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Issue no: 1152/181

• MAY 21 - 23, 2019

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue... Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

Does Your Smartphone Make You an “Unconscious” Villain? ISET PAGE 4

FOCUS ON THE BLACK SEA ARENA

Set to re-open mid-June, we meet the new director to find out his plans for boosting business

PAGE 11

Education & Science Center to Be Built in Batumi BY SAMANTHA GUTHRIE

A

new Education and Science Center will be built in Batumi as part of the government’s push to improve education across Georgia. The modern, multiuse seven-hectare space will be centered around a Batumi branch of the Vladimir Komarov School of Physics and Mathematics and will include laboratories, conference halls, sports facilities, indoor recreational areas, a library, science museum, outdoor stadium, and student dormitories. Speaking at a press conference for the project in Batumi on May 17, the Prime Minister of Georgia, Mamuka Bakhtadze, promised that his government “will build the most modern educational space in Batumi. Continued on page 5

International Exhibition CASPIAN AGRO-2019 Held in Baku BUSINESS PAGE 5

Up to the Georgian Mountains & Down to the Countryside BUSINESS PAGE 8

EU-World Bank Project to Support the Innovation Economy Launched BUSINESS PAGE 9

University of Georgia to Host Conference on Tracking Russian Influence in Post-Communist Countries BUSINESS PAGE 10

‘Georgia - Homeland of Wine Exhibiting in Tokyo, Japan BUSINESS PAGE 11 Prepared for Georgia Today Business by

Markets Asof17ͲMayͲ2019

STOCKS

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BankofGeorgia(BGEOLN)

GBP16.25

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GEOROG04/21

103.63(YTM4.76%)

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+0,1%

GeorgiaCapital(CGEOLN)

GBP9.83

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Ͳ5,1%

GEORG04/21

106.05(YTM3.54%)

Ͳ0,0%

+0,2%

GHG(GHGLN) TBCBankGroup(TBCGLN)

COMMODITIES CrudeOil,Brent(US$/bbl) GoldSpot(US$/OZ)

GBP2.35

+5,9%

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GRAIL07/22

107.51(YTM5.13%)

+0,1%

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GBP16.96

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GEBGG07/23

101.81(YTM5.51%)

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72,21

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2,7425

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1277,53

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3,0638

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3,4912

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2,7123

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FTSE100

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0,0424

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19498,61

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0,4533

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DAX

12238,94

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GEL/AZN

1,6181

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25764,00

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0,0057

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+1,8% +3,5%

FTSE250

7816,29

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MSCIEMEE

165,65

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MSCIEM

996,39

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SP500

2859,53

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1,0110

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MSCIFM

2600,66

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GTIndex(GEL)

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NASDAQ

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NEWS

@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:

GEORGIA TODAY

MAY 21 - 23, 2019

Latest on the Weekend's By-Elections

Wine Yard, a new Tsiskvili Group project, aims to introduce the history and culture of Georgia through a visual synthesis of Georgian theater, cinema, music, dance and gastronomy. Oto Nasrashvili is the musical leader of the project, while the show is directed by Goga Maisuradze and the costumes created by Barbara Aslamazi. The space, able to cater for nearly 200 guests, is located at Beliashvili Str. 99. The founders of Wine Yard state that the plays will be updated regularly and will give guests a unique experience each time. MyDoc, launched with the use of artificial intelligence, is a platform for diagnosing a patient online. The initiative came from Mamuka Monavardishvili, founder of a number of online platforms, including Myvideo.ge, Fly.ge and Maika.ge; Irakli Sasania, Medical Sciences Doctor; and healthcare expert Tornike Razmadze, a software specialist with 15 years’ experience. Uncomfortable, conservative methods of medical treatment, the risk of mistakes, and the lack of ongoing communication between patients and specialists was their motivation. In 2019, they got a GITA grant and now say they are confident they can offer a useful service to customers. ‘Kontakturi Bostani’ (a ‘Contact’ vegetable garden) came about thanks to friends Mariam Kavtaradze, Ana Devidze, Ana Beridze and Giorgi Nanitashvili, which they started working on during the Innovations Festival. A green area, it is open for children to learn about greenhouse seeding, plantation and care- all while having fun! The aim of the project is to let kids put into practice their theoretical knowledge and transform learning into an interesting and entertaining process. The founders want to launch more such areas and small greenhouses in which to cultivate biologically pure products. 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

BY KETEVAN KVARATSKHELIYA

A

ll the votes of the by-elections that took place in Tbilisi and the regions of Georgia on May 19 have been counted by the Central Election Commission of Georgia (CEC). According to the preliminary results, the candidates of the ruling Georgian Dream Party have succeeded, and obtained the status of mayors of five cities: Marneuli, Zestafoni, Chiatura, Zugdidi and Khulo, as well as gaining seats in eight city assemblies countrywide. However, a second round is to be held in the district of Mtatsminda in Tbilisi,

as none of the candidates were able to pass the 50% threshold. Lado Kakahdze, the Georgian Dream candidate, and Shalva Shavgulidze, representing the United National Movement, will compete in the next round. The representatives of the government have already commented on the results of by-elections. The PM Mamuka Bakhtadze stated that: "This is the greatest achievement of our team, a political achievement we are particularly proud of. Today, Georgian society, as well as the international community once again saw elections in Georgia happening in a free and democratic environment.” He went on to express his gratitude to the Central Election Commission representatives and

the law enforcers for their “professionalism." The PM also pointed out a number of conformations that took place on election day, saying that despite the attempts of one of the political forces to cause instability at the elections, the government took the responsibility “to ensure the highest standard of elections in Georgia.” The results of the recent by-elections were also assessed by the opposition, who spoke out against their validity. Former First Lady Sandra Roelofs, who was a mayor candidate of the United Opposition in the city of Zugdidi, claims she was the winner of the elections and will protest the announced results with her supporters.


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BUSINESS

GEORGIA TODAY

MAY 21 - 23, 2019

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.

