in the villages of Tskaltubo municipality. Imereti has the best natural climate conditions and respective traditions for this particular product. Demand for herbs is very high in Europe and CIS countries. The export of herbs has increased four times in 2010 and amounted to 2.54 million USD. Export is implemented on the following markets: Ukraine (43.5%), Belarus (17.2%), Azerbaijan (17%), Latvia (11.7%), Bulgaria (4.5%), Moldova (2.7%), Estonia (2.6%), Romania (0.5%), and Lithuania (0.4%). Poland and Czech Republic have insignificant shares4.

There are up to 12,000 greenhouses in Tskaltubo municipality, but existing supply does not meet the growing demand. Among small and medium-sized farmers, 5,500 harvest up to 25,000 tons of herbs solely in the villages of Tskaltubo municipality (Geguti, Patriketi, Tkachiri, Opshkviti, Mukhiani, Kvitiri, Meskheti, Partskhanakanebi). Despite the blockade by Russia and some decline of turnover in 2006, farmers started to look for new markets in 2007. Georgian herbs occupied 70% of the market only in Ukraine. There are several centers that receive and pack herbs in these villages. For example, there is an active spot “Georgian Herb” in the village of Kvitiri. It is worth mentioning that emigration is small in these villages. Moreover, these villages give jobs in greenhouses to hundreds of people from Tkibuli, Kharagauli, Chiatura and Khoni. There are private hotels in these villages where employees from other regions stay. In reality, new and modern farmers are formed in the above listed villages.

Imereti region has rich traditions in terms of tea production. From the currently operating tea factories, we can mention “Ternali Tea” LTD (in Tskaltubo municipality), “Alexander” LTD and “Argo 2003” LTD (in Khoni Municipality), Tkibuli Tea Factory LTD (in Tkibuli municipality) and others.

4 #1689, 05.09.2012 Decree of government upon approving Development Strategy of Imereti region in 2012-2017

There is a sufficient base of raw materials in the surrounding municipalities of Kutaisi for functioning small size processing factories that will be cost-efficient, considering cheap raw materials and the workforce (production of natural fruit juices, jams, tomato sauces, tea production, etc.). In the near future, it is planned to support the production of corn (Samtredia, Tskaltubo, Vani, Khoni, Zestaponi) and to also build a pig breeding complex.

Transport Logistics

Realization of the country’s strategic geo-economic advantage mostly takes place in Imereti. The geopolitical location of Imereti gave a transit function to Kutaisi. Currently, the region is a transit transport corridor on one hand between European and Asian countries and on the other hand, between the Western and Eastern regions of Georgia. In case of proper management, it is worth considering placing trade outlets alongside the Zestaponi- Kutaisi-Samtredia highway being built with the support of the International Development Agency of Japan. This will assist boosting local product sales. Additionally, the renewal of Kopitnari International airport creates a convenient condition for transforming Kutaisi as a tourism center.

Tourism

Imereti has serious perspective in terms of tourism development. This region is rich with mineral water, historical, and cultural sites. There are 53 resort and recreational spots (Sairme, Tskaltubo, Nunisi, Simoneti, Sulori, Sathire, Chiatura Khreiti, Zvare, Amaghleba, etc)5 in Imereti. Among them, having considered the research goals, we will accent on Tskaltubo municipality:

 Resort Tskaltubo – multi-profile balneology resort, famous for its thermal mineral waters which cure up to 60 different diseases;  Particular accent should be made on the Sataplia protected territory in Tskaltubo (345 h), famous for its karst cave and unique discovery in the world – traces of dinosaurs, as well as Prometheus cave, which draws international tourists.  There is one of the largest centers of the casino business with proper communication and infrastructure in Tskaltubo. For this purpose, the government adopted a special law, according to which casinos are exempted from taxes within the territory of Tskaltubo (the same tax exemption now applies to other cities of Georgia in compliance with amendments made in the 2014 legislation).  It is worth mentioning that a partnership fund is working on a detailed plan for a new stage of restoration and development of Tskaltubo as a spa resort. In 2014, the partnership fund and Austrian international consulting company “Kol and Partner” prepared a development concept for the resort. A potential development strategy has been outlined for 16 former sanatorium buildings including the development of five-star high class hotels and the construction of medical/recreational hotels. Apart from the hotels, the project envisages the development of additional tourism infrastructure, such as a trade center, parking facilities, an aqua park, and golf fields.

 In 2015, the partnership fund signed a memorandum of cooperation with the world-famous company “VICHY,” which implies the undertaking of modern research on the healing mineral waters of Tskaltubo, the development of offers of water procedures for different types of hotels, and opportunities to use the VICHY brand.

As a result of expanding the foreign relations of Georgia, the stimulation of tourism businesses and growth of tourist flows, there will be a boost in demand on Georgian national jewelry production; cloth; souvenirs; illustrated editions; video, audio, and photo materials; maps; information leaflets; business guidelines; etc. Increased demand creates additional opportunities for several successful small enterprises to employ local residents in case proper investment is made in technical equipment and staff recruitment. Unfortunately, this activity in the tourism field is mainly disorganized in Georgia.

Resume – Suggestions for the Development of Imereti Region

For the purposes of the economic development of Imereti, the State, business entities and donor organizations prioritize the following four areas: development of production capacity through obtaining natural resources; use of the area’s agricultural-economic potential; development of transport-logistic systems, and tourism. In particular:

1. Metallurgy and metal processing production; 2. Coal mining-processing; 3. Production of granite, marbleized tiling stones and tiles; 4. Production of furniture; 5. Development of certain fields of chemical industry; 6. Mining-processing clay soils and mineral stones; 7. Support of greenhouses; 8. Development of fruit and vegetable processing industry; 9. Tea production; 10. Formation of a logistic center for agriculture products in Imereti that will serve Western Georgia; 11. Discovery, adventure and religious tourism; 12. FEZ perspectives; 13. Development of modern and organized trade networks; 14. Transport communications and international transportation; 15. Effective consumption of energy resources.

4. 1.2 . Samegrelo-Zemo Svaneti Region

In terms of economic activity, an accent should be made on the development of industrial capabilities in the agricultural field; in particular hazelnut processing, fishery, the processing of subtropical fruit and concentrates, and beekeeping. Also, the development of transport and logistic and respective services; in particular access to the Black Sea and railways, as well as the organization of large storage facilities. Additionally, the development of tourism; in particular the promotion of tourism sites, organization of infrastructure, and organization of new tourism destinations.

Perspective of Industrial Development

The development of the business sector in Samegrelo-Zemo Svaneti is significantly supported by its strategic location and particular transit function. The existence of Poti harbor connecting the region European and Asian countries on one hand, and on the other hand connecting the Western and Eastern regions of Georgia. The banking sector has developed significantly within the last years as well. Bank branches and service centers operate in all self-governing units. The number of micro-finance organizations has also increased. There are several audit companies in the region, while almost all insurance companies operating in the country have branches in Zugdidi and Poti. The existence of Poti FEZ, created in 2010, can be considered a supporting factor for the development of the business sector. Additional opportunities in terms of business development and an increase in cargo turnover are created by the high capacity harbour in Anaklia, as well as the launch of Mestia Airport and the completion of Poti Airport.

Statistics of Production Industrial Products in Samegrelo-Zemo Svaneti Region

The vast majority of industrial enterprises in the region are small and medium-sized enterprises. Nowadays, the main industrial products of the region are hazelnuts and timber. Additionally, full activation of fishery fields can become a supporting factor for further economic development in the region. Moreover, modernized factories for fish processing in Poti that can produce different kinds of products from fish should be considered.

Table 9 - Main Enterprises in the Region According to Export Turnover6

Industrial Enterprises Primary Industry Export Top 10 License Holder Top 10 Companies Value of Companies (active) (according to export Activity Final Price of Goods (according to value of Mineral Resources turnover) License (GEL) (2014. USD) license)

“Black Sea Products” Black sea 8,337,010 Gold – cobalt – “Georgian Mining LLC anchovies silver – lead – zinc 3,150,000 Company” – copper

Iceberg 2 LTD Black sea 8,170,721 “Agro group For Thermal water anchovies Seasons” LTD 525,000

“Black Sea Products” Fish oil and 8,337,010 “Gruppo Via” LTD Sand-gravel LTD flour 276,774

Hazelnuts Manganese “Agro Export Georgia” without 13,489,211 “GV Group” LTD replacement LTD 180,000 shells mineral

Hazelnuts

LTD “S.R.T” without 13,257,600 “Sani” LTD Sand-gravel 158,056 shells

“Megrelian Hazelnut” Hazelnuts “Paliasomi 2004” 6,737,847 Thermal water LTD with shells LTD 141,706

Tangerines “Spaika Georgia” LTD 3,001,228 “Agro Food” LTD Thermal water 121,000

Ind.ent. Robert Tangerines 1,512,419 “Lazika TD” LTD Sand-gravel Gvasalia 101,329

Tea Fresh water, sand- “Geoplant” LTD 496,165 “Prime Beton” LTD 99,450 gravel

Laurel Chalkstone, sand- “Geoprirava” LTD 1,325, 816 JSC “Archeopolis” 96,061 gravel

6 Source: Economic Council of the Prime Minister of Georgia, 2014

Table 10 - Industrial Potential of Samegrelo-Zemo Svaneti 7

Self-governing Unit Perspective of Industrial Development  Furniture processing factory, production of wood construction materials, construction and construction items Zugdidi  Production of non-alcoholic drinks and beer  Production of construction materials: tile, brick, iron blocks  Development of canning industry Martvili  Development of dryer plant (dried persimmon)

Senaki  Cement factory  Brick factory  Plasterboard processing factory Khobi  Hazelnut processing factory  Maize oil processing factory

Zugdidi municipality is rich with the following natural resources:

• Brick clay – 920 000 m3 supply • Chalkstone –8 400 000 t. • Sand-gravel –38 000 000 m3 • Fresh water – 560 000 m3/d/n. There are several important ongoing investment projects in the region:

City of Zugdidi (value of 12 million USD): • Wissol Group – Wendy’s fast food • “T&K Restaurants” LLC – network of “McDonalds” fast food restaurants • “Sani” LTD –residential building with 77 apartments • Ind. entrepreneur “Avtandil Shengelaia” – construction of residential building on 3000 m2 • Ind. Entrepreneur Nana Kvashilava – hotel and food outlet • “Leo-444” LTD – hotel (42 rooms) • Ind. Entrepreneur Vano Lukava – hotel • “GG” LTD – maternity hospital • “Group Cartu” – rugby stadium in Zugdidi and hotel (value unknown)

Zugdidi Municipality (value of 12.6 million USD) • “Representation of JSC Stimori in Georgia” – greenhouse • “ASAI Georgia” – factory of concrete and construction materials • “Tori” LTD – hazelnut processing • “Nergeta” LTD – hazelnut processing • Ind. Entrepreneur I.Pipia – hazelnut processing

7 Source: Administration of the State Governor in Samegrelo-Zemo Svaneti

• “Black Sea” – oil processing • Ind. Entrepreneur Tamila Gvasalia – hazelnut processing

Perspective of Agricultural Development

The activation of private-public partnership schemes to support the development of leading fields in the Samegrelo-Zemo Svaneti region should include agriculture and priority fields of agro production (in particular, the production of hazelnuts, citrus and blueberries) and the production of export and import- replacement products.

The main export products in Samegrelo-Zemo Svaneti are hazelnuts, wine, tea, persimmons and fish flour. These products are exported to the EU, CIS, Asian, and American markets. The increase of exports is stable, which is mainly due to a growth in the amount of exported hazelnuts.

According to information from the Economic Council of the Prime Minister of Georgia, the table given below presents the volume of producing agricultural products in Samegrelo-Zemo Svaneti:

Table 11 – Volume of Agricultural Products in Samegrelo-Zemo Svaneti

Production of Agricultural Products Product 2013 (thousand tons) % of Gross Production Hazelnuts 20,5 51.6% Tea 1,8 54.5% Subtropical fruit 11,2 40.3% Pears 6,2 36.5% Honey 1,3 33.3% Plums 3,2 31.1% Maize 90,0 25.0% Pork 3,4 22.8% Poultry 2,1 20.8% Beef 3,0 15.0% Milk (million liters) 89,7 14.8% Eggs (million pieces) 35,3 7.1% Citrus 6,2 5.6% Vegetables 10,8 5.3% Area of Harvesting One-year Crops (thousand h) 2009 2010 2011 2012 2013 Maize 43.0 32.7 32.7 29.4 38.8 Vegetables 2.5 2.9 2.2 2.0 1.6 Quantity of Livestock and Bee Hives 2009 2010 2011 2012 2013 Livestock (thousand heads) Samegrelo-Zemo Svaneti 198.8 180.1 197.4 245.4 280.7 Share of Region (%) 20% 17% 18% 22% 23% Pigs (thousand heads)

Production of Agricultural Products Product 2013 (thousand tons) % of Gross Production Samegrelo-Zemo Svaneti 33.0 29.4 30.4 73.5 54.1 Share of Region (%) 24% 27% 29% 36% 28% Goats (thousand heads) Samegrelo-Zemo Svaneti 14.9 14.4 13.3 13.2 12.1 Share of Region (%) 21% 25% 25% 24% 20% Bee Hives (thousand hives) Samegrelo-Zemo Svaneti 70.2 100.7 109.1 113.9 125.7 Share of Region (%) 27% 32% 33% 33% 32%

According to 2014 data provided by the Agency of Agricultural Project Management of the Ministry of Agriculture, under the second component of cheap agro credits, 453 projects for medium and large farmers have been funded in Samegrelo-Zemo Svaneti. The total value of the project was 6.3 million GEL (see Table #12).

Table 12 - Figures of Cheap Agro Credits – Second Component

Purpose Beneficiary Average Amount for Funding One N of Projects Amount (GEL) Project (GEL) Livestock 242 2,902,693 11,995 Pig breeding 1 44,280 44,280 Fisheries 8 191,000 23,875 Poultry 21 335,900 15,995 Beekeeping 17 127,800 7,518 Greenhouses 50 733,365 14,667 Production of Mushrooms 1 5,500 5,500 Orchards 19 454,500 23,921 Gardening 2 30,000 15,000 Olericutlure 2 20,000 10,000 Production of Corn 30 718,700 23,957 Mixed Farming 4 29,100 7,275 Sheep Breeding 1 5,000 5,000 Mixed Arable Farming 13 199,300 15331 Mixed Livestock 22 250,100 11,368 Mixed Farming/Livestock 20 298,900 14,945 Total 453 6,346,138

Based on information from the same agency, under the third component of cheap agro credits, 46 projects were funded for agricultural production. The total amount of projects was 8.6 million USD (see Table #13).

Table 13 Figures of Cheap Agro Credits – Third Component

Purpose Beneficiary Average Amount for Funding One Number of Project (USD) Amount (USD) Projects Fish Processing 2 1,200,000 600,000 Milk Processing 1 37,400 37,400 Tea Production 1 50,000 50,000 Fruit Processing 1 21,000 21,000 Nut Processing 1 600,000 600,000 Hazelnut Processing 12 1,664,200 138,683 Production of Ethereal Oils 1 150,000 150,000 Production of Forage for Animals 4 1,131,000 282,750 Mixed 2 175,500 87,750 Storage Facilities 1 600,000 600,000 Mixed 1 45,000 45,000 Livestock 6 1,330,000 221,667 Poultry 1 30,000 30,000 Greenhouses 9 800,300 88,922 Gardening 2 223,000 111,500 Production of Crops 1 600,000 600,000 Total 46 8,657,400

According to information provided by the State Governor in Samegrelo-Zemo Svaneti, each municipality in the region has different capabilities of agricultural production (See Table #14).

Table 14 – Agricultural Capabilities of Samegrelo-Zemo Svaneti Region

Municipality Perspective of agricultural production Municipality Perspective of agricultural production development development Zugdidi  Corn processing factory Chkhorotsku  Tea production  Livestock/Forage supply for livestock  Greenhouse/Hazelnut nursery garden  Tea production  Canning industry  Canning production  Fruit production – processing  Processing industry – milk, meat  Nursery garden Senaki  Poultry Mestia  Processing industry – milk, meat  Fruit production – processing  Livestock/Forage base for livestock  Tea production  Beekeeping Martvili  Tea production  Nursery garden Abasha  Factory that processes soya food products, Khobi  Peat processing field factory that produces dried persimmon,  Poultry factory that produces oil  Livestock/Forage base for livestock Tsalenjikha  Fruit production – processing

Thermal waters in Samegrelo-Zemo Svaneti create convenient conditions for the development of greenhouses and nursery gardens. Operating greenhouses in Zugdidi, Senaki and Khobi municipalities successfully use thermal waters, which significantly decreases production-related expenses. These enterprises mainly produce cucumbers and tomatoes. Other greenhouses in the region produce herbs and flowers. Nowadays, there are 250 greenhouses in the region with an overall area of 23 h with the production of up to 500 tons8.

At the expense of the effective use of thermal waters, the region has serious potential not only to increase its volume of production, but to completely replace imported products in the region as well as in the entire country. There are 12 nursery gardens in Zugdidi and Khobi municipalities with an overall area of 44.8 h. These nursery gardens produce plants such as fruit, citrus, palms, blueberries, vegetables and crops that contain ethereal oils.9

Transport and Logistics

The location of Samegrelo-Zemo Svaneti in the zone of a transport corridor crossing with access to the Black Sea, strategic transport arteries, and a related transit function provide an enormous opportunity for development of the region.

There are 10 cold and 9 closed storage facilities available in the region: 8 cold storage and 8 closed facilities in Poti, 1 cold storage facility in Zugdidi municipality, as well as 1 cold storage and 1 closed storage facility in Senaki Municipality.

Tourism

The unique nature of Samegrelo and Svaneti, as well as their historical sites enables the development of diverse tourism destinations. With an up to 100 million USD investment of “Tetnuldi” LTD, it is planned to develop a ski resort in Tetnuldi. Implementation of the Tetnuldi mountain-ski project will be an important step for economic and tourism development in the region.

Improvement of tourism infrastructure will give the region’s population new opportunities to receive income.

There are several important conditions for development, namely:

 Promotion of tourism destinations;  Supporting project of organizing Maltakva seashore (Poti) into a recreational zone;  Reconstruction of Zugdidi museum and botanical garden, as well as rebranding their tourism image;  Organization of camping infrastructure, introduction of new tourism routes (extreme, heli- skiing);

8 N1372, 18.09.2015 decree of the government upon approving the Development Strategy of Samegrelo-Zemo Svaneti region in 2014-2021 9 N1372, 18.09.2015 decree of the government upon approving the Development Strategy of Samegrelo-Zemo Svaneti region in 2014-2021

 Proper care and improvement of infrastructure in Anaklia and the Ganmukhuri seashore- recreational zone;  Support to open fast food outlets, camping spots, illumination systems, public toilets, car parking lots and souvenir shops near tourism sites;  Support to transform real village houses into guesthouses in small and far mountain regions along with the provision of ecologically clean agricultural products;  Support to build hunters and fishermen’s cabins, recreational pavilions and stables.

Resume – Suggestions for the Development of Samegrelo-Zemo Svaneti Region

For the purposes of the economic development of Samegrelo-Zemo Svaneti, the state, business companies and donor organizations should focus on the following three directions: the maximum use of agricultural potential and facilitation of production; the development of a transport-logistics system, and tourism. In particular: 1. Developing agro-production priority spheres; specifically hazelnut, citrus and blueberry production, as well as the processing and production of concentrates 2. Fishing and processing 3. Beekeeping 4. Supporting greenhouses by using thermal waters 5. Developing fruit and vegetable production and processing plants 6. Producing tea 7. Producing furniture and wood construction materials 8. Mining-processing clay soil and mineral rocks 9. Improving tourist infrastructure and promoting tourist sites 10. Producing of Georgian traditional products and national souvenirs 11. Developing medical tourism 12. Increasing discovery, extreme and adventure tourism 13. Developing skiing resorts 14. Noting the importance of a free industrial zone to the region 15. Developing transport communications and international shipping that are allowed by access to the Black Sea as well as related strategic transport arteries and transit functions. 16. Using energy resources efficiently

4.1.3. Autonomous Republic of Adjara

In terms of economic activity in Adjara AR, an accent should be made on the maximal use of tourism potential; in particular the formation of diverse tourism products along with traditional tourism products, which mostly implies holidays at the seaside. The development of enterprises and use of natural resources; in particular the concept of the Khelvachauri industrial zone. The development of transport and logistics; namely Batumi harbor and tight relations with Turkey – a main trade partner.

Tourism

Adjara is the most attractive tourism region in the country, thus it is crucial to have proper infrastructure there, and also to build hotels and apartment-style residences.

It is necessary to arrange different festivals, concerts, high-class meetings and conferences not only during the summer season, but during the off-season period as well.

The following tourism directions can be developed:  Eco-tourism (four protected territories – Kobuleti, Kintrishi, Mtirala, Machakhela, Botanic Garden, Green Lake);  Agro-tourism;  Medical tourism;  Recreational and Spa tourism;  Cultural tourism;  Adventure tourism;  Winter sport tourism (Goderdzi, Beshumi, Gomarduli, Danisparauli, Kedlebi, Loma mountain; the average height of mountains is 2000-2500 meters in Adjara);  Cruise tourism (Batumi harbor);  Yachting;  Casino tourism;  Special interest tourism (Bird watching – there are more than 800,000 migratory birds each year);  Tourism “take a break”;  MICE tourism (meetings, conferences, exhibitions);  Educational tourism (e.g. courses in Georgian cuisine).

Perspective of Industrial Development

Table 15 - Main Enterprises in the Region According to Export Turnover10

Industrial Enterprises Mining Enterprises Top 10 Companies Top 10 License Holders Natural Minerals (according to export Activity (valid) (according to value turnover) of license)

Lead/copper/zinc/gold/ "AJARA TEXTILE" LTD Export of apparel “Kinland Georgia Mining“ LTD silver “BatumiMitex” LTD Export of apparel “Urbani XXI'' LTD Tuff breccia “Begin energy” LTD Export of raw petrolium “Enormous Invest” LTD Tuff breccia Tuff “Star RG” LTD Export of wood tiles “PROMEX+'' LTD breccie/gabbro/diorite

Doligan andesite – “BTM-TEXTILE“ LTD Export of apparel “Batummshen Group” LTD porphyry “Georgian textile” LTD Export of apparel “Liberty” LTD Andesite basalt Physical entity “Levan “A&T energy Georgia” LTD Export of black oil Andesite basalt Khozrevanidze” “TBS Global trading” LTD Export of hay and sheep “Rase” LTD Andesite porphyry Export of herbs, laurel “Nastya and Jacob-2010” LTD “Kobuleti M” LTD Andesite basalt and citrus “Global” LTD Export of herbs and fruit “Zimo7” LTD Sand/gravel

The following investments with a value of 468 million USD are to be made from 2015-2019 in Adjara; in particular: - 23 hotel and apartment residences; - 2 medical institutions; - 2 enterprises: Kobuleti – production of alcohol; Keda – fruit processing.

Adjara AR owns the following natural resources: andesite – porphyry, andesite, andesite-basalt, gabbro-diorite, fire-clay, peat, tuff breccie, and underground fresh water.

Perspective of Agricultural Development

The leading fields of agriculture in Adjara are citrus growing, fruit-farming, gardening, and livestock. Traditional fields include wineries, fisheries, corn growing, and beekeeping. Assisting fields are comprised of tea production, silk production, tobacco production, and treatment herbs.

The largest shares in agro-food export were taken by tangerines, hazelnuts, persimmons, sunflower oil and laurel. As for imports, the largest shares were taken by wheat, sugar, potatoes, oils and onions. The largest trade partners in the import of agricultural products are Ukraine, Armenia, Belarus, and Italy.

10 Source: economic council of the Prime Minister of Georgia, 2014

There are 72 fish farms operating in Adjara. They produce an average of 277.2 t of product while the maximum amount may reach 678 t of product.

Top priority investment fields of agriculture are:  Development of greenhouses for producing vegetables;  Development of livestock farms specializing in milk and fresh meat production;  Development of poultry farms focusing on egg and fresh meat production;  Development of fruit and vegetable processing industries;  Development of the production of fish products, meat products, confections, chips, etc.  Development of the production of dairy products;  Development of cool storage facilities for fruits and vegetables;  Arrangement of wholesale markets for selling agricultural and grocery food.

Based on 0information provided by the Economic Council of the Prime Minister, the table below presents the volume of agricultural production in Adjara.

Table 16 – Volume of Agricultural Products in Adjara AR

Production of Agricultural Products 2013 % of Gross Production Gross Consumption of the Product (thousand t) Country (thousand t. 2013) Tea 1,1 33.3% 3,0 Honey 0,6 15.4% 3,8 Nuts 1,4 13.0% 11,1 Subtropical fruit 3,0 10.8% 21,8 Pears 1,8 10.6% 17,2 Cherries 0,1 8.9% 5,3 Milk 35,3 5.8% 606,3 Plums 0,4 3.9% 10,3 Beans 0,4 3.8% 16,2 Potatoes 11,7 3.9% 297,1 Area of Harvesting One-year Crops (thousand h) 2009 2010 2011 2012 2013 Potatoes 1.4 1.4 0.9 1.2 0.8 Number of Livestock and Bee Hives 2009 2010 2011 2012 2013 Livestock (thousand heads) Adjara AR 87.5 79.3 87.7 86.1 86.7 Share of Region (%) 8.6% 7.6% 8.1% 7.6% 7.1% Bee Hives (thousand hives) Adjara AR 21.2 37.4 49.3 55.2 61.9 Share of Region (%) 8.3% 12.0% 15.0% 15.9% 15.5%

According to 2014 data provided by the Agency of Agricultural Project Management of the Ministry of Agriculture, under the second component of cheap agro credits, 49 projects for medium and large

farmers have been funded in Adjara. The total value of the project was 843 thousand GEL (see Table #17).

Table 17 – Figures of Cheap Agro Credits - Second Component

Purpose Beneficiary Average Amount for Funding One N of Projects Amount (GEL) Project (GEL) Wine production 1 588,883 588,883 Tea production 1 200,000 200,000 Fruit processing 1 100,000 100,000 Tobacco production 1 30,000 30,000

Storage facilities 2 86,000 43,000 Cool storage facilities 1 316,000 316,000 Livestock 2 62,000 31,000 Fisheries 1 163,000 163,000 Greenhouses 2 187,000 93,500 Mixed farming/Livestock 1 150,000 150,000 Total 49 843 050

Based on information from the same agency, under the third component of cheap agro credits, 13 projects were funded for agricultural production. The total amount of the projects was 1.9 million USD (see Table #18).

Table 18- Figures of Cheap Agro Credits - Third Component

Purpose Beneficiary Average Amount for Funding One N of Projects Amount (USD) Project (USD) 1 588,883 588,883 Tea production 1 200,000 200,000 Fruit processing 1 100,000 100,000 Tobacco production 1 30,000 30,000

Transport and Logistics

Based on information provided by the National Agency of Statistics, as of 2014 there are 660 organizations operating in the transport and communications field in Adjara. Among them, there are 25 large, 36 medium-sized and 599 small enterprises that hire up to 5000 people. The gross added value of the transport and communication field in Adjara amounted to 122 million GEL in 2013. Production and turnover totaled 267.5 million and 266.8 million GEL, respectively.

In order to maximally use Batumi’s geostrategic location, it is recommended to transform Batumi into a regional logistics and distribution center with high-quality infrastructure and services for potential investors and freight forwarding companies.

Batumi harbor is connected to countries of the Caucasus, Central Asia, Ukraine and Turkey with highways and rail.

Batumi harbor is distinguished for its geostrategic and natural advantages. The harbor has five terminals: an oil terminal, a terminal for dry cargo, a container terminal, and a railway-ferry transit and passenger terminal. Batumi International Airport and Adjara railway jointly play an important role in tourism development.

Resume - Perspectives of Economic Development of Batumi

A strategic development document for the economic development of Batumi in 2012-2015, prepared by the Economic Development Department of the City Hall of Batumi, presents main directions and priorities for the economic development of the city11: 1. Convenient environment for business and entrepreneurs; 2. Stimulation of industrial activity; 3. Attractive investment environment; 4. Effective system for attractive direct foreign investment; 5. Support the development of small and medium-sized business; 6. Enhancing the export potential of locally produced goods; 7. Supporting processing-production of ecologically clean agricultural products; 8. Formation and activation of the labor market having an optimal structure; 9. Complete usage of tourism potential; 10. Extending the tourism season; 11. Improving the accessibility of Batumi; 12. Maximal usage of the geostrategic location of Batumi; 13. Formation of a logistics and distribution center.

4.2 Supporting Micro and Small Enterprise Development/Expansion and Legislative Benefits

Even though Regional Development Plans give the impression that small business development is regarded as a source for the improvement of the economic environment, Georgian legislation does not include any special benefits for small business enterprises. Tax benefits, defined within the new Tax Code for micro and small businesses, are the exception. Specifically, the new regulation on “Special Tax Regimes” has been in force since December 20, 2011.12 Due to this revision, a new tax regime and the terms “micro” and “small” businesses have been adopted. Micro business units were freed from taxes, while small businesses pay 3-5% of taxable income. The law defines one more benefit for small businesses; namely that the benchmark of 30,000 GEL is not applied for some of their activities: in case

11 Strategic document of the economic development of Batumi in 2012-2015 http://batumi.ge/ge/upload/1.4.1- ქალაქ%20ბათუმის%20ეკონომიკური%20განვითარების%20სტრატეგია.pdf 12 Georgia Tax Code (N3591, 17.09.2010.). Chapter XII. “Special Tax Regimes”

the physical individual carries out economic activity individually, does not use a hired workforce, implements the listed activities/services, and their retail delivery is to the final user (himself/herself). These activities include: agriculture production activities carried out with tractors and mini-tractors; the production of rugs and carpets; the production of clothes and accessories; the production of wooden products for kitchen and household use; the production of household tableware and inventory; the production of musical instruments; the production of grooming tools and brushes; the renovation of consumer goods and goods for private consumption; washing and processing linens and other textile products; services for household management, etc.

It should be mentioned that according to the LEPL Revenue Service of the Ministry of Finance of Georgia, there are 38,161 individuals with the status of micro-business and 42,014 individuals with the status of small business (80,175 individuals in total) as of July 2015 (See Chart #1).

Chart 1 – Beneficiaries of Preferential Regimes from 2011-2015

The CEO of the Georgian Small & Medium Enterprises Association assesses the Government’s program for the support of micro businesses within the project “Produce in Georgia” as a step forward.13 As he points out, “the program targeting 4,000 enterprises in all of Georgia means the provision of 5,000 GEL grants to micro businesses is a gift that the entrepreneur does not need to pay back. Even if 10% of those 4,000 enterprises is sustained and we receive 400 strong entrepreneurs, who will both support themselves and employ others, it will be a huge impact. Initially, many sceptics criticized this initiative, however, eventually it was evaluated positively in spite of the expenditures from the state budget.”

