Georgia

Germany is the most important donor in the Georgian energy sector and has played a major role in shaping it over the past 20 years. Its activities range from the initial emergency supply, investments in efficient power generation and distribution to the promotion of renewable energies and energy efficiency. 90% of the electricity produced is generated from environmentally friendly hydropower. Thanks to KfW Development Bank’s involvement, Georgia has stabilised its electricity supply and is now a full member of the European Energy Union.

Project information - Energy (PDF, 179 KB, accessible)

With its support in the area of biodiversity and natural resources, KfW Development Bank is the largest donor in the southern Caucasus. The strategic framework is the so-called “Ecoregional Conservation Plan” – a transnational strategy that has been recognised by all three countries of the South Caucasus. KfW specifically supports the establishment and rehabilitation of protected areas. As the nation has difficulties fully financing the protected areas’ operating costs, the Caucasus Nature Fund (CNF) was founded in 2007. The CNF partially finances protected areas’ operating costs, thus ensuring their sustainability over the long term. Using the new instrument of contractual nature conservation, land users will receive assistance as they sustainably use and protect valuable habitats between the protected areas. Support is also being provided for sustainable orientation of forest management in the province of Adjara.

Despite high economic growth, Georgia still suffers from high unemployment, particularly among young people. A key reason is that the Georgian education system does not adequately prepare students for the challenges of today’s labour market. One approach to solving this problem is to modernise the system of vocational training in Georgia. KfW supports this process by financing a “Centre of Excellence” for construction and logistics, two professional fields which will become increasingly important in the future due to the geostrategic position of the country between Europe and Asia. In the course of the COVID-19 pandemic, which hit Georgia hard both economically and socially, KfW, together with other international financing institutions, financed economic reforms to improve competitiveness and increase crisis resilience of the Georgian economy. This created important preconditions which maintained the substance of the Georgian economy during the coronavirus crisis and will facilitate a fast recovery after it ends. This support also reduces the vulnerability of the Georgian economy to economic shocks in the medium term. Provision of financing to stabilise the Georgian social system supplemented this support.

Despite the progress it has already achieved with regard to providing public services, Georgia still faces enormous challenges, particularly at the local level. The population has insufficient access to essential municipal services, and they often do not satisfy the standards, which have since been aligned with those of the EU. Municipal infrastructure, particularly in semi-urban and rural regions, suffers from an investment backlog that has been building for decades. The urban infrastructure, some of which was built before the Second World War, is largely dilapidated, oversized and inefficient. So paradoxically, in Georgia, a country with abundant water resources, water supply is a major problem. Waste water disposal also barely meets minimum standards – waste water is generally not adequately treated. This is why KfW Development Bank’s commitment is so important for supplying people in Georgia with municipal services, clean drinking water and waste water treatment. For many years, the cooperation has focused on the renewal and expansion of the entire drinking water and sewage systems in Batumi, the third largest city in the country with around 200,000 inhabitants and an important regional tourist destination. In addition, KfW is supporting the development of functioning solid waste and recycling management to reduce the amount of solid waste and greenhouse gas emissions. It is also promoting sustainable regional development in the Kazbegi and Imereti regions, which are attractive regions for tourists, and is developing new approaches for climate-friendly and environmentally sound urban mobility for Batumi and the capital of Tbilisi. The priority areas here are innovative traffic systems for efficient traffic management and increased use of environmentally friendly transport such as public transport, cycle paths and pedestrian paths to usher in an urban transport transition.