Does Your Smartphone Make You an “Unconscious” Villain? THE GEORGIAN PERSPECTIVE

BY MARIAM TSULUKIDZE AND SELAM PETERSSON

O

ur dependence on smartphones can hardly be described as anything other than addictive. We invariably use them to document trips and thus to have the world at our fingertips. Though, these precious little gadgets have a dark history that we, as consumers, unconsciously support. Unfortunately, we will not be able to discuss in detail all the negative impacts within the supply chain of smartphones. Nonetheless, we wish this article to serve as an awakening, and a reminder, of what we as consumers are promoting. Moreover, what we - and governments - could do to avert some of these negative impacts.

HUMAN RIGHTS VIOLATIONS RELATED TO COBALT MINING Cobalt, copper, silver, gold are examples of indispensable components within smartphones. Cobalt is used in every rechargeable lithium-ion battery and it is a central component in electronic vehicles and jet engines. More than 60% of the world’s supply of cobalt is acquired from mines in the Democratic Republic of Congo (DRC). While approximately 20% of this supply is mined by locals (ca 255,000 locals are employed in the DRC, as documented by a Guardian journalist), the vast majority is mined by foreignowned industrial companies, among which Chinese ownership maintains the lion’s share. The heterogenite stone, where one finds cobalt, is rinsed in lake water by the locals and thereafter purchased by traders. The cobalt is then refined, in order to produce cobalt hydroxide, which is subsequently exported to China. Major component manufacturers and well-known electronic companies across the globe then purchase the refined cobalt from China in order to make the phones that consumers crave. In the DRC, both adults, and children as young as four years old, are employed in the extraction process. The standard procedure is to dig for the stone with their bare hands; with no protective gloves or safeguards. As a result, the locals breathe in the residual dust and are exposed to a hard, gruelling environment, often for over twelve hours and earning only around 0.10 - 0.65 USD per day. Additionally, far too frequently tun-

Source: REUTERS/Luc Gnago

nels collapse and bury workers alive. Cobalt mining also has an impact on new born babies, who are regularly found with infections and rashes covering their bodies, as confirmed by a doctor interviewed by the Mining Review Africa in January 2019. Exposed by an Amnesty International report from 2016, the supply chain of major companies, such as Apple, Microsoft, Samsung SDI, and Sony, among others, admitted to implementing little monitoring, which is facilitated by poor governmental regulations in the DRC. A follow-up study in 2017 by Amnesty international indicated that human rights were still being violated. For example, while Samsung SDI and Apple have been credited with stepping up their efforts in improving their supply chains, for which they are considered to have taken adequate action, the majority of the 20 reviewed companies were found to have taken minimal or no action. Although major phone suppliers have been making greater efforts in recent years to clean up the supply chain (UN Environment, 2019), there are still major concerns that need to be addressed with regard to various environmental and economic characteristics.

THE ENVIRONMENTAL COST In addition to requiring the substantial use of fossil fuels, industrial mining and

the processing of metals leads to heavy environmental pollution (2018) in nearby communities. Electronic devices have negative environmental impacts, even at the end of their lifecycles. In developing nations particularly, utilizing landfills as dump sites for waste has grave consequences as they leak toxic substances. But they have also consequences on landfill workers. The electronics industry generates approximately 41 million tons of waste/year. Shamefully less than 16% of the volume is recycled, despite the fact that e-waste is, quite literally, a gold mine. UN Environment reveals that 300 tons of gold are used each year in electronic devices, some of which could be reused for other products. As noted by the American Electronics TakeBack Coalition report (2014), recycling one million mobile phones would salvage as much as 24 kg of gold and more than 9,000 kg of copper. Throughout the world in 2016, the estimated worth of the 435,000 tons of discarded mobile phones amounted to 10.7 billion USD in the cost of raw materials, as defined by the UN Environment. Accounting for the second-hand market could push that estimate even higher. Nevertheless, recycling is not occurring to the same extent as the development of newer devices, those which the market craves, often leading to fully functioning phones being wasted.

Georgia does not yet have a unified national system to deal with old mobile phones, be it by recycling devices for further use or disposing of them following internationally accepted standards. Furthermore, the country lacks any official statistics of electronic waste, nor are there any specific landfills for such waste. Despite these factors, there are certain options for the recycling or reuse of mobile phones. For example, there are secondhand Georgian trade websites like Mymarket.ge or Extra.ge. People use them to sell old electronics, where sellers post notices with photos of their old devices and specifying further contact information. Buyers can pick and choose their ideal phone. Moreover, small-scale financial institutions, notably pawnshops, offer people the option to leave their old smartphones as a guarantee for borrowed money. Often these devices remain in pawnshops uncollected, leaving their final destinations uncertain. It is likely that these phones, along with other discarded technology, culminates in unofficial small electronics stores specializing in, for example, the repair of phones from spare parts. In addition, authorized resellers for Samsung and Apple in Georgia have recently initiated a trade-in promotion. This offers consumers the opportunity to replace their old phone, depending on its condition, with a new device for a discounted price. Obviously, this is not enough. As in many situations, there are two clear options for governmental intervention: the command-control and market-based policies. Under the command-control policy, Georgian authorities could rely on regulations (permission, prohibition, standard setting, and enforcement) to prevent and sanction dangerous behaviors and practices. While its logic is straightforward, this option would require the strengthening of national legislative and control measures by establishing the required competences and resources for law enforcement, in order to be in line with the best international practices. Capacity building for the entire enforcement chain would also constitute a significant component within the successful implementation of the policy. Whereas, incentive-based mechanisms would instead attempt to affect individual choices by rewarding desirable behavior and by making undesirable choices more costly. For example, additional fees could make the acquisition

of new smartphones more expensive, while the revenues could be used to reward proper disposal practices. This process could be performed alongside the introduction of extended responsibilities for producers, with manufacturers of electronic appliances (and, indirectly, consumers) covering the costs associated with the proper handling of devices at the end of their lifecycles. This policy also includes a certain aspect of the command-control mechanism, as under this system, the legislation compels entrepreneurs to take responsibilities for the recycling and financing of such schemes. Regardless of governmental choices, actions from non-governmental organizations and other stakeholder to help build awareness of the massive health risks associated with electronic waste, and the importance of recycling and well-managed waste segregation would be ideal.

