According to the official data of Business Registry, there are 14,700 thousand subjects in the region, comprising 10.5% of the total number of subjects registered in the country. Among the regions, by the number of registered subjects, Samegrelo - Zemo Svaneti is after Tbilisi and Imereti. Most of these subjects are small and medium businesses. Most of them are individual entrepreneurs – 33,600. There are also limited liability companies – 5,100; cooperatives – 828; solitary liability companies – 356; joint stock companies – 255; and non-profit legal entities – 1173.
In 2011, added value generated in Samegrelo - Zemo Svaneti’s business sector comprised GEL 366.3 million, which is two times higher than the same figure for year 2006. With respect to investments in fixed assets, significant growth was recorded from 2010, achieving, as of 2011, GEL 162.1 million. In the same year, business sector turnover almost tripled, compared with 2006, comprising GEL 1.332 million. Production in the same period increased about 2.4 times and amounted to GEL 836.2 million in 2011.
Business sector development in the region is based on the following advantages: The region is a strategic location, particularly due its transit function – existence of Poti Port in its territory, connecting European and Asian countries, and western and eastern regions of Georgia. In recent years, banking sector has been significantly developed in the region. Branch offices and service centers of commercial banks operate in all self-governing units. Number of microfinance entities increased as well. A good number of audit firms operate in the region and Zugdidi and Poti have branches of almost all insurance companies that operate in the country.
Existence of Poti Free Industrial Zone (FIZ), created in 2010, could be regarded as a factor that promotes business sector development. The FIZ occupies an area of about 300 hectares. Investments in the Poti FIZ contribute to creation of new jobs and provide opportunities for the development of local supply market and direct and indirect relations with the investors. By the end of 2013, a network of main and accessory roads to the industrial land parcels in the FIZ project zone will be constructed, as well as streets lighting, water and power supply facilities, arrangement of fire-protection, sewage, wastewater and telecommunication infrastructures, as well as providing an irrigation network for the green zones. Proper investment and infrastructure policies, as well as improvement of investment environment in the country, significant investments in the FIZ are expected especially in sectors such as high technologies, biotechnology, production of construction materials, engineering, steel, light industry, etc. With respect to business development and growth of cargo turnover, additional opportunities will be provided via further study of the possibility of a high capacity port in Anaklia as well as commissioning of Mestia Airport and completion of Poti Airport.
In recent years, positive trends were recorded in processing and export-oriented sectors (e.g., hazelnut production and processing grew significantly and steadily for the last decade). Development trends are apparent in the service sphere as well and situation in trading entities also improved.
Proper development of business sector in the region is hindered by the following factors: The region’s closeness to the conflict zone, weak commercial and basic infrastructure, poor revenues of the population and local budget, limited investments, low development level of local social capital, situation of labor market, high price and limited availability of bank credits (including agri-credits), low potential for alternative capital, lack of systematic information about local business potential and supply market.
In addition, the region lacks the most significant business supporting organizations (with the exception of Zugdidi Chamber of Trade and Industry with its very limited resources and capacities, and the newly established AIP in Poti, which, within the scopes of the grant project, provides consultations to support small and medium businesses) – such as business center, business incubator, re-training centers, investment and technological transfer centers, leasing companies, etc. Significant projects of well known international organizations and international NGOs operating in the region provide only fragmented support to business sector.
It should be noted that in 2008-2009, the national program of “cheap credits” was implemented to support small and medium businesses. Within the scope of this program, at the national level, including Samegrelo - Zemo Svaneti region, GEL 64.8 million was provided as loans. Effectiveness of this program was limited due to small funds, which was further aggravated by operational problems of companies because of the Russian-Georgian war and world financial crisis.
In Samegrelo - Zemo Svaneti region, industrial sector is weakly developed. In 2011, industry turnover in Samegrelo - Zemo Svaneti was GEL 289.7 million; output – GEL 286.1 million; number of people employed in the industry sector- 4,646; average monthly remuneration of the employees - GEL 283.4; and investments in fixed assets – GEL 14.9 million. It should be noted that 2011 was distinguished with very high growth rates. In particular, compared with 2010, turnover increased 2.1 times; production – 2.3 times; investments in fixed assets – 3.6 times; and growth of average monthly remuneration of the employees in production sector was 30%.
Value added in the production sector amounted to GEL 163.3 million, 3.3 times greater than in 2006. Negative growth rate was recorded only in 2008, caused by the outcomes of the war in August 2008. In 2007, 2009, 2010 and 2011, average growth rate was 14.3%.
Majority of the region’s industrial enterprises are small and medium enterprises. Currently, the regions key products include processed hazelnuts and timber materials. In Zugdidi Municipality, the production profile includes hazelnut and tea processing; in Abasha – ice cream and confectionery; in Tsalenjikha – timber processing and tea production; in Martvili – tea processing and wine production; in Senaki – wine production; in Poti – production of cod liver oil, fish powder, meat and dairy products; in Chkhorotsku – hazelnut production; and in Mestia – timber processing. Lack of agricultural products processing enterprises should be regarded as one of the key problems in the region’s production sector.
Given the region’s assets and resources, production sector has great potential of development in the region provided that effective investment and infrastructure policies are implemented. Effective use of the assets and resources, efforts oriented towards stimulation of local and foreign investments, maximum promotion of quality and export-oriented goods production, systematic care about improvement of the local workers qualifications, improvement of credit availability, formation of alternative capital market and taking advantage of various endogenous and exogenous factors would play critical role in the development of production sector.