The adoption of the Law of Georgia on Agricultural Cooperatives (N816-RS, 12.07.2013) is a step forward; the principal objective of which is the promotion of the revival of agriculture in the country, the elimination of rural poverty, the growing productivity of agricultural production, the improvement of

13 Available July, 2015. http://bfm.ge/index.php?newsid=9360#.VbS4MUP688E web-page “Banks and finances”, Conditions of small and medium business in Georgia. 07.05.2015.

competitiveness, and the increase of profitability. The Law also aims to deter migration from rural areas. In accordance with this directive, the LEPL Agricultural Cooperatives Development Agency14 was established at the Ministry of Agriculture. The Agency is tasked with granting and revoking the status of agricultural cooperatives, monitoring and implementing state programs. Agricultural cooperatives enjoy certain benefits: they have the opportunity to receive a grant; income earned and grants received from agricultural activities (primary production) are exempt from profit tax; no profit tax limits are imposed based on annual turnover; property tax is not imposed on cooperative property used for agricultural activities; dividends received by members within the cooperative’s activity are exempt from income tax, etc.

The internalization of business activities is starting to be on the agenda of Georgian enterprises. Small and medium size enterprises that cannot satisfy the requirements of international market competitors significantly reduce their own production life cycle.15 In the long run, it is much more effective to focus on the direction of creating many small enterprises engaged in international trade or to support the improvement of export possibilities for existing enterprises.

Increasing export competitiveness is of vital importance for raising employment possibilities. Generally, exporting enterprises create more workplaces and are more productive than those enterprises that only target the local market. According to data from 2006-2012, exporting enterprises comprise the 9-16% of all enterprises engaged in Georgia’s economy (excluding the service provision sector). This indicator is in line with the indicator of the region in the same period from 2006-2012.16

According to data from the National Statistics Office of Georgia and its Department of External Trade and Foreign Investments, the share of exporting enterprises within the total number of enterprises in the targeted cities as of June 2015 is: - 3.2% in Batumi (production of tobacco products; production of chairs and other furniture designed for sitting; production of wooden products; transportation of raw oil and oil-products through pipelines; wholesale trade of fruits and vegetables, chocolate, sweets, tea, pharmaceutical products, construction materials; etc.); - 1.0% of enterprises in Zugdidi and Zugdidi municipality are exporting enterprises (– processing of fruits and vegetables, production of agricultural products for spice production, processing of tea, etc.); - 3.2% in Kutaisi (retail trade of new and second-hand vehicles, various wooden products, production of natural leather, production of pharmaceutical products for medical use, wholesale trade with ferrous materials scrap and waste, production of household technical products excluding freezers and refrigerators, etc.); - 1.6% in Poti (processing and canning of fish products, trade with ferrous materials scrap and waste, organizing transportation logistics services, etc.); - 0.2% in Tskaltubo and Tskaltubo Municipality (construction stone mining, production of agricultural products for spice production, etc).

Thus, analyzing the country’s economic activity indicators gives the possibility to declare that the reforms focusing on economic liberalization during the past 10 years did not result in an increase of

14 Available at http://acda.gov.ge/index.php/geo/static/43 July, 2015 15 Japaridze D, Analysis of small business development politics in Georgia, Tbilisi 2012 16 Economic Memorandum of the country - Georgia: Possibilities for development, department of poverty eradication and economic development in central asia and Europe WB, 2014.

competitiveness for the private sector. The polarisation tendency of unequal economic development of regions is also increasing; the level of industrial development and its exporting potential is low; therefore employment possibilities are even lower.

4.3 Labor Market Analysis and the Problems of Employers in Relation to the Workforce in Adjara, Imereti and Samegrelo-Zemo Svaneti Regions

In Georgia, there is currently a discrepancy between the supply and demand of the labor force, not only in quantitative terms, but also from a structural point of view. Some of the human resources required by the labor market are not provided by the country’s professional and higher education institutions, while in other spheres, there are more professionals than the amount required (for example, the humanitarian, arts, social, business and legal sciences spheres). The system for adult education in Georgia is still in the process of formation. The list of study programs for vocational learning, revision and/or qualification for adults is limited, the data base for the labor market is not comprehensive, and the issues of purposefulness, financial provision and territorial accessibility remain unsolved. Besides the quantitative and structural discrepancy between the supply and demand in the labor market, a discrepancy in qualification is also taking place. Specifically, the qualification level of the labor force prepared in Georgia often does not satisfy employers’ requirements. It is especially problematic to find highly qualified vocational professionals: 60-70% of the so-called “problematic” work force (the workforce for professions which are difficult for employers to find) is within the group of qualified vocational workers.17

The national strategy for the formation of the labor force and the respective action plan of 2013-2014 (Resolution of the Government of Georgia, №199, 02.08.2013) defines activities for overcoming unemployment. These activities include the institutionalization of labour market surveys, creation of an information database, creation and development of a labor market needs-oriented professional learning system, etc.

The program implemented by the Ministry of Labour, Health and Social Assistance and the LEPL Social Service Agency is noteworthy in this regard. This program aims to provide short, free courses for vocational learning from autumn 2015 to job-seekers (vulnerable groups are named within the priority groups).18 The program is based on the results of the first labor market study implemented by the agency in 2015.

Up until 2015, supply and demand on the labour market was only fragmentally studied. Therefore, while analyzing the labour market in the targeted regions, we will provide information from a couple of studies implemented during the past years by the International Organization for Migration (IOM), TSU Migration Study Centre, Business Consulting Group (BCG Research), BAC Gateway19 and others.

17 Internally Displaced Persons in the Georgian Labour Market. TSU Migration Research Centre. DRC, Tbilisi, 2012. 104 p. 18 Program for the reforms of labour and employment (Programme Code 35 05). 2015 State Budget http://www.mof.gov.ge/images/File/sax-biujeti/TAVI%20V.pdf , available July, 2015. 19 Support Reintegration of Georgian Returning Migrants and the Implementation of the EU-Georgia Readmission Agreement. Employers’ Demand for Labour Force. EU, TIG, IOM. 2012; Supplying Workforce to the Georgian Labor Market. USAID, IOM. 2011; Labor Market in Georgia. USAID, IOM. 2010; Research on the Business Environment and Employers Demand for Labour in Samtskhe-Javakheti. IOM, 2010. Employers’ Demand for Labour Force in

Comparing supply and demand on the work force in the labor market gives the possibility to assess the extent to which the vocational and higher education system of the country is oriented to the needs of the labor market.

According to the survey implemented by the International Organization for Migration, 34% of active enterprises in Georgia had a problem finding or attracting the necessary work force from the years 2007-2012. Only 7% of small enterprises (fewer than 20 employees) have a problem finding the necessary staff. This indicator increases in the case of medium-sized enterprises (20-100 employees) and reaches 12%. For large enterprises (more than 100 employees), the indicator reaches 18%.20

The list of specific professions and specializations which are problematic for employers to find (both private and public organizations) is longer than 300. The authors of the research grouped the list of professions according to the spheres identified in Standard Classifier for Education (ISCED-1997).21 The research identified a list of the top 10 higher education specializations and the vocational professions that are limited in each region (see Tables #19 and #20).

Table 19- Higher Education Specializations and the Vocational Professions that are Limited in Each Region

Kutaisi and Surrounding Area Zugdidi and Surrounding Area 1 Health 1 Health 2 Business and management 2 Business and management 3 Engineering sciences 3 Education 4 Education 4 Arts, culture and sports 5 Social and behavioral sciences 5 Architecture and construction 6 Architecture and construction 6 Social and behavioral studies 7 Production and processing specialities 7 Journalism and information 8 Arts, culture and sports 8 Production and processing specialities 9 Journalism and information 9 Engineering sciences 10 Legal studies 10 Tourism and hotel management specialities

Vocational professionals22 are ranked as follows in the targeted cities according to education sphere:

Ajara. USAID, IOM, JCP, 2012. Internally Displaced Persons in the Georgian Labour Market. (Carried out by TSU Migration Research Center under the guidance of Tukhashvili M.), DRC, Tbilisi, 2010; Labour Market and Reintegration of Returned Migrants (carried out by TSU Migration Research Center under the guidance of Tukhashvili M.), DRC, 2012. 20 Supplying Workforce to the Georgian Labor Market. USAID, IOM. 2011; (Eng., Geo) 21 Support Reintegration of Georgian Returning Migrants and the Implementation of the EU-Georgia Readmission Agreement. Employers’ Demand for Labour Force. EU, TIG, IOM. 2012. (Eng., Geo) 22 The groups of the professional education spheres are defined according to the classification used by the Ministry of Education and Science of Georgia. According to this classification, the service sector also includes trade.

Table 20 - Vocational Professions that are Limited

Kutaisi and Surrounding Area Zugdidi and Surrounding Area 1 Mining and manufacturing 1 Engineering 2 Engineering 2 Services 3 Tourism, hotel and restaurant services 3 Transport and transportation services 4 Services 4 Tourism, hotel and restaurant services 5 Transport and transportation services 5 Mining and manufacturing 6 Construction 6 Construction 7 Medicine 7 IT 8 IT 8 Arts and sports 9 Arts and sports 9 Medicine 10 Agriculture sector 10 Agriculture Sector

The following professions were identified as the most in-demand by Kutaisi industrial enterprises, according to a survey of the Migration Study Centre in 2011: marketing, construction management, engineer – technologist, PR manager, woodwork specialist (carver, carpenter etc.).23

The reasons for not being able to find the necessary staff with the required profession and qualifications vary. According to the conducted surveys, a lack of practical experience and theoretical knowledge are the most evident (see Table #21).24

Table 21 - The Reasons for Not Finding Necessary Staff According to Region, Percent

Reasons Kutaisi and its Zugdidi and its Surrounding Area Surrounding Area The staff of this profession are not educated in the country 5 4 The staff of this profession are not educated in the region 20 21 They do not have the necessary theoretical background 16 15 They do not have the necessary practical experience 40 35 The employer does not know who to ask for necessary staff 4 6 The employees do not agree to work under the conditions 12 12 provided by the employer They do not want to work in the regions 3 7 Total 100 100

In order to study the fairness of the first two reasons identified by employers (the staff of this profession are not educated in the country or in the region), the research team studied the professions taught in Georgia’s higher and vocational education institutions and compared those professions to the “limited” or “required” professions.25

23 Labour Market and Reintegration of Returned Migrants (carried out by TSU Migration Research Center under the guidance of Tukhashvili M.), DRC, 2012. (Geo) 24 Support Reintegration of Georgian Returning Migrants and the Implementation of the EU-Georgia Readmission Agreement. Employers’ Demand for Labour Force. EU, TIG, IOM. 2012. (Eng., Geo) 25 Supplying Workforce to the Georgian Labor Market. USAID, IOM. 2011; (Eng., Geo)

Table 22 - Most Lacking and/or Demanded Professions in Georgia’s Professional/Vocational Education

Institutions According to Region26 (Professions ranked according to demand)

N Profession -

Zemo

Kvemo

Kartil Kartli

Guria Shida

Tbilisi

Adjara

Racha

Kvemo

svaneti

Imereti

– Svaneti

Kakheti

Georgia

–

Javakheti

Samtskhe

Samegrelo Lechkhumi 1 Cook 2 Waiter 3 IT Specialist 4 Baker 5 Electrician 6 Welder 7 Carver, Carpenter 8 Hairdresser, Stylist 9 Plumber 10 Sales Agent, Sales Consultant 11 Construction Equipment Operator 12 Auto Repair 13 Mechanization of Agricultural Machinery 14 Mechanical Technician / Technician of Agricultural Machinery 15 Barman 16 Locksmith/Machinist 17 Confectioner / Pastry Cook-Baker 18 Turner 19 Guide 20 Tailor 21 Repair of Household Appliances 22 Stone, Marble Processor 23 Operator in the Food Industry 24 Cosmetologist 25 Massage, Spa Center

26 The list of courses and programs in professional education colleges are changing fast; the analysis is conducted as of July 1, 2011, within the framework of the IOM and USAID surveys.

N Profession -

Zemo

Kvemo

Kartil Kartli

Guria Shida

Tbilisi

Adjara

Racha

Kvemo

svaneti

Imereti

– Svaneti

Kakheti

Georgia

–

Javakheti

Samtskhe

Samegrelo Lechkhumi Specialist 26 Manicure and Pedicure Specialist 27 Communications Technician 28 Grinder, Plasterer 29 Ferro Concrete Oils Manufacturing (armature, molding, concrete specialists) 30 Construction Techniques Mechanic 31 Tour Operator, Animator 32 Cable Specialist – Solder 33 Upholsterer 34 Technician, Electrics- Locksmith, 35 Makeup Artist 36 Painter 37 Body Specialist 38 Zoo Technician 39 Veterinary Service Specialist 40 Rabbit Breeding and Mushroom Growing Specialist 41 Melioration specialist Note: *Highlighted graphs indicate that the specialists are being educated, the ones without highlighting indicate that specialists are not educated. **There are no vocational colleges in the Mstkheta-Mtianeti region.

As it can be seen from the table above, some of the demanded professions from the employers’ side are neither taught or provided for in the region, nor in the whole country. Due to this reason, it is necessary to study the potential demand for these professions and plan/implement education activities accordingly.

According to the labor market survey implemented in 2010 by BAC Gateway in Poti, more than half of Poti employers believe that there is a problem of qualified staff in their city. This attitude is shared by

commercial and state organizations, and it is especially highlighted by the manager of “Rakia Georgia – Poti Free Industrial Zone.”27

The companies were asked whether they lack professions according to economic activity, and their answers are provided in Chart #2.

Chart 2 - Do you Experience a Lack of Qualified Specialists in Poti?

Logistics Trade Insurance Service Banks Industry

150% 100% 100% 89% 87% 85% 67% 50% 50% 50% 33% 13% 15% 11% 0% 0% 0% 0% 0% 0% 0% 0% Yes No Difficult to Answer

In Poti, the following professions are currently lacking: engineering – technical staff (including engineers, constructors, ship-constructors, and ship-repairmen), qualified workers (including mechanics, electricity workers, electric technicians and plumbers, turners, editors, carpenters, drivers), economists and financial specialists, management specialists, logistics specialists, foreign language specialists and accountants (see Chart #3).

It should be clearly mentioned that the majority of the interviewed respondents regard that the problem of limited vocational professionals is very important as it is hindering the economic development of Poti. Almost half of the interviewed respondents state (48%) that the problems of the workforce cannot be solved solely by employer organizations and they are calling international organizations to fund courses that can be adapted to the demand of the labor market.

Chart 3 – Which Professions are Lacking Specifically?

27 Study of the Demand on labour market in Poti. BAC Gateway, 2010.

Engineer Technical Specialist 40% Financial manager, economist 12% Logistics Specialist 8% Lawyer 8% Accountant 8% Cereal Technician 4% Programmer 4% Service officer 4% Insurance Officer 4% Marketing/Sales Manager 4% Supervisor 4% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

According to the survey implemented in 2011 by the Business Consulting Group in Adjara, even with the high unemployment rate, employers are still finding it difficult to attract the necessary vocational workers.28 The main reasons are again the low level of professionalism of the workforce and the fact that many of the professions are not provided in the region or in the country. This can also be explained by the fact that large cities are more attractive for vocational professionals; large cities provide a higher chance of employment, better possibilities for professional growth, and a better salary.

An increase in the qualifications of existing professional staff is another equally important problem for the surveyed companies. Employers need assistance from the state and international donor organizations in the sphere of requalification in terms of necessary finances, methodological learning materials, training of trainers, and the organization of well-equipped training centers. However, it was not possible to reach an agreement within the framework of the social partnership between the business companies and the professional learning centers. It remains problematic for the students of public professional institutions to get the necessary industrial practice (which should be 60% of the education system). Therefore, they receive a low level of education as a result.29 The business companies can be encouraged to provide practice or internship possibilities to students via tax benefits, cheap credits, etc.

The companies have named professions that will remain in-demand during the next few years (see Table #23).

28 Labor market study in Adjara. BCG, 2014. (The activities of the interviewed companies included trade (40.5%), manufacturing industry (18%) services (14.5%), etc. 47.5% of respondent companies have fewer than 10 employees. 29 Chelidze N. Vocational Reintegration Problems of Returned Migrants in Georgia. Journal Migration-5. TSU MRC, 2011. (Geo)

Table 23 – Specialities Remaining In-demand for the Next Few Years, percent

Demand for Professions of Higher Education Demand for Professions of Professional Education Institutions in Adjara Institutions in Adjara Sales Manager 26.7 Food Technician 2.0 Consultant 12.8 Cleaner 3.2 Accountant 13.8 IT Specialist 1.5 Waiter 11.5 Technical Personnel 3.2 Lawyer Engineer – Cook Baker 8.2 1.5 10.3 2.6 Chemistry Economist 6.4 Veterinarian 1.5 Cashier 9.0 Worker 2.6 Translator 4.6 Technical Personnel 1.5 Hairdresser 5.8 Sales Manager 2.6 Teacher 4.6 Engineer 1.5 Accountant 4.5 Administrator 1.9 Doctor / Procurement Manicure and Operator 3.5 1.5 3.8 1.9 Pharmaceutical Specialist Pedicure Specialist Executive and Mid- 3.4 Other specialists Administrator Craftsman 12.9 3.8 1.3 Management Administrator 2.8 Driver 3.8 Barman 1.3 Coach 2.1 Sales Person 3.2 Other professions 10.9

The Business Incubator of the Ministry of Economy and Finances of Adjara and the Employment Agency of the Ministry of Health and Social Protection of Adjara are functionally engaged in labor market formation and regulation. One of the functions of the Business Incubator is to maintain a common database for job-seekers and vacancies, as well as to identify those registered job-seekers who are willing to start their own business. In case of interest, the individuals are provided with trainings and professional internships in various economic spheres, such as: ecological, agricultural and industrial spheres. Recommendations and facilitation for business plan development and financial provisions are also provided for successful graduates and interns. In fact, the agency is still facing the problem of technical underdevelopment of the study demonstration site.

According to the Resolution of Adjara Employment Agency (Resolution of the Government of Adjara N43, 13.09.2011), the functions of the agency also includes: developing and updating the database for job-seekers and vacancies in the public and private sectors, systematically studying the labor market, consulting job-seekers and playing a facilitator role for their employment, planning and implementing employment programs, and organizing/conducting professional trainings for job-seekers. According to data provided by the agency, 7,842 individuals were employed from 2012-2015. Out of those, 3,979 were employed long-term, 3,057 were employed temporarily, and 806 were employed on a single basis. The number of individuals employed is decreasing every year, which is hard to explain (2012 – 4,906 individuals, 2013 – 2,228 individuals and 2014 – 1,703 individuals). This can be due to the decrease of potential job-seekers, a decrease in the effectiveness of the agency, or to general economic conditions. The agency confirms a mismatch in the professional trainings provided to job-seekers and the existing demand on the labor market, which is due to an incorrect professional orientation among the population. The agency believes that it is necessary to have professional psychological work with the population, to explain why it is more beneficial to take the training in restaurant management, which is in-demand, rather than a training for office managers.

4.4 Small and Medium Enterprises Survey Results

4.4.1. Assessment of Business Potential in the Target Cities for Strengthening the Economic Activities of IDPs and Eco-migrants

As the analysis of the labour market analysis and the problems of employers in relation to the workforce revealed, it is necessary to study employers’ demand and strengthen the orientation of the professional education system to focusing on the demands of the labor market. This will support not only the employment of job-seekers, but will also increase the profitability of businesses.

For this reason, another small-scale survey was conducted in the target cities of this project. The purpose of this survey was to assess the potential of operating enterprises in the target cities, to determine the motivations of enterprises, to identify the conditions that will enable them to increase their volume of production and/or offer more services to customers, and to identify additional employment capacities (of IDPs) in case of business expansion.

Activities, Financial Conditions and Personnel of the Surveyed Organizations in Target Areas of the Study

Field of Activities of Enterprises Studied in the Targeted Cities

The main fields of activities of the interviewed enterprises are: trade; repair services for cars, household appliances and customer goods (39%); manufacturing industry (14%); hotels and restaurants (14%); real estate, rent and other business activities (8%); health care and social assistance (7%); transport and communication (5%); education (5%); communal, social and personal services (3%); other (see Chart #4).

Chart 4 – Field of Activities of Interviewed Enterprises

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Wholesale and retail trade or cars 39% Hotels and restaurants 14% Manufacturing industry 14% Real estate, renting and business activities 8% Medical field 7% Transport and Communication 5% Education 5% Service 3% Agriculture and fishery 3% Coal mining and processing 1% Construction 1%

The data described above is in compliance with the data of the National Statistics Office of Georgia. Almost half of the enterprises in all three regions (Imereti - 53.9%, Samegrelo-Zemo Svaneti - 50.4%, Adjara AR - 47.7%) are involved in trade, repair services for cars, household appliances and customer goods (see Table #24).

Table 24 - Number of Enterprises Operating in Adjara AR, Imereti and Samegrelo-Zemo Svaneti Regions by Activity, 2014, Unit

Poti

Zemo

Kutaisi

Batumi

Imereti

Svaneti Zugdidi

Tskaltubo

Adjara AR Adjara Samegrelo

62 18 12 61 15 5 52 24 Agriculture, hunting and forestry 29% 19% 25% 8% 46%

1 1 24 19 10 5 Fishing, fisheries 1

101 18 12 39 14 3 34 25 Mining industry 18% 12% 36% 8% 74%

1031 488 74 498 207 85 705 440 Manufacturing industry 47% 7% 42% 17% 62%

Supply of electricity, natural gas and water 9 1 2 6 1 11 5

11% 22% 17% 0% 45%

Construction 429 179 21 434 82 54 712 481 42% 5% 19% 12% 68%

Trade; repair of motor vehicles, household goods 4098 1969 289 2195 763 471 3710 2363 and items of personal use 48% 7% 35% 21% 64%

486 232 36 217 71 55 756 500 HoReCa 48% 7% 33% 25% 66%

264 99 18 312 26 228 660 434 Transport and communications 38% 7% 8% 73% 66%

Real estate operations, leasing and consumer 579 364 32 318 115 95 642 510 services 63% 6% 36% 30% 79%

132 84 2 64 21 13 88 72 Education 64% 2% 33% 20% 82%

192 101 28 99 29 20 139 114 Healthcare and social assistance 53% 15% 29% 20% 82%

166 92 10 50 14 21 205 149 Utility, social and personal services 55% 6% 28% 42% 73%

60 16 5 38 10 4 53 30 Activity unknown 27% 8% 26% 11% 57%

7610 3661 542 4355 1368 1073 7777 5152 Number of active enterprises, total 48% 7% 31% 25% 66%

Among the enterprises, 15% have been in operation since 2012. Thirty-one percent of the interviewed enterprises were founded between 2010 and 2011. Interviewed enterprises that started operating from

2001 to 2009 amount to 34%, and 18% started operating from 1990 to 2000. Just 2% of the interviewed enterprises were established before 1990 (see Chart #5).

Chart 5 - Registration Years of Enterprises

0% 5% 10% 15% 20% 25% 30% 35% 40%

2010-2011 31% 2001-2009 34% 1990-2000 18% 1990 2%

The number of employed workers is not high among the interviewed enterprises. Among the enterprises, 66% have up to five workers employed. Thirteen percent of the enterprises have between 6 and 10 workers hired; and 13% of enterprises employ between 11 and 20 workers. Only 8% of the enterprises have a staff with 20 or more workers (see Chart #6).

Chart 6- Number of Employees in Enterprises

0% 10% 20% 30% 40% 50% 60% 70%

0-5 66% 6-10 13% 11-20 13% 20+ 8%

Financial Conditions of Enterprises

Despite the fact that most of the enterprises have long-term operating experience, 18% of those interviewed consider their economic activity is more not profitable than profitable. Half of the interviewed respondents consider that their economic activities are more profitable than not profitable, and 32% consider their economic activities to be profitable (see Chart #7).

Chart 7– Perceived Profitability of Enterprises

Profitable 32% More profitable than not profitable 50% More not profitable than profitable 15% Not profitable 3%

With the unfavorable conditions of the economic crisis and the depreciation of national currency exchange rate, when compared to the previous year, the financial conditions of the interviewed enterprises have deteriorated in 2015. In contrast, the financial conditions of only 5% of the enterprises

had worsened in 2014. For one-third of the enterprises, financial conditions worsened rather than improved in both years (2014 and 2015). In 2014, 37% of the enterprises and in 2015, 34% of the enterprises maintained their financial conditions. One-fourth of the enterprises indicated an improvement in their financial condition in 2014, while only 16% of the enterprises have stated an improvement in 2015 (see Chart #8).

Chart 8– Economic Conditions of Enterprises

2014 2015

Improved a lot 2% 1% More improved than worsened 23% 15% Has not changed 37% 34% More worsened than improved 33% 32% Has worsened a lot 5% 18%

The unstable economic environment has had an impact on production volume. Only one-fifth of the enterprises were able to increase their volume of production. For 44 % of enterprises, production remained unchanged, and 35 % of the enterprises indicated that production decreased. These changes were particularity vivid for the enterprises in Tskaltubo (57, 1 %) and Kutaisi (42, 9%). Enterprises in Zugdidi and Batumi have demonstrated a relative increase in their volume of production (see Chart #9).

Chart 9 – Change in the Volume of Production

0% 10% 20% 30% 40% 50% 60% 70%

42.9% Kutaisi 14.3% 42.9%

18.8% Zugdidi 31.3% 50.0%

57.1% Tskaltubo 28.6% 14.3%

26.7% Poti 13.3% 60.0%

35.3% Batumi 23.5% 41.2%

35.0% Total 21.0% 44.0%

Decreased Increased Did not change

The following factors were identified by the respondents to cause changes in the volume of production in all five cities: a drastic decline in the purchasing power of the population (35, 1 % of respondents),

changes in the prices of raw materials (19, 3 % of respondents), a price level increase on finished products (17, 5 % of respondents), intensification of competitiveness (8, 8 % of respondents), and other factors. Less support from the Government to do business was named as one of the impediments to production growth (5, 3 % of respondents) (see Chart #10).

Chart 10 - Main Reasons for a Decrease in the Volume of Production

0% 5% 10% 15% 20% 25% 30% 35% 40% Change in market volume (change in power of 35.1% consumers) Change in prices of raw materials 19.3%

Change in prices of ready products 17.5%

Change in competetiveness level 8.8%

Political instability 7.0%

Absence of support of business by government 5.3%

Other 7.0%

Respondents relate the growth in the volume of production to the improved competitiveness of the enterprises achieved as a result of improvements in the quality of goods and services and to the enhancement of enterprise production capacities. Among respondents, 43, 9 % provide this reason and 26, 8 % of respondents name changes in purchasing power as an influencing factor (see Chart #11).

Chart 11– Main Reasons for Production Growth

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Change in competitiveness via changing product and 44% service quality and enterprise capacity Change in market volume (change in purchasing 27% power of consumers) Change in prices of raw materials 10%

Change in prices of ready products 10%

Support of business by government 5%

Other 5%

Impeding Factors for the Operation of Enterprises

The conception that Georgia has a favorable environment for investment and doing business is reinforced by the assessment of factors provided by the interviewed enterprises, which potentially may

impede their development. One of the acute problems named was the low purchasing power of customers and the established practice of paying for goods afterwards/later. According to survey responses, 59 % of the enterprises were allocated on this aspect. A small amount of respondents named the excessive regulation of prices (20%); others indicated difficulties related to taking loans due to the unavailability of collateral (16%), a lack of specialists (14%); and heavy penalties charged for the improper administration of taxes (13%). Other factors hindering production developments include pressure from regulatory and/or governmental structures or criminal networks to exploit benefits, reporting to governmental bodies and agreeing on business activity, as well as the competence and impartiality of regulatory bodies. Unstable and inordinate legislative regulation is not problematic for a majority of the entrepreneurs (see Table #25).

Table 25– Impeding Factors for the Operation of Enterprises

Problem

at all all at

Problem

Somewhat Somewhat

Very Acute VeryAcute

Not a Problem Problem a Not Acute Problem Acute

Difficulties to take loans (unavailability of collateral) 16% 13% 71% Heavy penalties for mistakes (taxes) 13% 10% 77% Competence of regulatory bodies 4% 9% 87% Impartiality of regulatory bodies 3% 8% 89% Unstable and inordinate legislative regulation 5% 24% 71% Granting licenses 5% 6% 89% Nonpayment or delay of payment from clients 21% 28% 51% Low purchasing power 38% 31% 31% Excessive regulation of prices 20% 25% 55% Agreement upon entrepreneurship activities with governmental bodies 4% 9% 87% Reporting to governmental bodies 1% 12% 87% Lack of specialists 14% 10% 76% Pressure exercised from regulatory and/or governmental bodies to exploit benefits 5% 6% 89% (extortion) Pressure exercised from criminal networks to exploit benefits (racketeering, 4% 5% 91% extortion)

Enterprise Personnel

Throughout the last two years, 63 persons were employed by the interviewed enterprises. Among them, 14.3% were teachers/daycare specialists; 14.3 % represented a workforce with a low level of education; 9.5% represented waiters/waitresses; 7.9% represented lower management (administrator of a shop or hotel; sales manager; office manager); 6.3% were cooks and bakers; 6.3% represented consultants or operators; 4.8% were drivers; 4.8% were workers with high qualifications (locksmith, welder; joiner); 4.8% represented nurses and hospital attendants; 3.2% were salespeople or distributors; 3.2% were advertising agents; 3.2% represented maids and other occupations (see Chart #12).

Chart 12 –Personnel Employed Throughout the Last Two Years

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Teacher/Day-Care 14.3% workforce with low level of education 14.3% Waiter/Waitress 9.5% Lower management 7.9% Cook/Baker 6.3% Consultant, operators 6.3% Driver 4.8% Workforce with high qualification 4.8% Nurse 4.8% Seller 3.2% Ad Agent 3.2% Other 31.7%

For 66 % of employers, the qualification of hired workers is satisfactory. For 33 % of respondents, the qualification of hired workers is more satisfactory than unsatisfactory. Only 1% of respondents consider that the qualification of personnel is more unsatisfactory than satisfactory (see Chart #13).

Chart 13 – Satisfaction with the Level of Qualification of the Hired Workforce

Very Satisfctory 66%

More satisfactory than unsatisfactory 33%

More dissatisfactory than satisfactory 1%

0% 10% 20% 30% 40% 50% 60% 70%

Consequently, according to 76% of entrepreneurs, none of the personnel from subdivisions need professional development. Thirteen percent of responses were allotted for the need of increasing the qualifications of middle management. This could be explained by the fact that responsibility over the successful operation of an enterprise is held by this level of management. According to respondents, personnel from the marketing, financial and logistics departments also need retraining (see Chart #14).

Chart 14 – The levels that Need Retraining

0% 10% 20% 30% 40% 50% 60% 70% 80%

None 76% Accounting/Financial Department 5% Logistics 2% Marketing 7% HR 1% Middle management 13%

Respondents were asked to assess discipline, competence, qualification, working skills and work results of enterprise specialists and workers on a 5-point scale. Compared to workers, specialists were given higher scores. Respondents reported that both workers and specialists lack motivation and creative initiative (see Charts #15 and #16). This could be explained by low salaries and weak motivation mechanisms in enterprises.

