Issue #1132 Business

Issue no: 1132/171

• MARCH 12 - 14, 2019

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

FOCUS

ON WOMEN IN BUSINESS

Why Georgia needs more women and equality in business PAGE

6, 7

Foreign Direct Investment in Georgia Decreased by 35% in 2018

BY AMY JONES

P

reliminary data released by the National Statistics Office of Georgia, Geostat, on March 11 has revealed $1.2 bln of Foreign Direct Investment (FDI) in Georgia in 2018. The figure represents a 34.9% decrease compared to the same period in 2017.

The financial sector in Georgia received the highest amount of FDI totaling $277.9 mln. Transport benefited from the second highest FDI share with $209.9 mln, followed by the energy ($157.2 mln), manufacturing ($142.3 mln) and construction ($103.6 mln) sectors.

Continued on page 5 Photo source: The Financial

Georgia and South Korea Sign Agreement on Economic Cooperation

BUSINESS PAGE 2

Will Improved CA Balance and Planned Capital Investments Outweighs Pessimism and Lack of Credit? We’ll see!

ISET PAGE 4

Gov't to Tighten School Excursion Regulations

POLITICS PAGE 11 Prepared for Georgia Today Business by

Markets As of 08ͲMarͲ2019

Price

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Bank of Georgia (BGEO LN)

GBP 16.00

Ͳ5,3%

+0,9%

GEOROG 04/21

102.53 (YTM 5.47%)

+0,4%

+0,8%

Georgia Capital (CGEO LN)

STOCKS

GBP 11.10

Ͳ1,8%

Ͳ0,4%

GEORG 04/21

105.61 (YTM 4.04%)

+0,0%

Ͳ0,4%

GBP 2.06

+0,5%

Ͳ12,3%

GRAIL 07/22

106.90 (YTM 5.45%)

+0,4%

+1,3%

GBP 15.22

Ͳ1,0%

+8,1%

GEBGG 07/23

99.45 (YTM 6.14%)

+0,1%

+0,5%

CURRENCIES

GHG (GHG LN) TBC Bank Group (TBCG LN)

COMMODITIES Crude Oil, Brent (US$/bbl) Gold Spot (US$/OZ)

BONDS

Price

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65,74

+1,0%

+5,9%

GEL / USD

2,6834

+0,8%

+1,5%

1 298,30

+0,4%

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GEL / EUR

3,0156

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+0,7%

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GEL / GBP

3,4938

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+2,2%

INDICES

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2,6623

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FTSE 100

7 104,31

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+0,5%

GEL / RUB

0,0405

+0,2%

FTSE 250

19 047,67

Ͳ1,8%

+2,1%

GEL / TRY

0,4933

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DAX

11 457,84

Ͳ1,2%

+5,1%

GEL / AZN

1,5821

+0,8%

+1,5%

DOW JONES

25 450,24

Ͳ2,2%

+1,4%

GEL / AMD

0,0055

+1,9%

+1,9%

Ͳ2,5%

NASDAQ

+1,5%

GEL / UAH

0,1018

+2,7%

+4,5%

161,92

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EUR / USD

0,8901

+1,2%

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MSCI EM

1 030,13

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GBP / USD

0,7684

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SP 500

2 743,07

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+1,3%

CHF / USD

1,0082

+0,9%

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MSCI FM

2 662,95

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RUB / USD

66,3444

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+1,4%

GT Index (GEL)

1 582,68

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TRY / USD

5,4395

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+3,7%

GT Index (USD)

1 208,13

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AZN / USD

1,6957

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MSCI EM EE

7 408,14

+0,2%

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NEWS

GEORGIA TODAY

MARCH 12 - 14, 2019

@entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you: Tengiz Gogia is a Georgian entrepreneur based in the Netherlands who always wished to start a business in his homeland. Following a friend’s advice, Gogia launched an icecream café ‘Maestro Gelato’ for ice-cream and espresso lovers. The gelato and sorbet flavors are produced using natural fruit pastes. 18 core flavors are offered alongside seasonal flavors such as different fruits.

‘Maestro Gelato’ plans to offer more than 200 different gelatos and sorbets, including a vegan menu. Gogia wants to open ice-cream cafes across Tbilisi.

Meet 19-year-old farmer Zuka Maisashvili who has used his knowledge, experience, resources and family support to start producing wine from endemic grape varieties in Racha, Georgia. His brand ‘Gvinuka’ began making small quantities of wine. Foreign partners have already expressed interest; however, the wine is currently only available on the local market.

With new equipment purchased with grants, Maisashvili will continue to expand the business to a wider audience.

Victoria Kasyanova and Irina Ignatenko have launched a new startup ‘I SOAP’ producing handmade and fragrant soaps and cosmetics.

Utilizing natural products without artificial colors or pesticides is of paramount importance for the founders of ‘I SOAP’. Kasyanova’s spouse, a sailor who travels a lot, collects a wide range of new and rare products which enriches the brand’s ingredients.

The designers of ‘I SOAP’ are inexperienced marketeers. However, with high quality products and original packaging, they attract customers easily.

Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on business@entrepreneur.ge

PM Bakhtadze Comments on Developments around TBC Bank

BY THEA MORRISON

G

eorgian Prime Minister, Mamuka Bakhtadze says that various political forces are trying to take the TBC Bank issue back to the political information field, adding it is “irresponsibility and the attempt to provide the population with distorted information.”

The PM made the comment at a press conference held at the Government’s Administration on Friday.

Bakhtadze noted that the wrong emphasis is made and that these forces are trying to link the TBC issue with the Anaklia Port.

The PM talked about the role of the National Bank of Georgia (NBG) and said that it fulfills its role of regulator

quite well. According to him, some populist and ungrounded information and statements have been made about the NBG lately.

“I would like to declare with a full responsibility that the National Bank is an independent institute and staffed with high professionals, which showed that it always works in compliance with very high ethical norms. This is not my assessment, it is an assessment we hear from international financial institutions. This is the actual circumstance, all the rest is, unfortunately, political speculation,” he stated.

Bakhtadze added that TBC is the country’s leading financial institution which is of great importance.

On February 14, the National Bank of Georgia stated that after examining transactions conducted by TBC Bank 2007-2008, it was revealed that the Chairman of the Supervisory Board of TBC

Bank Mamuka Khazaradze and his Deputy Japaridze had violated the requirements of legislation regulating conflict of interests, therefore it suspended the authority of the two men.

Khazaradze filed a lawsuit against the regulator,butthesupervisoryboarddecided to withdraw it. It was followed by Khazaradze’s resignation as the board chair.

He announced he was leaving TBC, where he had spent 27 years. His deputy also decided to quit. However, Khazaradze and his deputy will keep positions at TBC Bank Group PLC, registered in London, UK, which keeps 100% shares of TBC Bank.

Khazaradze arrived in Parliament on Monday and raised the issue of responsibility of the National Bank President Koba Gvenetadze and his deputy. In addition, Khazaradze stated that he had received a threatening letter from Minister Gakharia.

BUSINESS

GEORGIA TODAY MARCH 12 - 14, 2019

3

Georgia and South Korea Sign Agreement on Economic Cooperation

relations between countries.