ARE THERE ANY SOLUTIONS? As we have already mentioned, some solutions can be driven by governments, through tougher regulations and stronger financial incentives, as well as targeted awareness campaigns to help affect consumer and producer behaviors. As consumers we can, for example, buy fairphones, developed with the intent of minimizing negative social, economic, and environmental impacts. We can also delay purchasing replacement devices and make sure the old models are disposed of properly. Improved technological processes and increased mining costs can also help. Innovative solutions, like harvesting cobalt from depleted lithium-ion batteries, are on the rise, exemplified by American Manganese. The recent price spike in cobalt/ton has lead Panasonic, a supplier for Tesla, to phase out cobalt in their batteries. Therefore, a combination of increased consumer awareness and technological change might improve the situation, as might developing and developed countries increasing their efforts and placing more emphasis on minimizing the negative impacts of “smartphone frenzy”, through the appropriate use of economic instruments and standards. Nevertheless, a significant amount of responsibility remains on the consumer. While it is true that our beloved smartphones do have momentous negative impacts, there is much we can do to help minimize these effects.

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BUSINESS

GEORGIA TODAY MAY 21 - 23, 2019

Image Source: Ministry of Foreign Affairs of Georgia

International Exhibition CASPIAN AGRO2019 Held in Baku BY MARIAM MERABISHVILI

T

he international exhibition CASPIAN AGRO-2019 opened in Baku last week, presenting around 200 agricultural products manufactured by 25 companies, the latest technologies implemented in the agrarian field, and agricultural machinery. The exclusive exposition was this year dedicated to Georgia, where 11 different Georgian products, including alcoholic beverages and sweets, were presented.

On the first day of the exhibition, Ilham Aliyev, President of the Republic of Azerbaijan, visited the international exposition. He personally visited the Georgian stand to see the various Georgian products. The Georgian side gifted him an exclusive edition of ‘The Knight in the Panther's Skin.’ The opening ceremony was attended by Deputy Minister of Foreign Affairs of Georgia Lasha Darsalia, Ambassador Extraordinary and Plenipotentiary of Georgia to Georgia Zurab Pataridze, Ministry of Environment Protection and Agriculture of Georgia and the representatives of Georgian companies participating in the exhibition.

Education & Science Center to Be Built in Batumi

Continued from page 1 We have very talented children in the Adjara region and this project will be implemented for them.” He expressed his desire for similar spaces to be created in “every corner of Georgia.” “I have heard a lot of ideas, including baseless criticism, on education being a national priority. It is! Education is the only way to overcome all the challenges faced by Georgia and that makes education our national priority. It can shape Georgia into a successful country in the 21st century and I am strongly convinced that the Georgian nation has a unique talent and potential,” Bakhtadze enthused. In January, Minister of Education, Science, Culture and Sport, Mikheil Batishvili, together with Tbilisi Mayor Kakha Kaladze and invited guests, laid the foundation stone for the construction of the ‘New Education and Science City’ in Tbilisi. The “city” will be constructed at kilometer 12 of the David Aghmashenebeli Highway leading out of the city in the direction of Mtskheta. During the ceremony, Batiashvili said that the new ‘city’ will serve as a model of high-quality education, helping reach the goals the government has set out for education reform. He explained that, from his perspective, it is clear that in order to reach the ambitions goals for education reform, which include the development of education clusters, such a multifunctional education complex is necessary. The ‘city’ is envisioned to serve as a hub for the implementation of reforms and to celebrate and build on the achievements of other educational institutions. Education has become a priority for the current government. The project comes after the govern-

ment announced plans to increase teachers’ salaries by 150 GEL per month from September 2019 last week. At the announcement of the Batumi Education and Science Center, Bakhtadze said that, “an integral part of the project is to ensure decent conditions of life for teachers. It is my personal tragedy when the average salary of teachers is below even the statistical average for pay in the country.” The government will provide “unprecedented support” for education in Georgia, said Bakhtadze, adding “the system needs new energy, new investments, new vision and we will ensure this.” Under Bakhtadze, the government has pledged to invest one-quarter of the state budget into education, and to increase education spending to 6% of GDP by 2022. In a March interview with national news network Imedi TV, Prime Minister Bakhtadze announced a new phase in his ongoing education reforms – a focus on modernization and technology. He noted plans to build new, modern kindergartens and fullytechnologically equipped schools “in every village, town and city of the country.” During the interview, the Prime Minister also emphasized the importance of private sector involvement, hoping that an increase in government spending will motivate private companies to match investments in their future workforces. “As a result,” Bakhtadze prophesized, “education will become a dominant sector in the economy.” GEL 1.6 billion ($600 mln) has been allocated for education in the 2019 budget, a significant increase from 2012 when the education budget was just GEL 600 million ($223.5 mln). For 2020, the government is committing GEL 2 billion ($745 mln), GEL 2.5 billion ($931 mln) in 2021, and GEL 3.4 billion ($1.27 bln) in 2022 – a quarter of the annual budget.