Chart 15 – Entrepreneurs’ Assessment of Employed Specialists in Enterprises

Discipline 4% 15% 80% Usage of working hours 7% 14% 79% Motivation 4% 15% 79% Communication skills 4% 13% 83% Qualification 4% 22% 74% Quality of performed work 5% 20% 75% Working Results 5% 20% 75%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1 2 3 4 5

Chart 16 - Entrepreneurs’ Assessment of Employed Workers in Enterprises

Discipline 6% 18% 75% Usage of working hours 7% 21% 73% Motivation 6% 23% 70% Communication skills 7% 18% 75% Qualification 7% 30% 63% Quality of performed work 6% 25% 70% Working results 7% 26% 67%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1 2 3 4 5

No form of motivation was named by 55% of the enterprises. In one-fourth of the enterprises, some gifts are distributed during holidays and celebrations. Seventeen percent of the enterprises allot premiums occasionally. Only 2% of the enterprises issue bonuses, however only in cases of overtime work (see Chart #17).

Chart 17 – Staff Motivation Schemes

None 56%

We issue a monthly bonus 3%

We issue a quarterly bonus 8%

We issue an annual bonus 6%

We sometimes give presents during holidays 25%

We reimburse overtime 2%

According to 8% of entrepreneurs, enterprise employees are often forced to work overtime. (5% of specialists). According to 25% of respondents, this seldom happens (21% of specialists). Some respondents consider that enterprise personnel work on a standard, 8-hour day schedule (see Chart #18).

Chart 18 – Work Schedule of Workers and Specialists

Workers Specialists

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Never 62% 47% Rarely 25% 21% Often 8% 5% Hard to answer 5% 27%

Due to unemployment in the country, enterprise personnel outflow is insignificant, with 80% of the respondents thinking that there is outflow in neither workers nor specialists. A slightly higher percentage of the enterprises indicated a change of personnel among workers (17%) rather than among specialists (3%). This can be explained by the desire and attempt of blue-collar workers to change their heavy and low-wage jobs and find employment with better working conditions. The reasons for outflow of human resources shall be considered to ensure the stability of jobs created under grant projects. These projects mainly contribute to creating and maintaining jobs that do not require high qualifications. In these cases, it is necessary to define and agree on work terms and conditions.

Professional Development Activities in Enterprises

The survey identified the lack of a culture in relation to professionalism. The survey revealed that 69% of the enterprises do not provide any professional development activities for their employees. Only 10%

of the enterprises provide professional development to their personnel on a permanent basis. The rest do so rarely (see Chart #19).

Chart 19 – Personnel Professional Development Activities

We have developed a concept of personnel recruitment 15.2%

We choose the study program by directly teaching on-site 32.6%

We send personnel to trainings and different 30.4% recruitment/training centers

We send personnel for internship abroad 13.0%

We consistently work on carrier plans for personnel 8.7%

Employers implement professional development activities directly at their work place, as indicated by 32.6% of respondents. Professional development activities take place in training centers located in Georgia for 30.4% of respondents. One-fifth of the enterprises have elaborated personnel professional development concepts. Few of the enterprises permanently work on career development plans for their personnel (8.7%). Thirteen percent of respondents indicated professional development through internships in foreign countries.

Development of the professional skills of personnel is a precondition for achieving high productivity in an enterprise. Systematic training and retraining activities, however, require the relevant financial resources. In most cases, employees refrain from paying fees for their professional development activities (16.7%). Consequently, enterprises are the main source of funding for professional training courses (50%). One-third of enterprises are trying to involve their personnel in free professional development courses or abstain from any trainings (27.8%). There were only two cases in which an employer and employee jointly funded professional development training courses (see Chart #41). Besides a lack of financial resources for training and retraining programs, another reason named by entrepreneurs was related to low motivation and interest of personnel, as well as the low quality of education programs. It can be assumed then, that enterprises have weak labor motivation mechanisms and low organizational culture. Furthermore, it stipulates the necessity of creating and improving existing professional training and development systems and educational programs in the country.

Chart 20– Professional Development Activity Funding Schemes

By enterprise 50.0% By employee 16.7% By enterprise and employee together 5.6% None/free 27.8%

Employers’ Demand on the Workforce

One-third of interviewed enterprises stated that they currently did not need a workforce of any profession. However, the remainder noted the following professions in need: financer, economist, auditor, accountant (17.2%); middle management – hotels/restaurants/shop administrators and office managers, hotel attendants (10.8%); highly qualified workers such as welders, joiners, lathe operators, milling-machine operators, and metal craftsmen (7.6%); representatives from a variety of specialties in the medical field (5.7%); sales consultants (5.1%); cooks (3.2%); IT specialists (3.2%); waiters/waitresses (3.2%); bakers, translators, PR managers, drivers, baby-sitters, hairdressers, cosmetologists, footwear specialists, and others. According to entrepreneurs, there will be a demand for the same professions and specialties for the next 1-2 years.

The professions that were stated to be in deficit are: accountant, sale person, cook, waiter/waitress and lathe operator.

The above-listed professions are among 55 scarce professions published by the Ministry of Labor, Health and Social Affairs of Georgia and the Department of Employment Policy and Department of Employment Programs in the Social Service Agency. The on-going programs of these structural bodies are directed towards studying market demand and elaborating relevant professional development programs based on research findings.30 This was the first large-scale research program which, based on several key criteria, selected and targeted 6,240 enterprises across Georgia. The research studied scarce professions and skills demanded by employers for specific professions.

One has to mention activities implemented regarding establishing and developing labor market information systems.31 The Employment Department of the Social Service Agency manages an on-line database, www.worknet.gov.ge, for vacancies and job-seekers. It represents a virtual space that provides the opportunity for job-seekers to directly communicate with employers, and for employers to publish vacancies and deliver consultations to job-seekers. The same structural body can redirect those individuals who are willing to pursue education in scarce professions to the relevant educational establishments and fund short-term (two months) professional development courses from the State budget.32 It is worth mentioning, though, that the main responsibility of the educational center is to match educational programs with the employers’ demands and present a pre-agreement with the employer regarding the future employment of graduates.

Selection of the Workforce

In the target cities, the selected enterprises were asked if they were aware of the new initiative – worknet.ge, an online database for job-seekers and vacancies, as well as the availability of free short- term professional development courses implemented by the Department of Employment Programs in the Social Services Agency. As it was revealed, 42 % of respondents were partly informed about this service. Despite this fact, 82% of employers still search and select needed personnel using private connections and recommendations. Five percent of respondents look for personnel using the internet

30 State Resolution on Approval of Labour Marker Analysis and Implementation and Development of Information System Program N248, 2.06.2015. 31 Georgian Government Resolution on Approval of Elaboration of Implementation and Development Concept and Action Plan for Labor Marker Information System N733, 26.12.2015.

32 Interview with Tea Sturua, Head of Department of Employment Programs in Social Service Angecy. Oct. 2015.

and newspaper advertisements. Four percent of those interviewed refer to the state and/or private employment agencies, and only 3% of the enterprises use services from professional colleges and educational establishments.

Generally, supervisors search for needed personnel (85%). According to 2% of respondents, the head of the department in need of personnel performs the search. Only in 5% of the enterprises does a human resources department perform the search. This can be explained either by disregarding the importance of a human resources department within an organization or by the size of an organization, where due to the limited capital of human resources, the head or founder of an enterprise fulfills the function of HR.

The most widely used method of selecting personnel is an interview (81%). Only 8% resort to the methods of testing and examining, and 1% of respondents select personnel based on experience (9% of respondents declined to answer).

Compared to the research administered on the labor market in previous years, more than half of the survey respondents mentioned no difficulties in attracting personnel of any category. Only one-fifth of employers stated difficulties in attracting personnel with long-term experience and qualified specialists at a young age. An insignificant number of respondents reported difficulties in attracting highly qualified and experienced personnel.

Respondents explain their difficulties by noting job-seekers’ unsatisfactory qualifications (35.8%) and job-seekers’ unjustified complaints (11.3%). Quite often, the refusal to accept a job offer is reasoned by a proposed low salary, as noted by 34% of respondents. An insignificant number of respondents pointed out problems related to the unavailability of adequate professional development centers in the country (5.7%).

Cooperation with Educational Establishments

Only 5% (5 enterprises) of interviewed respondents cooperate with professional educational establishments expressed in signed memorandums and offer the possibility for students to undergo an internship in an enterprise within the framework of the memorandum. All five enterprises expressed satisfaction with the professional preparedness of graduates from professional educational establishments.

The responses to the question "Which educational program would you order if educational programs were offered for free?” once again proved the existent lack of a culture of professionalism and distrust in the quality of education. Fifty-eight percent of entrepreneurs responded that even if the educational programs were offered for free, they would not send their employees for professional education. A small number of respondents would train and retrain accountants (8%), sales specialists (5%), highly qualified workers (locksmiths, lather operators, milling-machine operators, car repairmen) (7%), specialists from the medical field (7%), cooks, bakers, waitresses/waiters, cosmetologists, IT specialists, translators, sailors, and others. They also indicate that educational programs should be provided after working hours or should be short-term (from one to three months).

4.4.2. Opportunities for Business Expansion and the Creation of Employment

Among respondents, 54% plan to expand their business within the next two years; especially the enterprises located in Batumi and Tskaltubo. Two-thirds of interviewed enterprises do not plan expansion activities in Poti (see Chart #21).

Chart 21 - Enterprise Activity Expansion Plans

66.7% 73.5% 53.6% 56.3% 57.1% 54.0% 46.4% 43.8% 42.9% 46.0% 33.3% 26.5%

Kutaisi Zugdidi Tskaltubo Poti Batumi Total Yes No

Over half of the interviewed enterprises (53.7%) plan to expand their business through increasing the quality and assortment of offered goods and services. The expansion of business through introducing new equipment and technologies was mentioned by 22.2% of respondents. Others (16.7% of enterprises) are trying to find additional consumer markets in the country. Plans to explore export opportunities for goods and services was mentioned by 7.4% of enterprises, while 18.5% plan to introduce a new line in enterprise activities and 11.1% plan to expand their business by increasing the professional qualifications of their personnel.

A majority of respondents consider that the Government plays a key role in improving enterprise activities. For maintaining or expanding business, 43% of respondents request tax exemption; 31% of respondents request support in taking concessional loans; 15% of interviewed enterprises asks for maintenance of economic stability in the country; 11% of respondents request concessions in the rental of buildings, premises and land. Eight percent of interviewed entrepreneurs request protection of the competitive environment; 7% of respondents need support in increasing the professional education of personnel; 3% of enterprises request cuts in utility and other fees. Eight percent of respondents stated that the best support from the Government would be not to hinder their business activities (see Table #26).

Table 26 - Desired Assistance from the Government

Assistance from Government % Tax exemptions and a stable system 43% Accessibility of low interest rate credit resources 31% Maintenance of economic stability 15% Concessions on premises and land rent 11% Enterprise risk and asset insurance 8% Protection of the competitive environment 8% Best support is not to hinder business activities 8% Assistance in the professional education of personnel 7% Assistance in innovative activities 6% Licensing and registering procedures 5% Protection of personal and business securities 4% Cutting utility fees 3% Respondents had the right to choose only one answer to the question “what is a necessary condition for your enterprise to continue operation throughout the next two years?” The survey revealed that for 41% of respondents, it is the economic stability of the country. Thirty percent of enterprises consider the necessity of additional financial investment to sustain their businesses. Sixteen percent of entrepreneurs indicate a need for the expansion of consumer markets. Only 2% of respondents envisage receiving effective outcomes from the professional training of personnel and the development of new skills and capacities (see Table #27).

Table 27 – Necessary Condition for Sustaining the Existence of Enterprises

Condition % Sufficient financial resources for investment/expansion – concessional credit 30% Consumer expansion and penetration to new markets 16% Restructuring and reorganization – achieving an increase in efficiency 11% Increase professional qualifications of personnel 2% Economic stability in the country 41%

Enterprise Expansion Plans if Financial and Technical Support is Provided

The respondents expressed an interesting attitude about financial support opportunities for the expansion of business and the creation of additional jobs. Forty percent of respondents stated that they would expand their business if a majority of support was provided from a donor organization in the form of a grant. Twenty-five percent of respondents are ready to expand their business even if only credits are issued with concessional rates. Ten percent of entrepreneurs would expand their businesses notwithstanding the type of support provided (financial and technical provisions). Twenty-five percent of respondents would not accept an offer to expand business as it is associated with certain risk, since the increased production of goods and services requires new customer markets for the realization of excess production. In general, respondents were highly enthusiastic to receive donor support (financial and technical) for the expansion of their businesses in all five cities. Interviewed respondents in Batumi

(50%) and Tskaltubo (20%) were ready to accept support with any condition. More than one-third of respondents in Kutaisi (40%) and Zugdidi (32%) would not accept any offer (see Chart #22).

Chart #22 – Attitude towards Financial Support

0% 10% 20% 30% 40% 50% 60% 70% 40% Kutaisi 33% 10% 16% No, I will not support 32% 15% Zugdidi 4% 10% I will support only if funding will be 4% Tskaltubo 5% a grant 8% 20% 20% I will support only in case they give Poti 12%15% me credit with low interest rate 10% 4% I will support in any case Batumi 33% 60% 50% 25% Total 25% 40% 10%

Main reasons for the refusal of co-funding opportunities for the expansion of businesses with the condition of creating additional jobs were: a lack of production capacities (23.1%), low purchasing power of the population (22.3%), a limited market for goods and services (13.1%), and other. It is evident that the realization of goods and services is an acute problem in the country.

Many entrepreneurs (58%) assume that jobs created as a result of business expansion will be maintained; 39% of respondents consider that taking the current economic crisis into account, in regions it is very difficult to keep workers unchanged and at the same time to ensure sustainable business development (3% of entrepreneurs declined to answer). The enterprises that consider themselves to be well established and suited to customers’ needs are planning to keep all employees. Respondents assume that by improving quality and increasing the assortment of their goods and services, there always will be a demand for their products.

Respondents explain their belief in holding a comparative advantage compared to their competitors with the following reasons: their capacity to foresee market conditions and ability to be customer- oriented (42%), quality production (24%), the professionalism of personnel (19%), the quality of enterprise technical equipment (14%), their knowledge of contemporary information technologies (13%), and good management (7%) (see Chart #23).

Chart 23 – Factors of Competitiveness

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Knowledge of the market, forseeing market 42% conditions Knowledge of producing comptetive/high quality 24% production

Professionalism of production personnel 19%

Enterprise strengths 14%

Knowledge of modern informational technologies 13%

Knowledge of modern means of production 9%

Fair management 7%

Level of capitalization of enterprise 5% Number of net assets - optimal balance of assets and 4% liabilities)

Knowledge of legislation 2%

Necessary connections with powerful authorities 1%

Unfortunately, only one enterprise out of 100 interviewed exports produced goods, particularly manufactured wood products, to Turkey and Great Britain.

Market Demanded Economic Activities

Entrepreneurs were asked, based on their experience, to name the most in-demand economic activity on the market (micro or small business) that would be the most profitable in their city, would bring revenue for an owner, and would create additional jobs. The responses were: food market (14.7%); fast food places (8%); nut processing industry (6%); car repair (5.3%); furniture/wood workshop (4.7%); beauty salon (3.3%); private kindergarten (3.3%); household appliance repair shop (3.3%); metal and stone manufacturing shop (3.3%); children’s entertainment center (2.7%); Georgian bakery (2.7%); dairy product processing enterprise (2.7%); greenhouses (2.7%); bee breeding facility (2%); animal farm (2%); door and window manufacturing shop and other (2%). At the same time, 16 entrepreneurs state that micro and small businesses give the possibility to generate only minor revenue and that to receive a stable profit from them is a quite far away perspective in these cities.

Table 28 – Demanded Activity on the Market

Kutaisi Zugdidi Batumi

 Food Market  Food Market  Food Market  Car Repair  Fast Food Places  Beauty Salon  Fast Food Places  Car Repair  Private Kindergarten  Nut Processing Enterprise  Nut Processing  Children’s Entertainment  Animal Farm  Beauty Salon Center  Furniture Workshop  Repair of Household Appliances  Car Repair  Pharmacy  Georgian Bakery/Bakery  Repair of Household  Georgian Bakery/Bakery  Dairy Product Processing Enterprise Appliances  Beauty Salon  Furniture Workshop  Fast Food Places  Car Wash  Car Driving School  Dairy Product Processing  Greenhouse Enterprise  Bee Breeding Facility  Greenhouse  Hen Farm  Bee Breeding Facility  Door and Window Workshop  Nut Processing Enterprise  Photo Atelier, Repair  Dry Food Production  Repair of Household Appliances  Furniture Workshop  Pickguard Workshop  Door and Window Workshop  Optic Ship  Stone and Metal  Restaurant Manufacturing Workshop  Paint Shop  Distribution Service  Hotel  Construction Material Shop Tskaltubo Poti  Educational Center  Tourist Center, Guide Service  Food Market  Food Market  Café-Bar  Beauty Salon  Private Kindergarten  Agricultural Inventories/  Children’s Entertainment Center  Children’s Entertainment Center Equipment Shop  Fast Food Places  Repair of Household Appliances  Freight and Transportation  Furniture Workshop  Georgian Bakery/Bakery Company  Stone and Metal Manufacturing  Dairy Product Processing Enterprise Workshop  Furniture Workshop  Agricultural Inventories/Equipment  Door and Window Workshop Shop  Advertisement Agency

4.5 Legislative Base on the Provision of Livelihoods to IDPs and Eco-migrants in Georgia

Legislative Regulation of Issues Related to Internally Displaced Persons Since the 1990s, Georgia has been facing the severe problem of the resettlement and social-economic integration of internally displaced citizens as a result of domestic military conflicts in Abkhazia and Tskhinvali regions.

As of January 1, 2015, there are 264,828 registered IDPs in the country, which is evaluated as a slightly increased figure in the report of the Ministry of Internally Displaced Persons (MRA).33 New registration of IDPs began in Georgia on August 1, 2013 and lasted until June 1, 2014. At the point of starting new registration, 271,832 persons were registered as IDPs according to a database from 2007. Based on the results of new registration, the number of IDPs equals 264,828 persons. IDP status was terminated for 14,575 persons due to not passing obligatory registration. As a result of registration, 1,096 persons have been identified that may have been awarded IDP status by violating a law. The new registration revealed various violations of law, including apartments or monetary compensation received as a result of forgery.

Until 2007, the documents that define state policy envisaged the voluntary return to a permanent place of residence as the solution to IDPs’ long-term problems. When adopting a state strategy for IDPs in 2007, the state realized that the return to a permanent place of residence, as the best long-term solution, includes the integration of IDPs at the sites of their resettlement and strengthens their capacities. Thus, the strategy was based on creating conditions for the dignified and safe return of the internally displaced and support decent living conditions for the displaced population as well as their participation in society.34

Since 2007, important steps have been made to support the livelihoods of IDPs, such as preparing a normative base for the implementation of various actions. In 2009, the Action Plan for Implementation of State Strategy for IDPs came into force.35 In June 2012, the Government of Georgia issued decree N1162, 13.06.2012 on Approving Action Plan for Implementation of State Strategy for Internally Displaced Persons in 2012-2014.

In 2014, the Georgian law adopted in 1996 on Internally Displaced Persons – IDPs from the Occupied Territories of Georgia (N335, 28.06.1996.) was abolished and a new law on “Internally Displaced Persons –IDPs from the Occupied Territories of Georgia” came into force from March 1, 2014 (N1982, 06.02.2014). According to this law, the protection of the rights of IDPs by envisaging international standards has been declared. A new amendment of the law sets the rights and obligations of IDPs. Namely, an IDP has the right to: a) receive a monthly allowance of 45 GEL; b) receive social and other kinds of assistance provided by Georgian law; c) use a proper place of residence within the territory of Georgia before returning to their permanent place of residence, except for cases in which an IDP is

33 Report of 2014 by Ministry of Internally Displaced People from the Occupied territories, Accommodation and Refugees of Georgia. http://mra.gov.ge/res/docs/2015032410090412594.pdf 34 Decree #47 issued by government of Georgia on February 2, 2007 on Approving of the State Strategy for Internally Displaced Persons (2007)

35 Decree #403 issued by government of Georgia on May 28, 2009 on Approving Action Plan for Implementation of State Strategy on Internally Displaced Persons in 2009-2012

provided a long-term place of residence. An IDP is obliged to: a) inform the Ministry of a change in his/her temporary place of residence within one month; b) undergo registration within the timeframe announced in advance by the Ministry; c) inform the Ministry in advance if leaving the territory of Georgia for more than two months. The new law envisages improved procedures of assigning the status of IDP, providing IDP families with a long-term place of residence, and so on.

Based on the law, the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia issued order N320 (09.08.2013) on the Rules and Criteria for Providing Long-Term Housing Solutions to IDPs and Regulations for the Commission on IDP Matters. This rule specifies how accommodation procedures will be conducted, rules of distribution in accordance with approved criteria, and standards of residential areas. The order also envisages the needs of disabled IDPs.

In recent years, more focus is made on the labor organization of IDPs, their professional recruitment, and the realization of business projects. In 2014, LEPL IDP Livelihood Agency was created under the MRA. As a result of the Ministry’s close cooperation with the NGO sector, the “Strategy of Supporting Livelihoods to Internally Displaced Persons – IDPs” (government resolution N257, 12.03.2014) was adopted, which sets priorities as well as means of activity implementation for providing IDPs with livelihoods. The Main objective of the given strategy and establishment of the agency is the improvement of IDPs’ social-economic conditions from a long-term perspective. Action Plan for Provision of Livelihoods to IDPs (2016-2018) is being updated and processed; its final version will be released by MRA at the end of the current year.

Based on information provided by the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia, 56,154 IDP families need to be provided with housing from the state. Among them, more than 32,000 families feel this problem extremely. According to the new resettlement policy, resettlement mostly happens where the family is already integrated.

Based on data from the Ministry, 117,996 IDPs (among them: women – 64,247; men – 54,750) are resettled in target regions of the survey. Among them, 6,703 IDPs (women – 3,531; men – 3,172) are in the four self-governing units of Adjara Autonomous Republic, 25,529 IDPs (women – 13,872; men - 11,657) in all 12 self-governing units of Imereti, and 85,765 IDPs (women – 45,844; men – 39,921) in all 9 self-governing units of Samegrelo-Zemo Svaneti. The number of IDPs 18 years of age or younger equals 32,018, and the number of IDPs above 65 years of age equals 15,676. The number of IDPs aged from 18 to 65 equals 70,279.36

In target regions, 71,126 IDPs live in so-called “private accommodations,” while 46,871 IDPs live in so- called “collective centers.” In five selected self-governing units, there are 6,836 IDPs (among them: women – 3,511; men – 3,325) living in new accommodations. Among them are: Batumi – 2,268, Kutaisi - 281, Tskaltubo - 1,037, and Poti - 3,250. As for Zugdidi, information about long-term resettlement is not included in the unified database of the Ministry. According to the interview with a specialist, accommodation in Zugdidi is calculated for 320 families. IDPs were resettled in 260 apartments since 2015, and 60 apartments are not yet distributed.37

36 The database provided by the MRA does not enable the division of IDPs into the following categories: employable, under the age of employability, and pension-aged. 37 Interview with Mr. M Ablotia, head of the Refugee Department at Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia, October, 2015

Legislative Regulation of Issues Related to Eco-migrants

In 1998, the definition of Internally Displaced Persons was proposed in UN guiding principles on IDPs. This definition includes persons who have been affected by natural disasters. It is obvious that the issue of eco-migrants is a part of the international normative framework, however, Georgian legislation does not consider natural disasters to be sufficient grounds for awarding the status of internally displaced.

Little attention has been paid to ecological migration since 2013, not only by the government, but by international donor organizations as well. Migration caused as a result of ecological reasons was set as a field of future activity by the UNHCR, however, despite the fact that at this moment, the UNHCR mandate for refugees and IDPs does not include persons migrating as a result of natural disasters. Nowadays, the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia and several non-governmental organizations (Union of Development of Civil Society “Borjgalo” and the Caucasus Environmental NGO Organizations Network (CENN)38 work in order to address issues related to eco-migrants.

In the early 1980s, the Soviet Union ensured resettlement of eco-migrants in a relatively organized form by using necessary and sufficient resources. During the years of the first government of independent Georgia, eco-migrants were resettled in the regions inhabited with national minorities as well as in borderline regions in order to ensure “demographic balance.” From the period of the following government until the Rose Revolution of 2003, the issue of eco-migrants was completely ignored.39 Since 2003, various important actions have been taken in order to solve eco-migrants’ problems: in 2006, the government began to create an information database for families affected as a result of natural disasters, as well as the families needing urgent resettlement; in addition, an evaluation system for providing compensation to eco-migrants has been developed. The system is based on findings prepared by geologists according to the following evaluation criteria: 1. Destroyed house, 2. Damaged house, 3. Damaged house subject to restoration, and 4. Damaged plot of land around the house. Those who were in the first category of the above-listed criteria were subjects of state resettlement.

According to information provided by the Resettlement Department of the Ministry, the Government of Georgia managed to resettle up to 100 eco-migrant families annually, but due to insufficient financial and human resources, resettlement actions are spontaneous. This significantly disturbs the adaptation process after resettlement, which often becomes a condition stimulating the migrants’ departure from the resettlement area: due to conflicts with local residents of the resettlement areas or hard living conditions, eco-migrants return back.

In 2013, the government emphasized the necessity of including eco-migrants’ problems in legislative regulations.40 Along with NGOs, the Ministry prepared a draft document for the resettlement policy of eco-migrants. This document was to become the basis of legislative amendments about persons affected by natural disasters and the development of an eco-migrant resettlement strategy. On November 13, 2013, the Ministry of Internally Displaced Persons from the Occupied Territories,

38 Justin Lyle. Resettlement of Ecological Migrants in Georgia: Recent Developments and Trends in Policy, Implementation, and Perceptions. ECMI, 2012. (Eng., Geo) 39 Trier T., Turashvili M. Resettlement of Ecologically Displaced Persons Solution of a Problem or Creation of a New? Eco- Migration in Georgia 1981 – 2006. ECMI, 2007. (Eng., Geo)

40 Problems of eco-migrants were discussed by the Supreme Council of Adjara. 09.07.2013. Available http://www.ajaratv.ge/ge/?page=shownews&id=49556 date of access September, 2013.

Accommodation and Refugees of Georgia adopted decree N779 on “Creating the Commission Responsible for Establishing the Criteria for Providing Alternative Housing for Persons Affected by and Subjected to the Displacement due to Natural Disasters and Providing Alternative Housing for Them.” This normative act regulates the rule of resettling families (eco-migrants) affected by natural disasters who are subject to displacement. It also regulates the rule of awarding ownership of a residential house, and categories of damage to houses were also clarified. The mentioned decree also gives the first definition of a family (eco-migrant) affected by natural disaster and subject to displacement.

According to the Census conducted in 2006, up to 37,000 displaced families were registered waiting for the displacement. Among them, the houses of more than 11,000 families were placed into categories I and II (i.e. the houses were considered destroyed or unsuitable for living).41 It should be mentioned that this number consisted of the families that left their place of residence in order to improve their socio- economic conditions. Due to this fact, the Ministry started to monitor and check the number of beneficiaries. Accordingly, eco-migrant (beneficiary) families are selected by the commission. The Ministry was obliged to create an electronic database for families affected by natural disasters and subject to displacement. In accordance with order #779 by the Minister, this database is created and consistently updated with information about families affected by natural disasters and subject to displacement. This information is obtained by the respective departments of the Ministry from local self- governments as well as from personal statements made by the affected families. According to preliminary data (precise information will be available in the beginning of 2016), up to 6000-7000 families affected by natural disasters and subject to displacement are in need of resettlement.

On June 1, 2014, the Eco-migrants Department was established in the Ministry with two units: (a) the registration division and (b) the accommodation and monitoring division.

Based on information provided by the mentioned department, 660 thousand GEL was allocated in 2013- 2014 per year, while 1,800,000 GEL was allocated in 2015 (from 2009 to 2013, there was no amount allocated from the state budget to purchase homes for eco-migrants). At this time, 153 houses are purchased and distributed, and an additional 50 houses are to be purchased for the above-mentioned families until the end of this year. During this year, it is planned to draft measurement drawings of residential houses and plots of land purchased from 2004 – 2012. These primarily will be registered as state properties and afterwards re-registered and assigned to the private ownership of about 1,013 eco- migrant families.

41 Eco-migration – Challenge for Georgia. Elene Khachapuridze. 19.01.2012. News Portal www.netgazeti.ge Available http://netgazeti.ge/GE/89/Life/7827/ date of access September, 2013.

4.6 HH Survey Results

4.6.1. Age – Gender Structure, Economic Activity, Professional Composition, Qualification and Employment Capacities of IDPs and Eco-migrants Number of HH Members

As a result of the study conducted in all six self-governing units, it was revealed that households of inquired internally displaced persons consist of 3-4 members. The average size of HHs equals 3.2, which falls behind the average size of HHs in Georgia (3.6). Target HHs selected within the scope of the survey are mostly resettled in compliance with criteria set in Order N320 of the Minister (09.08.2013); criteria envisages the number of family members of IDP households and compliance with the residential area of the housing, as well as providing the families with durable housing. Mostly houses with a relatively small residential area were designed in long-term settlement projects. Consequently, interviewers met only a few HHs with many members.

Age – Gender Structure

The population 16 years of age and younger in inquired IDP families according to target cities is 22.5%. Working-age family members total 63.7%, while 13, 9% are pension-aged (see Chart #24). Among them, 17.3% are persons with limited abilities who receive the respective pension. The proportion of those who need special care is only 8.9%, and this group includes: pregnant women, single parents, children left without guardians and elderly family members who need consistent care. These persons with limited abilities and special needs are members of the working age, up to 16 years of age, and pension- aged groups.

Among the inquired HH members, 56.2% are female and 43.8% are male. Married family members total 44.5%, 11.9% are widows, 2.8% are divorced, and 40, 8% are single.

Chart 24 – Age Structure of the Population

63.7% 13.9% 0 22.5%

Population up to 16 Employable population Population in pension age

Education

Only 15.6% of inquired HH members have a higher education, 16.2% have vocational education, 40,7% have completed secondary education (12 grades or the equivalent), 6.4% have incomplete secondary education (9 grades), 4% have a primary education, and only 0.8% have no education (whose age

exceeds the defined age for receiving primary education). Inquired members still within the 0 – 12 age range total 16.3%. Profession

One-third of inquired HH members have a profession. Among them, 15% are teachers, 10.7% are accountants, 9.5% are nurses, 9.3% are economists, 4.7% are engineers, 4.7% are agronomists, 3.7% are lawyers, 3.4% are technologists, 3.2% are constructors, 3.2% are pharmacists, and 33% are specialized in different fields. The amount of respondents that have experience working in their professions is 56.6%.

Employment and Unemployment

HH members of working age that are employed total 19, 9%,42 while 80.1% are unemployed. The latter group was asked if they would like to be employed and 71.9% gave a positive answer. Some of them (28.1%) do not want to get a job, and others are not of the proper age (22.3%). Some of them have health problems (37.1%), some of them have a child or elderly family member to take care of (26.8%), and 4% want to continue studying.