South Korea and Georgia will establish a joint commission to effectively implement the treaty and to explore the directions of economic cooperation between the two countries. The Commission will discuss existing bilateral trade-economic relations and possibilities and opportunities for cooperation in different

sectors. The agreement with Georgia is aimed at expanding economic cooperation between the two countries, including improving the presence of Korean companies on the Georgian market.

“The agreement is another contributing factor to the growth of foreign trade turnover and the development of tradeeconomic cooperation. Its enabling will encourage entrepreneurs in terms of penetration of the market and encourage new investment projects” noted the Minister of Economy and Sustainable Development George Kobulia after signing the agreement.

The sides also agreed to start negotiations on the agreement regarding the promotion and protection of investment between both countries at a mutually convenient time.

In addition, speaking at the Korean Foreign Ministry, Kobulia underlined the fact that Korea is interested in Georgia as a new tourist destination. For this purpose, there will be 7 direct charter flights between Tbilisi and Seoul in 2019.

At the initiative of the Minister of Economy and Sustainable Development of Georgia, officials discussed issues surrounding the fulfillment of direct regular flights between Georgia and Korea were discussed at the meeting.

“Korea is one of the most important tourist destinations for Georgia. We plan to encourage tourists to come into this country as much as possible and offer them new tourist products. More than 13,000 Korean tourists arrived in Georgia in 2018, which is 112 percent higher than the previous year, while in January 2019 the growth became already 27 percent,” said George Kobulia.

tlement council, which is represented by the representatives of various agencies and business sectors,” the ministry stated.

The statement reads that before making the final decision about the dispute, the allegations made by the founder in connection with pressure put on the business by the state, are “groundless and unsubstantiated.”

“As for Vasil Sopromadze's allegations about alleged crimes committed by Ministry of Finance employees, first of all, we would like to state that for the Ministry of Finance, as a responsible public agency, condemns any act that harms

the reputation and professional activities of the system and thousands of people working there,” the Ministry of Finance said.

In response to the video address released by the Fresco founder, Tbilisi Mayor Kakha Kaladze told journalists that since 2012, when the ruling party Georgian Dream (GD) came to power, there are not any facts of terrorizing or putting pressure on businesses.

“If any person does anything illegal and incorrect, relevant agencies will be interested and everybody will be held accountable. Of course, the investigation will be unbiased,” the Mayor said.

Image source: Ministry of Economy and Sustainable Development of Georgia

BY MARIAM MERABISHVILI

W

ithin the framework of the visit of the Minister of Economy and Sustainable Development

George Kobulia to South Korea, the Government of Georgia and the Government of South Korea have signed an agreement on economic cooperation.

The agreement was signed by Deputy Minister of Economy and Sustainable Development of Georgia Genadi Arveladze and Deputy Minister of Foreign Affairs of Korea Lee Tae-oh in Seoul on

Ministry of Finance Responds to Fresco Founder’s Accusations

BY THEA MORRISON

G

eorgia’sMinistryofFinance (MOF) has released a statement in response to the founder of the chain of supermarkets Fresco Vasil Sopromadze, who accused Ministry of Finance employees of committing crimes.

Sopromadze released a video address on March 9, slamming the government for their attitude to business and urging politicians to use common sense.

“I have been hung in the air by the agencies of the Finance Ministry which have failed to make a tax conclusion, even based on violation of all regulations, because they know that they are totally wrong,” he said.

“Do not treat business like a hooker.

Believe me, business will give you a proper answer,” Sopromadze added.

MOF’s response to Fresco founder reads that his [Sopromadze’s] accusations towards the ministry employees have not been confirmed by an internal audit.

“The ministry will apply to legal measures and will also demand a public apol-

March 11. The agreement will enter into force in 30 days’ time.

The agreement should encourage more joint projects between South Korea and Georgia in beneficial fields for both parties, including investment, trade, tourism and industry sectors. It should also continue to strengthen economic cooperation, including socio-cultural

Photo source: Sputnik Georgia

ogy on part of Sopromadze for damaging the reputation of the system and misleading the public,” the statement reads.

The revenue service of the Ministry of Finance began checking the tax activities of Fresco on February 20, 2018.

The MOF explains that as a result of the inspection, a draft of the relevant tax inspection act has been developed, however, the payer does not agree with it.

“At this stage, the dispute is being discussed by the dispute settlement council of the revenue service under the Ministry of Finance and tax payer is authorized to file an appeal against the decision to the fort of the dispute set-

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BUSINESS

GEORGIA TODAY

MARCH 12 - 14, 2019

Will Improved CA Balance and Planned Capital Investments Outweighs Pessimism and Lack of Credit? We’ll see!

BY DAVIT KESHELAVA AND YASYA BABYCH

from tourism form an important part of households’ income, their growth had a positive impact on the projected real GDP.

I

INTERNAL FACTORS – THREATS AND OPPORTUNITIES

SET-PI has updated its forecast of Georgia’s real GDP growth rate for the first and second quarters of 2019. These are the main features of this month’s release:

HIGHLIGHTS • ISET-PI’s forecast of real GDP growth for the first quarter of 2019 stands at 4.3%. The second estimate of secondquarter growth forecast now stands at 4.6%.

• Based on January’s data, we expect annual growth in 2019 to be 4.4% in the worst-case or “no growth” scenario, and 5.5% in the best-case or “average longterm growth” scenario. Our “middle-ofthe-road” scenario (based on average growth over the last four quarters) predicts 4.7% real GDP growth.

• ISET’s annual forecast is consistent with evidence coming from the National Bank of Georgia (NBG) and international development institutions. For example, the National Bank of Georgia’s expectation for real GDP growth remained unchanged at 5% in 2019. According to the recent monetary policy report, improved net export, enhanced consumption, and investment supported by government capital spending and moderate credit activity growth will positively contribute to real GDP growth . Moreover, the International Monetary Fund (IMF) has also decreased its growth forecast from 4.78% (estimated in October) to 4.6% in 2019. The IMF provided similar findings to the National Bank of Georgia, identifying some contributors to the real GDP growth: improved current account balance and the government’s high infrastructural spending.

However, this authoritative institution identified threats coming from the recently introduced credit regulations and unstable economic conditions in the region.

Recently, Geostat published its rapid estimate of real GDP growth for January of 2019 and the estimated growth figure stands at 3.5%. The trade (mainly due to increased re-export of motor cars), hotel and restaurant, financial (mainly due to interest income obtained by commercial banks) and real estate sectors were the most important contributors to the real GDP growth in January, while the manufacturing and construction (mainly due to the notably reduced number of residential and commercial buildings built by construction companies ) sectors had a negative impact on the growth figure.

Based on the available data, one can conclude that the main (negative and positive) drivers of the real GDP growth for 2019 were improved external statistics, expansionary monetary policy and increased monetary aggregates, deteriorated consumer and business confidence and restricted credit expansion.

EXTERNAL FACTORS – THREATS AND OPPORTUNITIES In 2018, economies throughout the region enjoyed moderate growth – the Arme-

nian economy reached 5.8% annual growth, down from an impressive 7.5% in 2017. Russia advanced by 2.3%, which further stimulated the Georgian and Armenian economies through the trade, remittances, and tourism channels.

Moreover, Azerbaijan is still far behind its peer countries, with an average annual growth rate of 1.4% in 2018. Kazakhstan, Belarus, and Ukraine advanced on average by 4.1%, 3.0% and 3.3%, respectively.

