By Lynellyn D. Long, Ph.D. | Project Leader
Autumn 2024 will be remembered as the time when several national elections changed political alliances, institutions, and boundaries. Campaign promises of increased tariffs may well lead to trade wars that are likely to affect supply chains, production costs, and business operations worldwide. Micro and small business owners operating on the margins are particularly vulnerable. Yet, as HERA women entrepreneurs observe, their operations may be impacted not only by the American and European elections but equally or more so, by those close to home in Moldova and Georgia.
Georgia
During spring 2024, an estimated eight percent of Georgia’s population participated in mass demonstrations to protest the Government’s “Law of Transparency on Foreign Influence.” Dubbed the “Russia Law” by the protestors, the Law took effect in September. The new law requires non-governmental organizations (NGOs), receiving funds from abroad, to register as foreign agents or specifically as "organizations carrying the interests of a foreign power."[1] This effectively makes it difficult for Georgian NGOs to receive foreign funding. Despite, or because of, the ongoing civil protests, HERA received 44 applications from Georgia, representing 28 percent of this year’s total applicant pool from the region, and the most ever to date from Georgia. A panel of ten international judges ranked 19 of the 44 highly. During the summer, three assessors (two from the UK and one from Georgia) visited the finalists at their ventures and awarded 13 grants.
On October 26 Georgia held its national elections. Irakli Kobakhidze of Georgia Dream (GD), the ruling Parliamentary party claimed 54 percent of the vote to become Prime Minister.[2] The Opposition, comprised of four parties, protested on television channels that the GD party had only won 42 percent. The Opposition is seen as pro-West and GD as pro-Russia so the stakes were high.
Since 2016 Georgia and the European Union (EU) have signed a “Deep and Comprehensive Free Trade Agreement” (DCFTA), which helped to diversify the country’s trading partners. Georgia’s top five trading partners are: (1) mainland China - $703.5 million (18.1 percent of Georgia’s exports); (2) Russia - $551.7 million (14.2 percent); (3) Bulgaria: $423.1 million (10.9 percent); (4) Turkey: $366.5 million (9.4 percent); and (5) USA: $263.6 million (6.8 percent).[3] Since 2010, HERA has supported Georgian grantees, who trade in both East and West markets. However, increasingly, young HERA applicants are focusing on selling products and services online to Europe and North America customers.
In 2023, Georgia became a candidate to join the 27 EU countries. An estimated 80 percent of Georgians support joining the EU and NATO. However, a significant minority is pro-Russian. GD claims to be neutral and that they could not be “pro-Russian” with 20 percent of Georgian territory lost to Russia in the 2008 War. However, many who voted for GD remember the Soviet Union favourably, are more likely to be older, live in rural areas and/or be unemployed. Following this year’s October election and Western concerns of election irregularities, the EU froze Georgia’s bid to join, although Orban, the Hungarian prime minister, travelled immediately to Georgia to congratulate the new Government.
As witnessed last summer, an immediate impact of the country’s ongoing political instability has been a downturn in tourism, one of Georgia’s main sources of revenue. The country’s strong GDP growth rate estimated at 10.96 percent in 2022 decreased to an estimated 7.47 percent in 2023.[4] However, during the same period, the estimated inflation rate decreased from a high of 11.99 percent in 2022 to 2.49 percent in 2023. Georgia’s total unemployment rate has remained high and fairly constant estimated at 11.66 percent in 2022. Youth (15-24 years) unemployment is even higher, estimated at 28.7 percent for men and 32.7 percent for women (2023).
Given these data, it was not surprising that many young aspiring entrepreneurs applied for a HERA grant in 2024. That demand, as some foreign aid programs cut back, is likely to increase in 2025. In terms of the impact of the “Russian Law”, the Georgian our organisers and Board are optimistic that the Government will continue to welcome HERA’s support to innovative, young women entrepreneurs creating new markets, growing their products and services, and hiring and training others.
Moldova
In 2024, the HERA Board held our Annual General Meeting in Chisnau and organized a workshop for past and current grantees. In this year’s Grants Competition, 57 Moldovan women, representing 37 percent of all applicants, comprised the most in number from the four countries. In September three assessors (German, British, and Moldovan) visited 25 finalists and awarded 16 grants.
Since the Moldova program began in 2012, HERA teams have witnessed the rural/urban, incountry/expatriate residence, ethnic/linguistic minority and Transnistria/Moldova divides. President Maia Sandu, the incumbent, is EU-leaning and a former World Bank economist. Campaigning on anti-corruption, her re-election for another four years was never assured. During the election there were documented charges of vote buying by the pro-Russian oligarch, Ilan Shor. Shor reportedly spent $39 million in handouts to 138,000 Moldovans to support the pro-Russian candidates.[5] However, none of the five candidates received a clear majority in the first round and on November 3, a run off was held between the top two candidates: Sandu and the former Prosecutor General, Alexander Stoianoglo. In the first round, despite Russian interference, the referendum to change the Constitution to commit to joining the EU passed by a narrow margin.[6]
Stoianoglo, who had been fired by Sandu, favored closer relations with Moscow. In the run off, Sandu won 55 percent to Stoianoglo’s 45 percent. However, Stoianoglo gained 51 percent of the votes of those residing in Moldova. Sandu, in contrast, won her second term with strong support from 1.2 million expatriate Moldovans, young Moldovans, and urbanites. Despite bomb threats at overseas voting points, the expatriates contributed to the very high turnout of 54 percent on the second round.