As for employed IDPs (181 persons), 64,7% are employed in the private sector, 29.3% work in the state sector, 5% are self-employed, and only 1.1% have their own business. The main fields of employment include: public administration (13.9%); trade, auto maintenance, home appliances, and items of personal use (13,4%); transport and communications (12.7%); construction (12.2%); hotels and restaurants (8.8%); education (8.3%); finance– (6.7%); processing industry (6.3%); utilities, social and personal services (6.3%); and healthcare and social assistance (3.3%). It is worth mentioning that only 1.7% of them are employed in agriculture (which is due to the fact that the survey was conducted in urban areas).

IDPs are employed in the following positions: specialists, such as accountants, cashiers, hotel administrators, lab technicians, pharmacists, clerks, etc. (20.9%), tradesmen (17.5%), unskilled workers (11.6%), military service (8.9%), drivers (7.7%), cleaners (5.5%); sales people (5%); lawyers (4.4%); and teachers (4.4%). The amount of IDPs working in low-ranking positions is 15.6%.

The average number of years of IDPs’ work experience equals 5.5 years – 5.7 years for women and 4.6 years for men.

Each working age member of IDP HHs was asked the following question: if you had the chance to choose a field of employment, which profession/position would you choose? Most the answers were distributed as follows: sales person – 14.2%; tradesman – 12.9%; teacher – 5.6%; skilled worker on construction – 4.6%; unskilled worker – 5.6%; cleaner – 4.5%; cook/waiter/barman – 4.9%; driver – 4.3%; nurse – 4%; accountant – 2.8%, and so on.

Professional Trainings and Opportunities for Improving Qualifications

Five hundred IDPs, or 91.6% of respondents, have not attended any vocational courses, and only 8.4% have attended short vocational courses. Among them, 21.4% learned computer skills, 16.7% studied accounting, 14.3% mastered the profession of a stylist, 9.5% mastered marketing, 7.1% studied welding,

42 Such a low employment rate can be explained by hiding information by the respondents, which is influenced by the fear of losing social aid.

4.8% studied a foreign language, and 9.5% learned business skills (see Chart #25). Each of them is satisfied with the quality of studies, and 35.7% expressed a desire to improve their qualification in the same field.

Chart # 25 Professional Recruitment and Professions

The majority of courses were organized by non-governmental organizations (“Atinati,” “Dea,” Abkhazeti,” etc.). Despite the fact that a small part of IDPs still managed to attend trainings, unfortunately only 17% (N=7) of them managed to get a job and only one person out of all of the respondents managed to preserve their job. Other individuals who were employed through vocational courses declared that the reason they were dismissed was the completion of their employment program or an involuntary job cut due to decreased volume of production.

4.6.2. Living Conditions and Property of IDPs and Eco-migrants

Living Conditions

Survey target groups consisted of IDP families resettled in durable housing. In spite of this factor, 1.8% of 500 HHs live on someone else’s property and pay rent. The dwellings of 30.8% of IDPs are still under state ownership. Residents own 67,4% of the houses, and among them, 40.4% of respondents turned out to be the owner of their dwelling, while 27% of the houses are owned by other member of the family (see Chart #26).

Chart 26- Ownership of the Residential Area

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%

Own 67.4% State ownership 30.8% Someone else's property - rented 1.8%

IDP resettlement procedures are not complete in Kutaisi. Respectively, residential areas of the respondents (100%) are still owned by the state. The process of assigning apartments to IDPs is still slow in Zugdidi (31.1% of residential areas are still owned by the state). The situation is more severe in

Khelvachauri in terms of registering the residential areas of eco-migrants – 31.1% of them have not been assigned to the houses in which they live.

As mentioned above, 67.4% of IDPs own their dwelling. Among them, only 3% of IDPs had a residential area registered to them before 2011. Eight percent of them registered houses in 2011, 56% registered in 2012, 1% registered in 2013, 4% registered in 2014, and 28% registered in 2015. There are no differences according to cities; the situation depends on the time period the state needs to build houses and purchase apartments for IDPs.

Almost half of the houses (47%) that respondents live in do not need repairs, but 41% of the houses need partial renovation, and 11% of the houses need a complete renovation. The situation is severe in Khelvachauri, as 75.6% of eco-migrants’ houses need complete (40%) and partial (35.6%) renovation.

The State’s actions in terms of providing IDPs with durable housing are to be evaluated positively. Among respondents, 60.4% evaluated their housing conditions as satisfactory, 25.2% believe that their housing conditions are good, and 4.8% think that the conditions they live in are very good. It is worth mentioning that as believed by the respondents, only 9.6% have poor housing conditions. Dissatisfaction was mostly expressed in Khelvachauri, Tskaltubo and Poti. Only 6.6% of eco-migrants living in Khelvachauri evaluated their housing conditions to be “good” or “very good;” the majority of them believe that conditions are satisfactory (60%).

Those respondents who are dissatisfied with housing conditions were asked about the reasons for their disappointment. Eco-migrants living in Khelvachauri complain about the absence of natural gas and sanitary facilities as well as drinking water. IPDs living in Poti are mainly dissatisfied with the absence of sanitary facilities and need of renovation. IDPs are not provided with a natural gas supply in Batumi or Tskaltubo. There are more reasons for disappointment in Tskaltubo: houses need urgent renovation, as they are not provided with drinking water, a natural gas supply, sanitary facilities, or a sufficient dwelling area. Lack of residential area is problematic in Batumi and Poti as well (see Chart #27).

Chart 27 – Housing Conditions and Problems

Property

Only 4.2% of the respondents own an agricultural plot of land. However, land is mainly owned by eco- migrants resettled in Khelvachauri (40%). IDPs living in Kutaisi, Poti and Zugdidi do not have any land for agricultural purposes. Domestic animals are also owned only in Khelvachauri (4.4%), a second house or summer house is also owned only by eco-migrants resettled in Khelvachauri, which is explained by the fact that persons displaced involuntarily due to natural disasters do not stop being in touch with their former homes and those damaged houses still remain in their ownership. The majority of the respondents own: TV (93.6%), cell phone (86.8%) and refrigerator (73.6%). There is no significant difference among the cities from this point of view. Seven percent of IDP families own a car. Among them are 14.7% in Batumi, 8.9% in Poti, and 6.7% in Khelvachauri. Personal computers are owned in Poti (40%), Batumi (34.7%) and Kutaisi (26.7%). As for the remaining three cities, about 15% of respondents’ answers were positive in terms of owning or using a personal computer. If we consider the level of internet accessibility in regions, we think that the percentage rates in the given six cities are quite good (see Chart #28).

Chart 28 – Objects of Long-term Consumption

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TV 93.6% Mobile phone 86.8% Refrigerator 73.6% Washing machine 47.6% Satellite dish 24.2% Computer 24.2% Internet 24.0% Car 7.0% Plot of land 4.2% Second house/summer house 2.4% Bycicle 2.4% Deposit in bank 0.8% Radio 0.6% Animal (productive) 0.4% None of the above-listed 0.8%

Savings

Unfortunately, only four (0.2%) of inquired HHs have a deposit in a bank, and these respondents live in Batumi and Poti. However, it is worth mentioning that only one HH gave a positive answer to the question “Do you have a savings?”

4.6.3. Sources and Structure of Income of IDPs and Eco-migrants

Average Annual Income of HHs

The average annual income of each HH is 4,983 GEL. The income of HHs inquired in Batumi equals 5,603 GEL; in Khelvachauri it equals 5,010 GEL; in Poti it equals 4,996 GEL; in Tskaltubo it equals 4,766 GEL; in Zugdidi it equals 4,318 GEL; and in Kutaisi it equals 5,186 GEL.

All Sources of Income Received by HHs

Among inquired HHs, 69.6% (348 HHs) receive assistance for IDPs, 45.4% receive a state pension (age pension), 26% receive a salary, 21.8% (109 HHs) receive social assistance, 21.6% receive other monetary assistance envisaged in a social package (for disabled persons, persons without a breadwinner, war veterans, and social aid for families with many children – 15,8% of them use a household subsidy), and 10.6% receive aid from relatives,. Other sources of HH income include income received from self- employment or own production (5.6%) and monetary assistance from family members in migration (1.6%).

For 32% of households (162 households), the main source of income is a pension by age; for 27% (134 households) it is an IDP allowance; for 18% (90 households) it is a salary (when 181 members of the interviwed households are employed); for 10% (49 households), the main income is social assistance. Assistance from close people and money transfers from migrants are the main sources of income for only 21 households.

As of June 2015,43 27.4% of the recipients of subsistence allowance registered with the unified database of socially vulnerable families are internally displaced persons. As for their distribution in target regions, 1,828 IDPs (670 families) are registered in the database in the Adjara Autonomous Republic. A subsistence allowance44 is issued to 115 IDPs (51 families). A total of 11,210 IDPs (4,388 families) are registered in the database in Imereti, and among them, a subsistence allowance is received by 4,391 IDPs (1,774 families). A total of 27,745 IDPs (10,371 families) are registered in Samegrelo-Zemo Svaneti, and a subsistence allowance is received by 6,954 IDPs (2,663 families).

Results according to the target cities are distributed as follows: in Batumi, 1,331 IDPs (479 families) are registered in the unified database of socially vulnerable families, and a subsistence allowance is received by 78 IDPs (34 families). IDPs make up 5.9% of subsistence allowance receivers in Batumi. In Kutaisi, 5,478 IDPs (1,949 families) are registered in the unified database of socially vulnerable families, and a subsistence allowance is received by 1,683 IDPs (622 families). IDPs make up 30.7% of subsistence allowance receivers in Kutaisi. In Tskaltubo, 2,308 IDPs (1,013 families) are registered in the unified database of socially vulnerable families, and a subsistence allowance is received by 1,276 IDPs (572 families). IDPs make up 55.3% of subsistence allowance receivers in this city. In Poti, 3,319 IDPs (1,251 families) are registered in the unified database of socially vulnerable families, and a subsistence allowance is received by 848 IDPs (358 families). IDPs make up 12.2% of subsistence allowance receivers

43 LEPL Social Service Agency http://ssa.gov.ge/index.php?lang_id=GEO&sec_id=770 44 N225/N (22.08.2006) of the Minister of Labor, Health and Social care of Georgia on the Rule of Appointing and Issuing Purposeful Social Assistance, provision 5. Receiving subsistence allowance excludes the possibility of receiving “social assistance for vulnerable families” as well as a monthly allowance for IDPs. A family can choose to receive household assistance, respectively, a monthly subsistence allowance.

in this city. In Zugdidi, 12,268 (4,326 families) are registered in the unified database of socially vulnerable families, and a subsistence allowance is received by 3,772 IDPs (1,392 families). IDPs make up 30.7% of subsistence allowance receivers in this self-governing unit.

According to information provided by the LEPL Social Service Agency, as of September 2015, the following amount of state assistance has been transferred in target cities for IDPs45: Batumi – 168,300 GEL (1.6% of total assistance throughout Georgia); Kutaisi – 447,390 GEL (4.4% of total assistance throughout Georgia); Tskaltubo municipality – 205,425 GEL (2% of total assistance throughout Georgia); Poti – 416,047 GEL (4.1% of total assistance throughout Georgia); Zugdidi municipality – 1,871,662 GEL (18.2% total assistance throughout Georgia).

Assistance Received by HHs Excluding Subsistence Allowance and Pensions

Forty-three percent of inquired HHs (215 HHs) have been receiving assistance (excluding subsistence allowance and pension) from the state and non-governmental organizations for years. Namely, 84.4% of IDPs resettled in Kutaisi, 52.2% of IDPs in Zugdidi, 48.9% in Poti, 40% in Tskaltubo, and 9.5% in Batumi. IDPs resettled in Khelvachauri express dissatisfaction regarding a lack of attention from state, international and non-governmental organizations. Only 6.7% of eco-migrants have received assistance. The Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia has provided assistance to 19.5% of HHs, while 67.4% of HHs have received assistance from different state bodies, and 15.8% from the Red Cross. An insignificant quantity of answers are distributed among the rest of the organizations (UN, local NGOs, local self-government bodies, and international donor organizations).

As for the types of assistance received, 30.6% of HHs received monetary assistance, 27.8% of HHs received home appliances and household utensils, 19.4% of HHs received electricity vouchers, 17.5% of HHs received groceries, and 3.2% of HHs received free medicine. A greater portion of monetary assistance was received by IDP families resettled in Zugdidi, (91.5%). IDPs were mostly assisted with home appliances/household utensils and groceries in Kutaisi, while IDPs resettled in Poti were provided with electricity vouchers (see Chart #29).

Chart 29 - Received Assistance Excluding Subsistence Allowance and Pensions

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Monetary assistance 30.6% Home appliances, household utensils 27.8% Electricity vouchers 19.4% Groceries 17.5% Medicine 3.2% Other 1.6%

Within the past 22 years, IDP HHs received different assistance from state bodies, mostly in 2014 (35.9%), in 2015 (17.9%) and in 2013 (9.7%). IDPs received 15.2% of state assistance prior to 1995. The distribution of assistance for other years is insignificant. For the Red Cross, 618% of assistance was

45 LEPL Social Service Agency http://ssa.gov.ge/index.php?lang_id=GEO&sec_id=782

received in 1993. The majority (90.5%) of assistance received from the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia falls in 2015, 8%. was received in 2014 the total received from the Ministry was 2.4% was received in 2011, and 2.4% in 2000. Eco-migrants resettled in Khelvachauri recall that they have been assisted by different organizations mostly within recent years.

The main types of assistance provided by state bodies include: monetary assistance (37.2%), electricity vouchers (28.3%) and groceries (15.2%). The Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia provided HHs with home appliances and household utensils (92.9%); the Red Cross mostly provided HHs with groceries (67.6%) and money (20.6%); local self-government bodies allocated small one-time financial aid for repairing houses, food and treatment (75%) or free medicine (25%) for socially vulnerable families including IDPs.

Of the IDP families living in Kutaisi, Poti, Tskalutbo, Batumi and Zugdidi, 87.6% still receive one-time assistance from state bodies, and 97.6% receive assistance from the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia. The assistance provided by other organizations can be characterized as irregular and on a one-time basis, with families not having many opportunities to receive it.

The majority of the respondents declared that received assistance had a positive impact on their families’ economic condition. Among beneficiary HHs, 25.1% reported improved housing conditions, 28.1% saved money on utility bills, 6.1% saved money on medicine, 15.2% saved money on food, and 1% of HHs paid a debt.

The assistance received from state bodies did not have any influence on 13.8% of beneficiary families, but 86.2% of them evaluate the assistance received positively. Respondents had nearly similar attitudes towards assistance received from the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia. This aid played a positive role in the improvement of HH living conditions (95.2%). HHs emphasized the importance of aid received from the Red Cross in the 1990s in terms of saving their families from starvation. Beneficiary HHs give positive evaluations to one-time assistance received from local self-government bodies, while assistance received from NGOs and the UN did not influence on HH economic conditions due to its small volume.

Separate forms of assistance were positively evaluated, however part of the respondents (6.8%) emphasized a lower effectiveness of food assistance. Among respondents, 16.9% believed that monetary aid was not effective as well, as its amount was not sufficient to meet their needs.

Income Received from Cultivating Own Plot of Land and Farm

Out of all inquired HHs, only one family in Batumi and 27% of eco-migrants (12 HHs) living in Khelvachauri are involved in agriculture. The difference from other cities was caused by the fact that plots of land are mostly owned by the respondents living in Khelvachauri. Four percent of the families (2 HHs) inquired in Khelvachauri are the only ones who receive income from domestic animals.

HH Structure of the Consumption of Various Products

The structure of HH consumption looks quite interesting. The majority of products (varying from 86% to 100%) consumed by HHs are products bought or received as a result of an exchange for something.

There is a slight difference in Khelvachauri and Batumi HHs. Eighty-six percent of the products consumed in Khelvachauri are purchased or exchanged (94% in Batumi), while 9% of consumed products are produced or harvested by the HHs. In Khelvachauri, 4% consume the products received as assistance or a gift. The same index equals 5% in Batumi (see Chart #30).

Chart 30 – Sources of Consumed Products

100% 95% 86% 100% 99% 98% 99% 97% 80% 60% 40% 20% 9% 1% 5% 4% 0% 0% 0% 1% 0% 2% 0% 1% 1% 2% 0% Batumi Khelvachauri Poti Tskaltubo Zugdidi Kutaisi Overall picture

Produced/harvested by you Purchased (with money or in exchange for something) Received as assistance or present

4.6.4. Main Needs and Structure of Expenses of IDPs and Eco-migrants

Main Needs and Expenses of HHs

HHs named what amount of money is spent on the needs of the HH as well as the share of each component in total expenses. Average monthly expenses made by each HH equal 555.22 GEL. Among them, 37% is for food (204.41 GEL) 10% on medicine (57.27 GEL) and 10% on paying debts (53.86 GEL), and 6% (34.31 GEL) is spent on utility bills, shared on transportation costs (21 GEL), hygiene items (21 GEL) and the purchase of clothing/shoes (20.66 GEL). Two percent and one percent is spent on medical service and fuel, respectively. An insignificant share falls on education, leisure and apartment rent. Respondents named significantly different needs in the open answer “Other,” which is why we united this option with the category which took 21% of expenses. The following needs were included: renovation costs, purchase of necessary household utensils, money to be contributed to funerals and weddings, purchase of birthday gifts, transferring money on deposit, money given to a relative/child, and so on.

The respondents were asked how they would distribute money in case of receiving doubled income – on which component would they increase costs. As it turns out, expenses were increased on each component except for apartment rent. In particular, costs were tripled on purchasing clothing/shoes, medical service and leisure/rest. Expenses on food, medicine and paying debts were doubled. The households’ monthly allocation for education in case of doubled revenues would still be low – an average of 15 GEL instead of 3 GEL. However, it should be mentioned that if their budget doubled, they would spend five times more money for education. This means that at the moment they have to say no

to education (see Chart #31). In case of increased revenue, the tentative distribution of expenses shows that the interviewed households still have to share their actual revenue for basic needs: food and utilities, clothes and shoes, and healthcare. A proper holiday and amusement is still a luxury for them, though a quite important one, because in case of increased income, the costs for amusement and holiday expenses would triple.

Chart 31 – Structure of Spending Existing and Doubled Incomes

Among inquired respondents, 81% pay utility bills on time. There is no difference between self- governing units. The respondents living in Poti, however, have to pay belatedly (22%). Only 2% of inquired HHs always pay belatedly. Ten percent of the respondents living in Kutaisi do not pay utility bills at all, as their houses are not their property yet.

4.6.5. IDPs’ and Eco-migrants’ Accessibility to Financial Resources

HH Relations with Financial Institutions

Twenty-nine percent of HHs applied to financial institutions for loans. From Poti, 41% of IDP respondents and 47% of eco-migrants resettled in Khelvachauri tried to take a loan from financial institutions, which can be explained either by their bravery or desperate condition. IDPs living in Kutaisi (81%) and Tskaltubo (81%) relatively avoid taking a loan (see Chart #32).

Chart 32- Attempt to Take a Loan

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

31% Batumi 69% 47% Khelvachauri 53% 41% Poti 59% 19% Tskaltubo 81% 29% Zugdidi 71% 19% Kutaisi 81% 29% Overall picture 71% Yes No

Households are more trustful of banks – 77% of the respondents applied to banks for a loan, and 27% applied to micro finance organizations. There is no significant difference among self-governing units (see Chart #33).

Chart 33- Selected Financial Institutions for Receiving a Loan

0% 20% 40% 60% 80% 100%

Batumi 34% 72% Khelvachauri 10% 90% Poti 32% 73% Tskaltubo 41% 65% Zugdidi 15% 85% Kutaisi 24% 76% Overall picture 27% 77% Micro finance organization Bank

Households’ Access to Credit

Families usually take short-term loans. The average period of a loan is 19 months. Among loans, the period is shortest in Zugdidi and equals 14 months, while the longest period is in Khelvachauri and equals 22 months.

Loan applicants were granted a loan 97% of the time. The reason for refusing 3% of the applicants was an absence of a pledge for the demanded amount. Among respondents, 35% believe that taking a loan is more simple than difficult, and 33% think that it’s more difficult than simple. It is considered very simple for 18% of respondents and very difficult for 10% of respondents. Difficulty in taking a loan is particularly problematic in both Zugdidi (51%) and in Poti (46%).

Among inquired households, 54% do not have an ongoing loan. Among them, 69.2% in Tskaltubo, 68.8% in Kutaisi, and 57.3% in Batumi. As for a comparison among self-governing units, eco-migrants living in Khelvachauri had the need to take a loan most of all – 55.6% of eco-migrants have loans from a bank and 11% had loans from a micro finance organization. In Poti, 11.6% of HHs used a pawn shop. However, 28.4% of inquired respondents managed to take a loan from a bank. It is quite interesting that only 1.5% of HHs borrowed money from a private entity (see Chart #34).

Chart 34– Institutions that Issue Loans

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Batumi 10.4% 27.1% 1.0%2.1% 57.3%

Khelvachauri 11.1% 55.6% 0.0%2.2% 31.1%

Poti 8.9% 30.4% 16.1% 11.6% 31.3%

Tskaltubo 8.8% 18.7% 3.3%0.0% 69.2%

Zugdidi 1.1% 23.7% 8.6% 5.4% 59.1%

Kutaisi 4.3% 19.4% 2.2%3.2% 68.8%

Overall picture 7.2% 26.8% 6.0% 4.5% 54.0%

Yes, debt of micro finance organization Yes, debt of bank Yes, debt from private entity Yes, installment Yes, pawn service No

4.6.6. Purpose and Effectiveness of Loans Taken by IDPs and Eco-migrants

Amount of Loan

As mentioned above, respondents usually have short-term loans. The average trimmed46 size of a loan is small too. According to all six self-governing units, it equals 2,271 GEL. Namely: Khelvachauri – 3,795 GEL, Batumi – 3,422 GEL, Kutaisi - 1,782 GEL, Poti – 2,088 GEL, Tskaltubo – 1,613 GEL, and Zugdidi - 727 GEL.

46 Trimmed mean represents a mean value that is calculated by removing extreme cases. Correspondingly, trimmed mean is the corrected version of the average value.

Purpose of Loan

According to the answers of respondents who wanted to take a loan (147 households), the main reasons for taking a loan include: to buy household utensils (29%), medicine and medical care (28%), to buy food (18%), to repay a debt (6%), to plan a renovation (4%) and so on. Seven percent of HHs took a loan to start a business. Among them were two HHs in Batumi and Kutaisi, five HHs in Poti, and one HH in Tskaltubo and Zugdidi. The respondents living in Khelvachauri believe that business start-up is connected with high risk and thus, none of them have taken a loan for this purpose. The main goal for taking a loan in Khelvachauri is to raise money for home renovation (24%). The purpose of taking a loan is conditioned by absolute necessity; therefore, the amount is not high. IDPs do not have sufficient purchasing capacity or property to provide as collateral for the loan.

Capacities to Cover Unexpected Costs

IDPs resettled in all six self-governing units were asked the question “if you had an unexpected expense of 1000 GEL, how would you be able to pay this amount?” Only 1% of the respondents would be able to pay this amount without a problem. Forty percent would borrow money from a bank, 37% would borrow money from relative or friend, 12% would borrow from a micro finance organization, 1% would take a pension loan, and 8,4% would not take a loan from any source as they would not be able to repay it. The interviewed households rely on their relatives’ assistance to cover unexpected expenses, although it is a promising fact that 40% of respondents have an expectation that they can easily take a loan from a bank.

Accessibility to Healthcare

Among respondents, 71% mention the need to visit a doctor rather often. This need is very frequent for 28% of HHs, more frequent than rare for 39% of HHs, rarer than often for 25% of HHs, and very rare for only 8% of HHs. Despite the fact that HHs often need to call the doctor, the vast majority of inquired respondents do not receive medical care except for urgent surgeries, due to insufficient finances. Based on observations made on-site, it can be concluded that medical facilities are rather far from target locations, with the exception of Kutaisi.

4.6.7. Business Activity and Experience of IDPs and Eco-migrants

Business Experience and Evaluation

Only 4% of inquired HHs have or did own a business. Among them, 10% in Poti, 4% in Batumi and Zugdidi, as well as 2% in Khelvachauri and Tskaltubo. None of the HHs appeared to have business experience in Kutaisi. At the time of the survey, only half of the mentioned businesses were functional. As stated by the respondents, this is caused by financial problems related to the difficulty of selling the service or product. Only one respondent terminated their business due to a change of residence.

The number of respondents who are involved in business activity is so small that it’s difficult to speak about profitable fields of business for IDP settlements. Among the listed business activities, we can distinguish the purchase of a minibus taxi and providing this service, as well as other business activities,

such as: private tutoring, trade of second hand clothes, grocery shop, and bakery – these are single cases. The number of employees in these businesses is small, as either only the respondent is employed or one or two family members besides the respondent are employed.

As believed by 60% of respondents, their business is more profitable than non-profitable. The remaining 40% of respondents have a contradictory opinion. They think that in order to preserve the business, it’s necessary to enter new markets or make an additional investment for expansion. As believed by the majority of the respondents, however, the main precondition for a successful business is economic stability in the country.

Business Ideas and Plans

The question “do you prefer to work as a hired worker or run your own business under the same conditions?” was asked. Only one-fifth of the respondents answered that they preferred to be a hired worker. Seventy percent of the respondents mentioned that they would try to do both. Ten percent of respondents are absolutely against being hired and would only operate their own business. Thus, an HHs’ motivation to increase income and create its own source of income is big. Accordingly, the number of respondents who want to have their own micro or small business is rather solid and equals 58% of HHs.

Despite the above statistic, 49.5% of HHs believe that they need recruitment assistance as well as the respective financial resources in order to implement a business idea; 50.5% of the respondents think that they have sufficient knowledge to implement a business idea if they are provided with finances. There is almost zero difference among self-governing units, except for the fact that a larger part of eco- migrants believe that studying business skills is as important as having access to financial resources.

Respondents’ attitudes towards financial aid for implementing a business idea appeared to be rather interesting. Fifty-one percent (253 HH) of inquired respondents agree to 10% participation in case of receiving a grant from a donor organization to start a business. The rest do not agree either due to a lack of experience and skills or they try to avoid risks related to financial participation (see Chart #35).

Chart 35 – Willingness of 10% Participation in Case of Awarding a Grant

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Batumi 21% 79% Khelvachauri 16% 84% Poti 44% 56% Tsklatubo 44% 56% Zugdidi 20% 80% Kutaisi 36% 64% Total 49%51%

Yes No

In case they are provided with financial support and business consultations, respondents would start the business in which they have more related experience and that is believed to work in their region. Among the respondents, 47.6% would open a grocery shop; the rest of the answers are so diverse, that we present them in the table below (see Table #29).

Table 29 –Type of Business, Percent

Business ideas

Poti

Total Total

Kutaisi

Batumi Batumi

Zugdidi

Tskaltubo Khelvachauri Grocery shop 52 38 50 45 56 41 47.6 Beauty salon 9 16 9 4 9 5 8.4 Fast food eatery, beer bar 4 8 4 9 9 10 6.8 Car repair, trade 9 8 4 0 2 0 4.5 Car wash 8 0 2 2 0 0 2.6 Private kindergarten 4 3 2 11 0 0 3.2 Children’s entertainment center 3 5 0 2 4 0 2.3 Bakery/confectionary 0 0 7 4 2 5 2.9 Trade with clothing (second hand) 1 0 2 7 0 5 2.3 Atelier (shoes, clothing) with sewing lessons 4 0 0 0 0 3 2.3 Repair of household utensils, trade 1 5 0 0 2 5 1.9 Greenhouse (vegetables, mushrooms) 1 3 0 2 0 5 1.6 Cattle farm 0 3 3 4 0 0 1.6 Poultry farm 0 3 2 2 2 0 1.3 Pig farm 0 0 2 2 0 0 0.6 Bee-keeping 1 0 2 0 0 0 0.6 Furniture factory 0 5 2 0 6 0 1.9 Door & window factory 0 3 2 0 6 0 1.6 Hazelnut processing factory 0 0 3 0 0 8 1.6 Processing plant of dairy products 1 0 2 0 0 0 0.6 Production of dried fruit (persimmon, churchkhela, etc.) 1 0 0 0 0 0 0.3 Pharmacy 1 0 0 0 0 5 1.0 To purchase a minibus taxi and route line 0 0 0 2 0 3 0.6 To equip with construction team tools 0 0 0 2 0 3 0.6 Other (house for elderly, publishing house, micro finance 0 0 2 2 2 3 1.3 organization/pawn shop, ritual hall) Total 100 100 100 100 100 100 100

Among respondents, 85.5% believe that their business plans will work because there is a demand on the services and products “at a glance”; 13.8% of them think that offering competitive prices and high quality products will assist the increase of demand, and only 0.8% of the respondents plan to run their business successfully by means of their knowledge and experience.

Business ideas named by the respondents are the result of their opinions that the following businesses will be both profitable and demanded in their settlements: grocery shop (49.7%), beauty salon (7.7%),

private kindergarten and children’s entertainment center (5.7%), fast food eatery (5.6%), car wash/repair (4.8%), furniture and/or door & window factory (3.1%), bakery (2.4%), shoes and clothing atelier (1.8%) and other (18.8%).

Factors that Prevent the Implementation of Business

As survey results clarify, the majority of HHs are aware of the obstacles and conditions they may face while running a business. As believed by inquired HHs, the main factors that may influence the failure of their businesses are as follows: insufficient financial resources (47%); health problems and age (21%); fear of debt and failure (20%); lack of professionalism and experience (6%); low access to cheap credit (3%); economic and political instability in the country (1%) and others (2%) (see Chart #36).

Chart 36– Factors that Prevent the Implementation of Business Ideas

Insufficient Funds 47.1%

Low accesability to low interest rate credits 2.9%

Lack of knowledge and experience 5.6%

Health related problmes and age 20.9%

Fear of dept and failure 20.4%

Political and economic instability 0.6%

Other 2.5%

On the question: if you were given a sufficient amount of money to make one of the below listed wishes come true, how would use this money? Respondents’ answers were distributed in the following way: 34.8% would start a business, 13% would buy an apartment to live in and 8.4%would by an apartment to rent out, 11.4% would buy a plot of land in order to receive income, 4.4% would open a deposit in a bank, 2.6% would receive medical treatment; and only 1.4% of the respondents expressed a desire to use the money for improving their qualification and/or receiving education. Unfortunately, the share of those respondents who would save this financial income at home and use it eventually according to their needs is 16.4%. Most probably, these are the people under the pension age who want to avoid business start-up risks and have had some negative experience with banks (see Table #30).

Table 30 – Plans in Case of Having Sufficient Financial Resources

uri

Poti

Total

Kutaisi

Batumi

Zugdidi

Tskaltubo Khelvacha

I would start/expand a business 37% 40% 34% 30% 34% 36% 34.8% I would buy a house to live in 18% 22% 11% 13% 3% 14% 13.0% I would buy a house to rent out 13% 4% 8% 12% 11% 0% 8.4% I would buy land for income generation 6% 7% 18% 6% 30% 0% 11.4% I would buy equipment for income generation 2% 0% 0% 0% 1% 0% 0.6% I would buy a car to use as a taxi 1% 0% 2% 1% 0% 0% 0.8% I would open a savings account in a bank 5% 2% 0% 1% 0% 17% 4.4% I would save it and spend it gradually 5% 7% 19% 23% 17% 23% 16.4% I would spend it on education 3% 4% 1% 0% 1% 0% 1.4% I would get medical services/buy medicine 2% 4% 0% 1% 0% 9% 2.6% I would refurbish a house/furniture 0% 2.2% 0% 1.1% 0% 1% 0.6% I would pay off debts 1% 4% 0% 0% 0% 0% 0.6% Other 1% 0% 0% 1% 2% 0% 1% DK 5% 2% 7% 10% 0% 0% 4.2%

4.6.8. Capacities of Solving Main Problems of IDPs and Eco-migrants

Capacities of Integration at the Place of Residence

More than two-thirds of inquired HH members communicate with other IDPs “very often.” More than one-fifth of them communicate “more often than rarely.” The number of those respondents who communicate rarely with IDPs is very small (up to 5%). Besides, communication is very intense with local residents (60%); one-fourth of HHs communicate with local residents “more often than rarely,” but 15% of inquired respondents rarely communicate with locals. Eco-migrants are not isolated from local residents either, as 95% of them report communicating with locals very often.

Types of communication with other IDPs and local residents are mostly the same as the types of communication with newly resettled IDPs and eco-migrants (88%). Nine percent of inquired respondents declare that they communicate with other residents only in urgent necessity. Communication is random/occasional for only 3% of respondents, and we received this rate in large cities (Batumi and Kutaisi), where close neighbor connections are less common.

89% of inquired HHs noted that local residents rarely point out their status in the environment where social communications occur. Five percent answered “more frequently than rarely” when this question was asked. One-tenth of the respondents inquired in Batumi, Kutaisi and Khelvachauri complain about the fact that local residents remind them about their status very often.

The attitude of local residents has not changed over the years for 65% of respondents. Particularly, the attitude has not changed towards IDPs resettled in Poti (96%) and Zugdidi (93%). A change in attitudes was named by 35% of respondents (176 HHs), and this change was positive in the case of 96% of inquired HHs. A negative change in attitude was named only in Kutaisi.

Due to the more positive than negative attitude of local residents, 91% of our respondents feel fully integrated into the society. Seven percent feel partially integrated and only one percent is dissatisfied because they are not able to integrate into society. Partial integration (17%) was more frequently named by IDPs living in Tskaltubo, which is caused by relatively harder economic conditions in Tskaltubo (e.g. difficulty of access to livelihoods, improper living conditions, etc.) for satisfying integration criteria.47

At the time of the survey, inquired HHs feel settled at their current place of residence. Seven percent, or34 HHs have plans related to changing their place of residence and unfortunately don’t feel settled in their durable housing. Among them, a vast majority (88%) of HHs want to move a lot in order to gain employment opportunities and receive income somewhere else (73%). Other HHs (37%) want to move to another place in order to improve their living conditions. This reason – the improvement of living conditions – is particularly common among eco-migrants (100%).

47 Inter-agency Standing Committee (IASC) framework document on durable solutions for Internally Displaced Persons set the following criteria for deciding the possibility of achieving durable solutions: safety and security; an adequate standard of living; access to livelihoods; restoration of houses, land and property; access to documents; reunification of family; participation in public affairs; and access to effective remedies and justice.

Main Problems and Request for Assistance

The main problems named by IDPs and eco-migrants are related to unemployment, with 67% of answers indicating this problem. Other serious problem faced are: limited access to healthcare (33%) and high prices of medicine (68%). More than half of the inquired respondents (62%, 309 HH) complain about a lack of proper food. Additionally, one-third of target group members have trouble paying utility bills.

The most severe problems according to priority: I - unemployment (38%), II- improper medical care (32%), III- high utility bills (17%) (see Table #31 and Chart #37).

Table 31 – HH Problems, Percent48

Problems

Poti

Total Total

Kutaisi

Batumi

Zugdidi

Tskaltubo Khelvachauri

Unemployment 18.4 17.6 15.1 19.7 24.5 16.5 18.5

Limited access to medicine 23.1 21.2 19.2 13.6 22.6 13.6 18.2

Lack of food 12.1 17.6 10.1 22.5 18.9 18.6 16.7

Limited access to healthcare 10.3 4.2 11.6 8.6 7.2 8.6 8.8

Paying utility bills 8.1 1.8 14.8 11.1 5.7 7.2 8.7

Repayment of bank credit 8.1 14.5 11.6 3.3 6.8 3.8 7.2

Housing conditions 4.4 8.5 5.7 10.6 2.3 5.7 6.2

Lack of furniture 2.5 5.5 6.6 3.1 8.7 9.3 6.0

Leisure/recreation 5.0 1.8 0.9 3.6 1.1 6.2 3.5

Purchase of clothing 2.8 4.2 1.3 1.9 0.4 6.9 3.1

Limited access to education 2.5 0.6 2.2 1.1 1.5 0.7 1.5

Purchase of school items 1.6 2.4 0.3 0.6 0.4 0.2 0.8

Insufficient financial resources 0.6 0 0 0.3 0 2.1 0.6

Heating 0 0 0.6 0 0 0.0 0.1

Insufficient area of dwelling 0.3 0 0 0 0 0.0 0.1

To pay a pledge 0.3 0 0 0 0 0.0 0.1

None 0 0 0 0 0 0.5 0.1

48 Table #31 and Chart #37 provide data obtained as a result of two different types of questions - Table #31 describes major problems named by households and Chart #37 presents problems of significance 1, 2 and 3 among the main HH problems.

Chart 37- Top Three Most Important Problems

Batumi Khelvachauri Poti Tskaltubo Zugdidi Kutaisi Total

I place Unemployment 39% 38% 46% 29% 44% 30% 38%

II place

Low access to drugs 29% 36% 28% 44% 29% 30% 32% III place

Paying utility bills 18% 2% 31% 24% 6% 13% 17%

N=95 N=45 N=90 N=90 N=90 N=90 N=500

Survey results clarified that IDPs and eco-migrants still do not see the possibility to leave the state- dependent category in the near future. Among the respondents, 58.7% believe that the most effective assistance for their families would be a monthly allowance. They also expect exemptions on utility bills and ask for assistance purchasing clothes, shoes, medicine and food (17.5%). On the background of such an attitude, it is worth mentioning that 13.3% of HHs ask for starting capital (envisaging their financial participation) to open a business and 6.1% of them are ready to attend trainings in order to develop business skills (see Chart #38).

Chart 38 - The Most Effective Assistance

Monthly monetary allownace 58.7%

Exemptions in utility bills 15.2%

Business start up with cofinancing 13.3%

Development of business skills 6.1%

Food aid 1.9%

Financing education 1.9%

Employment 1.2%

Exemptions in doing business 1.0%

Expanding the residential area 0.3%

Buying drugs 0.2%

Help with clothes/footwear 0.2%

Inquired respondents believe that preconditions for integrating into the society they currently live in include an increase in income (58%) and the support of employment (22%) (see Chart #39).

Chart 39- Preconditions for Improving Integration

Increasing income (including allowances) 58%

Adequate work/job 22%

Fair living conditions 7%

Accesability to healthcare 6%

Personal contacts 3%

Security 2%

Accesability to education 1%

Accesability to legal services 1%

4.7 Ongoing or Planned Governmental/Non-governmental and International Programs that Implement Livelihood Projects in Target Regions and the Results of the Consultations with Program Representatives

International experience and analysis of best intervention practices demonstrate that for the purpose of overcoming poverty caused by obligatory leave of the dwelling and ensuring sustainable integration at the site of resettlement which, together with resettlement, should create a proper environment for achieving the self-sufficiency of IDPs, the government and donor organizations mostly apply livelihood support actions with the aim of ensuring employment.49 These actions may include:  Grants for self-employment, for example, the purchase of labor tools or trade goods;  Self-employment programs, namely, grants for starting or expanding small and middle-sized businesses;  Interest-free loans and micro-credits (with a lower interest rate or subsidized interest rate) for the development of family businesses;  Employment in existing successful companies that want to expand within the scope of an allocated grant/loan;  Recruitment for employment: scholarships for pupils and students in order to be trained or recruited; recruitment of job seekers in demanded professions;  Employment of extremely vulnerable IDPs in order to develop their professional skills;  Community mobilization/enhancement of community capacities – engagement of local officials for better identification of common problems; additional needs and resources in order to achieve self-sufficiency and to avoid doubling and overlapping of planned projects and municipal activities, and support the functioning of social enterprises, etc.;  Support the enhancement of corporate social responsibility – supporting direct participation in business of IDPs’ economic activities (social enterprises, cooperatives and others).

Taking international experience into consideration, the central government, local and international organizations should implement diverse and various projects in Georgia, including target regions (Imereti, Samegrelo-Zemo Svaneti, and Autonomous Republic of Adjara). Within the scopes of the mentioned programs, certain target groups including IDPs have the opportunity to receive certain support for having livelihood sources. The influence of these programs on the improvement of living conditions, however, is still not significant.

The strategy for Providing Access to Livelihoods for Internally Displaced Persons – IDPs (Government decree N257, 13.02.2014.) envisages the creation of a systemized and updatable database of IDPs’ access to livelihoods. This project has already started with the financial support of the UN under the DRC

49 Evaluation Report –Azerbaijan Internally Displaced Persons Youth Support Project, Component B “Youth Skills and Business Development”, January 2013, Social Development, Europe and Central Asia- http://www- wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/04/24/090224b082e03900/1_0/Rendered/PDF/Evaluati on0rep0business0development.pdf ; Government of the Republic of Serbia -National Strategy for Resolving the Problems of Refugees and Internally Displaced Persons, Belgrade, 30 May 2002 - http://www.brookings.edu/~/media/Projects/idp/Serbia_IDPstrategy_2002.PDF ; The strategy for durable solutions of issues regarding Displaced and Internally Displaced Persons in Montenegro, with special emphasis on the Konik Area, Podgorica, July 2011 - http://www.gov.me/ResourceManager/FileDownload.aspx?rid=82126&rType=2&file=THE%20STRATEGY%20FOR%20DUR ABLE%20SOLUTIONS%20OF%20ISSUES%20REGARDING%20DISPLACED%20PERSONS.pdf ; Business Innovation Programs (BIP) - http://www.bips.no/balkans/bosnia/index.html

project “From Dependence to Self-reliance – innovative and effective livelihood decisions for Georgia.” Information regarding ongoing and planned programs is based on information provided within the scope of the research project of the Danish Refugee Council – “Comprehensive mapping of Livelihood Support Programs, Providers and Mechanisms.”

The programs initiated by the central government to support internally displaced persons mostly envisage the provision of durable housing for IDPs and eco-migrants as well as their legal protection. One of the programs implemented by the central government that refers to the support of IDP access to livelihoods envisages the provision of IDP families with houses in villages.

The requirement set for beneficiaries, according to which a beneficiary is obliged to start his own farm in a village can be considered as a livelihood component of the mentioned program. The program is funded by the State budget and the beneficiary receives a monetary grant. Besides, we also need to mention the initiative of the German government-owned International Bank KFW, which along with the rehabilitation/construction of IDP houses, plans to purchase up to 60 village houses with agricultural plots of land for IDPs in Samegrelo.

Since January 2015, international consortium “Action Against Hunger” (ACF) has implemented the following program in Georgia: Livelihood Initiatives to Foster employability and Entrepreneurship of IDPs and host populations in Georgia – LIFE Georgia.50 The following organizations are engaged in the program: AFC, FAO, DRC with NGOs: “Rural Development for Future Georgia,” “Atinati,” “Education for Democracy,” and legal consortium “LAGI”. The program aims to create sustainable livelihoods for local populations and IDPs resettled in Shida Kartli and Zugdidi by means of the development of professional skills. The project involves activities such as: raising public awareness, community mobilization, trainings in professional recruitment, internships, the development of business and entrepreneurial skills, and funding business ideas. The target group of the given project consists of the residents living in villages of Shida Kartli and Samegrelo-Zemo Svaneti regions, particularly vulnerable groups such as: women, youngsters, IDPs, and disabled persons. The pilot project is based on Spain’s experience with regard to job creation that was shared by AFC and currently is implemented with the LEPL Social Service Agency Department of Employment Programs and Vocational Education Department of the Ministry of Education and Science. This is a combination of development of personal and professional skills that is held by many training centers in Georgia, but in this case, it is a five-month course based on team principles. In addition to trainings, team members help each other in the development of professional skills, finding a job, and communicating with employers.

The non-governmental organization Women’s International Center implements the program “Women as actors for changes and strengthening,” which aims to increase the political participation of women. As a result of the project, women’s’ economic condition will improve. Women living in villages, internally displaced women, women who have been affected by conflict, as well as women representing national and religious minorities will have improved access to small grants, business consultations, work recruitment, bank systems and micro finance institutions. The project envisages offering financial education and professional recruitment courses. The project started in January 2013 and will be completed at the end of 2015. With the funding of USAID, the project is being implemented in Kakheti, Samtskhe-Javakheti, Imereti and Mtskheta-Mtianeti. Project implementation partners include: fund “TASO,” the Association of Young Economists of Georgia, and the Institute for War and Peace Reporting, a non-governmental organization operating in Gali district.

50 Available http://lag.ge/index.php?Cat=HeaD_FuLL&ID=158&LanG=2 Oct., 2015

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Since March 2015, with the EU’s financial support, the Danish Refugee Council (DRC) and Charity Humanitarian Centre “Abkhazeti” have implemented the project “From dependence to self-reliance – innovative and effective livelihood decisions for Georgia.” The target group of the project includes internally displaced persons living in Samegrelo-Zemo Svaneti, Adjara and Imereti. Within the scope of the project, it is planned to award grants for small and medium-sized enterprises to create jobs. Grants will also be awarded to IDPs, eco-migrants and the local population for business start-ups or business expansion. The humanitarian fund “Abkhazeti” (CHCA) also has rich experience with implementing programs that support the socio-economic integration of IDPs. Within the scope of one of the projects, this organization developed an approach to increase IDPs’ access to financial resources, which implied awarding beneficiaries with loans at a lower interest rate.

With its project “Supporting Entrepreneurship of Young People in Georgia,”51 the Association of Young Economists of Georgia directly supports young IDPs living throughout Georgia. The project started in January 2015 with the funding of the EU and Ministry of Foreign Affairs of Estonia. The project covers activities such as arranging discussion meetings for young entrepreneurs, funding business start-ups, as well as business cooperation and mentorship.

Since 2014, ASB (Arbeiter-Samariter-Bund) has implemented a project for the “Development of Social Enterprises” for the IDP populations in Kakheti and Bolnisi municipalities. The project envisages establishing three social enterprises in the given regions. ASB disseminates information about introducing potential services and sometimes provides technical support for their establishment. Information is collected from the population on the types of services necessary, and which local associations would be able to provide these services. The collected information is processed with local self-governing bodies as well as with partner organizations responsible for the progress of the project on-site. After selecting the initiatives, the project assists with the creation of social enterprises which will then work with the self-governing bodies and provide the citizens with services. ASB monitors the suitability of product quality with standards so that enterprises can continue operating in case of the absence of a donor. By means of this approach, ASB increases the access of the local population to necessary services, and at the same time tries to support re-investment of profit in the community, so as to achieve additional social goals.52 It is also worth mentioning that the project is new and a monitoring report is not available yet. Respectively, it is difficult to assess progress. Moreover, the given approach slightly exceeds the phenomenon of social enterprise and in the end, forms as funding of business start- up.

In the modern world, there are active discussions around social entrepreneurship issues; namely, who stands behind this term and what are successful examples of social entrepreneurship and social enterprises. However, there is no unified approach or definition of the term “social enterprise/social entrepreneurship.” The definition differs in European countries and in the USA. For instance, in United States, the term “Social entrepreneurship” is associated with market-oriented organizations; namely, an “organization or enterprise which carries out a social mission with entrepreneurial, profitable strategies.” The UK Department of Trade and Industry gives the following definition: “Social enterprise is the

51 Available http://www.economists.ge/ka/project/96%C2%AD%20akhalgazrdebis%C2%ADsametsarmeo%C2%AD%20shesadzleblobebis%C 2%ADmkhardatchera%C2%AD%20saqartveloshi%202922839 Oct., 2015 52 Available http://asb-georgia.org/ge/projects/12-socialuri-sacarmoebis-ganvitareba Oct., 2015

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business that ultimately serves social goals and reinvests its profit in the community or business to achieve these social goals. Its focus is not increase of profit for shareholders and owners.” One of the types of social enterprise is “Work Integration Social Enterprise (WISE),” which implies that a business hires vulnerable groups that do not have access to employment opportunities.53 From this point of view, enterprises operating in Georgia that are classified as social enterprises do not actually match the criteria of social enterprise developed by the European Research Network of Social Enterprises. Namely: 54

Economic criteria:

 A continuous activity producing goods or services  Level of independence  A significant amount of economic risk  A minimum amount of paid work

Social criteria:

 An explicit aim to benefit the society  An initiative launched by a group of citizens  A decision-making power not based on capital ownership  A common environment, which ensures high involvement of stakeholders  A limited profit distribution

Apart from the programs directly oriented on internally displaced persons, various programs of development are being implemented in Georgia. It can be said that ongoing/planned projects funded by international organizations mostly focus on supporting the development of agriculture, however, they also include fields such as: vocational education courses, improvement of qualification, development of small farmers with cooperatives, etc. Successful implementation of these components will assist the improvement of the economic environment in target areas in general, as well as increase the employment rate, which will positively influence the incomes of the poor population.

Improvement of the business environment, support of the private sector and assistance in vocational education are envisaged by the program “Development of Private Sector in South Caucasus,” implemented by the international organization GIZ. This program is also implemented in Armenia and Azerbaijan, and aims to improve conditions for the development of the sectors oriented on trade abroad. The total budget of the program is 11 million EURO and its target segment consists of small and medium-sized businesses. The program started in 2013 and will finish in 2016.55

The Eurasia Partnership Fund56 implements the “Social Entrepreneurship Development Program” throughout Georgia, which aims to develop social entrepreneurship and support businesses that are focused on social goals and which reinvest in the social goals of business. After a long preparatory period, Eurasia Partnership Fund provides social enterprises with technical and grant assistance to support a limited number of projects that are represented by a well-defined target group and create a

53 Available http://www.inworkproject.eu/toolbox/index.php/glossary-resources/glossary/work-integration-social-enterprise Oct., 2015. 54 Available http://www.emes.net/site/wp-content/uploads/EMES-WP-12-03_Defourny-Nyssens.pdf Oct., 2015. 55 Available http://www.giz.de/en/worldwide/20324.html Oct., 2015. 56 Available http://www.epfound.ge/georgian/mimdinare-programebi/socialuri-metsarmeoba.html Oct., 2015.

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model for discussion and replication. Eurasia Partnership Fund cooperates with the Prague-founded fundraising Czech Center for implementation of the enterprise’s actions. The project is an ongoing initiative and the period of its validity is not limited.

Apart from international NGOs, embassies of different countries represented in Georgia also provide support for socially vulnerable groups and ensure funding for initiatives of creating livelihoods for them. In particular, within the scope of technical cooperation, the Embassy of Germany funds 10-12 small projects a year. In sum, the size of the budget does not exceed 10,000 EURO. These projects are more for formal or non-formal groups than for separate individuals.57

With the financial support of Heks-Eper Biological Farming Association, “Elkana” implements the project “Development of Fair trade and organic Hazelnut Value Chain for small farmers in Georgia.” Within the scope of this project, Elkana organizes trainings, gathers farmers in order to demonstrate the importance of cooperation, and awards grants for purchasing machines. The maximum amount of the grant is 40,000 GEL and 15% participation is required from beneficiaries.

Since February 2015, the “Japan Social Development Fund” has provided funding for a project with a value of 2.5 million USD - Empowering Poor Communities and Micro-entrepreneurs in Georgia Tourism Sector.58 This project is implemented by the World Bank and Biological Farming Association “Elkana.” The main goal of the project is to create jobs for poor and vulnerable communities and increase their income in Kakheti and Imereti regions where the World Bank implements development projects aimed to develop tourism and revive the urban area. A new project will help 500 families, particularly women living in Kakheti and Imereti regions, to start new businesses. Including IDPs, 2,700 poor and vulnerable people (particularly those who live in Tskaltubo or nearby) will receive some direct benefit from the project. Project beneficiaries include local entrepreneurs who are interested in business start-ups, family enterprises, women-led enterprises such as those for handmade items, guesthouses, cafés/restaurants, souvenir shops and enterprises that process local products.

Since June 2014, the LEPL Entrepreneurship Development Agency of the Ministry of Economy and Sustainable Development of Georgia and non-entrepreneurial (non-commercial) legal entity Agricultural Project Management Agency of the Ministry of Agriculture, started implementation of a new governmental program “Produce in Georgia” (government decree N365 30.05.2014 on approval of governmental program “Produce in Georgia” (industrial part; micro and small entrepreneurship part; agriculture part).59 In order to develop micro and small businesses, the program envisages to launch entrepreneurship support programs in economically vulnerable regions of Georgia. Additionally, it aims to provide financial and technical support for micro and small entrepreneurs, as well as support and diversification for improving the quality of local products. In the first half of 2015, Entrepreneurship Development Agency selected subjects/contactors who will implement micro and small business support programs in all four lots: 1. Samtskhe-Javakheti, Kvemo Kartli (contractor: non-entrepreneurial (non-commercial) legal entity Regional Development Association – RDA)60; 2. Imereti, Racha-Lechkhumi and Kvemo Svaneti (contractor: non-entrepreneurial (non-commercial) legal entity “Scout Movement of Georgia”); 3. Kakheti, Mtskheta-Mtianeti, Shida Kartli (contractor: Tbilisi business training center); 4.

57 Available at http://www.tiflis.diplo.de/Vertretung/tiflis/ka/05/WZ__neu/Kleinstprojekte/Kleinstprojekte/Kleinstprojekte__Uebersichtsseite .html Oct., 2015. 58 Available at http://www.qartuli.ge/?menuid=98&id=62&lang=1 Oct., 2015. 59 Available at http://enterprisegeorgia.gov.ge/en/whatwedo/mikro-da-mcire-biznesis-xelSewyoba Oct., 2015. 60 Available at http://www.rda.org.ge/ Oct., 2015

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Adjara Autonomous Republic, Guria, Samegrelo-Zemo Svaneti (contractor: GMSG-INNOVA LTD). Under the respective lot, the agency undertakes popularization of the program and events to be funded. In case of necessity, the agency provides the entrepreneur or group of entrepreneurs with consultations, evaluates, and then recommends the agency to approve the project. Following, the agency should be applied to with a written recommendation for funding the approved project, which should be proven. In this case, the agency and program beneficiary/group of beneficiaries sign an agreement of beneficiary; after that, the agency is liable to award funding for the program beneficiary/team of program beneficiaries. In the process of project implementation, the contractor provides information-consulting services and carries out ongoing monitoring of funded projects. The maximum amount of funding provided by the agency for one beneficiary is 5,000 GEL and no more than 15,000 GEL for a group of beneficiaries. The share of participation is no less than 20% of the funded amount. Before signing the agreement of beneficiary, the program beneficiary/team of program beneficiaries will transfer the amount of participation from their bank account and inform both the contractor and the agency. After that, the agency will transfer the amount of funding on the given bank account. In order to implement the project, the amount of participation will be used first, and then the amount of funding will be used. It is worth mentioning that the contractor needs to take the following conditions into consideration when evaluating and approving a project: a) priority of service-oriented project; b) amount of participation; c) business start-up by females; d) business start-up by IDPs.

IDPs are a priority for the program initiated by the Ministry of Labor, Health and Social Protection. The project aims to recruit job-seekers for a short-term period and improve qualifications by taking employers’ demands into consideration. This project is implemented by the Employment Programs Department of LEPL Social Service Agency in cooperation with vocational schools.

USAID/REAP,61 USAID/NEO,62 USAID/UNHCR, ENPARD/OXFAM/RCDA/ACF, SDC/MOLI,63 SDC/Mercy Corps/RED,64 BP/CDI SCPX,65 UNDP, EPI, USAID/UNHCR, Cemonics, People in Need, CARE International in the Caucasus, and similar programs also have experience mobilizing potential entrepreneurs for agricultural and regional development projects in Georgia.

Livelihoods for IDPs and Eco-migrants in Target Regions Considering the Local Industrial-economic Potential

As it can be seen, over the last few years, international donor organizations and the Government of Georgia have been actively implementing various projects aimed at supporting small businesses. The implementation of such projects should reduce migration, create jobs and provide households with livelihoods. Most of the projects are being implemented by a network of local provider organizations.

In the scope of the study under the EU-funded project “From Dependency to Self-Sufficiency - Innovative, effective and scalable Livelihood solutions for Georgia,” interviews were conducted with representatives of the local providers of such programs mainly involved in strengthening the engagement of vulnerable groups in economic activities.

61 Available at http://reap.ge/index.php?lang_id=GEO&sec_id=73 Oct., 2015. 62 Available at http://georgianeo.ge/index.php?news_id=203 Oct., 2015. 63 Available at http://www.moli.ge/project-business-partners.html Oct., 2015 64 Available at http://mercycorps.ge/index.php/current-projects/87-current-projects/red Oct., 2015. 65Available at http://www.rda.org.ge/ Oct., 2015.

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By means of special in-depth interview guides, interviews were conducted with the representatives of government institutions and non-government organizations. Guides included up to 30 questions, although considering the purposes of the draft report of the study, the information collected via interviews was grouped into three main topics:

I. Effective activities that need to be done for the socio-economic development of IDPs and Eco- migrants; II. Using local industrial and economic potential for the purpose of job creation; III. Exploring business ideas that are tailored to the requirements of the local market and that can provide a household with a livelihood in case of a small grant component.

I Question Basic needs of IDPs and eco-migrants In your opinion, considering your - Provision with long-term accommodation; experience, what needs to be done in - Provision with agricultural land plots; order to improve the living conditions - Increase accessibility of quality healthcare; of IDPs and eco-migrants? What role - Psychological rehabilitation; do you think the state agencies, - Education - vocational trainings/accessibility to vocational education; donors and NGOs can play? - Employment. Question Actions to be made What kind of assistance do you think  Criteria for assessing the socio-economic situation of socially would be most vulnerable families (households) should be revised: granting/quitting effective/helpful/efficient for IDPs and social allowance should not be connected with having an elementary livelihood source; eco-migrants in terms of socio-  Short term/cheap vocational courses tailored to the requirements of economic development? the market should be offered;  Accessibility to finance should be supported – absence of collateral restricts the chances of receiving a loan from a bank;  Provision with agrarian land plots;  Definition and identification of eco-migrant in legislation; II Question Industrial-Economic Potential for creation of new jobs Investment in which economic field Batumi, Tskaltubo, Zugdidi: could create new jobs?  Hotel;  Production of national souvenirs (felt, tapestries, jewellery, wood products, enamel, etc.);  Restaurant;  Fast food, café;  Construction/repairing teams;  Fruit processing enterprises; Batumi:  Citrus processing enterprise;  Production of wooden furniture;  Production of wooden windows and doors;  Guesthouse;  Trade center;

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 Establishing a distribution network;  Polygraphic service/enterprise;  Production of chips;  Production of dairy products;  Private Kindergarten;  Children’s entertainment center;  Cleaning service;  Greenhouse for mushrooms;  Greenhouse for berries;  Cold and dry storage; Kutaisi:  Technical Servicing and repairing of vehicles;  Car wash;  Sewing salon;  Trade center;  Establishing a distribution network;  Greenhouse for mushrooms;  Production of furniture;  Drying facilities (fruit processing); Tskaltubo:  Greenhouse;  Gardening;  Beekeeping – production of honey and candles;  Technical Servicing and repairing of vehicles/car wash in the scope of resort infrastructure;  Beauty salon;  Production of bio vegetables;  Poultry, egg production; Zugdidi:  Processing of nuts;  Production of dairy products;  Production of construction materials;  Cannery;  Confectionery;  Poultry;  Greenhouse for berries;  Citruse, fruit processing; Poti:  Confectionery;  Production of fish products and cans;  Trade center;  Beauty salon;  Technical Servicing and repairing of vehicles;  Car wash;  Private Kindergarten;  Slaughter house;  Cold and dry storage; III Question Livelihood Business ideas for small grant component that can be deemed as successful, tailored to local market requirements

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In case the respondent organization is Kutaisi, Tskaltubo, Zugdidi, Batumi: engaged in income-generating project  Production of national souvenirs (felt, tapestries, jewellery, activities for households in terms of wood products, enamel, etc.) disbursing small grants for small Kutaisi:  Technical Servicing and repairing of vehicles; business startups or company  Car Wash; growing – What potentially successful  Production of wrapping and cardboard boxes; fields do you see in your region and  Sewing Salon; what kind of business ideas are  Bakery; financed most?  Stationery Services (Copy machine, purchasing computer and printer);  Workshops (Repairing watches and jewellery, repairing shoes);  Greenhouse for mushrooms;  Dried fruit production; Batumi:  Production of hand-embroidered tablecloths and napkins for hotels and restaurants;  Production of wooden household items (chairs, brushes, utensils, etc.);  Sewing Salon;  Sewing of swimwear;  Purchasing tools/equipment for engaging in construction works;  Purchasing vehicles/motorcycles for distribution services;  Beauty Salon;  Bakery;  Trade center/market/shop;  Production of pharmaceutical products;  Guesthouse;  Stationery Services (Copy machine, purchasing computer and printer);  Plant Nursery for eco-migrants; Tskaltubo:  Purchasing table for massage;  Purchasing equipment for stylist, manicure and pedicure specialists;  Purchasing equipment/tools for construction works;  Beekeeping;  Chicken Farm;  Purchasing vehicle for distribution;  Poultry, egg production;  Rabbit husbandry;  Guesthouse; Zugdidi:  Purchasing agrarian equipment for agrarian services;  Dairy - cheese production;  Beauty Salon;  Bakery;  Workshops (Repairing watches and jewellery, repairing shoes);  Greenhouse for mushrooms;  Fishery (Salmon); Poti:

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 Fishery and production of fish products;  Trade Center;  Bakery;  Beauty Salon;  Technical servicing and repairing of vehicles;  Car wash;  Production of Georgian products (tkemali, churchkhela, gozinaki).

The analysis of the various studies66 shows that the monitoring of financed projects by implementing organizations lasts from one to three years on average. Based on this observation, it can be assumed that only 5% of initiated businesses stop their life cycle during the monitoring stage – despite the projects being quite irregular and the number of beneficiaries rather small due to the limited budget of such programs. This can be considered a result of the successful and well-managed activities of donor organizations. Also, it should be mentioned that a feasibility study of the projects suggested by businesses indicated a significant amount of risk. In order to overcome this, a revised law “about the National Investment Agency” entered into force in March of 2015 (N3023, 19.03.2015). The most outstanding update of the revised law is article 5/A, which implies “studying business and investment issues in Georgia and creating the databases” that will facilitate the process of matching needs and investment priorities.

As we see, within the recent years, international donor organizations and the Government of Georgia actively implement projects that support small businesses, develop agriculture, and increase the competitiveness of human resources. Important challenges still remain, however, in ensuring access to livelihoods for vulnerable groups – in case of a lack of proper communication, a multitude of program implementer organizations does not exclude the possibility of assistance duplication, which lowers the purposefulness and effectiveness of spending program finances.