There is still no data available on annual GDP growth for Turkey. However, Turkey’s economy shrunk notably in the third quarter of 2018 followed by a deterioration of consumption and business confidence that has already had negative consequences on Georgia’s economy (see Figure 2). Thus, economic and political instabilities of the countries situated in the wider region are potential external threats to the Georgian economy that might not be taken into consideration in our model yet.

In January 2019, exports grew by 7.2% year on year and this growth figure was mainly driven by significantly increased exports/re-exports of motor cars, cigarettes, and cigars to Azerbaijan recovered exports of wine and mineral waters to Russia and re-export of motor cars to Armenia. However, Georgian exports to

Turkey, China (caused by reduced reexport of copper ores and concentrates) and the EU (due to decreased export/ re-export of mineral or chemical fertilizers to Lithuania and decreased reexport of petroleum oils to France) experienced a notable decline. During the same period, imports decreased moderately by 1.1%. The trade deficit thus shrank by 6.1% compared to the same month in 2018 and reached 349.2 million USD. Overall, the reduction in the trade deficit made a significant positive contribution to the real GDP growth forecast.

Remittances and tourism, together with foreign direct investment (FDI), are among the main sources of foreign funds coming into Georgia. In January, remittances increased by 5.5% relative to the same month of the previous year. Once again, the main contributors to this growth were the USA, EU, Azerbaijan and Israel, while the reduction of money inflow from Turkey (-1.8 pp.) and Russia (-3.0 pp.) had a negative impact on the growth estimation. Regarding the number of visitors, Georgia experienced a 0.6% reduction in yearly terms. However, inbound tourism increased by 5.9% year on year. As Georgia is among those countries in which remittances and income

Annual inflation in January 2018 constituted 2.2%, which was in line with the 3% NBG target. In addition, annual inflation on imported goods came down to 2%, while the core inflation rate stood at a low 0.6%. Low and stable inflation usually gives policymakers the opportunity to actively use monetary policy instruments to boost growth figures.

Thus, the Monetary Policy Committee of the NBG met on January 30, 2019, and due to the reduced macroeconomic risk coming from the external sector and weak inflationary pressure from the aggregate demand, they decided to reduce the Monetary Policy Rate (MPR) by 0.25 percentage points to 6.75. This was the first time since July 2018 that the National Bank of Georgia conducted an expansionary monetary policy by reducing the policy rate. In addition, NBG has purchased foreign exchange in the amount of $85 million to improve its ratio of reserves/ARA metric .

In addition, nearly all of the monetary aggregates have experienced doubledigit growth relative to the same month of the previous year. In particular, the largest M3 and M2 aggregates increased by 15.3% and 16.0% respectively in yearly terms, while the most liquid Currency in Circulation (CCIR) went up by 8.4% year on year (it is notable that monetary aggregates experienced a monthly reduction in January, as usual). According to economic theory, increased money supply encourages business expansion and consumer spending, which leads to a rise in aggregate demand.

Worsened business and consumer confidence were among the negative contributors (threats) to the real GDP growth forecast. According to ISET-PI’s latest publication of the quarterly Business Confidence Index (BCI), the index dropped by 7.4 percentage points in the first quarter of 2019 relative to the previous quarter (it is notable that the index deteriorated in yearly terms as well).

The BCI drop was driven by a worsening in past performance and expectations in a number of business sectors. Interestingly, companies in the construction industry assessed their past performance most pessimistically, however, they display the most optimistic expectations.

While private sector expectations tend to worsen, they continue to remain positive (see: http://iset-pi.ge/index. php/en/business-confidence).

In addition, in January 2019 ISET-PI’s

Consumer Confidence Index (CCI) dropped insignificantly, by 1.1 index points monthly (but increased slightly yearly). While the reduction in the expectations index (by 5.3 points) – measuring expectations for the coming 12 months – outweighed the growth of the present situation index (by 3.1 points). People’s pessimism can be explained by January’s overconsumption and negative expectations related to unemployment, inflation, and the general economy (see: http:// iset-pi.ge/index.php/en/consumer-confidence-index/2344-january-2019-postchristmas-hangover).

Lastly, new lending regulations could potentially have a negative impact on growth predictions. The first wave of regulations entered into force in May 2018. This regulation has introduced a ceiling of 25% of a commercial bank’s supervisory capital for loans issued without a prior comprehensive analysis of a consumer’s solvency. The second wave of more restrictive regulations has been in force since January 2019 (decree was mandatory for institutions which issue loans to individuals). The new regulation introduced principles of responsible lending, made solvency analysis necessary, and defined required payment-to-income (PTI) and loan-tovalue (LTV) ratios such that the difference between the debtor’s net income and the loan is not less than the subsistence minimum . These regulations notably restricted credit expansion and have had negative implications on the growth figure. However, it is hard to capture the negative impact of the credit restrictions to GDP growth, as only one month has passed since the government introduced these more restrictive measures. Therefore, credit restrictions might be considered potential internal threats to the real GDP growth figure that might not be fully taken into consideration in our model yet.

In January 2017, Total Volume of Commercial Bank’s Consumer Credit decreased by 2.4% compared to the previous month and increased by only 4.2% relative to the same month of the previous year. The Credit Volume of Commercial Banks' Short Term Consumer Credits reduced by 50.7% and 57.7% in monthly and yearly terms respectively.

Moreover, the main driver of this negative trend is Consumer Loans in National Currency, which decreased by 56.4% and 64.4% in monthly and yearly terms correspondingly . In contrast, the Credit Volume of Commercial Banks' Long Term Consumer Credits increased by 5.1% and 16.7% in monthly and yearly terms respectively. Overall, the consumer credit related variables had a slight negative impact on the growth forecast.

Our forecasting model is based on the Leading Economic Indicator (LEI) methodology developed by the New Economic School, Moscow, Russia. We constructed a dynamic model of the Georgian economy, which assumes that all economic variables, including GDP itself, are driven by a small number of factors that can be extracted from the data well before the GDP growth estimates are published. For each quarter, ISET-PI produces five consecutive monthly forecasts (or “vintages”), which increase in precision as time goes on. Our first forecast (the 1st vintage) is available about five months before the end of the quarter in question. The last forecast (the 5th vintage) is published in the first month of the next quarter.

BUSINESS

GEORGIA TODAY MARCH 12 - 14, 2019

$32 Mln Project to Prevent Climate Disasters in Georgia

BY KETEVAN KVARATSKHELIYA

A

new project with $32 million funding has been launched to prevent the destructive consequences of natural disasters in Georgia.

The new initiative will first be implemented in the region of Ajara, the zone with the highest risk of natural disasters. Highly-precise geological and hydrological maps will be produced.

The program will also expand to the rest of the country and include the instalment of early warning systems in different regions. The instalment process of the given systems has already commenced in the basin of the River Vere in Tbilisi and in the Devdoraki Gorge in the north of the country.

Underlining the importance of the project, Nino Tandilashvili, the Deputy Minister of Environment Protection and Agriculture of Georgia, stated that this is the first project of such an impressive scale ever carried out in Georgia regarding the mitigation of climate threats.

“This is a 7-year project. In case of its successful implementation, nearly 1.4 million residents in the country will be better protected from natural disasters and their negative consequences,” said Tandilasvhili.

The Deputy Minister also noted plans to collaborate with higher education institutions during the project in order to train a new generation of geologists, hydrologists, and meteorologists.

The Swiss government has contributed $5 million towards the project, whilst the Green Climate Fund, a financial mechanism under the UNFCCC, allocated $27 million.

Foreign Direct Investment in Georgia Decreased by 35% in 2018 Continued from page 1 Other industries to receive substantial FDI were real estate ($90 mln), hotels and restaurants ($72.3 mln), mining ($66.7 mln), agriculture and fishing ($15.9 mln) and health and social work ($13.2 mln).

FDI came from various countries around the world. Azerbaijan remained the highest investor with $240 mln, followed by the UK ($203.7 mln), the Netherlands ($167.9 mln) and the United States ($103.7 mln). Substantial amounts of FDI also came from Panama ($74.7 mln), the Czech Republic ($72.3 mln), China ($65.4 mln), South Korea ($63.2 mln), and Russia ($60.1 mln).

FDI is an investment made by a company or individual in one country into a business located in another country. The National Statistics Office of Georgia considers investments to be direct if the share of the investment exceeds 10 percent of the company’s stock capital.

Due to the vital role FDI plays in the economic growth of a country, FDI is important to Georgia and the economy. Offering ease of doing business to foreign companies helps to attract FDI. Additionally, political stability, low taxes, few regulations, a cheap or highly-qualified workforce, strategic location, free trade, low levels of corruption, economic openness, and good infrastructure can

attract investors.

Considering the World Bank ranked Georgia on 6th place among the 190 economies where it is the easiest to do business in the world, it is perhaps surprising that the percentage of FDI in Georgia dropped in 2018.

Various factors may have impacted the 2018 preliminary figures. For example, Georgia has a low level of education which, in turn, leads to a lack of qualified workers. In addition, there is a shortage of English language skills among the Georgian workforce.

Moreover, Georgia’s lack of infrastructure, insufficient natural resources, low level of democracy, and illegally-occupied zones make it less attractive to investors.

Nonetheless, current projects are underway that should help Georgia to increase its FDI. For example, the EU recently pledged €233 mln to the construction of the Anaklia Deep Sea Port which will enable goods to move more freely between Europe and Georgia, improving transport links for future investors.

In order to achieve double-digit economic growth, FDI in Georgia must reach at least $3 bln annually, reported Forbes magazine. Politicians must ensure that they continue to improve the ease of doing business in Georgia, whilst ensuring predictability and stability for potential investors.

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BUSINESS

GEORGIA TODAY

MARCH 12 - 14, 2019

The Glass Ceiling in Georgia

BY GABRIELLE COLCHEN

T

he International Women's Association organized a panel discussion on Glass Ceiling for women in Georgia and around the world.

Petra Benkö, president of the association and wife of the Austrian Ambassador, led the discussion during which women from different backgrounds talked about their business experiences as women.

The panellists were Louise Vinton (Head of UNDP in Europe and Central Asia), Ceren Yazgan (Turkish Ambassador), Nino Ivanishvili (Dean of GIPA (Peruvian anti-corruption group), Magda Magradze (director Millennium Challenge Georgia) and Professor Ekatarine Sania.

A glass ceiling is the unreachable barrier women face in their career when they want to rise to the top level. Indeed, women still occupy a very small percentage of manager positions, even though more women have graduated from university then men.

Mrs. Yazgan explained that the glass ceiling begins with stereotypes. She said that we need to stop assuming that we know how other people live and who they are before actually knowing them.

She also stressed the importance of equal opportunities for men and women.

Louisa Vinton said that she was glad that parity was respected among the UNDP. She then explained that women tend to wait for recognition when they actually need to demand it. She also emphasized the importance of solidarity among women. She explained that, throughout her career, being pushed by other older women helped her gaining confidence and achieving what she did.

Nino Ivanishvili was very inspiring and explained that she eventually became a journalist because she was determined to fight for democracy and for voices that could not be heard. She affirmed that “there is no ceiling or barrier that cannot be broken” and that being strongly resolute in achieving our own goals is the only possible way.

Magda Magradze focused on the gap that exists between women and men in the STEM fields. She explained that women usually do not pursue carriers in these fields even though they have studied a STEM subject. This is due to stereotypes that tend to exclude women from the engineering world for example.

She believes that families should be better educated since parents often have a large impact on the choice of their children’s field of education. Girls should be made aware of all career possibilities when they are at school. They need to understand that they can become humanity professionals just like civil engineers if they wish to.

Photo by Gabrielle Colchen

Finally, the scientific professor Ekatarine Sania talked about her experience being the only women in her class when

she was studying at university. However, she also had a positive discourse arguing that as a professor, she sees more

and more women enrolling in scientific fields and she thinks that Georgia is going in the right direction.

The Case for Women in Boardrooms: Going Beyond Quotas

BY WIEBKE SCHLOEMER, IFC REGIONAL DIRECTOR, EUROPE AND CENTRAL ASIA

M

alala Yousafzai once said: “We can’t all succeed, when half of us are held back.” Speaking at her first historic speech at the United Nations in 2013, the then 16-year-old women’s and children’s right activist made a simple equation.

In the 21st century, it seems incredible that we are still discussing the case for gender diversity and working to convince businesses and governments of its importance. The case for more women in leadership roles is clear, but progress is achingly slow.

This is despite ample evidence that companies perform better when they have women on their boards. A 2016 OECD report, for example, showed that companies with gender-diverse executive committees achieved 47 percent higher return on equity and 55 percent higher gross income than companies with less diverse boards. A 2018 Harvard Business Review survey of 1,700 companies found a “statistically significant” relationship between diversity in leadership and increased innovation.

Our work with the private sector to promote gender diversity globally has shown that having more women on boards has a strong impact on corporate governance, decision-making, and business results. A recent IFC study in Egypt also showed that companies with women on their boards reported a higher return on equity and investment.

Despite the increased awareness, however, much work remains. In Eastern Europe, women held only 8.5 percent of board positions as of 2016, according to the International Labour Organization.

In 2018, Georgia introduced legislation mandating a 20 percent gender quota in supervisory boards for com-

mercial banks. Which leads us to the big question: Are quotas enough?

Back in 2007, Norway became the first state to implement a quota for gender diversity on boards, requiring that at least 40 percent of board members of listed companies were women. Other European countries quickly followed suit. Despite skeptics who argue that quotas are mere window-dressing and don’t actually help create more women executives, the result in Norway has been positive. More than 40 percent of Norway’s corporate boards included women last year, up sharply from 6 percent in.

While the Norwegian experience shows that

quotas can help eradicate some inequalities in the short term, deeper change in the gender landscape is only possible through a comprehensive program of support.

First, it’s crucial to ensure that women actually stay in the work force. While there’s a near equal divide between the numbers of male and female entrylevel workers in many countries, as workers move into midcareer managerial posts, gender imbalances become more apparent, m a i n l y because of the number of women who drop

out to focus on family.