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BUSINESS

G

eorgian Economic Climate is a joint product of PMC Research Center and the ifo Institute for Economic Research. In this bulletin, we discuss Georgia’s economic climate as assessed by Georgian economists. PMC Research Center is a regional partner of the ifo Institute, one of the leading economic research institutes in Europe, specializing in applied economic research, policy advising and other services for governments, businesses, researchers and the public. The ifo Institute publishes the World Economic Survey (WES) on a quarterly basis, accurately presenting the current economic situation and forecasts for industrial, emerging and developing economies. 30 experts are participating in this initiative from Georgia. The survey was conducted in April 2019, assessing April- September 2019 period. In the second quarter of 2019, Georgian economic climate has slightly improved. In this period, Georgian economists assessed Georgia’s present economic situation positively; However, the assessment of present economic situation in this quarter has deteriorated compared to the first quarter of 2019 and the second quarter of 2018. In the second quarter of 2019, Georgia’s economic situation in the next six months has also been assessed positively by Georgian economists. In this quarter, expectations in six months has slightly improved compared to the first quarter of 2019; Notwithstanding, the expectations in six months of Q2 2019 has deteriorated compared with the Q2 2018. According to the semi-annual assessment of Georgian economic challenges, the Georgian economy currently faces the following four major problems: 1. Lack of skilled labour; 2. Lack of innovation; 3. Capital shortage; 4. Widening income inequality. In addition, experts consider there to be least severe challenges faced in the following areas: 1. Trade barriers to exports; 2. Legal and administrative barriers for business; 3. Corruption; 4. Debt management. In addition, experts predict Georgia’s main economic indicators. According to the results, in the second quarter of 2019, the expected real GDP growth for 2019 is 4.3%. Other main economic indicators

GEORGIA TODAY

MAY 21 - 23, 2019

China/EU on Georgian economy. The majority of experts (60%) think that Georgia will not be affected by the current trade disputes between the US and the EU and the US and China. Moreover, they reckon that for Georgia there is no significant difference between Foreign Direct Investments (FDIs) from China and from the other countries. Majority of Georgian experts (43%) neither agree nor disagree the idea that in order the world trade to operate well, supranational governance (for instance arbitration courts, harmonized product standards or environmental standards) is necessary, which in turn could limit the government’s decision-making freedom.

METHODOLOGY The ECI is based on quarterly expert assessments of the present economic situation as well as expectations for the next six months. The scale ranges from –100 points to +100 points. An index of –100 means that all experts assess the economic situation as deteriorating (negative), while an index of +100 indicates improvement (positive), and 0 means neutral/no change. are forecasted as follows: • Inflation rate is expected to decrease in the next six months, on the year-onyear bases; • In 2019 the inflation rate is expected to be 4.0%; • In 2024 the inflation rate is expected to be 4.9%. • The Georgian Lari is currently undervalued against the US Dollar, about the same against the Euro and British pound and overvalued against the Yen. • The export volume is expected to increase in the coming six months; • The import volume is expected to increase in the coming six months; • The export volume is expected to increase more than the import volume, resulting in an improved trade balance in the next six months.

SPECIAL QUESTION The first half of 2018 has seen the start of bilateral trade disputes between the US and the EU and the US and China. China initially, but also the EU and others are confronted with high import tariffs on selected goods as part of the US administration’s economic policy. In this quarter, experts assessed the impact of current trade disputes between US/


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BUSINESS

GEORGIA TODAY

MAY 21 - 23, 2019

Up to the Georgian Mountains & Down to the Countryside BY ERIC LIVNY

I

n an attempt to promote the technological, medical and cultural development of China's countryside, the Chinese Communist Party's Youth League plans to dispatch 10 million students to impoverished villages across the country, CNN reports. Students will be volunteering their summer vacation time in order to participate in a "rural rejuvenation" campaign championed by President Xi Jinping. Exactly 50 years ago, in 1969, Xi himself was sent to work in Liangjiahe village, more than 800km from his native Beijing. A son of a high ranking communist party official, Xi was among approximately 17 million (supposedly) privileged urban youth forcefully recruited into Mao Zedong's Down to the Countryside Movement. Although far from voluntary, Xi remembers this chapter in his biography as "a rewarding, life-changing experience that toughened his body and mind." China's rise from the ashes of colonial plunder to global prominence has much to do with the country's success in educating its rural population, raising agricultural productivity, and shifting a very large share of traditional farmers to employment in the modern sector of the economy. Yet, how likely is it that China's voluntary or involuntary development prescriptions would work in societies that cherish individual freedoms, such as Georgia or Armenia? Georgian and Armenian villages are as much in need of "technological, medical and cultural development" as their Chinese equivalents. However, it is hard to discern anything resembling a coordinated, Chinastyle "rural rejuvenation" campaign in either of the South Caucasus countries.

GEORGIA PILOTS RURAL DEVELOPMENT PROJECTS: CHORVILA Georgia's most prominent politician and philanthropist, Mr. Ivanishvili, did not need to be sent to the countryside in order to "toughen his body and mind". The youngest among five siblings, he grew up in very modest circumstances, in the family of a manganese factory worker in Chorvila, a small village in the Sachkhere municipality. Having amassed a formidable fortune in the murky waters of post-Soviet capitalism, Mr. Ivanishvili was eager to give

Ivanishvili invested in the hardware of development... but did not do much about the software

back. Yet, instead of incentivizing Georgian youth to settle in the countryside, he used his personal wealth to improve the lot of villagers in one particular village, Chorvila, and in one particular Georgian municipality, Sachkhere. The story of this peculiarly Georgian "rural rejuvenation" project, implemented by Mr. Ivanishvili before he became active in politics, is beautifully described in a recent Jam News story. Mr. Ivanishvili built a school (featuring an Olympicsize indoor swimming pool and stateof-the-art sports facilities), a modern hospital, and even a ‘palace of rituals' – freely available (until 2012) for local residents to hold wedding parties and funeral ceremonies. He renovated all Chorvila houses, supplied families with gas heaters, televisions, and refrigerators, and even paid their gas bills. So, what did Mr. Ivanishvili do, and what didn't he do? He invested in very expensive infrastructure, the hardware of development, and did so in a very limited geographic domain. He did not do much about the software of development – the quality of human capital in Sachkhere. As a result of Mr. Ivanishvili's intervention, the Sachkhere of 2019 has better housing conditions, but is still a fairly backward agrarian community, with no innovation capacity, and few, if any, modern businesses. The kids of Chorvila's school have access to better infrastructure but are not exposed to young role models or inspiring teachers. Instead of learning, they are being lectured or yelled at. Their future education and employment prospects are as bleak as those of other kids in Georgia's small towns and villages.

TEACH AND LEARN WITH GEORGIA: THE PAST In 2010, Georgia saw the launch of yet another rural development initiative, Teach and Learn with Georgia (TLG). TLG is somewhat similar to China's "Down to the Countryside Movement" in that it sends young teachers to Georgia's remote communities. Yet, unlike its Chinese equivalent, TLG does not concern itself with young Georgians. Instead, it seeks to recruit foreign youth "on a quest for a volunteer teaching experience in a stunning Eurasian country," as advertised, for example, on reachtoteachrecruiting.com. The brainchild of Georgia's ("staunchly pro-Western") former president Mikheil Saakashvili, TLG initially sought to recruit 1,000 native English speakers "to help Georgian students learn the English language." At its peak, in 2010-2012, the program had an annual budget of 8 million GEL, spent mostly on recruitment campaigns and return flight tickets (two per volunteer, to allow some vacation time). TLG was very light on the selection, training, and orientation of teachers, resulting in uneven performance and less-than-optimal use of the volunteers' time. But it did have an impact. Emma Pratt, an Ohio girl, learned about TLG while interning with the US Embassy in Tbilisi in between the first and second years in Ohio State University Master's Program in Slavic and East European studies. When Emma graduated in sum-

mer 2011, the US economy was still recovering from a recession. "I'd rather be underemployed in Georgia," Emma thought, and applied. Six months later, having passed an FBI criminal background check, Emma landed in Sagarejo, a town of 10,000 people about 60km east of Tbilisi. Since it wasn't her first time in the country, Emma could communicate in Georgian, which was very unusual for a typical TLG volunteer. The principal of Sagarejo's school #3, to which she was assigned, gave Emma a very warm welcome. Her two coteachers, Nino and Zaira, had some "Soviet habits", as Emma puts it politely, but both were willing to learn. Emma co-taught 1-6 grades, two hours per grade, for 12 hours per week. The small English classroom had a library and a computer with speakers, helping her to manage her classes. Emma had an impact on almost 100 kids, for most of whom she was the first native speaker they had encountered in their lives. Above anything else, however, TLG had a tremendous impact on Emma's own life. She still lives in Georgia, where she teaches English at the Georgian Police Academy and the International School of Economics at Tbilisi State University (ISET). Just a couple of months ago, she got married to Dida, a graduate of Tbilisi State University's Mathematics Department and the prestigious Komarovi school.

TEACH AND LEARN WITH GEORGIA: A NEW CONCEPT? Even at its peak, TLG was not able to achieve its goal of bringing a thousand of foreign volunteer teachers to Georgia. Today, TLG is well past its heyday, appearing to have run out of steam – literally (budget-wise) and figuratively (in terms of drive). In recent years, the program has been financed at the level of 0.5mln GEL per year, a fraction of its 2010-2012 budget. This is not sufficient to run an

effective recruitment campaign as well as select, orientate, train, support and monitor the performance of TLG volunteers. The TLG website has not been updated in years, negatively affecting the program's international visibility and marketing. Fewer than 50 TLG volunteers are currently placed in Georgian schools, well short of Georgia's needs. There are several things a redesigned TLG could do in order to achieve greater scale and impact. First, it should engage not only a few dozen foreigners "on a quest for a volunteer teaching experience in a stunning Eurasian country," but also focus on their Georgian peers. Thousands of Georgian village communities could benefit from the presence of Georgian volunteers – better educated and entrepreneurial, able to innovate, teach school subjects, serve as role models and community organizers. Secondly, TLG could increase the program's geographic coverage and impact by expanding the scope of volunteering activities. In addition to employing teachers living in remote communities, TLG could engage a much more qualified set of volunteers in the role of individual or group coaches. Coaching can be done remotely, over the internet. And one hour a week – a typical time commitment for a coach – is something within reach for many more people: foreigners and members of the Georgian diaspora who are not able to relocate to Georgia for a long period of time; members of the Georgian expat community; established Georgian professionals, teachers, and academics. Coaching comes with another advantage: it does not have to be limited to school disciplines. With the help of an experienced coach, Georgian kids could engage in a wide range of extracurricular activities – from guided reading or movie watching to entrepreneurial and social projects.

There are several things a redesigned TLG could do to achieve greater scale and impact Finally, TLG could do much more to systematically connect its teachers and coaches to other organizations working to develop Georgia's rural communities, and to each other. If less isolated and supported, TLG volunteers would have more impact, giving them a sense of greater satisfaction and professional fulfillment. * * * Georgia is not China. Georgians are a freedom loving people. But freedom without solidarity, without a sense of responsibility for the society's weaker members, is difficult to guard and sustain. Most Georgians are strongly attached to their ancestral village communities. With a bit of coordination and relatively modest funding, Georgia's visionary policymakers and philanthropists could start a significant social movement of homecoming and giving back. And this would be the best thing Georgia could do to reach its goal of Euro-Atlantic integration.

ABOUT THE AUTHOR:

Eric Livny is Founder and President at Tbilinomics Policy Advisors and Chair of Economic Policy Committee at the International Chamber of Commerce (ICC Georgia).


BUSINESS

GEORGIA TODAY MAY 21 - 23, 2019

2018 Data Shows Unemployment Rate in Georgia Dropped by 1.2% BY THEA MORRISON

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he annual unemployment rate in Georgia decreased by 1.2% to 12.7% in 2018, according to the National Statistics Office of Georgia (Geostat). Geostat reports that in 2018, the economically active population amounted to 63.9% of the working age population and, compared to 2017, the economic activity rate and employment rate decreased by 1.9 and 0.9 percentage points respectively. “In urban areas, the employment rate increased by 1.2 percentage points compared to the previous year, while in rural areas it decreased by 3.4 percentage points. In the urban areas, the economic activity rate decreased by 1.0 percentage points compared to the previous year, and in rural areas by 3.1 percentage points,” the report reads. The unemployment rate is much lower in rural than in urban settlements. In 2018, the unemployment rate in urban settlements decreased by 3.5 percentage points compared to the previous year, while in rural settlements it increased by 0.7 percentage points. In 2018, the unemployment rate decreased in Tbilisi, Ajara, Imereti and Guria regions compared to the previous year. In the capital Tbilisi, where the unemployment rate was the highest, this indicator decreased by 5.9% while in Ajara and Imereti region by 1.8 and 1.6% respectively. The unemployment rate was high in the Samegrelo-Zemo Svaneti and Mtskheta-Mtianeti regions (at 3.3 and 1.9% respectively). Over the last 10 years, the highest unemployment rate was observed in 2009- 18.3%. A year after the 2008 Georgian-Russian August war, the unemployment rate was 17.9%. According to the statistics, in 2008-2018, the unemployment rate decreased by 5.2%.