Many Moldovans live and work in Western Europe and provide remittances. In 2014, Moldova also negotiated a DCFTA with the EU. By 2023, 65.4 percent of its exports went to EU markets.[7] The EU (2023 data) comprises 53.7 percent of Moldova’s trade followed by Ukraine (13.1 percent) and China (8.1 percent). Trade with Russia has fallen and comprises 3.7 percent. In the rural areas, many HERA entrepreneurs sell in local markets whereas in the cities, many sell online to buyers in Europe.
Since early 2000, Moldova’s economy has trended upward with two exceptions: (1) following its bank fraud scandal in 2014; and (2) during the COVID pandemic in 2022. Inflation decreased from a high of 28.74 percent in 2022 to 13.42 percent in 2023 (but was 5.11 percent in 2021).[8] Unemployment rose in 2023 but overall remains low at 1.62 percent (versus 0.91 in 2022) Youth unemployment (ages 15-24) is 4.2 percent.
Although Moldova remains one of the poorest countries in Europe, many HERA entrepreneurs are optimistic that the Government is working to address corruption and that their economy is improving. The HERA assessors have also witnessed impressive improvements in roads and the country's overall infrastructure. Some HERA entrepreneurs have applied for grants after returning from Western Europe to invest their savings and start businesses in Moldova. Since the war in Ukraine, HERA has also awarded grants to several Ukrainians, who have resettled there. The returns of Moldovan young entrepreneurs and Ukrainians resettling in Moldova are likely to increase the demand again in 2025. Given the election results it will be important for HERA to reach out to more women entrepreneurs in rural communities.
Updates
To date, HERA has awarded 563 grants to women entrepreneurs across Armenia, Georgia, Moldova, and Ukraine. These entrepreneurs in turn have trained and/or employed over 850 young women at risk of dangerous migration and trafficking. Since HERA began working in the four countries, the women entrepreneurs have faced down COVID, conflict, and inflation. With the war in Ukraine and a changing political environment, they may now face economic volatility. The key characteristic of the HERA women entrepreneurs is their resilience. As entrepreneurs, they are used to risk and adversity and finding new opportunities even in the most difficult and precarious of times.
To develop our strategy to respond to a rapidly changing political and economic context, the HERA Board is holding an open webinar on “Elections and Entrepreneurs” on Saturday, November 23 at noon ET (see registration link below). Three HERA 2024 grantees have kindly agreed to share their direct business analyses and experiences. They include a CEO of a Consultancy in Moldova, a reproductive health physician providing services in rural Georgia, and a manger of two family cafes in Bucha, Ukraine. HERA Board members from Georgia, Ukraine, Moldova, Germany, and France will also comment on the recent European Elections; and a New York investor, on the international business and regional implications of the U.S. election. Dr. Paul Jeffrey Stekler, HERA USA Board member, three-time Emmy Award winner, documentary filmmaker and political commentator, will moderate. The webinar will conclude with an Audience Q&A.
With an informed strategy in hand, the HERA France and US teams fully expect to launch a 2025 Campaign to provide grants to women entrepreneurs in Armenia, Georgia, Moldova, and Ukraine again. Our focus, as always, will be on those entrepreneurs who are serious about and have the capacity to grow their micro and small enterprises and once that happens, are committed to training and hiring young women at risk of dangerous migration.
On GivingTuesday, December 3rd (US East Coast time only), GlobalGiving will provide a match for your early contributions that day. The HERA team and all our entrepreneurs would very much appreciate your support on GivingTuesday. Thank you for all you have done this past year and know that your support is making a difference.
1.https://en.wikipedia.org/wiki/2023–2024_Georgian_protests and interviews in late July, 2024.
2. https://www.bbc.co.uk/news/articles/c78ddj25kgvo and reports by Georgians involved in election monitoring.
3. Workman, Daniel, https://www.worldstopexports.com/georgias-top-15-import-partners/#?utm_content=cmp-true
4. https://www.cia.gov/the-world-factbook/countries/georgia/ (and what follows)
5. Kirby, Paul. 3 November 2024. https://www.bbc.co.uk/news/articles/cz7w9dglzzlo (and what follows)
6. https://en.wikipedia.org/wiki/2024_Moldovan_presidential_election and interviews
8. https://www.cia.gov/the-world-factbook/countries/moldova/
Links:
By Lynellyn D. Long | Project Leader
By Lynellyn D. Long, Ph.D. | Project Leader
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