Implementing women- and familyfriendly workplace policies such as flextime arrangements and child-care benefits, and encouraging women to return to work, can help prevent that loss. IFC’s 2017 report, Tackling Childcare: The Business Case for Employer-Supported Childcare, demonstrated the rising recognition among policymakers and businesses of the benefits to addressing these issues.

The second challenge is to cultivate talent by investing in women’s professional development. Exposing more women managers to key operational responsibilities and preparing them for the boardroom is key. Women in Eastern Europe, for example, represent 25–40 percent of mid- to senior-level management. But a look beneath this statistic reveals clear stratification by gender and job function.

Female managers typically supervise departments supporting core business functions, while male managers oversee key operational and financial units.

There are also other gender differences—most likely accumulated from years of conditioning—that should be addressed. Even the most accomplished and experienced women often benefit from training and coaching on how to assert themselves, how to tap into their strengths to build their personal leadership style, and how to communicate in high-powered, male-dominated settings.

Corporations can help by modifying their training programs to account for these differences.

While quotas raise awareness and help prioritize gender diversity and eventually push the numbers up, they can only be qualitatively effective if they are implemented alongside other more widespread measures. Focus on fixing the leaking pipeline of female talent, promote more women into front-line roles, and invest in women’s professional development and we could finally see a more equitable corporate landscape in the years to come. That would be good news for everyone.

BUSINESS

GEORGIA TODAY MARCH 12 - 14, 2019

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Female Georgian Winemakers to Hold Tastings Across US This Week

BY SAMANTHA GUTHRIE

F

ive successful female Georgian winemakers will be exhibiting their wines at tasting events across the United States this week.

Tastings will be held at bars and restaurants that feature Georgian wines in New York, Los Angeles, and San Francisco. The tastings will run from Saturday, March 9 to Friday, March 15 and feature wines from five of Georgia’s most prolific winemaking women.

One of the participants, Keto Ninidze, founder and lead farmer of ODA Wines, told BM.ge that “wine tasting will be held in those wine bars, restaurants and wine stores, which were the first ones to popularize Georgian wines in the USA. They include: Brumaire, Wildair, Uva Wine & Spirits, and Astor Wine & Spirits. This is a long list. Tasting will be conducted by wine professionals.”

Ninidze will offer tasters three less common varieties of Georgian wine: shishveli ojaleshi, dzelshavi, and orbaluri ojaleshi. ODA has been selling wine in the United States for the last two years, at $25 (GEL 67) a bottle. They also export their wine to Japan, Germany, and Israel – some of the fastest growing export destinations for the country’s wines, alongside the top countries for exports: Russia, Ukraine, China, Kazakhstan, and Poland.

Also presenting their wines to American consumers will be Gogowine, represented by Keti Berishvili, Tamuna

Wine founded by Tamuna Bidinashvili, Mavino founded by Marina Kurtanidze, and Freya’s Wine Cellar created by American transplant to Georgia Enek Paterson.

Gogowine’s Beriashvili (gogo means “girl” in Georgian) is just 30 years old.

Trained as a PR specialist, she decided to join her family’s winemaking business, starting with a small vineyard of her own. Her wines are sold at organic wine shops in Georgia. “I have just realized I found something I am really interested in. It gives me great pleasure to be here. Only a year ago, I knew very few things about this business and now I am much more experienced. Last year’s harvest taught me a lot,” Beriashvili said in a 2016 interview with Georgian Journal.

Tamuna Bidinashvili makes her wine in the village of Gremi in Kakheti. She has been making small batch, high quality wine from her vineyards there since 2014.

Mavino is Marina Kurtanidze’s encore to her successful partnership with fellow Georgian wine woman Tea Melanashvili under the brand Mandili – one of the first Georgian wine companies established by all women, in 2012. Now, Mavino exports its qvevri wines to England, France, USA, Spain, Denmark, and Japan.

Freya’s Wine Cellar is the work of 25 year old Enek Freya Peterson, a native of Boston who has lived in Georgia for several years, following her passion for the local culture and wine. She soon purchased a vineyard and has been making her own natural, qvevri wine

Keto Ninidze, founder and lead farmer of ODA Wines

for the past four years.

This handful of female winemakers are helping to open the US market for Georgian wines, and proving to local traditionalists that wine is not just a

boys’ club. In the United States, Georgian wines often have a special following among natural wine lovers, and is slowly gaining traction among connoisseurs. In the first two months of 2019,

Georgian winemakers exported 12 million bottles of wine for a total of $30 million (GEL 80.4 mln). A small fraction of that, just 128,145 bottles, went to the United States.

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BUSINESS

GEORGIA TODAY

MARCH 12 - 14, 2019

Education for the 21st Century: Broad, Deep or Flexible?

BY ERIC LIVNY

M

y lecture on the future of education in the 21st century was intended for a small number of Caucasus University students and faculty. Since I don’t really know what school education will look like in 20 or 30 years, my plan was to have an open-ended “Socratic discussion”, with other participants and myself seated in a U-shape or a circle. Yet, the classroom was arranged in a very traditional way. Behind me was a white board; facing me were neat rows of desks. That’s how the first modern schools looked like in the second half of the 19th century.

And that’s how most humans still teach and are taught today.

Yet, the way we learn is related to the type of knowledge or skills we are trying to acquire. Learning to become a farmer or a master craftsman in the 17th century, for example, was very different from learning how to become a patriotic soldier in a 19th century nation state, or an assembly line worker in a factory powered by Watt’s steam engine.

A BIT OF HISTORY In 1689, the year of England’s Glorious Revolution and the Bill of Rights, the vast majority of Europe’s population were expert farmers and craftsmen – shoemakers and carpenters, stonemasons and smiths, bakers and butchers. Working with primitive tools, they were amazingly skilled at their respective trades.

They did not attend schools or professional colleges, since none existed at that time. Instead, they went through lengthy apprenticeships, starting as a teenager, helping their masters in exchange for food, clothes, shelter and an opportunity to acquire all the skills associated with their crafts.

Most of the learning back in 1689 happened simply by doing, under the master’s watchful eye. The knowledge and skills one acquired in this way were unique – including carefully guarded professional secrets passed down from one generation of craftsmen to another.

They were extremely deep but also extremely narrow. An expert shoemaker

of the 17th century was able to produce stunningly beautiful boots but could hardly do basic math, to say nothing of engaging in a Socratic discussion of political or poetic subjects. With no general education, no Internet and no TV, few shoemakers of the 17th century had any idea of the world outside their native towns.

In contrast, Charlie Chaplin’s character in Modern Times does not have any unique skills or deep knowledge of any subject. He is a modern factory worker, trained to (very) quickly screw nuts onto pieces of machinery that move along an assembly line. He is a typical product of the modern, early 20th century general education system – itself an assembly line of factory workers and patriotic soldiers.

Modern schools are a 19th century invention, designed to quickly and efficiently mass produce people with the ability to man modern factories and trenches (also 19th century inventions).

The kind of education modern schools were equipped to provide was, well, very standard, one-size-fit-all: the future scientist and the artist, the business genius and the agile mathematical mind.

Since modern factories did not require terribly skilled workers, schools focused on endowing students with shallow but relatively broad knowledge in a standard set of subjects, such as arithmetic, national geography and history, national language and literature, as well as prayer (in the national language!). Administrative efficiency, in addition, required that students were grouped by age rather than mental maturity, interest or ability, and that everybody were taught at the same pace.

