Green Finance and Investment Access to Green Finance for SMEs in Georgia

Abstract: Small and medium-sized enterprises (SMEs) play an important role in Georgia's economy. SMEs provide more than 67% of employment and about 62% of gross value added. Although the environmental footprint of individual SMEs may be low, their aggregate impact in many respects exceeds that of large businesses. Commercial banks have an important role to play in providing access to green finance, particularly for SMEs. This report reviews the experience with green lending in the SME sector in Georgia. The analysis identifies the main challenges with lending to SMEs for green projects and discusses possible solutions. The report, in particular, looks at the role of the government and the policy instruments it can use to stimulate higher demand for green lending in the SME sector Foreword Abbreviations and acronyms Executive summary Chapter 1. The macroeconomic context for green investments in Georgia 1.1. Political context 1.2. Macroeconomic situation 1.3. Macroeconomic situation 1.4. Forward outlook Notes References Chapter 2. Small and medium-sized enterprise policy in Georgia 2.1. Context for SME development 2.2. Definitions of SMEs in Georgia 2.3. SME policy environment 2.4. National SME development strategy 2.5. Institutional support 2.6. Programmes and measures to support SMEs 2.7. Emerging measures 2.8. Barriers to access to finance 2.9. Financing structures 2.10. Market gap for green SME investments References Chapter 3. Energy, Environmental and Climate Policy of Georgia 3.1. Context Intended nationally determined contribution Low Emission Development Strategy National Energy Efficiency Action Plan Energy community Nationally appropriate mitigation actions 3.2. Renewable energy 3.3. Potential areas for strengthening Notes References Chapter 4. Climate finance for SMEs in Georgia 4.1. Overview 4.2. Georgian credit market 4.3. Green credit 4.4. Local banks that provide green finance in Georgia 4.5. Key success factors 4.6. Key challenges 4.7. Policy response Notes References Chapter 5. Recommendations for policy makers 5.1. Strengthen environmental policy and regulation 5.2. Define role of SMEs in the green transition 5.3. Improve wider access to finance for SMEs 5.4. Improve the availability and terms of green finance for SMEs 5.5. Scale the overall availability of green finance in the Georgian economy 5.6. Raise awareness among SMEs of green transition opportunities References Annex A. Georgia’s banking sector Annex A. Georgia’s banking sector Annex B. SME low-cost energy and resource efficiency investments