Georgia’s Path to Growth Through Public-Private Partnerships

Georgia is making significant strides toward becoming a regional transport and energy hub through strategic investments in infrastructure. The Asian Development Bank’s "Public–Private Partnership Monitor: Georgia" report highlights the country’s use of public-private partnerships (PPPs) to enhance its transport, energy, and social sectors. Despite the challenges of limited institutional capacity and low awareness, Georgia’s robust legal framework and ambitious projects like the Black Sea Submarine Cable Project are positioning the country for sustainable growth.

Georgia, a small yet strategically positioned nation in the South Caucasus, is working to solidify its status as a regional hub through a series of infrastructure investments. The recent "Public–Private Partnership Monitor: Georgia" report from the Asian Development Bank (October 2024) provides a thorough look at how the country is leveraging public-private partnerships (PPPs) to develop critical sectors like transport, energy, and urban services. With economic growth averaging 7.5% in 2023, Georgia is focusing on sustainable development, prioritizing renewable energy, improved connectivity, and enhanced social infrastructure.

Building on a Strategic Location

Georgia's location at the crossroads of Europe and Asia makes it a prime candidate for becoming a regional transport and logistics hub. The government recognizes the opportunity this presents and is channeling significant resources into developing the nation's infrastructure to capitalize on its geographic advantage. The ongoing development of the East-West Highway, which connects the Caspian Sea with the Black Sea, exemplifies this commitment. This flagship project aims to boost trade routes and strengthen regional connectivity, underscoring the nation's goal of becoming a key player in global logistics.

In addition to improving its road network, Georgia is modernizing its railway system, with investments directed toward both infrastructure and rolling stock. The country is also investing heavily in renewable energy projects like hydropower, wind, and solar, positioning itself as a green energy leader in the region. One of the most ambitious initiatives in this space is the Black Sea Submarine Cable Project, which is expected to launch in 2029. This project aims to connect Georgia’s power grid with Europe, creating new export and transit opportunities for renewable energy.

A Framework for Growth

Georgia’s success in implementing PPPs hinges on the robust legal framework it has developed since 2018. The PPP Law allows for various types of partnerships, both concession and non-concession. By establishing a clear regulatory environment, the government has attracted private investors who are now key players in several sectors, including transport, energy, and social infrastructure.

For example, in the energy sector, Georgia has laid the groundwork for projects that will have a long-lasting impact on its energy security and economic stability. The Black Sea Submarine Cable Project, among other initiatives, is a clear indication of the government's willingness to embrace large-scale projects in collaboration with the private sector. Moreover, social infrastructure projects such as healthcare and educational facilities are also receiving attention, further signaling the government’s commitment to inclusive development.

Addressing Key Challenges

Despite its impressive progress, Georgia’s PPP landscape is not without its challenges. The report highlights several issues that need to be addressed for the PPP environment to reach its full potential. One of the primary hurdles is the limited institutional capacity, which slows down the process of project development and approval. Many government agencies lack the technical expertise and resources to efficiently manage PPP projects, resulting in delays and missed opportunities.

Another challenge is the relatively low awareness of PPPs among both public and private sector actors. Georgia is still in the early stages of fully integrating PPPs into its development strategy, and many businesses and policymakers are not yet fully informed about the benefits of such partnerships. To overcome these challenges, ongoing regulatory reforms and government-led training programs are essential. Building capacity within government agencies and increasing public awareness about the benefits of PPPs will be crucial for Georgia’s continued development.

The Road Ahead

As Georgia looks toward the future, its ability to sustain economic growth will depend largely on its continued success in implementing PPPs. The government’s focus on infrastructure development, especially in the transport and energy sectors, is a step in the right direction. With a clear legal framework in place and a growing pipeline of projects, Georgia is well-positioned to attract further private investment, ensuring that it remains a key player in the region’s economic landscape.

However, it will take more than just legal frameworks and investment to fully realize Georgia’s potential. The government must continue to address institutional challenges and ensure that all stakeholders are aware of the opportunities that PPPs present. By doing so, Georgia can leverage these partnerships to drive growth and improve the quality of life for its citizens.