Just like the standard Ford Model T was a technological solution for mass (middle class) mobility, modern schools were the institutional and technological solutions for mass literacy and numeracy.

On average, school graduates were not much better than the 17th century apprentices at Socratic discussions. However, they could count, and were able to read jingoistic newspapers teaching them who the enemy was and why it was good to die for one’s country.

THE FUTURE OF LEARNING What kind of knowledge and skills will our kids need in the 21st century and how

will they be able to acquire them? Would they benefit from a modernized version of the “deep and narrow” individual apprenticeship model, such as homeschooling or its more radical, child-driven version, unschooling? Or, should we strive to continuously upgrade the “broad and shallow” national standards to which our schools are required to teach?

The answers to these questions are not clear, and they shouldn’t be for at least three reasons.

Firstly, the schooling methods of the past served a clear purpose: to train expert farmers, craftsmen, factory workers and patriotic citizens. But today, it is hard to predict how the labor market will develop over the next 12 years, let alone the next 25 years. It is not even clear in which country our kids will choose to live. And, with advances in automation and communication technologies killing existing and creating new jobs at an ever increasing pace, the best schooling strategy might be one preparing students for an uncertain professional future. A future in which they are constantly pushed to learn new skills and ‘retool’. Training people for an uncertain future is essentially about training how to learn – independently and effectively.

Secondly, while there are not too many points we can make about education models for the 21st century in a definite manner, one thing is certain: There will be several more approaches to learning than ever before in human history. Standard curricula and classrooms – the Ford T Model of education – will surely continue to retain their significance in those parts of the world battling against illiteracy. Elsewhere, the emphasis will inevitably shift towards more individualized, student-centered approaches allowing kids to discover and develop their unique talents. Not everybody ought to become mathematicians. Not all parents would want their kids to be subject to national propaganda.

Thirdly, and perhaps most importantly, technology ‘disrupts’ the very way in which we learn – anything. Over the past several years, I have observed my spouse Ania (PhD in Law from Krakow’s Jagiellonian University) successfully mastering several applied skills – from web design and graphic editing to woodworking and

upholstery. She did so with the help of instructional videos, freely available online, and mentors – master craftsmen of the 21st century. She couldn’t care less about formal degrees in any of the above subjects. Instead, she cares about her online portfolio and reputation.

YouTube and Google, Khan Academy, Coursera, EdX and many other providers of “massive open online courses” (MOOCs) make information, scientific knowledge and practical skills increasingly more accessible than ever before.

The best content – be it Khan Academy’s math and economics, or Dr. Najeeb’s anatomy and physiology lectures – are just one click away for anybody with an internet connection. We can easily “Google” recipes and disease symptoms, statistical procedures and necessary pieces of programming code. When in need of advice, we can approach interestbased online communities and forums.

And, with instructional videos available on pretty much any topic, we can continue learning all our lives.

Will the ever increasing possibilities of fully individualized online and mentor-assisted learning cancel the need for schools as a collective learning framework? Probably not. Schools are likely to retain their function as a framework for learning basic social skills: discipline, stamina, teamwork, brainstorming solutions to problems or engaging with each other in a Socratic discussion. Schools will provide access to lab equipment and technologies (for example, Robotics and 3D printing) that may not be accessible from everybody’s home. Finally, and ironically, schools may be reengineered to become a place for kids to take a break from tedious studies at home, meet other kids, have fun or work on joint projects.

AN IMPASSE? My younger kids, Jan (14) and Katya (13) are enrolled in a very good school, Ecole Française du Caucase – a well-financed and well-managed public French school.

In addition to basic math, sciences and technology, Jan and Katya study French language and literature, memorize France’s royal dynasties and rivers, and are (supposed to be) convinced that France is a cornerstone of global civilization.

As most kids of their generation, neither Jan nor Katya are particularly happy

about their schooling experience. For one, they are terribly bored – they have little interest in memorizing French rivers or kings. Math and sciences, which they do enjoy, are taught at a snail’s pace, as is suitable for the weakest students in their classes. They complain about learning by rote, as well as too many uninspiring, repetitive homework exercises, leaving little time for guitar or programming (Katya and Jan’s passions, respectively).

Don’t get me wrong, Jan and Katya are truly privileged to study in a French public school. The situation is far worse for kids in the public education systems of countries like Georgia and Armenia.

Georgian and Armenian kids memorize their own rivers and royalties, and learn about the mythological eminence of their own ancient civilizations. Yet, Georgian and Armenian schools have neither great teachers nor great infrastructure. In fact, they are a huge waste of time for the vast majority of kids attending them.

DON’T MISS A GOOD CRISIS! The impasse with public school reforms in Georgia, Armenia and other developing (and not only) countries around the world may be a blessing in disguise. If public schools continue to provide basic literacy and numeracy, according to their original (broad but shallow) 19th century design, the demand for higher level learning – deeper, more individualized and flexible – will be addressed by private actors, and through other means.

Armenia’s TUMO Center for Creative Technologies is an excellent example of doing just that. 14,000 TUMOians, ages 12-18, are currently enrolled in TUMO’s five centers in Armenia. There are no entry exams and no fees (TUMO is financed by rental fees paid by IT and media companies occupying the upper floors of its buildings). Instead of lectures, students follow an AI-controlled, individually tailored learning path with special workshops for those achieving expected outcomes. Instead of being grouped by age and squeezed into standard classrooms, students work in a seemingly chaotic but carefully crafted and totally inspiring open space, 600 at a time. They learn at their own pace. Building an online portfolio and investing in their own future.

BUSINESS

GEORGIA TODAY MARCH 12 - 14, 2019

T-Shirts and Furniture in Short Supply as Startups Boom in Estonia

I

n Estonia’s capital of Tallinn, today a leading global hub for tech startups, there is a massive temporary short supply of office equipment needed to furnish the growing number of coworking spaces and company headquarters in the city.

“We need hundreds of chairs for new employees, but even IKEAs in neighboring Latvia and Finland can only offer us a combined weekly supply of 20 chairs,” says Kaarel Kotkas, CEO of online identity verification company Veriff.

The supply problem, due to the rising number of employees that are basing themselves in the city every day, has also stretched to T-shirts; local producers are struggling to keep up with the growing demand for custom-made apparel with startup slogans and logos. Hence, there is a backlog in waiting times with local designer providers such as Reet Aus, whose certified brand of T-shirts are made from sustainable and recycled materials such as surplus industry materials.

“It can take up to 7 months to get shirts from Reet, since the demand is so high,” added Kotkas.

Tallinn today is home to the highest proportion of tech companies with valuations of over US$1 billion in per capita evaluation. Overall, there are currently around 550 startups in Estonia engaging in a variety of sectors ranging from FinTech to GreenTech and beyond. This startup growth reached a significant milestone in 2018, with the number of startup employees having grown by 26 percent from 2,981 people in 2017 to 3,763 last year.

“The challenge to fulfill the tremendous amount of furniture and T-shirts is probably a good one to have,” says Kaisa-Triin Kosenkranius from the Work in Estonia program. “There is strong market demand on both fronts, and this has been due, in no small part, to Estonia’s popularity as a tech talent destination.”