Image source: Pro Bono Australia

Last year, the share of hired employees was 50.8% among employed persons, having increased by 2.5 percentage points compared to the previous year. “The down-trend in self-employment has been maintained during the last five years. In 2018, the number of hired employees exceeded the number of self-employed persons for the first time,” Geostat says. The statistics show that, traditionally, the unemployment rate is higher for men than for women. Last year, this indicator was 2.7 times higher for men compared to the corresponding indicator for women. In addition, in 2018, the unemployment indicator decreased by 1.5% for women and by 1.1% for men compared to 2017. The activity rate is relatively high for men: for women it was 55.6% and for men 73.6 %. In 2018, the activity rate for women decreased by 2.6 % and by 1.0 % for men compared to the previous year. The agency says that in 2018, the employment rate for women decreased by 1.5 percentage points compared to 2017, while for men it remained the same. As usual, in 2018, the highest rate of unemployment was within the age group of 20-24 years (30.8%) while this indicator is typically the lowest in the 65+ age group.

EU-World Bank Project Launched to Support the Innovation Economy

Image source: Ministry of Economy and Sustainable Development

BY SAMANTHA GUTHRIE

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new project was launched last week to support Georgia’s Innovation and Technology Agency (GITA) by building institutional capacity. The project, titled ‘Increasing Institutional Capacity for Innovation’ (IICI), is supported jointly by the European Union and the World Bank. The European Union will provide 2.7 million EUR in funding for the project, which will be implemented by the World Bank. On Thursday, May 16, a launch event was held at Tech Park Georgia in Tbilisi’s Okrokana district. The opening remarks were delivered by recently appointed Deputy Minister of Economy and Sustainable Development Nikoloz Alavidze, World Bank Regional Director for the South Caucasus Mercy Tembon, and First Secretary of the Delegation of the European Union to Georgia Stig Kjeldsen. “The World Bank is proud to continue to stand by GITA as it transforms from a young ‘startup’ agency into a mature framework for Georgia’s coordination of its innovation and entrepreneurship policy and practice,” said Tembon. She added, “With support from the EU, and the Bank’s technical assistance, this project will allow GITA to take the next step toward greater institutional capacity and effectiveness, test the potential for technology transfer, and improve opportunities for investing in innovative, early stage companies in Georgia.” Speaking to the audience, Kjeldsen affirmed the European Union’s enthusiastic support for the project, saying "Innovation increases SME competitiveness and creates jobs, and innovation policy is actually at the heart of the EU’s own Europe 2020 strategy for growth and job creation…Further assisting GITA in building Georgia's innovation

ecosystem falls naturally in line with the EU’s commitment to supporting business development in Georgia." The overall objective of the project is to increase GITA’s internal capacity to develop and implement sustainable, impactful innovation and entrepreneurship policies and programs; test and demonstrate the viability of technology transfer between educational institutions and the private sector in Georgia; improve the deal flow of innovative startups ready for investment, and fund availability for early-stage companies. The European Union expects the IICI project to generate what they call “important results,” including easier access to support and finance for small and medium enterprises (SMEs) and innovative companies, a more coherent public approach to supporting entrepreneurs and SMEs, and an overall increase in innovative economic activity. In his remarks, Alavidze thanked the World Bank and the European Union for investing in innovation in Georgia. “We need more initiatives to promote an innovation ecosystem in Georgia, to encourage innovative companies and researchers to be able to monetize their own technological ideas and then sell them in commercially profitable products. Thus, the implementation of this project will be positively reflected on the economic growth process,” the deputy minister said. GITA currently operates several projects and initiatives, including FabLabs (fabrication laboratories) and ILabs (innovation laboratories) across the country, a business incubator, and innovationfocused youth camps. Tech Park (also referred to as Technopark) is one of GITA’s flagship projects. It offers FabLabs and co-working spaces to the public, designed to be a physical space for technological, educational, and professional resources to accumulate to support the development of a knowledge-based economy.

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BUSINESS

GEORGIA TODAY

MAY 21 - 23, 2019

The University of Georgia Will Host a conference on Tracking Russian Influence in Post-Communist Countries Modern Tunnel Boring Machines to Be Used in Nenskra HPP Project

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enskra Hydro JSC, the company behind the Nenskra Hydropower Plant (HPP) project will use the latest technology when excavating Nenskra HPP tunnels, namely, two Double Shield TBMs (Tunnel Boring Machines), custom made especially for JSC Nenskra Hydro by the German company Herrenknecht. The length of the machines is 190 and 250 meters, and the diameter 4.3 m and 5.3 m. Both machines have already been transported to Georgia and are being stored in Poti. Nenskra HPP infrastructure will include two tunnels. The Nakra transfer tunnel connects Nakra valley with Nenskra valley and is approximately 12.5 km long with 3.5 m diameter. It will divert water from the Nakra weir into the Nenskra reservoir. The Nenskra headrace tunnel follows the left bank of the Nenskra valley and is to be approximately 15.1 km long with 4.5 m diameter. The tunnel will connect the reservoir with the powerhouse. "The use of TBM has several advantages, among them safety and reduction of environmental impact. The TBMs we purchased combine tunnel excavation with concrete segment lining, which guarantees the safety of the workers, as

well as the safety and efficiency of the tunnels’ operation in the future,” said Teimuraz Kopadze, Chief Operations Officer of JSC "Nenskra Hydro". Excavation is planned from 2020. Prior to that, preparatory works are being carried out in Chuberi and Nakra villages of the Mestia municipality, which includes construction and rehabilitation of bridges and roads, as well as construction of temporary camps and power supply lines. JSC “Nenskra Hydro” was founded in 2015 as an outcome of cooperation between K-Water, Korea Water Resource Corporation, and the JSC Partnership fund. The company will construct a highdam HPP in Mestia Municipality, in the valleys of the Nenskra and Nakra. The HPP with 280 MW of installed capacity will annually provide Georgia with total energy generation of 1'200.00 GWh which will be fully consumed by the local energy market. Along with the construction activities, JSC “Nenskra Hydro” is implementing a range of social projects targeted at sustainable development of the region. The social projects are being implemented primarily in the areas of vocational training, small-scale infrastructure rehabilitation and small and medium enterprises.

