Financial Times: “Mineral water debut leads to rich pickings – with a little help”

Small and medium-sized enterprises (SMEs) for the backbone of any market economy and this is especially true of emerging markets, including Georgia.

In emerging Europe, between 70 and 95 per cent of all registered companies are classified as SMEs, providing 60-80 per cent of growth in gross domestic product, according to the European Bank for Reconstruction and Development (EBRD).

Despite their outsized role, SMEs in emerging economies struggle to secure finance for growth.

But this wasn’t the case for Marneuli Food Factory (MFF).

Jonathan Wheatley, writing for the Financial Times, describes the MFF success story in Georgia and how using foreign aid helped the company transform from a run-down mineral water factory into a dynamic enterprise that serves the local and international market.

In 1997, after visiting the derelict mineral water factory, Swiss tourist Thomas Diem put up $40,000 to get the company back on its feet. Fast forward a few years and together with local investors, they created JSC Healthy Water and, later, a holding company that today owns four companies: the water bottler, a distribution company, an agribusiness company and Marneuli Food Factory, or MFF.

Wheatley states not all companies in Georgia are as successful as MFF but reforms enacted since the Rose Revolution in 2003 aimed to help small businesses gain access to capital that will fund future growth. Larger financial institutions were also offering loans to SMEs, and this helped too.

He spoke to Claudio Viezzoli, head of the EBRD’s Small Business Initiative, who said development has come most quickly to countries that make life easier for small entrepreneurs.

This is true in Georgia and in other countries that understand that wealth and growth will come as a result of people risking their money in successful ventures”, conversely adding "those countries that are stuck in a complex setting of difficult administrative systems are bound to be more prone to corruption. Unfortunately, this is still true in a lot of countries in the region.”

Read the full article here: www.ft.com