Boosting that popularity, are the biggest start-ups based in the city. Top 20 companies – which include likes of Veriff, Transferwise, and Taxify – collectively account for an astonishing 62 percent of new jobs created by startups in 2018. Veriff showed the biggest increase in percentage, with over 490 percent employee growth in their Estonian office. Last month, the company also announced that they had surpassed their 100-employee mark in all their offices and that they are looking to add 100 more people in the coming year.

“2018 was a renaissance for the new wave of Estonian startups. Funding was raised, bigger offices

were built, and more people were hired. 2019 will therefore be the year of newcomers,” said Kotkas.

Indeed, data gathered by the Estonian Startup Leaders Club notes that startups in Estonia employ 581 people from abroad. Supporting this notion is the annual “Desirable Employer Survey of 2019” (conducted by CV Keskus), which point out that Estonian startups are among the top companies that people would like to work for, which – in addition to Veriff – also includes Cleveron and Starship Technologies. This clearly illustrates that start-ups are considered as an attractive work environment, not just among Estonians, but people from all corners of the world.

“After 3 years of living and working at the Bay Area in San Francisco, Estonia still beats most places to build an early phase start-up company; despite missing a local IKEA,” said Sten Tamkivi, CPO at global mobility company Topia and President of the Estonian Startup Leaders Club.

Estonia is ramping-up its drive to bring in more global tech talents to base themselves in Tallinn.

The Work in Estonia program – an initiative by Estonia’s government – recently launched the second edition of its annual Career Hunt campaign, which identifies some of the world’s most promising tech talents and brings them to Estonia for free to give them a shot at working with the tech companies based there.

The Career Hunt program seeks to build on its success in 2018, whereby 5,500 people from around the world applied for a five-day free trip to Estonia.

From that figure, 23 successful candidates landed face-to-face interviews and eight of them have already started work with the tech companies.

This year’s program will see 14 Estonian IT industry heavyweights participate in the initiative to find and nurture more talent. The companies include TransferWise, Monese, Veriff, Starship Technologies, Pipedrive, Thorgate Digital, Taxify, Malwarebytes, Finestmedia, Icefire, Alien Gain (petPawal), Swedbank Estonia, Genius Sports Services Estonia, and Mooncascade.

Combining the massive growth in startup funding – bolstered by the US$328 million received in investments last year – and the number of tech employees, Estonia’s startup scene is now more vibrant than ever. 2019 is set to continue this trend and the world will be looking forward to seeing what new innovations the country’s start-up scene will produce in the coming year.

Georgia, Lithuania Sign Cybersecurity Cooperation Declaration

BY THEA MORRISON

T

he Minister of Defense of Georgia Levan Izoria and his Lithuanian counterpart Raimundas Karoblis signed a declaration of intent on cooperation in cybersecurity on March 7.

The declaration aims to advance cooperation between the two countries in cybersecurity.

During the signing ceremony, the Georgian minister highlighted that NATO allies recognized cyberspace as an operational domain in which NATO must defend itself as effectively as it does

in the air, on land, and at sea.

“In order for Georgia’s critical infrastructure not to be threatened as a result of cyber-attacks, it is necessary to strengthen our national efforts, deepen our relations with international partners, learn from their experience, and conduct joint trainings in this field,” he said.

Izoria added that Georgia desires to reach these goals in close cooperation with the National Cyber Security Centre of Lithuania to ensure that Georgia’s critical infrastructure is maximally protected from cyber-attacks. Georgian President Salome Zurabishvili and her Lithuanian counterpart Dalia Grybauskaite also attended the signing ceremony.

Afterwards, Zurabishvili visited the National Museum of Lithuania where the exhibition “Declaration of the Council of Lithuanian Freedom Fight Movement of February 16, 1949 and its Signatories” is staged. The two presidents had a meeting on March 7, after which President Dalia Grybauskaite hosted an official dinner for the Georgian President.

The sides highlighted the exemplary friendship and cooperation between Georgia and Lithuania.

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POLITICS

GEORGIA TODAY

MARCH 12 - 14, 2019

Bakhtadze Presents Roadmap to EU Membership in Brussels

BY SAMANTHA GUTHRIE

L

ast week, while attending the joint meeting of the Government Commission on EU Integration and the State Commission on NATO Integration, Georgian Prime Minister Mamuka Bakhtadze declared that his country’s relationship with the European Union has never been so advanced as it is now, and, proudly, noted that Georgia is successfully implementing its responsibilities to the EU. “I believe that we have sufficient resources to fulfill a part of our obligations ahead of schedule,” said Bakhtadze, optimistic about the legislative and institutional reforms that Georgia has carried out – a mandatory precondition for EuroAtlantic integration.

The joint meeting approved Georgia's Annual National Program, one of the central mechanisms towards NATO membership. Bakhtadze reiterated that Georgia is a special and reliable partner for NATO, as evidenced by the strong messages made at the recent Munich Security Conference. “This year, we are hosting NATO's Secretary General, Military Committee, and North Atlantic Council, which is a great honor and, at the same time, responsibility. Still, all this reiterates that Georgia-NATO relations have advanced to a new level,” added Bakhtadze.

The following day, on March 5, Bakhtadze attended the 5th Meeting of

Photo: Press Office of the Prime Minister

the Georgia-EU Association Council in Brussels. There, he provided participants with Georgia’s “Roadmap 2EU,” a document that aims to support and enhance Georgia’s integration into the EU. During the Georgia-EU Association Council meeting, Bakhtadze summarized Georgia’s progress towards European integration and presented the roadmap, which, as he explained, is “a very impor-

tant document enabling us to consolidate our progress under European integration and to take further steps beyond the Association Agreement, toward deeper and more comprehensive integration, including sectoral integration.”

One of the most important steps towards integration over the past year include the visa-free travel regime extended to Georgian citizens by the EU in March 2018, explained Bakhtadze, “Ensuring a

flawless visa-waiver process is one of our government's top priorities because, besides practical benefits, visa-free travel also carries political weight.”

Speaking about the roadmap at the Georgia-EU Association Council meeting, the Prime Minister said, “Georgia is the leader of the Eastern Partnership.

When the implementation of the eastern Partnership Project started ten years ago, it was truly a milestone event. Geor-

gia has been successful in fulfilling this task, but we believe that there is an opportunity to continue integration with focus on concrete sectors.” Consultations and detailed discussions began at the meeting, and, Bakhtadze added, “I can tell you – though it may be a bit too early – that this roadmap will help us consolidate democracy in Georgia, advance our success to a higher level, overcome the economic challenges currently facing Georgia, and successfully finalize the overarching reforms that apply to all directions, including structural reforms. I would like to single out the sector of education. I believe that this document will help provide the public with a concrete criterion for measuring Georgia's development and progress toward Europe.”

Also discussed at the meeting were the issues of the successfully competitive presidential election in October of last year, progress in rule of law reforms, progress in the implementation of the Human Rights Strategy and its Action Plan, the long-awaited adoption of the law on Occupational Health and Safety, the DCFTA, and the various financial and technical assistance the EU has provided to Georgia in the last year.

The EU underlined its commitment to continue assisting Georgia in the Association Agenda’s key areas of cooperation: economic development and market opportunities; strengthening institutions and good governance; connectivity, energy efficiency, environment and climate change; enhancing mobility and people-to-people contacts.