Apart from this, the participation of vulnerable groups in these projects is far from a reality due to the terms of participation offered. Despite the fact that these programs envisage the development of business skills and the provision of financial education, financial liabilities are so high that the majority of internally displaced persons cannot afford them. They don’t have a savings or any pledge for a mortgage loan. Not having agricultural plots of land is another important preventive factor. These problems are particularly severe for internally displaced persons resettled in long-term settlements, who are provided with these residential areas due to the most extreme poverty.

66 Chelidze N., Fact-finging assessment among households having migrants and returnee migrants in the Kakheti, Kvemo kartli and Samtskhe-Javakheti Regions. IOM, SDC. Tbilisi, May, 2015.

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5. Findings and Recommendations Based on the survey results, the following are the main findings:

Socio-Economic Conditions of IDPs and Eco-migrants

- Despite sufficient support provided by the Government to IDPs in terms of the provision of dwellings, there are still many unsolved problems prevalent for IDPs residing in long-term houses in terms of ensuring normal living conditions. According to the survey findings, 41% of dwellings (where respondents’ families live) require minor refurbishment and 11% of dwellings need to be completely repaired. Living conditions are more precarious for eco-migrants (75.6 % of eco-migrant houses need partial or full repair).

- It is worth mentioning that 43% of interviewed households have received different kinds of support from either the State or the non-governmental sector (excluding a living allowance and pension) for years. Notwithstanding the multiplicity of provided support, the economic conditions of the interviewed IDPs are quite poor. Only 4.2% of interviewed respondents own agricultural land and only 0.2% of those interviewed have a financial savings. The main source of income for IDPs is an IDP allowance, state pension, and/or living allowance.

- The majority of respondents said that received assistance had a positive impact on their economic conditions; the respondents positively evaluated the fact that assistance was carried out in different forms, however, some respondents (6.8%) said that assistance with food is not very efficient. Monetary assistance turned out to be inadequate for 16.9% of respondents, because its amount was not enough to meet their needs.

- Income generated by HHs or allowances/assistances received from various donor organizations make up on-fifth of HH consumption. The largest part of the HH consumed products are purchased (and very few are produced), this once more indicates the dependency level of IDPs on monthly assistance and allowances.

- On average, monthly expenses of households amount to 555.22 GEL. Out of this amount, most is used for buying food (37%), medicine and clothes/shoes (respectively, 10% and 4%), repayment of debts (10%), utilities (6%), and transport (4%). Only one percent goes to education and holiday/amusement. In the respondents’ responses regarding the potential doubling of revenue (respondents were asked the following question: Imagine that your income doubles, how you would distribute the increased income into categories given in the questionnaire?), expenses on healthcare service and amusement/holiday tripled. Money to buy food and medicine, as well as to repay debts doubled. The households’ allocated small amounts for skills development every month (if revenue doubled); an average of 15 GEL instead of 3 GEL. However, it should be mentioned that if their budget doubled, they would spend five times more money for skills development. This is an important factor for donor organizations to consider.

- According to the survey findings, interviewed respondents have quite intensive interaction with financial institutions (banks, micro finance organizations, pawn shops). At the same time, accessibility to credit resources is quite high, however the loans are mainly short-term and are issued for a small amount of money. This, in its turn, defines the purpose of the loan, which is

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mainly to cover household expenses (purchase household items, healthcare, food, repay a debt, make a repair, etc.). Only 7 % of IDPs applied for and took a loan to start a business.

- Notwithstanding the desire to have micro or small business is quite high among IDPs (58% of interviewed IDPs), only 4% of respondents had or have their own businesses. The main reason named for not having one’s own business is a lack of the necessary financial resources. It is noteworthy that only 51% agrees to accept donor support to start a business with the condition of 10% participation from the recipient’s side. The remainder do not have the desire due to a lack of experience and skills, or refrain from taking part due to the risks associated with financial participation.

- The survey revealed that there is quite high business potential among IDPs. For the question “From the wishes below, if you had enough money to fulfil one of them, how would you use this amount?” Among respondents, 34.8% indicated that they would start a business. It is noteworthy that IDPs consider insufficient financial resources to be a main risk associated with starting a business (47%). Another 49.5% of respondents think that while thinking about the business apart from financial resources, they also need additional knowledge.

- It is worrisome that according to survey findings, eco-migrants and internally displaced people do not foresee the possibility to change their state dependent status in the near future. Among the respondents, 58.7% consider a monthly allowance to be the most effective support provided for them.

Business Environment

- The reforms implemented in the direction of economic liberalization throughout the last 10 years have significantly improved the business environment in the country. However, these reforms have not ensured a sufficient increase of the competitiveness of the private sector; have not created new jobs; and have not broadened employment opportunities for the population (including internally displaced persons) (Japaridze, D. 2012).

- According to the regional development strategies (Regional Development Strategies of Adjara AR, Imereti and Samegrelo-Zemo Svaneti, 2013), the intraregional economic development level and speed is extremely unequal; the level of utilizing economic potential is also weak. In general, economic and in particular, business activity is relatively high in big cities. Medium and small- sized cities, especially village settlements are often not attractive for investors. Consequently, it is advisable to increase attention in the direction of economic growth in the regional development strategies.

- Limited resources that hinder testing and refining innovations remains a challenge for economic development. Government’s assistance in support of innovation is token in nature.

- Despite the fact that stimulation of entrepreneurship activities and support of small and medium businesses is a major priority in the regional development plan of Georgia, the development of small and medium-sized businesses still poses challenges in Georgia, particularly in the target regions. Most (96%) (National Statistics Office of Georgia, Business Statistics Department, 2014) of the enterprises in the target regions are small and medium-

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sized, however, they are responsible only for 16% of business revenue, 25% of production, and 32% of employment.

- Interviews with international and local non-governmental organizations representatives and experts demonstrated that international donor organizations and the Georgian Government are actively implementing micro and small business support programs. Monitoring of the project funded by the implementing organization lasts from one to three years. According to respondents, only 5% of funded businesses stop operation before the end of monitoring. This figure is much higher, however, according to the findings obtained from the interviews with IDPs.

- Currently, Georgian legislation does not provide any special provisional terms for small businesses. The exception is tax concessions provided for micro and small enterprises according to the new Tax Code. Some state programs and initiatives are complimentary (e.g. the project “Produce in Georgia,” support for agricultural cooperatives and others). Within the framework of these programs, small and micro businesses receive support through small grants and tax exemption initiatives. A small number of business operators benefiting from this support still indicates a low level of the efficiency of these initiatives. According to data provided by the Revenue Service of the Ministry of Finance of Georgia in July 2015, only 38,161 individuals benefit from micro business status and 42,014 individuals benefit from small business status).

- According to the regional development strategies (Regional Development Strategies of Adjara AR, Imereti and Samegrelo-Zemo Svaneti, 2013), the implementation of a number of state programs in the agro-sector in recent years has created real opportunities for developing agricultural production and increasing employment opportunities in villages. However, the following factors still hinder activities in this sector: underdevelopment of infrastructure; lack of manufacturing factories in villages; demolished irrigation and drainage systems; limited accessibility to loans; increasing prices on agricultural utilities (fertilizers and other), and so on. The utilization of regional rural potential by taking advantage from a local peculiarity and introducing innovations still remains an acute issue.

- As the review of economic development potential of the targeted regions showed, despite some progress, the economic potential of a free economic zone is underutilized in terms of creating new enterprises and jobs.

- According to World Bank’s Country Economic Memorandum for Georgia (World Bank, Georgia: Seizing the opportunity to prosper, Country Economic Memorandum, 2014) for speeding up economic growth and increasing the creation of new jobs, it is of utmost importance to increase the competitiveness of exports. In general, export-oriented enterprises are more productive and create more jobs than local market-oriented firms.

- It is extremely important to conduct market research and provide access to research for the attraction of investment and also for increasing the effectiveness of businesses (especially small and medium-sized businesses). It is noteworthy to indicate that the “Georgian National Investment Agency,” defined “Research on business and investment related issues and creation of information bank” as its main function.

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Employment and Qualifications

- Unemployment level is generally high in Georgia and in the targeted study regions. Two-thirds of workers are self-employed (most of the self-employed persons are subsistence farmers and the generated income is mostly used for private needs) which might be indicating the low economic development of the region and country.

- The main problems named by IDPs and eco-migrants are related mainly to unemployment. Consequently, the prerequisites for integration at the current living place named by interviewed households were a household revenue increase (58%) and assistance in finding employment (22%).

- Quantitative, structural and quality mismatch exists between the supply and demand of labor, which creates impediments for business effectiveness and therefore economic growth. Implemented reforms in the labor, employment and education sectors in recent years give hope that this mismatch will reduce.

- Despite the fact that several donor and state organizations were planning and implementing professional development and training programs for IDPs, only a few IDPs and eco-migrants (8.4%) from the targeted regions confirm participation in such programs. This could be an indicator of existing restrictions on program geographical area and a low level of inclusiveness.

- The survey findings confirm low efficiency of IDP professional development programs in terms of meeting the demands of the market as well as meeting the requirements of employers. The survey identified that only 17% of IDPs were employed as a result of participation in professional training programs. Among them, almost none could keep their jobs. It should be mentioned that a majority of those who participated in the training are satisfied with the quality of training program, and 36% out of all interviewed graduates expressed interest in obtaining further professional development in the same area. This indicates the need of developing and extending professional education programs.

Coordination of Assistance Programs

- In Georgia there are a number of ongoing programs and projects that grant the access to livelihood resources to vulnerable groups including IDPs, however the impact of such programs on the quality of life of the population is small. A majority of programs do not take categories of IDPs needs and vulnerability into account; the programs are not based on research and analysis of living and socio-economic conditions, and therefore are not tailored to meet the real needs of these groups. The improper coordination of IDP support programs and the unavailability of a common system is a challenge. Multiplicity of implementing organizations does not exclude the occurrence of duplicated support in case of improper coordination, that decreases the effectiveness and usefulness of program costs. Even though number of non- governmental and donor organizations started taking this need into account and based their

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program support on study results, duplication of studies and uncoordinated approaches are still prevalent.

- It is also worth mentioning that many donor and Government funded programs support small and medium-sized businesses, however the problems related to effectiveness and sustainability of these of programs are still not resolved. As stated above, this can be attributed to the absence of a coordinated approach to the issue. There is a lack of information among potential beneficiaries; there is not proper targeting of beneficiaries; the projects are short-term; there is insufficient funding and an uncoordinated implementation of such programs by agencies; and there is also a lack of motivation and skills among beneficiaries, etc.

Status Related Problems related

- One of the guiding principles of the state strategy (Government of Georgia, Decree 257, 2014) ‘the prevention of discrimination and right to an adequate life’ is not formally threatened by any ongoing program, however, IDP status can be a discriminative factor in a number of cases (i.e. during the loan application process). It is noteworthy that IDP status contains signs of “positive discrimination” as well. Positive discrimination does not support the IDPs in overcoming their dependency on state or international donor organizations.

- There are still challenges in terms of the existing interrelation between a person’s economic activities and social allowance, and between an IDP and social allowance. In particular, how does the criteria defined in the legislation on receiving social assistance affect the motivation of beneficiaries to work and receive revenue? It is notable that according to the law on “Internally Displaced Persons from Georgian Occupied Territories,” a displaced person has the right to receive an IDP monthly allowance and other social assistance according to the terms and conditions defined in the law. In parallel to this, according to resolution N225/N issued on August 22, 2006 by the Minister of Labor, Health and Social Affairs on “Rules of Assignment and Distribution of Targeted Social Assistance,” the receipt of a living allowance excludes the receipt of vulnerable family assistance or a monthly IDP allowance. This is to a certain extent a legal gap and does not support poverty reduction among IDPs. Besides, if a person who receives a living allowance (or anybody from the family) starts a job or receives any kind of support (e.g. grant) for improving economic conditions, then this person will stop receiving the living allowance. This becomes a motive to refrain from employment or the receipt of a grant. The lack of social assistance and its incompatibility with other sources of income does not support poverty reduction in the population, particularly the poverty reduction of IDPs. Therefore, the social assistance system requires essential reforms.

IDPs and Host Communities

- According to research findings, IDPs do not encounter problems with adapting to a new living place or local population, however for a certain amount of respondents, the problem of integration and adaptation is still present and is mainly of an economic character. Up to now, only a few respondents have expressed problems of a physiological or social character. It is also worth mentioning that only few IDPs assistance programs envisage promoting the cooperation

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between IDPs and host communities – the integration and cooperation of IDPs and host communities is among the main principles of the state strategy (Government of Georgia, Decree 257, 2014).

Recommendations

Social Protection

Business Environment

- For development and providing support to small and medium-sized businesses (firstly in regions and IDP settlements), it is important to provide a relevant consultation system (including legal, marketing, business organizations and management, other topics). It is also important to improve accessibility to financial resources (subsidized/concessional interest rates, simplification of procedures, and so on). A similar mechanism of business support ‘Produce in Georgia’ already exists (Government of Georgia, Decree 365, 2014), although the program is not tailored to the vulnerable population. At the same time, for supporting the business start-up initiatives of IDPs, it could be reasonable to create a special fund within the IDP Livelihood Agency that would

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accumulate financial resources coming from donor organizations and state structures. This fund, after discussing business proposals in a commission setting, would issue concessional loans.

Employability

- During the planning and implementation of vocational development programs for job seekers (including IDPs), it is important to study and analyze regional and local opportunities for employment. Vocational development programs should provide programs for specialties relevant to potential employers. In addition to the development of general skills (office software programs, foreign languages, skills for job searching and self-presentation), it is important to provide courses for acquiring specific professional knowledge. Attention should be paid to the inclusiveness of these programs, their geographical and financial accessibility (including coverage of transportation and foods costs). It is important to prepare IDPs in advance for infrastructure and investment projects. To obtain relevant information in this area, the IDP Livelihood Agency should cooperate with relevant governmental and private organizations.

Coordinating Mechanisms

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- The study showed that IDPs do not see the possibility of leaving the category of dependent persons in the nearest future and that they consider monthly financial support as the most effective assistance for families at this stage. It is unacceptable to support the establishment of IDPs as a special group of “socially disabled” by providing exceptions, exemptions and favoring. Interventions should be designed that encourage the transition of IDPs from dependency to self- reliance.

Establishment of Value Chains

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development support mechanism to provide a range of services to farmers could be done in coordination with NGOs and the private sector.

International Best Practices

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of residence, the government and donor organizations mainly apply activities aimed at ensuring jobs for IDPs:

- Recommended activities include:

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Annex #1 – Technical report of quantitative and qualitative studies

Within the scopes of the survey, a desk and methods of qualitative and quantitative surveys have been utilized.

Quantitative research

Fieldwork

Preparatory works for data collection activities were implemented in three main stages: (1) Fieldwork implementation plan has been developed (2) Field personnel has been recruited (3) Trainings were conducted for field personnel

First stage of fieldwork preparatory activities envisages development of fieldwork implementation plan. Fieldwork implementation plan consists of two main components:

(1) A general Fieldwork implementation plan which defines main functional units participating in field work as well as their duties and functions. It also envisages general chain of activities which is to be followed by each functional unit.

(2) A detailed Fieldwork implementation plan which defines the exact logistics and timing of fieldwork. The fieldwork management plan should include start dates and major deadlines for all phases of the survey fieldwork.

Two main functional units were involved in the process of undertaking field work:

(1) In-office fieldwork management team (fieldwork manager, data quality controls and other in- office staff);

(2) Field team (interviewers).

Recruitment of field personnel

For successful implementation of field works, particular attention is paid to recruitment of each functional unit staff members: (1) the in-office fieldwork management team and (2) the fieldwork team.

The in-office fieldwork management team consisted of:

A fieldwork manager who is responsible for managing fieldwork logistics and monitoring the timely implementation of the fieldwork;

A data quality control supervisor who is responsible for observing quality control procedures and supervising the work of questionnaire revision and logical control specialists;

Questionnaire revision and logical control specialists who are responsible for revising the completed questionnaires before electronic data entry;

Coding Specialists responsible for coding open-ended answers in the completed questionnaires.

Quality control interviewer for undertaking a telephone control – they are responsible for making calls with randomly selected small group of respondents for checking the quality of work carried out by interviewers.

The fieldwork team

Regional fieldwork supervisors who are responsible for the fieldwork management and monitoring;

Interviewers who are responsible for paying field visits and conducting interviews:

Reserve interviewers who will be involved in fieldwork in case any interviewer withdraws from the fieldwork for certain reasons.

Training of Field Team

Before commencement of trainings, ACT field department prepared training materials for interviewers which include the following documents:

 Instruction for selecting an address and respondent1;  Form of technical report;  Questionnaires; Trainings were conducted by project manager and fieldwork manager. Interviewers got comprehensive information on the following:

 Survey theme (goals and objectives) – purpose of a survey, its goals and objectives and anticipated uses of the findings;

 Survey instrument – content of each question, skip instructions;

 Technical issues and fieldwork logistics – procedures for the timely and efficient implementation of the fieldwork.

Upon completion of the training all training participants were provided with the materials needed for the fieldwork, such as:

 The sufficient number of survey questionnaires;

1 In case of selecting enterprises, regional supervisors were guided by a list prepared by sampling specialist. Supervisors used contact numbers provided in the list to call contact persons of enterprises and agreed time and date of the interview with them. A qualitative survey manager made in advance contact with the respondents of in-depth intervies and agreed date and time of the interview with them. Accordingly, interviewers of enterprise survey and in-depth interviews were not provided with respondents’ sampling instruction during the trainings.

 Instruction for random selection of final sampling point and other respective documents;

 For of technical report of fieldwork.

Difficulties of fieldwork

In order to fulfill sufficient number of interviews with eco-migrants planned within the scopes of the survey, visiting them at only one address did not appear to be enough. In order to identify addresses of eco-migrants and to ensure successful implementation of field work, regional coordinator of Adjara Autonomous Republic was helped by a representation of DRC in Batumi. In sum, despite the difficulties, 45 completed interviews were conducted with eco-migrants.

Data quality control In order to ensure high quality of obtained data, different techniques are used for fieldwork data control

(1) Telephone control; (2) Fieldwork monitoring. According to fieldwork plan, head of control group developed an action plan of monitoring immediately after the launch of fieldwork. Monitoring process was undertaken in three stages – in the initial stage, in the middle and upon the completion of fieldwork.

Fieldwork monitoring was carried out by control group according to a special questionnaire prepared by a project manager. The questionnaire used by control group for monitoring is a brief version of research questionnaire.

Questionnaires have been selected randomly. Control of fieldwork was performed according to the following procedures:

- Telephone control – 20 percent, which implies checking of each interviewer involved in the survey by calling the respondents. In order to perform this, questionnaires are randomly checked from the work of each interviewer. - Detailed revision of filled questionnaires – 100 percent which implies logical control and revision of all completed questionnaires in order to ensure timely identification and correction of system errors or omitted answers.

As a result of fieldwork monitoring, different types of insignificant inaccuracies have been identified which were corrected with the help of revision specialists.

After completion of fieldwork, the obtained results were entered and processed in the special statistical software (SPSS 20.0). Data entry was performed in ACT head office. Upon completion of data entry, database cleaning was performed.

The data cleaning procedure managed to identify and correct the following types of errors:

- Skip errors; - Data entry errors; - Revision and logical control errors; 3

- Registration errors; - Other types of inaccuracies; - Missing data or data omitted from the questionnaire or database.

Qualitative research

Fieldwork and personnel recruitment

All individuals involved in the survey, fieldwork manager and interviewers had rich experience of working on qualitative survey field. ACT involved specialists of in-depth interviews to perform in-depth interviews. Within the scopes of the given survey, they attended trainings regarding guides of in-depth interview where they got detailed information about survey themes and specific nature of concrete questions.

Interviewers recorded in-depth interviews by means of audio recording devices. Use of recording devices was agreed with the respondent and interview was audio recorded only after receiving their consent.

39 in-depth interviews were conducted within the scopes of qualitative research.

Data processing

Based on audio recordings of in-depth interviews, specialists prepared the interview transcripts. By means of these transcripts, information gathered within the survey was integrated in the final report.

Annex #2 - Business statistics in Adjara AR, Imereti and Samegrelo-Zemo Svaneti regions

Enterprises in target regions according to size

According to GeoStat, as of January 1, 2015, a total of 7610 enterprises were operating in Imereti region, among them 216 were large, 522 medium-sized and 6872 small units.

Kutaisi contains 48.1%, of all active enterprises in region, this figure includes 65.7%, of all large enterprises operating in Imereti, 49.8% of medium-sized enterprises and 47.4% of small enterprises. Small amount of operating enterprises – 7.1 % are located in Tskaltubo, respectively, according to size – 4.6%, 6.7%, 7.2%.

As of the same period, 4355 enterprises were operating in Samegrelo-Zemo Svaneti region. Among them, 162 large, 316 medium and 3877 small enterprises. It is worth mentioning that Samegrelo-Zemo Svaneti region falls behind both regions - Adjara and Imereti in terms of number of large enterprises.

31.4% and 24.6% of enterprises are localized in Poti and Zugdidi, among them 37.7% and 43.2% of large enterprises operating in Samegrelo-Zemo Svaneti, 32.3% and 32.0% of medium-sized enterprises and 31.1% and 23.3% of small enterprises.

As for Adjara AR, it is distinguished for relatively bigger number of large enterprises compared to above- mentioned regions. As of January 1, 2015 there were 7777 enterprises operating in this region, from which 359 were large, 693 medium-sized and 672 small enterprises.

66.2% of enterprises operating in Adjara AR are functioning in self-governing city Batumi, among which 80.5% are large enterprises, 71.3% medium and 65.5% small enterprises.

Enterprises in target regions according to business activity

Almost half of enterprises in all three regions (Imereti – 53.9%, Samegrelo-Zemo Svaneti – 50.4%, Adjara AR – 47.7%) are engaged in trade; repair of motor vehicles and personal and household goods.

The industry sector accounts for 15% (including 13.5% for the manufacturing industry) of all enterprises in Imereti region, 12.5% (including 11.4% in manufacturing industry) – in the Samegrelo-Zemo Svaneti region, and 9.6% of all active enterprises (including 9.1% in the manufacturing industry) – in the Adjara AR region.

There is a somewhat different situation when describing other sectors, namely, among the enterprises operating in Imereti, 5.6% are engaged in the construction sector, 6.4% – in the field of hotels and restaurants, 7.6% - in the field of real estate, renting and consumer services, while the remaining 11.5% is distributed among other sectors.

In terms of the number of enterprises in Samegrelo-Zemo Svaneti, after trade and industry, the construction sector is in the lead with 10% of all enterprises in the region, followed by 5.6% of enterprises engaged in the real estate, renting and consumer services, 7.1% – in transport and communications, 5,0% in HoReCa field, while the remaining 7.7% are distributed among other fields.

As for Adjara AR, 9.7% of enterprises operate in HoReCa field, 8,2% in real estate, renting and consumer services, 8.5% in transport and communications, 9,2% in construction field and the remaining 7% operate in other fields (see Table #1).

Table 1 - Number of enterprises operating in Adjara AR, Imereti and Samegrelo-Zemo Svaneti regions

by activities, 2014, unit

gdidi

Zemo Zemo

Poti

Adjara Adjara

Kutaisi

Batumi

Imereti

Svaneti

Tskaltub Samegre Agriculture, hunting and 62 18 12 61 15 5 52 24 forestry 29% 19% 25% 8% 46% Fishing, fisheries 1 1 24 19 10 5 1 Mining industry 101 18 12 39 14 3 34 25 18% 12% 36% 8% 74% Manufacturing industry 1031 488 74 498 207 85 705 440 47% 7% 42% 17% 62% Supply of electricity, natural 9 1 2 6 1 11 5 gas and water 11% 22% 17% 0% 45% Construction 429 179 21 434 82 54 712 481 42% 5% 19% 12% 68% Trade; repair of motor 4098 1969 289 2195 763 471 3710 2363 vehicles, household goods and 48% 7% 35% 21% 64% items of personal use HoReCa 486 232 36 217 71 55 756 500 48% 7% 33% 25% 66% Transport and 264 99 18 312 26 228 660 434 communications 38% 7% 8% 73% 66% Real estate operations, leasing 579 364 32 318 115 95 642 510 and consumer services 63% 6% 36% 30% 79% Education 132 84 2 64 21 13 88 72 64% 2% 33% 20% 82% Healthcare and social 192 101 28 99 29 20 139 114 assistance 53% 15% 29% 20% 82% Providing utility, social and 166 92 10 50 14 21 205 149 personal services 55% 6% 28% 42% 73% Activity unknown 60 16 5 38 10 4 53 30 27% 8% 26% 11% 57% Number of active enterprises, 7610 3661 542 4355 1368 1073 7777 5152 total 48% 7% 31% 25% 66%

Enterprises in target regions according to turnover

According to declared data of the enterprises, in 2014, the business sector turnover in the Imereti region amounted to GEL 2063.6 million (4,5% of total country index), while production constituted GEL 1023,6 million (4.3% of total country index).

In 2014, the business sector turnover comprised GEL 1608.0 million in Samegrelo-Zemo Svaneti region (3.5% of total country index) and GEL 2877.5 million in Adjara AR (6.2). As for production, the figure amounted to GEL 1010.6 million in Samegrelo-Zemo Svaneti region (4.2%) and GEL 1909.9 in Adjara AR (8%). With this figure, it ranks third after Tbilisi and Kvemo Kartli region.

Chart 1 - The business sector turnover and production distribution by territorial units 2014

Production 4.3% 4.2% 8% Imereti Samegrelo-Zemo Svaneti Adjara AR Business sector turnover 4.5% 3.5% 6.2%

According to GeoStat as of 2013, 63.3% of business sector turnover in Imereti comprised of large enterprises (Samegrelo-Zemo Svaneti - 75.8%; Adjara AR - 68.4%). 17.2% on medium sized (Samegrelo- Zemo Svaneti - 11.4%; Adjara AR -15.7%), and 19.5% on small business (Samegrelo-Zemo Svaneti- 12.9%; Adjara AR -15.8%).

Chart 2 - The business sector turnover distribution by territorial units and the scale of enterprises 2013

Adjara AR 68% 16%

Large Samegrelo-Zemo Svaneti 76% 13% medium

Imereti 63% 20%

Enterprises of target regions according to production and employment

By enterprise size, production in 2013 was distributed as follows: large businesses in Imereti generated 73.2%, in Samegrelo-Zemo Svaneti –78.8%, in Adjara AR– 69.8%, while the remaining portion of production was disseminated among small and medium-sized businesses. 7

Chart 3 - The business sector production distribution by territorial units and the scale of enterprises 2013

Adjara AR 70% 30% Large Samegrelo-Zemo Svaneti 79% 21% Medium/Small Imereti 73% 27%

In the Imereti region, in 2014, the business sector employed 37230 persons, of whom 38.4% were women. Large businesses accounted for 45.5%, medium-sized businesses – for 21.5%, and small businesses – for 33% of those employed.

Imereti ranked third in the country in terms of the number of employees in the business sector (after Tbilisi, and Adjara) with a 7.2% share.

In 2014, the number of those employed in the business sector in the Samegrelo-Zemo Svaneti region constituted 22344 persons (4.4% of the total number of business sector employees in the country), among whom 46.6% were engaged in large, 23.4% – in medium-sized, and 30% – in small businesses. Out of the total number of employees, 34.9% were women.

As for Adjara AR, in 2014, the business sector employed 45637 individuals (8.9% of those engaged in the business sector across the country), of whom 47.3% were employed in large, 18.5% – in medium- sized, and 34.2% – in small businesses. The proportion of women employed in this sector amounted to 43.1%.

Chart 4 – Distribution of employed people in the business sector by the scale of enterprises 2014

Adjara AR 47% 19% 34% N= 45637 8,9%

Large Samegrelo-Zemo Svaneti 47% 23% 30% Medium Small N= 22433 4,4%

Imereti 46% 22% 33% N= 37230 7.2%

Chart 5 – Distribution of employed people in the business sector by gender 2014

Adjara AR 57% 43%

N= 45637 8,9%

Men Samegrelo-Zemo Svaneti 65% 35% Women N= 22433 4,4%

Imereti 62% 38% N= 37230 7.2%

Business sector turnover, production and employment in target regions according to business field

According to 2013 data, the business sector turnover in Samegrelo-Zemo Svaneti was generated by:

- 33.8% - trade, and repair of motor vehicles, household goods and personal items sector, - 27.9% –transport and communications, - 27% - manufacturing, - 5.9% –construction, - 1.3% –agriculture, - 0,8% - HoReCa, - 0,5% - electricity, gas and water production and distribution.

The remaining sectors had an insignificant share of turnover in the business sector in Samegrelo-Zemo Svaneti region.

Chart 6 - Distribution of business fields in the business sector turnover 2013

Trade, and repair of motor vehicles, household goods and personal… 34%

Transport and communications 28%

Manufacturing 27% Construction 6% Agriculture 1% Samegrelo-Zemo Svaneti HoReCa 1% Electricity, gas and water production and distribution 1% Other 3%

The production shares in Samegrelo-Zemo Svaneti region is as follows:

- 42% - the manufacturing industry , - 31.2% - transport and communications, - 11,7% -construction, - 6,2% - trade, repair of automobiles, household goods and personal items, - 2,1% - agriculture, - 0.5% - electricity, gas, and water production and distribution, - 0.5% - Mining.

The remaining 6.0% of production was distributed among the other sectors in Samegrelo-Zemo Svaneti region.

Chart 7 - Distribution of production in the business sector 2013

The manufacturing industry 42%

Transport and communications 31%

Construction 12% Trade, repair of automobiles, household goods and personal items 6% Samegrelo-Zemo Svaneti Agriculture 2% Electricity, gas, and water production and distribution 1% Mining 1%

Other 6%

According to the number of employees in the business sector, in the Samegrelo-Zemo Svaneti region, in 2013, the manufacturing industry and other fields prevailed as follows:

- 16.8% - manufacturing industry; - 15.3% - repair of automobiles, household goods and items of personal use; - 11% - construction; - 7.6% - agriculture; - 10% - health care and social assistance; - 3.6% - HoReCa; - 2,2% - provision of communal, social and personal services; - 3.8% - hospitality (hotels and restaurants); - 1.4% - electricity, gas and water production and distribution.

Chart 8 - Distribution of employed people in the business sector by different business fields 2013

Manufacturing industry 17%

Repair of automobiles, household goods 15% and items of personal use

Construction 11%

Agriculture 8%

Health care and social assistance 10% Samegrelo-Zemo Svaneti HoReCa 4%

Provision of communal, social and 2% personal services Electricity, gas and water production 1% and distribution

other 32%

According to 2013 data, the business sector turnover in Imereti region was generated by:

- 48.7% - trade, and repair of motor vehicles, household goods and personal items; - 28,5% - manufacturing industry; - 5.7% – construction; - 4% - healthcare and social assistance; - 3.2% - mining; - 2.5% - electricity, gas, and water production and distribution; - 1.4% - hotels and restaurants; - 0.3% - agriculture.

The remaining 5.6% was distributed among other sectors.