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ussia’s economic integration in Europe has grown considerably over the last decades, with many national markets in Europe having become heavily dependent on Russian energy supplies and financial resources, allowing Moscow to gain access to key decision-making bodies and processes. As a revisionist power, Russia represents a threat and a destabilizing power not only to western secular liberal democracies, but most noticeably to post-communist countries. On June 17, the School of Social Science of the University of Georgia and New Economics School - Georgia will host an unprecedented conference on ‘Tracking Russian Influence in Post-Communist Countries.’ Within the framework of the conference, various issues will be discussed: • Political and economic influence of Russia; • Military and Hybrid influences of Russia; • Culture, norms and values; • Ways to address challenges. The list of speakers includes heavyweights in the field, among them: Michael Carpenter- Adviser of Ex VicePresident of US Joe Biden in International Relations, National Security Consultant at Lithuania National Defense Foundation, Director of Penn Biden Center for Diplomacy and Global Engagement. Jeffrey Mankoff- Deputy Director and Senior Fellow at CSIS Russia and Eurasia Program, Ex Advisor of U.S-Russia Relations at U.S State Department, Expert in International Security and Russian Foreign Policy. Brian Whitmore- Senior Fellow and Director of the Russia Program at the

Center for European Policy Analysis, Senior Russia Analyst for Radio Free Europe/Radio Liberty. Lecturer at Mechnikov National University in Odessa. Luke Coffey- Director of the Allison Center for Foreign Policy Studies at the Heritage Foundation, Ex Senior Adviser of Secretary of State for Defense of UK, Author of the book: “NATO-Georgia: U.S and European Interest”. The International Relations Department of the University of Georgia has been working on the scientific research ‘Russia’s Economic Footprint in Georgia – a Tool for Political Influence’ for a year, a study that strives to expose the eco-

nomic influence of Russia in Georgia, its effect on political decisions and communication strategies. The first phase of the research will be presented at the conference. During the study, the School of Science of the University of Georgia was visited by representatives of the New York Times, Harvard University Davis Center for Russian and Eurasian Studies, Center for Strategic and International Studies, Atlantic Council and others. The final results of the research will be presented at the Atlantic Council and the Center for Strategic and International Studies- CSIS.

The New Statement in Mobile Videography – What is Dual-View Video Recording? TRANSLATED BY KETEVAN KVARATSKHELIYA

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he answer: It is a new way of recording video, via a split screen, allowing for two different images in one video. Find out more below!

WHAT DOES ‘DUALVIEW VIDEO’ MEAN? Dual-view video recording is an innovative method for smartphone users allowing for simultaneous working of the two main cameras, allowing us to capture two different images of a view in one video. After the dual-view video recording you get two images on the smartphone display: one a full image, the second, you can zoom into any specific details of the event, all while recording.

HOW DO I SWITCH THE VIDEO RECORDING TOOL ON? Prior to switching the dual-view video recording tool on, go to Camera, tap on More, tap on Dual-View Video mode and point the phone in the direction of the view you want to record. On the updated display you will see the two sides of the image, full and zoomed. It is that easy to observe events from different perspectives!

WHO CAN ACCESS THE INNOVATIVE VIDEO RECORDING TOOL? Starting today, the dual-view video recording function is accessible for all those who own HUAWEI P30 series

smartphones: the HUAWEI P30 and/or HUAWEI P30 Pro. The HUAWEI Company introduced the brand new P30 series smartphones

to clientele at an event held on March 26 in Paris. The totally renewed, powerful and ultra-sensitive camera system of the HUAWEI P30 and HUAWEI P30 Pro

radically changes the rules of photography. The HUAWEI P30 series is equipped with a camera system launched as a result of the company’s ongoing col-

laboration with Leica, which, along with modern sensors and technology, enables automatic processing of an image and offers professional shooting capabilities.


BUSINESS

GEORGIA TODAY MAY 21 - 23, 2019

11

‘Georgia - Homeland of Wine Exhibiting in Tokyo, Japan

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eorgia, is the birthplace of wine. We present the Georgian wine, its history, culture, nature and the charms of the country – states the website of Georgia - Homeland of Wine, serving as a promotion for the exhibition carrying the exact same name, happening in Tokyo, Japan. ‘Georgia- Homeland of Wine’ opened on March 10 at the Terrada House exhibition center and will welcome visitors until May 7. The exhibition brings together unique archeological artefacts and latest Warpsquare technologies to bring to life Georgian culture and winemaking history, enabling visitors to travel to the ancient homeland of winemaking through interaction. The project ‘Georgia – Homeland of Wine,’ organized by the National Wine Agency and Association ‘Georgian Wine’

is being implemented in partnership with Sony music communication and TOPPAN. Numerous promotional events have already taken place: • Famous British journalist and wine writer Andrew Jefford read a lecture in Tokyo on the importance of Georgian wine. Jefford has been to Georgia a number of times and is a significant figure in the tight circle of Georgian wine experts. “Who would say no to Georgian wine?” he asked. “Georgia is the homeland of wine and has an 8000-year history of winemaking!” • A presentation was held in the headquarters of Tokyo Marine Holdings, the biggest insurance company in Japan, to discuss the potential Georgian wine has on the Japanese market, with renowned sommelier Azusa Segawa in attendance to talk about the unique traits of Georgian wine. Head of Tokyo Marine Hold-

