The International Network on Financial Education (OECD/INFE) of the Organization for Economic Co-operation and Development (OECD) has published the results of the 2021 International Survey on Financial Education for Micro, Small and Medium Entrepreneurs.
The study, conducted based on the OECD/INFE methodology, Georgia participated along with 14 countries. The results showed that Georgia's financial education score on a 17-point scale was 10.3 points (60%), lower than the average of other countries covered in the study.
"As for the issues that were the least affected by the Coronavirus pandemic, respondents named quantity of employees and debts – 72% of them reported on unchanged number of employees, 52% reported of unchanged financial debts, in case of the latter, 22% of respondents declared that as a result of the pandemic,their financial debts increased/increased significantly.
Almost half of the inquired companies note that as a result of the Coronavirus pandemic, their company appeared in the situation when cash flows were not sufficient to cover financial liabilities or to reimburse expected business costs. The said index was higher in regions than in Tbilisi – 42% of companies that operate in the capital city faced the lack of cash flow, while the share of such companies was 53% in regions.
Main strategies the companies applied to cope with the said situation included cutting business operation costs (46%), utilization of owner’s personal/family money or credit (44%), temporary suspend of business operation (38%).
As for differences in strategies by regions and Tbilisi, it turned out that in case of Tbilisi, companies cut salaries/reimbursement of owners in 10% more cases, compared to Tbilisi, 12% more companies in regions had to take a new debt to cover liabilities or cope with foreseen costs. In addition, in Tbilisi, 12% more companies had to pay payables and salaries belated.
After the start of the pandemic, 1/5 of the inquired companies applied for a loan for business needs, 66% of them were rewarded with a loan. Among them, who did not apply for a loan, 64% declared that their business did not require additional funding.
As the study demonstrates, in the majority of cases, companies did not use the measurements provided by the state during the pandemic - Cash benefits (59%), Tax benefits(64%), Loan deferment (64%), Loan Interest Subsidy (84%).
Reasons behind refusing the state measurements are different, for example, as declared by 38% of companies, they did not use Loan deferment as they did not need it, 45% could not use cash benefits as their companies were not entitled for this exemption, also 54% of companies could not use the Loan interest subsidy because of the same reason", - the report reads.
The research in Georgia was organized by the National Bank of Georgia and was conducted by the ACT research and consulting company, with the financial support of the European Fund for South East Europe Development Facility (EFSE DF). The survey embraced a thousand of micro, small and medium business owners across the country. Individuals directly involved in the company’s financial decision-making process were interviewed. For the purposes of the study, companies with the annual turnover of up to GEL 1.5 million and employing up to 50 staff were selected.
