Georgia’s minister of the economy and sustainable development, Vera Kobalia, could be considered an unlikely person to fill one of the country’s most important posts. On her appointment, her critics railed against her lack of experience and asked how Georgian president Mikheil Saakashvili could possibly appoint a 28-year-old to the job. Criticisms that her appointment was inappropriate were not quashed when racy photos of the minister were found on her Facebook page.
But Ms Kobalia is undeterred. With her bodyguard pacing outside the London hotel’s lounge, she brushes off criticisms about her inexperience and answers questions about the future of her country’s economy with poise and impeccable English that she gained from formative years living in Vancouver, Canada. She admits that she was nervous when the ministerial job was offered, and pondered for a few days whether to take it, as she was already fully committed to a non-governmental organisation that she had co-founded. Called the Coalition for Justice, the organisation is dedicated to helping displaced people from Georgia’s zones of conflict. Ms Kobalia herself is from Sukhumi, in the disputed region of Abkhazia.
Path to growth
The minister has made the development of the tourism and agriculture sectors her top priorities and is hoping to get the country’s economic rebound back on track. After years of solid growth, largely due to huge inflows of FDI, Georgia’s economy tanked in 2009, with a GDP contraction of 7%. This year Ms Kobalia says the country’s GDP will grow by 6%.
She says: “We think the agricultural sector is very important. The easy explanation is that the population of the world is growing, we are seeing the need for natural and organic products, and Georgia has always been a producer of those. We are proud that we don’t have GM [genetically modified] products in Georgia. [Developing agriculture] goes along with our strategy of a 'green Georgia'. This includes alternative energy, as we are a country with hydropower, but we are only using 18% of our capacity. So we are always behind what we could potentially use.”
Tourism will undoubtedly be another important sector for the country’s growth. Ms Kobalia recalls a time under Soviet rule when Georgia received 7 million tourists a year. This year, the country expects 2 million tourists, so there is plenty of scope for expansion. She believes that, in the short term, the development of tourism is the easiest way to boost the economy and provide jobs. She also says that she would like to see more development of the country’s IT sector.
Reversing the brain drain
Ms Kobalia claims that many Georgians who left the country in the chaotic years of the 1990s, as she did, are now coming back to Georgia and adding to the country's pool of human capital. Her future does not appear to be in politics, as she mentions that she would like to remain in the post long enough to accomplish her goals, but then she would like to return to the private sector.
When it comes to reattracting FDI to the country, the minister says that there were large inflows to Georgia prior to the global economic crisis. But when the crisis hit, it affected all countries and there is much more competition. Ms Kobalia also believes that the political and security situation in the country is improving, and for evidence she says that fewer investors are asking about risks of this sort, compared with 2008 when it was all any potential investor wanted to know.
She says: “It was much easier attracting FDI before the crisis. People realised that [Georgia] was an emerging market positioned extremely well between Europe and Asia and they saw the potential. Now, in 2010 and going into 2011, every single country in the world is fighting over the same dollar.
"It is not that the money isn’t there, but people aren’t spending the money. So we [countries seeking FDI] are all doing the roadshows and presentations and just presenting the growth of the economy isn’t going to work any more. You need to give specific numbers and feasibility studies to these potential investors and really interest them.”