ings and Director of Sony, Shuzo Sumi, and the famous TV reporter Hitoshi Kusano shared their impressions about their visits to Georgia and the representative of the Georgian Embassy in Japan, David Goginashvili, introduced the history and culture of Georgian wine, the investment climate and GeorgianJapanese relations. • Exhibition posters were placed on the walls of the five Tokyo subway stations The posters offer basic information about the project, Georgia, and its phenomenal wine. The five subway stations carry over 770,000 passengers daily. • At the ‘Georgia- Homeland of Wine’ exhibition, Wine Master of Japan, Kenichi Ohashi, highlighted that the Georgian winemaking method is unique in a presentation about Georgian wine given to Japanese wine professionals. The event was attended by up to 120 guests, among them local wine experts, members of the Japanese Sommelier Association, and representatives of restaurant and trade chains. Ohashi underlined the diversity of Georgian grape varieties which contribute to the taste and uniqueness of Georgian wine. "Georgia is truly the first producer of wine and therefore deserves respect. The diversity of varieties is also interesting. All this is new to us [Japanese] and I want us to learn more about Georgian wine: this is an ancient historical knowledge that is completely new to us,” Ohashi said. • A presentation about Georgia’s tourism potential was held for the representatives of Japanese tourist companies at Terrada Republic / TMMT Hall, Tokyo. Representative of the Embassy of Georgia to Japan David Goginashvili spoke

about Georgian wine, history, culture and gastronomy to representatives of Intourist Japan, Toyota Tsusho Corporation, Turkish Air & Travel, Latera International, Europe Express, and others. After the presentation, business meetings were held between representatives of the Georgian and Japanese sides, where

future cooperation plans were discussed. The implementation of the GeorgiaHomeland of Wine project started in 2017, at the Bordeaux Center for Wine and Civilizations, France, and involved a scientific study, based on which the scientific community recognized Georgia as the homeland of wine.

CULTURE

Meet the New Black Sea Arena Director INTERVIEW BY KETEVAN KVARATSKHELIYA

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lack Sea Arena, the largest concert arena in Georgia, located on Black Sea Coast, in the Guria region, and launched in 2016, has since seen Christina Aguilera, Vanesa Mae, as well as legendary Ennio Morricone among the performers. It recently welcomed a new Director, Tato Kharchilava. GEORGIA TODAY sat down with the young and energetic leader to find out more about him and his future plans. “Black Sea Arena was handed over to me nearly two months ago, with three years’ experience of communicating with artists,” he tells us. “The Black Sea Arena management had built up a great reputation by hosting a number of worldrenowned stars. Yet, after joining the Black Sea Arena management, my team and I, having organized many different events, were faced with a challenge: despite the relatively short but brilliant past, the Black Sea Arena was handed to us without any specific plans for the future.” Kharchilava strongly accentuated the significance of choosing artists with care. “Even though investment in the right equipment and maintenance of the venue is of crucial importance, without a correctly chosen performers, this alone will fail to attract an audience. It was on the

top of our agenda to negotiate only with those artists who would catch the eye of big audiences and bring success.” We asked Tato about the upcoming summer season. “Due to time limits, we were unable to open the season in May, so we are opening on June 16 with the concert of prominent American hip-hop group The BlackEyed Peas, guaranteed to be an unforgettable performance. I’m sure it will also prove to be one of the most successful evenings, as 50% of tickets were sold in the first couple of weeks, which makes nearly 5,000 individuals planning to attend so far,” Kharchilava told us.

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George Sharashidze COMMERCIAL DEPARTMENT

Commercial Director: Iva Merabishvili Marketing Manager: Sesili Tikaradze

GEORGIA TODAY

EDITORIAL DEPARTMENT:

Editor-In-Chief: Katie Ruth Davies

“August is to boast a great variety of diverse local, as well as international, performances; among them, Jessie J, one of the most popular British stars, and the American band Thirty Seconds to Mars will take to the stage of Black Sea Arena. Negotiations are ongoing with other foreign and Georgian artists, because, along with our aim to host famous artists and in this way boost the tourism of the region, popularizing Georgian performers is also of crucial importance for us.” We asked the Black Sea Arena Director about the criteria used when choosing potential performers.

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

“It is vital that the artist be famous and popular, as this serves as a guarantee that we’ll attract more listeners. However, we also have the tastes of Georgians and the residents of neighboring countries very much in mind when choosing singers.” Corporate Social Responsibility is of great importance today and a number of companies actively engage in various initiatives. We asked Kharchilava what his plans were in this regard. “Black Sea Arena puts a lot of effort into supporting Georgian artists and helping them financially to hold concerts. We also look out for the socially vulner-

Website Manager/Editor: Katie Ruth Davies Layout: Misha Mchedlishvili Webmaster: Sergey Gevenov Circulation Managers: David Kerdikashvili, David Djandjgava

able members of society, and those living in villages, by offering discounted tickets. It’s a project which serves to promote the culture of attending performances and aims to expand the global outlook,” said Kharchilava, adding that performances at Black Sea Arena are to cover all age groups. We asked if the Arena will be adapted to be a year-round venue, but he noted it is as yet not technically equipped to host performers beyond the summer season. We then asked about the role of the Arena in terms of boosting tourism and increasing the popularity of Georgia on a global scale. “Black Sea Arena bears a vital role for the country. With the number of great projects, we ensure this venue remains a symbol for the recognition of Georgia worldwide. It is also vital for the development of tourism, as attending a concert is not only limited to the cost of a ticket but encompasses transport, food and accommodation expenditures. So, taking into account the number of attendees, the benefit to Georgia and the country’s economy can certainly be impressive,” he stated. At the end of the interview, we asked Kharchilava to share some news about upcoming projects. “Black Sea Arena is to be a multifunctional venue, where we will host not only hip-hop and rock bands, but opera singers and musical plays as well,” he said.

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Profile for Georgia Today

Issue #1152 Business  

May 21 - 23, 2019

Issue #1152 Business  

May 21 - 23, 2019

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