"Business and investments do not like uncertainty" - Mariam Koyava
Mariam Koyava discusses the dynamics of foreign direct investments on BMGTV's "Business Morning" program and in the joint column of BMG and SavvY, "time to invest," evaluating the impact of current events on FDI.
Koyava notes that foreign investment dynamics in Georgia have remained stable since COVID-19. However, projecting the dynamics in 2024 is difficult due to ongoing processes in the region.
“Regarding the dynamics of FDI, we can say that considering the COVID-19 factor, it is progressing steadily. Naturally, there were setbacks during the COVID-19 outbreak, as experienced by many other countries. However, we have observed growth in both volume and across various sectors. Notably, FDI has been active in trade, infrastructure, and energy.
It will be challenging to assess the dynamics of 2024 due to what is happening in the region, the world, and the country - we call it "a hot" year when the dynamics can change daily," says Mariam Koyava.
When asked about the impact of uncertainties on foreign direct investment, SavvY's managing partner explains that it is one of the biggest obstacles for investors, especially regarding long-term projects.
"Business and investments do not like uncertainty, and they don't like it very much - stability and consistency are essential factors for many investors and can even be vital. As investing in many sectors is not a short-term process, some sectors require quite a long-term development.
Here, we often use McKinsey's strategic framework, where there are 4 business strategy levels, starting with 'A clear enough future' and ending with 'True ambiguity'. We use specific parameters to measure where a specific sector in a particular country falls within this framework. This is because uncertainty in any country or the world does not equally affect all sectors - some are affected more, and others are affected less. In some industries, uncertainties even create opportunities. But the main result of using this framework is that it reveals general behavioral regularities in times of uncertainty: do nothing, stop, wait, observe, assess the risks, and make a decision after that," explains Mariam Koyava.
The managing partner of SavvY also discusses the sectors where FDI volumes are sustainable and stable.
“Our research reveals an interesting trend that interest remains, first of all, in natural resources. For example, uncertainty does not affect investors' interest if there is oil, although Georgia cannot boast of having it.
The second area encompasses sectors where value is created and maintained within the country, such as real estate, energy, industries focused on domestic trade, and the banking sector. Typically, interest in these sectors is increasing. However, local investors generally show more interest in these areas, leading to a decrease in direct foreign investments," explains Koyava.