Ivane Matchavariani on the Importance of Education Reforms TRANSLATED

BY KETEVAN KVARATSKHELIYA

W

hile evaluating the new education initiative presented by the Prime Minister, ‘Education – A Road to Freedom’, the Minister of Finance of Georgia Ivane Matchavariani stated to TV Pirveli “currently, there is no theme of more importance than the initiative regarding education reform.”

The minister said the government has made a major step, which will contribute to the prosperity of the country and eradication of poverty within its borders in future.

“In general, small countries like us with limited income try to avoid making any commitment on a legislative level in any sphere. However, I do strongly believe that this is a courageous step which will help our country to prosper and overcome the problem of poverty in the future. Within the scope of the project, the education budget will increase to reach 6% of the total GDP by 2022. This value makes more than a quarter of the current tax income,” stated the minister.

“Most importantly, these figures are backed up with multilateral reform which involves the construction of new schools and rehabilitation of already existing ones; equipping them with the latest technologies; improving the level of teachers’ qualifications and increasing their salaries in a way that the profession

of a teacher becomes one of the most popular,” continued Matchavariani.

He also claimed that improving the level of education is one of the major preconditions of the country’s economic development.

“We will increase the prestige of this profession, higher the level of education and, in this way, contribute to the amelioration of the country’s economic situation. Today, the countries with high human capital are occupying leading positions. The given figure is measured according to a number of indexes, including the World Bank Human Capital Index.

We are on the 61st line according in this index and, after launching the reforms, we aim to be included among the top-10 countries, within the following 10-12 years,” said Matchavariani.

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11

Controversial Road Would Improve Tourism but not Agriculture

BY RYAN MICHAEL SHERMAN

I

n May of last year, construction of the initial sections of the Sno-Juta-Roshka-Shatili-OmaloKhadori Valley-Batsara-Akhmeta road construction project commenced. The project aims to build a road from Kazbegi through Khevsureti to Tusheti. It would represent the first interregional paved highway for the area.

“Road users and especially, the local population, will be able to move on a new, comfortable and safer road,” says an official statement at build.gov.ge.

“Travel time and cost will be reduced.

Furthermore, regional connectivity will be improved, and social-economic opportunities enhanced.”

This project has been met with significant pushback. A popular petition called ‘Save the High Caucasus Mountains from Destructive Road Construction’ criticizes the project for the environmental damage that will result. They also assert that such a road will violate the rights of traditional communities and that conflict with local populations will be inevitable. The petition, which has collected nearly 10,000 signatures, calls on the government of Georgia to stop this project.

Yet Khevsureti residents do not oppose the project and have long petitioned for improved infrastructure in Khevusreti, according to interviews conducted in Khevsureti in the summer of 2017. They disagree with other Georgians who oppose

the road construction on their behalf.

“We want it both ways—we want people living up there, but we don’t want to build a road,” said Otari Tsiklauri, a resident of Roshka. “But it doesn’t work like that, does it? It is the 21st century after all. People should not be struggling to survive with the help of some horses and donkeys.”

Yet locals also expressed a strong preference for improving roads from lowlands over an interregional highway. With stretches reaching as high as 3100 meters, the Kazbegi-Khevsureti section of the road will be closed much of the year and will require substantial maintenance.

The state of the existing roads to the lowlands should be dealt with first, locals said, as poor conditions increase the cost to transport goods and materials and make access to Khevsureti seasonal and highly dependent on weather conditions.

These constraints reduce the production capacity of local farms and hinder the development of mountain dairy and livestock value-chains.

Residents felt the new Kazbegi-Khevsureti road will primarily benefit households directly involved in the summer tourism industry in popular destinations such as Roshka, Shatili, and Mutso. For most Khevsureti households, income is generated by traditional agriculture such as cattle raising and dairy processing for mountain products which can be sold for a premium on lowland markets such as hacho, cheese, erbo and matsoni.

A 2015 USAID report credits dairy challenges in Georgia to a lack of qualified veterinarians, access to medicines,

and feeding difficulties. While much has been done in Georgia since to relieve these constraints, Khevsureti and Tusheti still suffer from the poor infrastructure making crucial inputs accessible.

Khevsureti has also experienced severe outmigration in recent years. The official 2014 census recorded only 354 people living in the area, down from 866 people in the 2002 census.

In February last year, former prime minister Giorgi Kvirikashvili said, “the

roads that link mountainous regions to each other are very important and we are working on them. They are important because otherwise it would be impossible to preserve these regions’ cultures for future generations.”

While connectivity is crucial for alleviating the difficult mountain living conditions that lead high rates of outmigration, it is unclear if a road from Kazbegi and Khevsureti to Tusheti would help reverse these trends.

Some commenters have claimed sections of the Sno-Juta-Roshka-ShatiliOmalo-Khadori Valley-Batsara-Akhmeta road construction project have since been canceled and much of the road will now not be paved, but no official updates have been issued about the project which was set to end in February this year, according to the current government project page at build.gov.ge. A government spokesperson could not be reached for comment.

Gov't to Tighten School Excursion Regulations

BY THEA MORRISON

F

rom 2020, Georgia is tightening regulations for school excursions. The changes have been made to the Code of Children of Georgia.

The initiator of the Code is the Human Rights and Civil Integration Committee of the Parliament.

The article, which regulates the protection of children's rights in public events, consists of eight paragraphs.

Under the new regulations, groups going on excursions should be accompanied by a person who has undergone a primary medical care course.

In addition, organizers must notify the police, fire-rescue and emergency services of the the place, time and duration of the excursion.

Moreover, according to the Code, the class head should have access to all data about the children participating in some public events, including information about a child’s special needs and about the instructor of the event and the qualification of the person who drives the children. The teacher can also request recommendations about the driver and their driving license, as well as documentation confirming the technical con-

Photo source: eurus.ge

dition of the vehicle.

During the transportation of children and some public events, it is necessary for a doctor or nurse to be present. In

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case of their absence, children must be accompanied by at least one adult who has undergone the primary medical care course. Schools who have no doctor or

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Vazha Tavberidze, Nugzar B. Ruhadze, Samantha Guthrie, Amy Jones, Thea Morrison, Ana Dumbadze, Ketevan Kvaratskheliya Photographer: Irakli Dolidze

nurse can inform the Ministry of Education, who will provide them with a qualified staff member.

Article 66 of the Code concerning the

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protection of child safety in public activities indicates that transportation of food during excursions should be carried out in compliance with sanitary conditions.

The Municipal Service of Children Protection and Support will monitor the maintenance of the proper norms regarding children’s food during excursions.

The Code of Children has already been defined and the committee hearings have also been scheduled. When the discussions at the committees are over, the draft will be sent to the Parliament of Georgia for approval.

The deadline for the enactment of the law is June 2020. Violation of the code’s regulations will result in different sanctions imposed by law.

School excursion regulations were first tightened in Georgia last year, after the June 9 accident during a school excursion which left 4 dead and 21 people injured.

After the primary regulations, the school is required to request documents from the driver certifying their driving qualification and the vehicle’s technical qualifications.

In addition, if an excursion is organized by an educational institution or by parents, it is necessary for the school to be informed about the excursion. An adult, who has undergone a first aid medical course, must also be included in the group.

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