Chart 9 - The business sector turnover by different business fields 2013

Trade, and repair of motor vehicles, household goods and 49% personal items

Manufacturing industry 29%

Construction 6%

Healthcare and social assistance 4%

Mining 3% Imereti Electricity, gas, and water production and distribution 3%

Hotels and restaurants 1%

Agriculture 0.3%

Other 6%

The production shares in Imereti region is as follows:

- 51.3% -manufacturing industry; - 10.3% - construction; - 9.5% - trade, repair of motor vehicles, household goods and items of personal use; - 7.3% - healthcare and social assistance - 5.8% - mining industry; - 5% - real estate, renting and consumer service; - 2,6% - electricity, gas and water production and distribution generated of product output, - 2.2% - hotels and restaurants; - 0.7% - agriculture.

The remaining sectors had an insignificant share of the production in Imereti region.

Chart 10 - Distribution of production in the business sector 2013

Manufacturing industry 51%

Construction 10% Trade, repair of motor vehicles, 10% household goods and items of… Healthcare and social assistance 7%

Mining industry 6% Real estate, renting and consumer 5% Imereti service Electricity, gas and water production 3% and distribution generated of product… Hotels and restaurants 2%

Agriculture 1%

Other 5%

As for the number of employees in the business sector in the Imereti region:

- 28.3% - manufacturing industry; - 17.9% - trade, repair of automobiles, household goods and items of personal use; - 14.6% - healthcare and social assistance; - 8.9% - construction; - 6.1% - real estate, renting and consumer service; - 4.8% - mining industry; - 4.6% - hotels and restaurants; - 2.1%, - production and distribution of electricity, gas and water; - 0.5% - agriculture.

Chart 11 - Distribution of employed people in the business sector by different business fields 2013

Manufacturing industry 28% Trade, repair of automobiles, household 18% goods and items of personal use Healthcare and social assistance 15%

Construction 9% Real estate, renting and consumer 6% service Mining industry 5% Imereti

Hotels and restaurants 5% Production and distribution of 2% electricity, gas and water Agriculture 1%

Other 18%

According to 2013 data, the business sector turnover in Adjara AR was generated by:

- 49.2% - trade and the repair of motor vehicles, household goods and personal items; - 16.7% - construction; - 10.5% - manufacturing industry; - 9.7% - transport and communications; - 4.4% - hotels and restaurants; - 3.5% - provision of communal, social and personal services; - 1.3% - the production and distribution of electricity, gas and water.

The remaining 4.7% was distributed among other sectors in Adjara AR.

Chart 12 - The business sector turnover by different business fields 2013

Trade and the repair of motor vehicles, 49% household goods and personal items

Construction 17%

Manufacturing industry 11%

Transport and communications 10%

Adjara AR Hotels and restaurants 4%

Provision of communal, social and 4% personal services The production and distribution of 1% electricity, gas and water

Other 5%

The production shares in Adjara AR is as follows:

- 31.3% - construction; - 16.4% - transport and communications; - 15.8% - manufacturing industry; - 13% - trade, repair of automobiles, household goods and items of personal use; - 7.2% - the hospitality industry; - 5.9% - provision of communal, social and personal services; - 1.3% - electricity, gas and water production and distribution.

The remaining 9.2% was distributed among other sectors in Adjara AR.

Chart 13 - Distribution of production in the business sector 2013

Construction 31%

Transport and communication 16%

Manufacturing industry 16%

Trade, repair of automobiles, household 13% goods and items of personal use Adjara AR The hospitality industry 7%

Provision of communal, social and 6% personal services Electricity, gas and water production 1% and distribution

Other 9%

As for the number of employees in the business sector in the Adjara AR:

- 8.9% - trade, and repair of motor vehicles, household goods and personal items; - 17.6% - construction; - 14% - manufacturing industry; - 11.7% - HoReCa; - 10.5% - healthcare and social assistance, - 9.4% -transport and communications; - 7.2% - the real estate, renting and consumer services.

The remaining 10.7% was distributed in other sectors in Adjara AR.

Chart 14 - Distribution of employed people in the business sector by different business fields 2013

Trade, and repair of motor vehicles, 19% household goods and personal items

Construction 18%

Manufacturing industry 14%

HoReCa 12%

Adjara AR Healthcare and social assistance 11%

Transport and communications 9%

The real estate, renting and consumer 7% services

Other 2%

Economic activity in target regions

According to GeoStat, in 2014, the volume of GDP at market prices amounted to GEL 29.2 billion2 which exceeds the previous year's figure (GEL 28.8 billion – 2013) by 8.7 percent. In the same year, GDP per capita amounted to USD 3680.7 (while in 2013 the figure was USD 3599.6).

In 2013, the added value generated in the country (GDP at basic prices) amounted to GEL 23.3 billion, 48.8% of which fell on Tbilisi, 11.4% – on the Imereti, Racha-Lechkhumi and Kvemo Svaneti regions, 8.8% – on Kvemo Kartli, 7.7% – on Adjara, 6.7% – on Samegrelo-Zemo Svaneti, 5.7% – on Kakheti, and 3.0% –

2 2014 data on GDP are preliminary and will be confirmed on 16 November 2015. 17 on Samtskhe-Javakheti, while the remaining 8.2% was distributed among the other regions (see Chart #1)

Chart 15 - Distribution of gross added value according to territorial units (in current prices, million GEL) 2013

Kakheti Samegrelo-Zemo Imereti, Racha- 6% Svaneti Lechkhumi, 7% Kvemo Svaneti 11% Guria 2%

Adjara 8%

Samtskhe- Tbilisi Javakheti 48% Kvemo Kartli 3% 9%

Shida Kartli and Mtskheta- Mtianeti 6%

Chart 16 - Economic Activities structure of GDP in 2013, Georgia

Hotels and Agriculture, restaurants Real estate fishery 2,3% operations, 9,4% leasing and Other fields consumer 9,7% services 5,8% Industry Healthcare and 17,3% social assistance 5,7% Education 5,2% Construction State governance 6,7% 10,1%

Trade 17,3% Transport and communications 10,5%

In 2013, industry, construction, trade and state governance played almost equal role in the formation of added value of Adjara (each of them about 11.5%).

Industry (17.1%), state governance (14.6%) and agriculture (13.2%) made important contribution in added value of Imereti, Racha-Lechkhumi and Kvemo Svaneti.

As for Samegrelo-Zemo Svaneti region, leading positions were held by agriculture (19.6%), transport and communications (15.5%), industry (13.6%) and state governance (13.6%).

Chart 17 - Georgia’s Regions Gross Value Added Activities Structure by regions, 2013

100% Other fields 1,857.8 247.3 293.2 90% 133.4 351.1 330.5 501.3 60.7 158.6 935.7 Health and Social Work 628.0 77.2 80% 136.7 38.3 268.2 58.9 65.1 88.4 878.1 203.4 70% 87.7 120.6 104.6 Education 19.1 105.1 255.1 35.3 115.5 120.0 190.8 60% 1,994.5 39.2 224.8 Public Administration 145.8 44.6 107.7 180.1 54.5 50% 266.8 10.3 80.6 227.2 67.1 6.0 122.4 Transport and Communication 33.9 64.4 36.7 39.9 40% 4.3 364.5 835.4 51.0 15.5 90.4 162.8 3,236.8 243.7 7.9 25.3 64.5 22.7 Trade 30% 334.0 25.9 140.4 157.1 42.0 223.9 20% 289.7 Construction 1,041.3 387.6 207.7 134.9 152.3 10% 264.2 359.8 323.2 Industry 1,396.1 383.9 133.8 0% 0.0 Agriculture, Fishing

Chart 18 - Georgia’s Regions Gross Value Added Field Structure by regions, 2013

100% 42.0 140.4 22.7 289.7 64.5 15.590.4 227.2 Imereti 383.9 7.9 364.5 224.8 90% 157.1 243.7 4.3 266.8 935.7 25.9 223.9 115.536.7 122.4 152.3 80.6 19.16.0 80% 25.3 44.6 190.8 65.1 Samegrelo Zemo Svaneti 51.0 35.3 351.1 323.2 39.2 39.9 104.6 180.1 120.6 158.6 70% 835.4 64.4 Guria 134.9 107.7 54.5 38.3 501.3 60% 120.0 60.7 133.8 203.4 77.2 133.4 293.2 Adjara 207.7 334.0 87.7 50% 255.1 247.3 3,236.8 1,994.5 136.7 Samtskhe Javakheti 40% 359.8 1,041.3 58.9 30% 628.0 1,857.8 Kvemo Kartli 264.2 1,396.1 878.1 20% 0.0 268.2 Shida Kartli 10% 387.6 145.8 105.1 88.4 330.5 0% 162.8 33.9 67.1 10.3 Tbilisi

Kakheti

In 2013, volume of gross added value created by Imereti, Racha-Lechkhumi and Kvemo Svaneti was GEL 2670.4 million while this index in Samegrelo-Zemo Svaneti region was GEL 1574.0 million and GEL 1798.1 million in Adjara AR.

15.9% of added value in Imereti, Racha-Lechkhumi and Kvemo Svaneti regions falls on industry, 14.4% on agriculture3, 10% -education, 5.3% - trade4, while the remaining 53% is distributed on other fields.

One fifth (20.5%) of gross added value in Samegrelo-Zemo Svaneti region falls on agriculture5, 14.8%- industry 14.4%- transport and communications, 6.6% - education 5.7%- trade6, 4.1%- healthcare and social assistance, 4.1% construction while the remaining 29.6% is distributed on other fields.

As for Adjara AR, gross added value in 2013 is contributed by trade (13.6%)7 , 12.5% - construction 11.9% - industry, 7.4%- agriculture8, 6,8% - transport and communications, 6.7% - education, 6.7% - healthcare and social service and the remaining 34.4% is distributed on other fields.

Employment rate in target regions

According to official statistics, in 2014, economically active population (workforce) in Georgia amounted to 1991.1 persons, of whom 87.6% were employed and 12.4% were unemployed (unemployment rate).

3 Agriculture, hunting and forestry; fishing, fishery; 4 Trade; repair of automobiles, household goods and items of personal use. 5 Agriculture, hunting and forestry; fishing, fishery; 6 Trade; repair of automobiles, household goods and items of personal use. 7 Trade; repair of automobiles, household goods and items of personal use. 8 Agriculture, hunting and forestry; fishing, fishery; 21

Among those employed, 60% were self-employed, 39.6% were contracted, and the status of the remaining 0.4% was unknown (see Table #2).

In 2014, the number of economically active population (workforce) in Imereti region amounted to 383.3 thousand persons, which is significantly higher than the same indicator in Samegrelo-Zemo Svaneti (218.8 thousand persons).

Among the economically active population in Samegrelo-Zemo Svaneti, 86.6% were employed while 13.4% were unemployed (unemployment rate). Among those employed, the vast majority (67%) were self-employed, while the remaining 31% were contracted, while among the economically active population in Imereti, Racha-Lechkhumi and Kvemo Svaneti regions, 90% were employed, 10.1% were unemployed; of those employed 69% were self-employed and 30% were contracted.

As for Adjara AR, as of 2014, the unemployment rate is 15.8% (see Chart #5).

Table 2 - Distribution of 15+ population according to economic activity by regions, 2014, thousand

persons9

Mtianeti Mtianeti

Javakheti, Javakheti,

Guria Guria

Tbilisi

Adjara

Kakheti

Georgia

Samegrelo Samegrelo

Lechkhumi Lechkhumi

Shida Kartli Shida

KvemoKartli ZemoSvaneti

KvemoSvaneti

Imereti, Racha Imereti, Mtskheta Samtskhe Economically active population 196,3 419,2 147,1 205,1 193,5 218,8 383,3 227,7 1991,1 (workforce), total Employed 186,2 325,0 135,1 185,6 162,8 189,4 344,8 216,2 1745,2 Contracted 45,6 263,6 38,2 63,1 66,9 59,6 103,7 51,5 692,3 Self-employed 140,6 61,4 96,9 122,5 95,5 127,2 238,1 164,0 1046,1 Unknown 0,0 0,0 0,0 0,0 0,4 2,7 3,0 0,7 6,8 Unemployed 10,1 94,2 12,0 19,5 30,6 29,4 38,5 11,6 246,0 Population out of workforce 76,4 364,6 55,1 92,6 88,4 96,8 159,8 70,7 1004,4 Unemployment rate % 5,2 22,5 8,2 9,5 15,8 13,4 10,1 5,1 12,4 Activity rate, % 72,0 53,5 72,8 68,9 68,6 69,3 70,6 76,3 66,5 Employment rate % 68,3 41,5 66,8 62,4 57,8 60,0 63,5 72,4 58,3

Chart 19 - Distribution of 15+ population according to economic activity by regions, 2014, percent

9 Source: National Statistics Office of Georgia

Unemployment Activity Employment

80 76.3 72 72.8 72.4 68.3 68.9 68.6 69.3 70.6 70 66.8 66.5 62.4 63.5 57.8 60 58.3 60 53.5 50 41.5 40

30 22.5 20 15.8 13.4 12.4 8.2 9.5 10.1 10 5.2 5.1

0 Kakheti Tbilisi Shida Kartli Kvemo Kartli Adjara AR Samegrelo Imereti* Other Georgia Zemo regions** Svaneti

Annex #3 – Household Survey Instrument

# Questionnaire number

Questionnaire is coded:

Questionnaire is entered:

Study of economic potential and capacities of IDPs

Questionnaire

September, 2015

Section A. Information about family members

A1. Demographics

A1.2 A1.3 A.1.4 A.1.5 A1.6 A1.7 A1.8 A1.9. A1.10. A1.11 A1.12 A.13 A.14 Why Relation Gender Age IDP status Marital status Does your What Achieve Profession Has Is s/he Does don’t you to head (1=female (1=Yes, 1=single family kind of d level (refers only s/he currentl s/he want to of HH 2=male) 2=No) 2=married member special of to those work y want get a (codes) 3=divorced have a need educatio respondents ed employe employ job?(see 4=widow status of does s/he n (see who have with d? ment?( codes) disabled have (in codes) technical, his/h (1=yes, 1=yes, person? case of higher er 2= no) 2=no) (see any)? (see education) profe Ask codes) codes) ssion? only (1=Ye them s who 2=No) are not employ

ed)

# Circle the respondent the Circle # A1.1Name 1 1 2 1 2 1 2 3 4 1 2 1 2 1 2 2 1 2 1 2 1 2 3 4 1 2 1 2 1 2 3 1 2 1 2 1 2 3 4 1 2 1 2 1 2 4 1 2 1 2 1 2 3 4 1 2 1 2 1 2 5 1 2 1 2 1 2 3 4 1 2 1 2 1 2 6 1 2 1 2 1 2 3 4 1 2 1 2 1 2 7 1 2 1 2 1 2 3 4 1 2 1 2 1 2 8 1 2 1 2 1 2 3 4 1 2 1 2 1 2 9 1 2 1 2 1 2 3 4 1 2 1 2 1 2 10 1 2 1 2 1 2 3 4 1 2 1 2 1 2

Codes

A1.2 Relation to head of HH

1 = head of family 6 = mother/father 11 = niece/nephew 2 = wife/husband 7 = grandmother/grandfather 12 = other relative 3 = son or daughter / stepson, stepdaughter 8 = stepmother/stepfather 13 = non-relative 4 = daughter-in-law/brother-in-law 9 = sister/brother 5 = grandchild 10 = brother-in-law/sister-in-law

A1.7 Description of family member 1=none 4=vision problems 7= Other (specify) 2=physical disability 5=hearing problems 3= mental disability 6=chronic disease

A1.8 Description of family members 1=no special needs 4=child without guardian 7= Other (specify) 2=pregnant 5= elder family member who needs care 3=single parent 6= pensioner

A1.9 Achieved level of education 0=no education 3= complete secondary (12 grades) 1= primary education (6 grades) 4=Technical education 2=incomplete secondary (9 grades) 5= higher education (BA, MA, PHD), scientific degree

A1.14 Reasons for not wanting to get a job 1= due to age 4 = I’m afraid of losing social assistance/aid for IDPs 2 =due to young children 5= I have alternative source of income 3 = due to health problems Other (specify)

A2. Employment

(Record names of those family members who are currently employed or want to get a job)

A1.1 A2.1. Employment A2.2. A2.3 A2.4 A2.5 A2.6 If you had a A2.7 Income in Name status (filled only Field of Position/profession How long have If you had a chance to choose any GEL from in case the occupation where s/he currently you been working chance to choose profession, which employment respondent is (filled only in case works in this job/how field of profession/position received within currently the respondent is (filled only in case long have you occupation, which would you choose? the last 12 employed, any currently the respondent in been doing this? field would you (Ask everyone) months excluding kind of employed) currently employed) choose? pensions and aids employment (see codes) Record Record year (Ask everyone) counts) If it’s been less (See codes) (see codes) than 1 year, record 0,6 in case of 6 months,

record 0,2 in case circle the respondent the circle

# # of 2 months 1 2 3 4 5 6 7 8

A2.1 Employment status 1 = state sector 2 = private sector 3 = self-employed 4 = own business 5 = Farm 6 = non-governmental sector 7= Other (specify)

A2.2 Employment field 1.1 Agriculture in the city (Please specify) 1.2 Agriculture outside the city (Please specify) 2 Fishing, fishery 3 Mining industry (Please specify) 4 Processing industry (Please specify) 5 Production and distribution of electricity, gas and water 6 Construction (Please specify) 7 Trade; maintenance of cars, home appliances and items of personal use (Please specify) 8 Hotels and restaurants (Please specify) 9 Transport and communications (Please specify) 10 Finances (Please specify) 11 Operations with real estate, leasing providing consumers with service (Please specify) 12 State governance (Please specify) 13 Education (Please specify) 14 Health care and social assistance (Please specify) 15 Providing utility, social and personal services 16 Other (Specify) ------17 None

A3. Have you attended course of vocational education?

1 Yes 1  A.4 2 No 2  A.15

A4. What courses did you attend? A5. Who organized those courses? (Specify the name) A6. Where did you attend those courses? (Specify name of institution/college/study center) A7. What was the duration of the courses you attended? Record number of days, months or years in separate column, record day/month or year verbally in the column “day/month”. Duration of course Name of course Organizer Name of institution Day/month Number (Specify) 1 2 3 4

A8. Did you get a job after attending the courses? 1 Yes 1  A.9 2 No 2  A.10

A9. Are you currently working with the profession you mastered by means of courses? 1 Yes 1  A.14 2 No 2  A.10

A10. Have you ever worked with the profession you mastered by means of courses? 1 Yes 1  A.4 2 No 2  A.14

A11. Please specify how long have you worked with the profession you mastered by means of courses? (Ask the respondent to name profession and period of work, record number of days, months or years in separate column, record day/month or year verbally in the column “day/month”. Profession Number Day/month (specify) 1 2 3 4

A12. Please tell me, what is the reason you are not working with the profession you mastered by means of the courses anymore? Profession Reason 1 2 3 4

A13. Was information obtained during the courses enough to preserve the job? 1 Yes 1 2 No 2

A14. Do you need to be recruited with the same profile now? 1 Yes 1 2 No 2

A15. Please name all sources of income of your family, circle all those aids/sources of income that your family receives: A16. Which one is main source? All sources Main source 1 Salary 1 1 2 Income from business/self-employment 2 2 3 Income from farm 3 3 4 Age pension 4 4 5 Social assistance for vulnerable families 5 5 6 Assistance for IDPs 6 6 7 Social assistance for disabled persons (category 1) 7 7 8 Social assistance for disabled persons (category 2) 8 8 9 Pension for war veterans 9 9 10 Assistance for orphan children 10 10 11 Household subsidy (to cover household-utility services – monthly) 11 11 12 Monetary aid from relatives 12 12 13 Money transfers from family member in migration 13 13 14 Other (please specify)

A17. Please tell me, what is your family’s average monthly income: (including salaries of all family members, assistances, income from agriculture products) 1 Average monthly income GEL

SECTION B. Housing conditions

B1. Please tell me, whose is the house you are currently living in? My own 1 Belongs to other member of family 2  B.2 Shared ownership of adult family members 3 It’s in state ownership 4  B.3 Other (specify)

B2. Since when is the house you are living in owned by you or your family member? ______Year

B3. Please tell me, what is the condition of the house/apartment you are living in? (Single answer) Does not need reconstruction 1 Needs partial reconstruction 2 Needs complete reconstruction 3 Is not the subject of reconstruction anymore 4

B4. In general, how would you evaluate your family’s living conditions? (Single answer) Very poor 1  B5 Poor 2 Satisfactory 3 Good 4  B6 Very good 5

B5. Can you tell me why you evaluated your living conditions as very poor/poor? We don’t have electricity 1 We don’t have natural gas 2 We don’t have drinking water 3 We don’t have sanitary facilities (bath, toilet) 4 Other (specify)

B6. Do you own/use the following: (circle all named items, record only those objects which are in due condition) 1 Land 1 2 Second house/summer house 2 3 TV 3 4 Satellite 4 5 Mobile phone 5 6 Internet 6 7 Radio 7 8 Computer 8 9 Washing machine 9 10 Refrigerator 10 11 Car 11 12 Bicycle 12 13 Agricultural technical equipment 13 14 Deposit in bank 14 15 Poultry (productive) 15 16 Animal (productive) 16 17 Other (specify) ______

B7. Do you have savings? 1 Yes 1  B.8 2 No 2  C.1

B8. For what purpose do you save money?

______

Section C. Received assistances

C1. Have you received assistance from government and non-governmental organizations?

1 Yes 1  C2 2 No 2  E1

C2. Please name assistances received from government and NGOs. 4 answers are accepted (record name of organization) (record only one-time aids, do not record assistances and pensions) 1 2 3 4 1 Name of organization or state agency

2 When did you receive aid from Month ______them for the first time? Year ______3 What kind of aid did you receive? (record, see codes)

4 Does your family still receive Yes 1 1 1 1 aid from them? No 2 2 2 2 5 How was the received aid Negatively reflected on your family’s 1 1 1 1 economic condition? Did not make any influence 2 2 2 2 Positively 3 3 3 3

C3. Why? Please explain your answer (Explain answer given in C.2.5)

______

Section E. Expenses / access to finances

E1. Are you involved in arable farming?

1 Yes 1 2 No 2

E2. Do you have productive domestic animals? 1 Yes 1 2 No 2

E3. What part of products produced by your family do you: (if the family is not involved in arable farming and does not have domestic animals, skip to question E4 and circle 88) Use in family _ _ _ _ % Sell/exchange to other product _ _ _ _ %

Ask everyone!

E4. What part of the products consumed by you is: 1 Produced/harvested by you _ _ _ _ % 2 Hunted/captured/gathered in the forest _ _ _ _ % 3 Purchased (with money or exchanged for some product) _ _ _ _ % 4 Received as aid or present _ _ _ _ % Total 100%

E5. Please tell me, in your opinion, from your family’s monthly income, what amount of money is spent on the following: Read all listed categories, if the family does not spend anything on the given category, record 0. Sum up income of the family in the end of chart.

E6. Imagine, that your family’s monthly income doubles next month, in which categories would you spend money? Read all listed categories, if the family does not spend anything on the given category, record 0. Sum up income of the family in the end of chart. E5 E6 1 Food 2 Utility bills 3 Fuel 4 Medical service 5 Education 6 Transportation 7 Leisure/fun 8 Debt 9 Clothing/shoes 10 Accommodation (rent) 11 Medicines 12 Hygiene items 13 Other (Please specify) Total

E7. In general, how affordable is for you to pay utility bills in time? (Single answer) 1 I always pay in time 1 2 Sometimes I have to pay belatedly 2 3 I always pay belatedly 3 4 I don’t pay utility bills 4

E8. Speaking of the last 12 months, have you or your family member applied to any finance institution (bank, micro finance) for taking a loan? 1 Yes 1  E9 2 No 2  E14

E9. Approximately for what period of time did you or your family member ask for a loan?

Record number of months _ _ _ _ _ Month

E10. Did you ask micro finance organization or bank for a loan? 1 Micro finance organization 1 2 Bank 2

E11. What was the purpose of requested loan? 1 Business start-up 1 2 To fund education 2 3 Leisure 3 4 To buy housing items 4 5 To buy a car 5 6 To buy food 6 7 Other (specify)

E12. Did you take a loan? 1 Yes 1  E14 2 No 2  E13

E13. What was the reason you could not get a loan? 1 Bad credit history 1 2 Absence of pledge 2 3 Other (specify)

(Ask everyone) E14. In your opinion, how simple is to take a loan? 1 Very difficult 1 2 More difficult than simple 2 3 More simple than difficult 3 4 Very simple 4

E15. Do you or your family member have to pay a loan (to bank, private entity, pawn, installment)? (In general and not the loan take within the past 12 months in particular) 1 Yes, debt of micro finance organization 1 2 Yes, debt of bank 2 3 Yes, debt from private entity 3  E16 4 Yes, installment 4 5 Yes, pawn service 5 4 No 4  E17

E16. Approximately what is the amount of loan or credit, debt you/family member have to pay? Amount of loan / credit / debt (amount left to be paid at the _ _ _ _ _ GEL moment of interview)

E17. If you had unexpected expense - 1000 GEL, how would you be able to pay this amount? 1 I would pay without a problem 1 2 I would have to borrow money from relative 2 3 I would have to borrow money from bank 3 4 I would have to borrow money from micro finance organization 4 5 Other (specify)

E18. Were there cases when you or your family member needed doctor’s help but you could not get it due to certain reasons? 1 Yes 1  E19 2 No 2  F1

E19. How often does this happen? 1 Very rare 1 2 More rare than often 2 3 More often than rare 3 4 Very often 4

E20. What was the reason you could not apply to doctor for help? 1 Medical facility is far 1 2 Due to finances 2 3 Other (specify) 3

Section F. Business experience

F1. Did/does you or your family member have own business? 1 Yes 1  F2 2 No 2  F9

F2. Does this business function right now? 1 Yes 1  F4 2 No 2  F3

F3. What is the reason this business does not function anymore? 1 No demand on service/product 1 2 Due to financial problems 2  F9 3 Problems in terms of business management 3 4 Other (specify)

F4. What kind of business do you/your family member own? 1 Grocery store 1 2 Beauty salon 2 3 Private kindergarten 3 4 Children’s entertainment center 4 5 Car repair 5 6 Car wash 6 7 Repair of home appliances 7 8 Atelier 8 9 Shoe repair 9 10 Bakery 10 11 Fast food outlet 11 12 Processing plant of dairy products 12 13 Greenhouse (vegetables, plants, mushroom) 13 14 Bee-keeping 14 15 Chicken farm 15 16 Cattle farm 16 17 Pig farm 17 18 Rabbit farm 18 19 Hazelnut processing factory 19 20 Production of dried fruit (persimmon, Churchkhela, etc.) 20 21 Furniture factory 21 22 Doors & windows factory 22 23 Stone and metal processing plant 23 24 Other (specify)

F5. On average, how many people are employed in your business (both full time and part time)? Quantity 1 Only me 1 2 Only members of household (specify quantity) 2 3 Other (specify quantity) 3

F6. How profitable is your business? 1 Not profitable at all 1 2 More non-profitable than profitable 2 3 More profitable than non-profitable 3

4 Profitable 4

F7. What is necessary condition for your business to continue operating within the following two years? (Choose only one answer) 1 Ensuring sufficient amount of money for investments/expansion 1 2 Widening range of consumers and entering new markets 2 3 Hiring new qualified personnel 3 4 Development of new skills / recruitment of existing work force 4 5 Economic stability in the country 6 Other (specify)

F8. Imagine that you are offered a job where you will have the same income, but you will be a hired worker, would you agree on that? 1 Yes, I would give up the business 1 2 Yes, but I would keep the business 2  F13 3 No 3

F9. Do you want you or your family member to have own small business? 1 Yes 1  F10 2 No 2  F13

F10. Please tell me, which of the statements listed below match you most of all? 1 I need starting capital and knowledge to implement a business idea 1 2 I just need starting capital to implement a business idea, I have the respective knowledge 2 3 I just need trainings to implement a business idea, I will be able to collect starting capital 3

F11. What kind of business do you want to start? 1 Grocery store 1 2 Beauty salon 2 3 Private kindergarten 3 4 Children’s entertainment center 4 5 Car repair 5 6 Car wash 6 7 Repair of home appliances 7 8 Atelier 8 9 Shoe repair 9 10 Bakery 10 11 Fast food outlet 11 12 Processing plant of dairy products 12 13 Greenhouse (vegetables, plants, mushroom) 13 14 Bee-keeping 14 15 Chicken farm 15 16 Cattle farm 16

17 Pig farm 17 18 Rabbit farm 18 19 Hazelnut processing factory 19 20 Production of dried fruit (persimmon, Churchkhela, etc.) 20 21 Furniture factory 21 22 Doors & windows factory 22 23 Stone and metal processing plant 23 24 Other (specify)

F12. What makes you think that this business will be successful? 1 There is a demand on this product 1 2 It will be competitive due to price 2 3 It will be competitive due to quality 3 4 Other (specify)

F13. Can you name all the preventive factors that can prevent you from starting/managing the business? (SEVERAL ANSWERS ARE PERMISSIBLE) 1 Insufficient financial capital 1 2 Low access to cheap credit 2 3 Lack of education and experience 3 4 Administrative-bureaucracy delays 4 5 Insufficient market (no demand on produced product, service) 5 6 Corruption 6 7 Uncompetitive environment 7 8 Health problems 8 9 Age 9 10 Fear of debts and failure 10 11 Political instability 11 12 Other (specify)

F14. Would you agree on 10% participation in case of receiving a grant from organization? 1 Yes 1 2 No 2

F15. In your opinion, what kind of business would the most profitable in your settlement? 1 Grocery store 1 2 Beauty salon 2 3 Private kindergarten 3 4 Children’s entertainment center 4 5 Car repair 5 6 Car wash 6 7 Repair of home appliances 7 8 Atelier 8 9 Shoe repair 9 10 Bakery 10

11 Fast food outlet 11 12 Processing plant of dairy products 12 13 Greenhouse (vegetables, plants, mushroom) 13 14 Bee-keeping 14 15 Chicken farm 15 16 Cattle farm 16 17 Pig farm 17 18 Rabbit farm 18 19 Hazelnut processing factory 19 20 Production of dried fruit (persimmon, Churchkhela, etc.) 20 21 Furniture factory 21 22 Doors & windows factory 22 23 Stone and metal processing plant 23 24 Other (specify)

F16. Which of the following actions would you make in case of having sufficient financial resources? (Single answer) 1 I would start/expand business 1 2 I would buy a house/apartment to live 2 3 I would buy a house/apartment to rent out 3 4 I would buy a plot of land to receive income 4 5 I would buy industrial equipment to receive income 5 6 I would buy a good car 6 7 I would buy a car to work as taxi 7 8 I would open a deposit in bank 8 9 I would keep it at home and spend eventually 9 10 I would study (me or family member) 10 11 I would improve qualification (me or family member) 11 12 Other (specify)

Section G. Main problems/solutions

G1. How often do you communicate with local residents and other IDPs? Ask question about eco-migrants only in Adjara More rarely More Very Very rarely than frequently frequently frequently than rarely 1 IDPs 1 2 3 4 2 Local residents 1 2 3 4 3 Eco-migrants (only in Adjara) 1 2 3 4

Ask only those who have any type of communication with local residents (Ask only in case they give answer 2,3,4)

G2. What kind of relations do you have with local residents? 1 It’s not different from relations with IDPs 1 2 It’s random/accidental 2 3 Communication is made only if it’s urgently necessary 3 4 Relationship is tight and involves different situations ordinary to life (you may trust them to give a 4 key of your apartment, leave a child, etc.) 5 Other (specify)

G3. How often is your status mentioned in the environment where you live?

