Press release number: IFAD 29/05

Rome - 29 June 2005 – Three hundred rural communities in Georgia will initially benefit from a new project designed to increase incomes and employment opportunities among small- and medium-scale farmers.

A US$34.7 million project will be financed by a US$9.2 million loan and a US$800,000 grant from the International Fund for Agricultural Development (IFAD) to Georgia. The loan agreement was signed today at IFAD headquarters by Zaal Gogsadze, Georgian Ambassador to Italy, and IFAD’s Vice President, Cyril Enweze.

Rural poverty has been on the rise in Georgia since the collapse of the Soviet Union and its command economy. Today, farm holdings tend to be small and fragmented as more than 80 per cent of the rural population depends on subsistence farming for their survival. Most rural farmers in Georgia lack access to the resources they need to enter commercial agriculture, such as capital, land, markets, and appropriate technologies.

The four-year Rural Development Project will be implemented by the Ministry of Agriculture and focus on developing the country’s agricultural supply chain, improving rural financial services and modernizing rural institutions through legal reforms. Under the financial agreement, the IFAD loan will be used exclusively to link rural communities with marketing chains, expand credit availability and improve land tenure, while grant funding will be used to build the capacity of rural finance providers.

Project activities will be concentrated in areas that produce commodities with high potential for agribusiness, such as cow’s milk, apples, potatoes, hazelnuts, and wine grapes.

The project will be cofinanced by a US$10 million credit from the International Development Association of the World Bank, a US$4.5 million grant from the Japan Policy and Human Resources Development Fund, US$2.5 million from the government, US$2.9 million from partner financial institutions, and US$4.8 million from rural participants.

With this loan, IFAD will have financed 3 projects in Georgia, totalling almost US$25 million.

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IFAD is a specialized agency of the United Nations dedicated to eradicating rural poverty in developing countries. Seventy-five per cent of the world’s poorest people – 800 million women, children and men – live in rural areas and depend on agriculture and related activities for their livelihoods. Through low-interest loans and grants, IFAD works with governments to develop and finance programmes and projects that enable rural poor people to overcome poverty themselves.

There are 192 ongoing IFAD-supported rural poverty eradication programmes and projects, totalling US$6.5 billion. IFAD has invested about US$2.8 billion in these initiatives. Cofinancing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help more than 100 million rural poor women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested almost US$8.7 billion in 690 projects and programmes that have helped more than 250 million poor rural men and women achieve better lives for themselves and their families. Governments and other financing sources in the recipient countries, including project beneficiaries, have contributed about US$8.4 billion, and multilateral, bilateral and other donors have provided about US$6.9 billion in cofinancing.