How to Invest in Georgia

Plenty of Opportunity in the 'Switzerland of the Caucasus'"

I attended the inaugural Weird Shit Investment Conference in London this week, organised by the legendary Swen Lorenz. I heard around 25 presentations throughout the day, offering left-field investment ideas ranging from banks in Kazakhstan to Madagascan hot dog stands.

Not one, but two of the presentations made the case that we should be investing in Georgia, and that is what I am going to look at today: how to play the rise of the “Switzerland of the Caucasus.”

Georgia sits in a strategically enviable location on the Black Sea, from where it looks west to Europe (Georgia has applied to join the EU) but also east to Asia. It lies on the Silk Road, the trading route to China; indeed, there are also rumours it may join the Shanghai Cooperation Organisation (SCO). To be a member of both the EU and SCO would be quite something.

It has a small, young, proud, ambitious, and well-educated population of 3.7 million, 85% of whom are Christian Orthodox and another 11% Muslim. About 35% live in the capital and largest city, Tbilisi. Like so many former Soviet nations, they want everything we in the west have and more, and they are prepared to work hard to get it.

While the older generation mostly has Russian as a second language, the more westernised, younger folk tend to speak English, French, or German, or all three. One of the presenters yesterday described Georgia’s education as “mathematically and scientifically oriented,” a legacy of Russian occupation. The country is a representative democracy.

Georgia’s dark days of post-Soviet-Union corruption are mostly behind it, and in 2008 the World Bank dubbed it "the number one economic reformer in the world" after it went in just a year from the 112th to the 18th ranked nation for “ease of doing business”. It now sits at 6th in said rankings with high levels of economic freedom—back in 2018, for example, it became only the second country in the world to legalise marijuana—and is one of the fastest-growing economies in Eastern Europe. Taxes, at around 20%, are on the low side.

One of the means by which it eliminated corruption (as well as sacking the entire police force - really) was by centralising key databases, such as the land registry and passports, with digital technology. Instead of having to bribe officials, you went straight to digital HQ, where fees were flat and transparent. Like many Eastern European nations, it has embraced new tech and the digital revolution, both in its public bodies and in the private sector.

One reason it has been able to reform and grow so quickly because it is small. It is also blessedly short of natural resources, so the country relies on trade. It is also something of an international transport corridor, especially for commodities. Kazakh uranium, for example, is only able to get to market because of Georgia, and it has important oil and gas pipelines. Its ports, notably Batumi and Poti, are operating at 100% capacity, and the Chinese are now building a deep-sea port.

Historical industries include gold mining—it was to Georgia, or Colchis as it was then known, that Jason and the Argonauts went in search of the Golden Fleece—and wine production. It is still a prolific wine producer today.

How to Invest in Georgia

There are no focused Georgia ETFs, but fortunately, there is another better option—two in fact—and very easy for investors in the UK, US and EU to buy.