“Georgia should take advantage of sanctions against Russia” - When realpolitik meets business

One of this year’s major plans for Zugdidi, main city of Samegrelo province of Georgia, is the construction of a massive nut, almond and dried fruit processing plant. The project is managed by the Zugdidi-based nut production company Betachi with the help of Russian investors.

We sat down with businessman Archil Vekua to hear his thoughts on the new project, the export potential of nuts and nut-derived products, the business environment, existing issues and the newly-founded company, “Snaxco”:

– Mr. Vekua, for how long has the Betachi company been operating in the region?

– Betachi was founded two ears ago and mainly deals with export of nuts and almonds to Russia. It is precisely this field that we plan to expand by constructing a nut processing plant in Zugdidi together with a certain Russian company. We are expecting approximately a million USD in direct investment to achieve this goal. Out of this, 400,000 USD will come from a joint Georgian-Russian investment, and 600,000 will be an agrarian loan from TBC Bank within the framework of “Produce in Georgia” project.

– Do you consider the region’s current environment attractive for investment?

– As you probably already know, the Russian market has become closed due to sanctions, meaning that packaged nuts, almonds and such are no longer getting shipped to Europe. Keeping this in mind, we have offered a Russian company to transfer its production to Georgia and resume its exports to Europe from here. They agreed to the proposal.

I think that both business and the government should take advantage of the situation. Since Russia ended up under sanctions and Russian produce got barred from European markets, we have an opportunity to grab a piece of investments into Russia for ourselves, start producing goods that were supposed to be produced by Russia and export them to Europe.

– This is a very bold statement.

– When dollar’s exchange rate goes up, Russian exports decrease, and so does the amount of money transfers from there. In a situation like this, we do not have the luxury of taking a moral high ground or turning up our noses at this chance – we have to seize it and use it. It is important for the re-orientation towards Europe to happen in a timely fashion, especially considering that neither the business nor the government possess the resources necessary to invest into this field independently.

– Does business feel much support from the government nowadays?

– Yes, quite a bit, especially in the field of attracting investors. However, we prioritize European investors above all, which might prove unwise, considering that many Russian investors already have the European market figured out and sales established there. Due to this, getting them interested in Georgia might verywell be a far easier, faster and more efficient method than any other we currently have at our disposal. The European market is closed to them nowadays, which basically amounts to cutting off their air. And we have just the oxygen they need – the only trick lies in utilizing this advantage in a smart way. This applies both to the business and the government.

– Is your company going to be entirely export-oriented or do you intend to carve yourself a spot in the Georgian market as well?

– Part of our product will be sold in Georgia. We will try to do our best to supplant the goods we now import from Turkey with Georgian ones. I doubt that the Georgian market has any brands of similar type and quality to ours that would be able to put up a serious competition. As for the European market, the German, Dutch and Italian companies that our Russian partners supply – or used to supply, to be precise – with their products, they are ready to cooperate with us. We also have plans to export our goods to Asia.

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