1 Very rarely 1 2 More rarely than frequently 2 3 More frequently than rarely 3 4 Very frequently 4

G4. Which of the below listed problems are most severe for your family? G5. Please choose three most important problems and put them according to importance, 1= most problematic, etc. Problematic issues Three most problematic issues 1 Lack of food 1 2 Inaccessibility of medicines 2 3 Unemployment 3 4 Inaccessibility of healthcare 4 5 Inaccessibility of education 5 6 Buying school items 6 7 Housing conditions 7 8 Lack of furniture 8 9 Buying clothing 9 10 Leisure/fun 10 11 Re-payment of bank credit 11 12 Paying utility bills 12 13 Other (specify)

G6. Has the attitude of local residents towards you changed as years passed?

1  G7 1 Has changed 2 Has not changed 2  G8

G7. How has the attitude of local residents towards you changed – positively or negatively? 1 Negatively 1 2 More negatively than positively 2 3 More positively than negatively 3 4 Positively 4

G8. Do you think you are integrated in society (did you adjust to new environment well)? 1 Yes 1 2 Partially 2 3 No 3 4 Hard to answer 99

G9. Do you think that you have settled or will settle in your current place of residence? 1 Yes, I’ve settled 1  G12 2 Yes, I will settle in future 2 3 No 3  G10

G10. Do you want to change a place of residence? 1  G11 1 Yes 2 No 2  G12

G11. Why do you want to change your place of residence? (Several answers are permissible) 1 To find a job/better job 1 2 To improve livelihoods/increase income 2 3 For more safety 3 4 For better dwelling 4 5 For access to education 5 6 For access to medical care 6 7 To make new acquaintances/friends 7 8 For access to justice 8 9 Other (specify)

G12. Which of the following would be important for you in order to increase level of your integration in society where you currently live? 1 Income (including assistances) 1 2 Adequate job 2 3 Safety 3 4 Good dwelling 4 5 Accessibility of education 5 6 Accessibility of healthcare 6 7 Personal contacts and circle 7

8 Access to legal documents (certificate of birth, certificate of marriage, passport, etc.) 8

# Questionnaire number

9 Accessibility of legal services 9 10 Other (specify)

G13. Please put the following sentences according to importance for you, give 1 to the most important, 2 to less important and so on. 1 To return home 2 To stay where you live now 3 To move to other region of Georgia 4 To migrate abroad

G14. In your opinion, what kind of assistance would be most effective for your family? 1 Exemptions on utility bills 1 2 Exemptions in business (taxation) 2 3 Monthly monetary aid 3 4 Starting capital with our participation to start own business/farm 4 5 Assistance in development of business skills 5 6 Assistance with food 6 7 Assistance by funding education 7 8 Assistance with clothing/shoes 8 9 Other (specify)

Thank you for cooperation!

Annex #4 – Small and Medium Enterprises Survey Instrument

Questionnaire is coded:

Questionnaire is entered:

Study of small and medium enterprises

Questionnaire

October, 2015

F.1 Our target segment consists of micro, small and medium-size enterprises/businesses, that’s why, before starting an interview, let me check whether your organization matches with our selection criteria. Please tell us range of your enterprise’s turnover in 2014. 1 Less than 30 000 GEL 1 2 31 000 - 100 000 GEL 2 3 100 001 – 250 000 GEL 3 4 250 001 – 500 000 GEL 4 Continue 5 500 001 – 750 000 GEL 5 6 750 001 – 1 000 000 GEL 6 7 1 000 001 – 1 250 000 GEL 7 8 1 250 001 – 1 500 000 GEL 8 9 1 500 001 GEL and more 9 End the interview

Section A. Information about enterprise

A1. Please tell me, what is a legal form of your organization/enterprise? (Single answer)

1 Society of joint liability (general partnership) 1 2 Unlimited partnership 2 3 Limited partnership 3 4 Limited Liability Company 4 5 Joint Stock Company 5 6 Cooperative 6 7 Non-entrepreneurial (non-commercial) legal entity 7 8 Other (Specify)

A2. In which sector does your company operate? [3 sectors max.] [Show card A3] AB Agriculture and fishery 1 C Mining and quarry 2 D Manufacturing 3 E Utilities (electricity, gas and water supply) 4 F Construction 5 G Wholesale and Retail Trade, Repair of Motor Vehicles 6 H Hotel and restaurant 7 I Transport and communications 8 K Real estate, leasing and business activities 9 R Other (Specify)

A2ab. [If A2=AB ask the following question] Can you be more specific, in which sub-sector does your company operate? [Max. three sub-sectors] AB Agriculture and fishery (If needed, detailed description is provided) 1 Wheat and other grains Wheat and other grains which are not indicated in another category 2 Fruit and nuts Fruit, nuts, plants used in drinks and spices 3 Vegetables Vegetables, gardening and nursery garden 4 Animals Live animals and animal products 6 Forestry Timber products, production of wood and other services related to it 7 Fishing Fish and other sea products, services related to fishing 8 Other (Specify)

A2c. [If A2=C ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] C Mining and quarry (If needed, detailed description is provided) 9 Coal Coal and brown coal (lignite), peat 10 Oil and natural gas Raw oil and natural gas, services related to producing oil and gas 11 Uranium Uranium and thorium mines, metal mines 12 Other mining and quarry Other mining and quarry products 13 Other (Specify)

A2d. [If A2=D ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] D Manufacturing (If needed, detailed description is provided) 14 Crops Crops, flour and flour products, forage for animals 15 Bread and pastry Bread, fresh pastry and cakes, cookies and biscuits, canned confectionary and cakes 16 Processed meat and fish Meat and meat products, processed and canned fish and fish products 17 Vegetable and animal oils Vegetable and animal fats and oils 18 Dairy products Dairy products and ice-cream 19 Other food products Other food products 20 Mineral water and beverages Mineral water and beverages 21 Alcohol drinks Alcohol drinks 22 Tobacco products Tobacco products 23 Textile Textile and clothing, fur 24 Leather Leather and products made of leather 25 Wood Wood and items produced of wood, cork (except from furniture); stubble 26 Pulp and paper Pulp, paper and products made of paper 27 Filtered oil Coke, filtered oil products and nuclear fuel; industrial gases 28 Chemicals Chemicals, chemical products and artificial fiber 29 Rubber and plastic products Rubber and plastic products 30 Other non-metal and mineral Other non-metal mineral products products

31 Main metals Main metals and manufactured metal products 32 Office devices and computers Office devices and computers; devices, equipment and machines which are not indicated in another category 33 Communication and medical Radio, television and communication equipment and devices, medical, equipment measurement and optical instruments; watches 34 Transport equipment Transport equipment 35 Furniture Furniture, other manufactured goods which are not indicated in another category 36 Other (Specify)

A2f. [If A2=F ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] F Construction (If needed, detailed description is provided) 37 Construction of buildings Construction of buildings and civil engineering works 38 Construction of highways and Construction of highways, roads, runways and sport facilities runway 39 Other construction works Other construction works 40 Other (Specify)

A2g. [If A2=G ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] G Retail and wholesale trade or (If needed, detailed description is provided) repair of motor vehicles 41 Wholesale trade with new and Trade with motor vehicles and bikes, technical maintenance and repair used cars

42 Retail trade with home appliances Retail trade except from trade with cars and bikes; repair of home appliances and items of personal use 43 Wholesale trade with dairy Wholesale trade and trade by means of agents, except from trade with products, eggs, cooking oils and cars and bikes fats 44 Other (Specify)

A2h. [If A2=H ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] H Hotels and restaurants (If needed, detailed description is provided) 45 Hotel Hotel services; camps and other short-term accommodations 46 Restaurant Restaurant services, other services related to food and drinks 47 Other (Specify)

A2i. [If A2I ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] I Transport and communications (If needed, detailed description is provided)) 48 Railway transportation Railway transportation services 49 Other land transportation Land transportation services; water transportation services 50 Transportation service with pipe Transportation service with pipe 51 Air transportation service Air transportation service 52 Cargo packaging and stocking Cargo packaging and stocking 53 Other accessorial transport Other accessorial transport services services 54 Tour agency and tourism Tour agency and service of tour operator; services for tourists 55 Post and courier service Post and courier service 56 Tele-communication service Tele-communication service 57 Other (Specify)

A2k. [If A2=K ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] K Real estate, leasing and business activities 58 Real estate, computer service, research Real estate and leasing, computer service, research & development & development 59 Law, accounting Legal, accounting, bookkeeping and audit services 60 Architecture and engineering Architecture, engineering service; technical testing; advertisement services 61 Other (Specify)

A2r. [If A2=R ask the following question] Can you be more specific, in which sub-sector does your company operate? (Max. three sub-sectors] R Other (If needed, detailed description is provided) 62 Public administration Public administration and security services; obligatory social safety services 63 Educational services Educational services 64 Health Health and social work 65 Other fields Other fields, social and personal services 66 Other (Specify)

A3. Since when (year/month) does your enterprise work?

------Year ------Month

A4. When (year/month) did your enterprise register in Revenue Service?

------Year ------Month

A5. How many employees do you currently employ (both full and part-time employees)?

Quantity 1 Full time employees 2 Part-time/contractual/project/seasonal employees

A5.1 How many of your employees are women? Quantity 1 Founder 2 Director 3 Full time employees 4 Part-time/contractual/project/seasonal employees

A5.2 How many of your employees have a status of IDP?

Quantity 1 Founder 2 Director 3 Full time employees 4 Part-time/contractual/project/seasonal employees

A6. In general, how profitable is your business?

1 Non-profitable 1 2 More non-profitable than profitable 2 3 More profitable than non-profitable 3 4 Profitable 4

Section B. Economic Condition of Enterprise

B1. Please tell me, how did your enterprise’s financial condition change in 2014? (Single answer)

B2. Please tell me, how did your enterprise’s financial condition change in 2015? (Single answer)

B1 2014 B2 2015 1 Has worsened a lot 1 1 2 More worsened than improved 2 2 3 Has not changed 3 3 4 More improved than worsened 4 4 5 Improved a lot 5 5 B3. Please tell me, how did the volume of your enterprise change in 2014? (Single answer)

1 Reduced 1  B4 2 Increased 2  B5 3 Remained unchanged 3  B6

B4. You mentioned that the volume of production has reduced in 2014. Please tell me, what was the reason of this change? You can name maximum three main reasons.

B5. You mentioned that the volume of production has increased in 2014. Please tell me, what was the reason of this change? You can name maximum three main reasons.

B4 B5 1 Change of prices on raw materials 1 1 2 Change of prices on ready products 2 2 3 Change of quality of goods and services 3 3 4 Change of level of communication 4 4 Change of market volume (change of purchasing value of consumers), (other reason, 5 5 5 specify) 6 Change of advertisement activities 6 6 7 Change of qualification of personnel 7 7 8 Change of manufacturing power of enterprise 8 8 Support of business by government (cheap credits, change of customs policy, tax 9 9 exemptions of vice versa, other legislative changes) Absence of support of business by government (expensive credits, absence of tax 10 10 exemptions) 11 Political instability 11 12 Stable political situation 12 13 Other (Specify) 14 Other (Specify) 15 Other (Specify)

B6. Now, I will read you a list of problems your enterprise may face in the process of working. Please evaluate how severe is each problem for your enterprise’s proper functioning. Use 3 point scale for evaluation where “1” means - very severe problem, “2” means – more or less severe problem, “3” means- is not a problem at all. You can also name other factors which are not given in the list. [Rate each statement, one answer per each line]

Record

point 1 Difficulty of receiving credit (absence of pledge) (Other reason, specify) 3 Serious fines for mistakes (tax) 5 Competence of bodies in control 6 Objectivity of bodies in control 11 Instable and disorganized legislative regulation 12 Receiving a license 14 No payment/belated payment by clients 15 Low purchasing demand 17 Excessive price regulation 18 Agreeing entrepreneurial activities with state agencies 19 Accountability towards state agencies 20 Lack of specialists 21 Pressure from controlling or/and state agencies for money (extortion)

22 Pressure from criminal authorities for money (racket, extortion) 23 Other (Specify) 24 Other (Specify) 25 Other (Specify)

B7. Please tell me, do you carry out export of your products? 1 Yes 1  B8 2 No 2  B10

B8. In which country / countries do you export your products? 1 Azerbaijan 1 2 Bulgaria 2 3 Turkey 3 4 Armenia 4 5 Russia 5 6 Other (Specify) 7 Other (Specify)

B9. Please tell me, how regularly do you carry out export of your products? (Single answer) 1 Once a year or more often 1 2 Once in 2 years 2 3 Once in 3 years 3 4 Once in 4 years or more rarely 4

B10. Do you plan to expand your enterprise within the future one or two years? 1 Yes 1  B11 2 No 2  B12

B11. You mentioned that you plan to expand your enterprise. Please tell me, in what way are you going to expand? You can choose maximum three answers. 1 Enriched assortment 1 2 Starting new activity 2 3 Increasing volume of sales on expense of lowering prices 3 4 Increasing prices on products as a result of improved quality 4 5 Entering new markets 5 6 Finding new markets inside the country 6 7 Improvement of advertising activities 7 8 Launching new technique and technologies, increasing effectiveness of production 8 9 Investing additional own financial resources 9 10 Improvement of production management system (re-organization; personnel cut, etc.) 10 11 Improvement of personnel’s qualification 11 12 Bank credit or loan 12 13 Other (Specify) 14 Other (Specify)

B12. Imagine, that a certain organization allocated certain amount of money for expanding your business with cofinancing principle and in order to create additional jobs, would you support this initiative? 1 No, I won’t support 1 2 I will support only if funding will be a grant 2 3 I will support only in case they give me credit with low interest rate 3 4 I will support in any case 4

B13. In what case would you agree the donor organization to support your enterprise’s expansion in exchange for creating jobs? 1 I would not agree in any case 0 2 Only in case of grant 1 3 In case of offering realistic balance between amount of grant and terms to be fulfilled 2 4 In case of purchasing technical equipment 3 5 In case of staff recruitment 4 6 Other (Specify)

B14. In case of creating more jobs, do you think that increased number of jobs will be preserved considering the current situation on the market? 1 Yes 1 2 No 2

B15. Why?

______

B16. In your opinion, what kind of business would be most profitable to start on the market you are right now? (Several answers are permissible)

1 Grocery store 1 2 Beauty salon 2 3 Private kindergarten 3 4 Children’s entertainment center 4 5 Car repair 5 6 Car wash 6 7 Repair of home appliances 7 8 Atelier 8 9 Shoe repair 9 10 Bakery 10 11 Fast food outlet 11 12 Processing plant of dairy products 12

13 Greenhouse (vegetables, plants, mushroom) 13 14 Bee-keeping 14 15 Chicken farm 15 16 Cattle farm 16 17 Pig farm 17 18 Rabbit farm 18 19 Hazelnut processing factory 19 20 Production of dried fruit (persimmon, Churchkhela, etc.) 20 21 Furniture factory 21 22 Doors & windows factory 22 23 Stone and metal processing plant 23 24 Other (Specify)

B17. What makes you think that this business will work? 1 There is a demand on this product/service 1 2 It will be competitive due to price 2 3 It will be competitive due to quality 3 4 Other (Specify)

B18. To your mind, what kind of support is necessary from the government for development of your enterprise? Name three most important factors.

1 Tax exemptions 1 2 Exemptions on tenancy of buildings and land 2 3 Simplification and stability of tax system ს 3 4 Accessibility to cheap credit resources 4 5 Simplification of licensing and registration procedures 5 6 Insurance of property and entrepreneurial risks 6 7 Protection of safety of person and business 7 Regulation of state control (reducing frequency of control, simplification of procedures, reducing 8 8 sanctions, etc.) 9 Support towards innovative work 9 10 Protection of competitive environment 10 11 Support in staff recruitment 11 12 The best support would be not to disturb my work 12 13 Avoidance of economic crisis or mitigation of its results 13 14 Quick stabilization after economic crisis 14 15 Implementation of correct economic policy 15 16 No state support is necessary 16 17 Other (Specify)

B19. What is necessary for your enterprise to continue operating within the following two years? (Select only one answer) 1 Ensuring sufficient amount of money for investments/expansion - cheap credit 1 2 Widening range of consumers and entering new markets 2 3 Re-equipment and re-organization – increasing effectiveness of production as a result 3 4 Hiring new qualified personnel 4 5 Development of new skills / recruitment of existing work force 5 6 Economic stability in the country 6 7 Other (Specify)

B20. Please tell me, what do you believe is your advantage compared to your competitors? Name three most important factors 1 Knowledge of the market, participation of the market conditions 1 2 Level of capitalization of enterprise 2 3 Manufacturing capacities 3 4 Knowledge of modern means of production 4 5 Number of net assets (optimal balance of assets and liabilities) 5 6 Knowledge of modern informational technologies 6 7 Necessary connections with powerful authorities 7 8 Professionalism of production personnel 8 9 Knowledge of legislation 9 10 Knowledge of producing competitive product 10 11 Strong team of managers 11 12 Effective management of employees 12 13 Other (Specify)

Section C. Enterprise’s personnel

C1. What is average age of specialists employed in your enterprise? (Single answer) C2. What is average age of workers employed in your enterprise? (Single answer) C1 C2

Specialists Workers 18-25 years 1 1 26-30 years 2 2 31- 35 years 3 3 36- 40 years 4 4 41- 45 years 5 5 46- 50 years 6 6 51 years and more 7 7 C3. Speaking of the last two years, how many employees did you hire and what was their field of qualification? [To interviewer: write down profession/field of qualification verbally. Record number of employees working with the respective profession next to each answer]

C 3.1 C 3.2 Professions Quantity 1 Profession / specialization ------1 ------2 Profession / specialization ------2 ------3 Profession / specialization ------3 ------4 Profession / specialization ------4 ------5 Profession / specialization ------5 ------6 Profession / specialization ------6 ------7 Profession / specialization ------7 ------

C4. In general, how satisfactory is the qualification level of personnel working in your enterprise? (Single answer)

1 Not satisfactory at all 1  C5 2 More unsatisfactory 2 3 More satisfactory 3  C6 4 Completely unsatisfactory 4

C5. What are the reasons for unsatisfactory level of qualification? (Several answers)

1 Insufficient theoretical knowledge 1 2 Lack of practical skills 2 3 Lack of skills for working with informational technologies 3 4 Communication gap 4 5 Lack of creative attitude towards the work 5 6 Absence of initiative 6 7 Not knowing foreign languages 7 8 Lack of professional qualification 8 9 Low sense of responsibility 9 10 Production discipline is not followed very often 10 11 Other (Specify) 12 Other (Specify)

C6. Are there any trainings dedicated to improvement of personnel’s qualification held in your enterprise? (Single answer) 1 Yes, trainings are regularly held 1 2 Yes, trainings are sometimes held 2  C7 3 Yes, trainings are rarely held 3 4 There are no trainings 4  C10

C7. What kind of measures are taken in your company to improve personnel’s qualification?

C8. [To interviewer! Ask about each activity named by the respondent in C7] Who funds the activities named by you?

C7 C8

By enterprise By employee By enterprise By (Specify) Other

1. 1. 2. 3. employee and together None/free 4. 5. We have developed a conception of 1 1 1 2 3 4 --- personnel recruitment We choose the study program by directly 2 2 1 2 3 4 --- teaching at site We send personnel to trainings and 3 3 1 2 3 4 --- different recruitment/training centers We send personnel for internship in 4 4 1 2 3 4 --- abroad We consistently work on carrier plans of 5 5 1 2 3 4 --- personnel We teach adjoining professions in 6 6 1 2 3 4 --- enterprise 7 Other (Specify) 8 Other (Specify)

C9. Please tell me, what barriers do you face while training – recruiting your staff? 1 Lack of financial resources 1 2 Low qualification of trainers/recruiters 2 3 Lack of personnel’s interest 3 4 I don’t face any problems 4 5 Other (Specify)

C10. In your opinion, which unit of the company needs recruitment at this point? 1 None 0 2 Accounting/financial unit 1 3 Logistics department 2 4 Marketing department 3 5 Medium rank management 4 6 High rank/top management 5 7 HR department 6 Enterprise workers (specify professions/specialization) 1. ------8 7 2. ------3.------9 Other (Specify)

C11. Now I will name different aspects and please rate specialists working in your company according to these aspects. Use 5 point scale for evaluation where “1” means very low evaluation while “5” means very high evaluation. C12. Now please rate the workers of your company according to the same aspects. Use 5 point scale for evaluation where “1” means very low evaluation while “5” means very high evaluation. C11 C12

Specialists Workers 1 Results ------2 Quality of performed work ------3 Qualification ------4 Ability of communication ------5 Motivation ------6 Usage of working hours ------7 Production discipline ------

C13. Please tell me, is outflow of workers from the company more common than outflow of workers? (Single answer) 1 Specialists 1 2 Workers 2 3 Both equally 3 4 None of them 4

C14. How often do specialists have to work overtime? C15. How often do workers have to work overtime? (Single answer)

C14 C15

Specialists Workers 1 Never 1 1 2 Rarely 2 2 3 Sometimes 3 3 4 Often 4 4

C16. What kind of material incentives do you use for motivating personnel?

1 None 1 2 We issue monthly bonus 2 3 We issue quarterly bonus 3 4 We issue annual bonus 4 5 We sometimes give presents during holidays 5 6 Other (Specify?

C17. In general, what type of professionals does your company need? Please name several professions (e.g. accountant, confectioner, office manager, shoemaker, etc.) ______(1) ______(2) ______(3) ______(4) ______(5) C18. From the professions named by you, which two of them are most difficult to find on Georgian labor market? ______(1) ______(2)

Section D. Demand on the company’s personnel

D1. How do you find necessary staff members?

1 Private HR agencies 1 2 State HR agency 2 3 Advertisement/newspaper notifications 3 4 Internet 4 5 Personal contacts and recommendations 5 6 Educational institutions 6 7 Professional training – recruitment centers 7 8 Other (Specify)

D2. After looking for necessary persons, how do you select staff? 1 Screening / testing 1 2 Interviewing 2 3 According to information given in resume 3 4 By means of intermediate agencies 4 5 Other (Specify)

D3. Who selects staff members for your enterprise most often? 1 HR department (HR management department, HR manager) 1 2 Head of the department where the vacancy is announced 2 3 Head of enterprise 3 4 Other (Specify)

D4. What measures are taken in your enterprise for adaptation of new personnel? (Several answers are permissible)

1 Conception for staff adaptation is developed 1 2 New employee is introduced with history of enterprise, condition and production culture 2 3 New employee is introduced with personnel 3 4 Curator is appointed to new employee 4 5 Interviews are held with new employee from time to time 5 6 Other (Specify)

D5. While looking for necessary staff members for the enterprise, which category of personnel is most difficult to find? (Single answer)

1 Young qualified specialists 1 2 Specialists with rich experience 2 3 Young qualified workers 3 4 Experienced, qualified worker 4  D6 5 Non-qualified worker 5 6 Middle rank managers 6 7 Any category is difficult to find 7 8 Other (Specify) 9 None of the categories are difficult to find 9  D7

D6. In most of the cases, why is it difficult for you to find employees? (Several answers are permissible)

1 Their qualification is often unsatisfactory 1 2 Specialists I need are not trained in the country 2 3 There is no flexible system for finding employees in this country 3 4 They are often dissatisfied with the salary we offer 4 They don’t agree to work under the terms of my company (e.g. working on duties, working at 5 5 nights, duration of working hours, etc.) 6 I think they have too many complaints compared to their qualification 6 7 Other (Specify)

D7. For what professions/specialists you may have a demand in future 1-2 years? {To interviewer: write down profession/specialization verbally. Record presumable quantity of employees with this profession next to each answer]

D 7.1 D 7.2 Profession Quantity 1 Profession / specialization ------1 --- 2 Profession / specialization ------2 --- 3 Profession / specialization ------3 --- 4 Profession / specialization ------4 --- 5 None of them are in deficit 0 ---

D8. Nowadays, what prevents you to expand the volume of your enterprise which implies increasing number of employees? (Several answers are permissible)

1 Lack (inaccessibility) of production resources 1 2 Unhealthy competitive environment 2 3 Limited market for selling goods (service) 3 4 Excessive number and high rates of taxes 4 5 Presence of unqualified personnel 5 6 Unqualified, inexperienced management 6 7 Lack (inaccessibility) of financial resources 7 8 Corruption in state bodes (so called state extortion) 8 9 Corruption in local (city, district) state agencies 9 10 Low purchasing capacity of consumers 10 11 Other (Specify) 12 Other (Specify)

D9. Do you cooperate with any vocational school? 1 Yes (name the school)  D10 1. ------1 2. ------3. ------2 No 2  D15

D10. What kind of cooperation do you have with vocational college? 1 I have signed a memorandum, though it is just formal 1 2 I have signed a memorandum and we cooperate in accordance with it 2 3 I have not signed a memorandum but we often hire their graduates 3 4 As a part of memorandum, students have practical courses 4 5 My specialists attend recruitment courses 5 6 Other (Specify) D11. How satisfied are you with cooperation with vocational school?

1 Completely dissatisfied 1 2 Dissatisfied 2 3 Neither satisfied nor dissatisfied 3 4 Satisfied 4 5 Very satisfied 5

D12. How satisfied are you with level of professional qualification of vocational college graduates? (Ask only in case the respondent has an experience of hiring a vocational school graduate) 1 Completely dissatisfied 1 2 Dissatisfied 2 3 Neither satisfied nor dissatisfied 3 4 Satisfied 4 5 Very satisfied 5

D13. In case of offering free educational programs, which educational programs would you demand from college? Profession 1 Profession / specialization ------2 Profession / specialization ------3 Profession / specialization ------4 Profession / specialization ------5 None of them are in deficit 0

D14. What duration of program is preferable for you?

______Month

______Year

D15. Have you heard about an initiative of Department of Employment Programs of LEPL Social Service Agency of Ministry of Labor, Health and Social Care of Georgia – the initiative implies offering short-term free professional training-recruitment courses throughout Georgia? Program is to be implemented from September.

1 Yes 1 2 No 2

Thank you for cooperation!

Annex #5 – In-depth Interview Guide

Study of economic potential and capacities of IDPs and Eco-migrants

Guide for in-depth interview

2015

Part 1: introduction (5 minutes)

Greeting and introducing survey goals

Hello, I represent a research company “ACT”. We are currently undertaking a survey within the scopes of EU funded project “Moving from state dependency to self-support – decisions of innovative and effective livelihoods for Georgia” implemented by Danish Refugee Council (DRC) and Charity Humanitarian Center “Abkhazeti” (CHCA). Aim of the mentioned survey is to identify barriers and capacities of accessibility of livelihood sources for IDPs and other vulnerable groups, including eco-migrants, to study existing and potential human resources and business and investment environment.

Your participation in the survey is very important as your knowledge and experience will help us to study the current situation thoroughly. This will help further development of the country.

Duration of interview

Interview will last approximately 40 minutes.

Explaining the function of recording devices and receiving consent on audio recording.

Introduction of the respondent

Name, surname, name of organization, occupation/position, etc.

Part 2: Occupation (20 minutes)

Please tell us about your organization’s work and implemented/planned programs which refer to IDPs or eco- migrants.

IDPs What kind of work do you implement towards IPDs in terms of livelihood sources? Livelihood sources imply adequate and sustainable access to incomes and resources in order to satisfy basic needs (including adequate access to food, drinking water, medical service, education, residence and participation and social integration in community’s life).

Eco-migrants (if there are any) What kind of work do you implement towards eco-migrants in terms of livelihood sources?

In general, are requirements and needs of IDPs and eco-migrants recorded? Which agencies undertake this and how? Should such recording take place and which agencies should implement it?

Do IDPs and eco-migrants apply to you on their initiative in regard to certain requests? Mostly what problems are reported by them?

What are the problems and needs of IDPs and eco-migrants in terms of obtaining livelihoods? What should be done in order to solve this problem? Do you believe that local government has sufficient mechanisms for receiving information about IDPs needs in terms of livelihoods? What should be done in order to improve the mechanism for obtaining information?

Development strategy/action plan – probably you are familiar with regional development strategy/action plan – if we judge based on regional development strategy document or actions plans, do you think that it is possible to achieve set goals? In case of negative answer, probe – why? (Probe according to target city)

Part 3: cooperation with different agencies / organizations (20 minutes)

Do you cooperate with stage agencies which work on improvement of living conditions of IDPs and/or eco-migrant families, their integration in society, livelihood issues? Which agencies do you cooperate with? What does this cooperation imply?

Have you heard about activities of international/donor organizations in regions, namely about programs to support small business? (Programs which imply support of business start-up/expansion? Professional recruitment? For example, Marcy Corps, ENPARD, USAID/REAP, etc.?)

Which program have you heard of? How successful is that program? Why?

At what extent are IDPs/eco-migrants involved in these programs? How? How successful is their participation in these programs? Why?

Have you heard of/implemented surveys addressed at studying needs of IDPs and eco-migrants or any other issue? Are the results of such surveys available? Where are they available?

Part 4: funded projects (10 minutes)

Do you implement grant programs? What kind of business do you fund more frequently? What is the proportion of co-funding?

How do you implement monitoring? How long does monitoring on business last?

What is the ratio of failed (failure/business that failed) businesses in funded projects?

In case of necessity, which organization holds trainings/business consultation?

How would you evaluate the work undertaken by partner (involved in their projects) business consultants?

Do you help potential beneficiaries in finding additional finances, selecting micro finance organizations on banks (finding better terms and conditions)?

Do you fund cooperatives and if yes, do you prefer to fund business ideas of cooperatives? Why?

Are there different approaches in funding scheme for business start-ups and expansions? What are these differences?

What are selection criteria for beneficiaries? Does any group, e.g. women, IDPs, or returned migrants, etc. have any advantages?

Part 5: Desirable fields of development (10 minutes)

Based on your experience, what needs to be done in the first place in order to improve living conditions (access to livelihoods) of IDPs and eco-migrants? Where do you see the role of state agencies? What can IDPs and eco- migrants do?

In your opinion, which fields are potentially successful (name target city where NGO operates – Zugdidi, Poti, Batumi, Tskaltubo, Kutaisi)? In which field would it be successful to invest? In which fields would IDPs and eco- migrants participate most successfully? What is necessary for that?

Imagine that you are to make a decision about the project of improving access to livelihoods/living conditions of IDPs and eco-migrants in your city, what activities would you carry out?

 Why is it important? What benefits can it bring?  What is the second most important issue?  Which is the third most important issue?

Need of support: in your opinion, what kind of support would the most effective/useful/efficient for IDPs and eco- migrants in terms of implementing this activity? (Probe about different ways of support, trainings, recruitment, cheap credits, improvement of infrastructure, etc.]

Do you have additional opinions or comments to share?

Thank you!