PAFAI: Promoting Access to Finance and Insurance in Georgia

The SDC funded PAFAI project changed the landscape of agricultural finance and insurance in Georgia. The key to this success lay in forging new partnerships and facilitating long-term cooperation.

Unity creates strength
—Georgian Proverb


Strong partnerships are crucial for achieving impactful and long-lasting results. The Swiss Agency for Development and Cooperation (SDC) funded Promoting Access to Finance and Agricultural Insurance (PAFAI) project, which operated between May 2015–April 2017, developed rich partnerships between over 20 stakeholders. This deep cooperation contributed to the successful implementation of measures to improve access to both agricultural finance and agricultural insurance for Georgian farmers.

Access to Insurance

PAFAI’s agricultural insurance component helped prepare the sector for future growth through improving the technical capacities of insurance companies and working with the Government of Georgia to make the insurance process more efficient for Georgian farmers. Key outcomes included the training of 118 loss adjusters, the development of crop-specific loss adjustment guidelines, and an 18,795 increase in the number of farmers using agricultural insurance. PAFAI partnered with Agroseguro, a prominent agriculture insurance organization from Spain, for the development of loss adjustment guidelines. Agroseguro worked closely with PAFAI to create the loss adjustment standards and conduct comprehensive trainings, while also collaborating with insurance actors to ensure the standards were tailored to Georgian needs.


Field training in apple loss adjustment. Shindisi (Mtatsminda region of Tbilisi); September 22, 2016.

“The insurance packages before the government-subsidized agroinsurance program had a very high premium and such conditions were not favorable for us. Now, when the government is subsidizing, it makes sense for us to get insured. We feel more optimistic and hopeful.”
Mr. Makhashvili, Chairman of Sighnaghi (Kakheti) collective farm

Access to Finance

On the finance side, PAFAI worked with Georgian financial institutions and agribusinesses to create financial products that would increase the productivity and income of farmers. This resulted in the launch of six Value Chain Finance (VCF) schemes, the training of more than 700 financial institution staff in agriculture lending, and a 72.5% increase in staff productivity (number of loans disbursed per loan officer per month). PAFAI built partnerships between Georgian FIs, agro input suppliers, service providers, processors, and primary producers to facilitate the creation of these mutually beneficial financial products. These VCF schemes have proven to be popular among both farmers and financial institutions, with 1,200 VCF loans worth 540,000 USD being disbursed over the course of the project. Smallholder farmers have seen particular improvements to their operations, with many now being able to purchase essential agricultural inputs with an effective 0% interest rate.

“Together with PAFAI, Crystal has created the methodology to provide for timely financing of agricultural inputs to our client farmers. We have optimized logistics – our input supplier partners directly deliver needed materials to farmers, usually at a wholesale price.”
Kakha Gabeskiria, Crystal COO

If you give a man nuts, then give him something to crack them with
—Georgian Proverb

PAFAI also facilitated the establishment of the first warehouse receipt financing scheme to be used in Georgia. This was achieved through cooperation with other development projects and with the support of the Ministry of Agriculture. A warehouse receipt scheme works by providing farmers with loans using their produce as collateral. Farmers can then safely store their produce in optimal longevity conditions, allowing them to sell their produce when the market is offering a high price. The cost of renting space in the warehouse is then paid out of the sale of the stored produce, which helps to reduce farmers’ upfront expenditure. The scheme is currently being piloted in the hazelnut sector, but warehouse receipt financing could be adapted to benefit many other agricultural value chains in Georgia.

“This type of value chain financing didn’t exist in Georgia. The PAFAI team has helped a lot in terms of sharing international practices. I believe that the development of agriculture by means of value chain financing mechanisms must be a priority for Georgia. This will allow us to decrease prices and compete with imported products as well as become more export-oriented.”
Beka Gonashvili, AgroQiziki CEO

Further strengthening cooperation between the project’s key partners, PAFAI organized a study tour to Romania with Georgian financial institutions, government officials, and agribusinesses. The main goal was to study the role of finance and government in the evolution of Romania’s agricultural sector, returning with lessons for Georgia’s future development.


Meeting with Deputy Minister Giorgi Chkheidze, APMA Director Mamuka Kvaratskhelia, and BoG AgroBusiness Manager Revaz Chubinidze at the Romanian Agency for Payment and Interventions in Agriculture. Bucharest, Romania; March 9, 2017.

“We learnt how the Romanian government supports financing of farms and the role financial institutions played in their development. The Romania Tour was indeed interesting from the perspective of learning about the implementation of the EU Common Agricultural Policy.”
Giorgi Chkheidze, Deputy Minister of Agriculture

While the PAFAI project has officially concluded, the partnerships and the benefits of the project will endure for years to come. Georgian agriculture has a bright future, and it will be exciting to see it flourish through the continued collaboration of passionate stakeholders.

Find out more about PAFAI in this short video: