Digital Ecosystem Country Assessment (DECA) Report

The Georgian digital ecosystem has a solid foundation, with relatively well-established physical and regulatory infrastructure, government commitment to the development of digital government services, multiple providers of digital connectivity, and a range of digital financial services (DFS). However, access to quality digital tools, skills, and services is not equal across the country; gaps in policy and regulation create uncertainty and limit investment; and cybersecurity threats continue to undermine confidence in digital tools and services.

The Georgia DECA took place between October 2022 and April 2023. It included desk research, consultations with USAID/ Georgia, and three weeks of in-country interviews in Tbilisi, Georgia, followed by three weeks of virtual interviews and focus group discussions. The research project involved a total of 70 interviews with 60 different stakeholders from civil society, academia, the private and public sectors, international development organizations, and USAID/Georgia technical offices. The DECA was guided by USAID/Georgia’s 2020-2025 Country Development Cooperation Strategy (CDCS), which includes three strategic priorities:

  1. Resilience to External Malign Influence Strengthened
  2. Fragile Democratic Gains Consolidated through Enhanced Citizen Responsive Governance
  3. Inclusive High-Value Employment Opportunities Provided through Increased Economic Growth

Pillar 1: Digital Infrastructure and Adoption

Connectivity infrastructure in Georgia is well-developed, but gaps still exist in urban-rural connectivity. Significant progress has been made in connectivity infrastructure over the last few years, with 4G coverage reaching 98 percent of the population in 2021 and the government prioritizing the planned testing and expansion of 5G networks. The availability of telecommunications networks and development of fiber-optic connectivity can enable innovation in telecommunications service provision, while simultaneously boosting other digital services (e.g., e-government, e‐commerce, online learning, and e-banking). Broadband internet has become an important foundation for socioeconomic development in Georgia’s growing digital economy, bolstering competitiveness across many areas, including education, health, entertainment, and general information society development. With its Universal Internetization program and Log-in Georgia Project, the Government of Georgia (GoG) strives to eliminate last-mile connectivity challenges and to bridge the geographic digital divide in the remaining white zones1 of underserved rural areas. 1 In the field of telecommunications, an area which is not served by a given network—specifically a mobile telephone network or by the Internet.

Georgia is poised to be a regional digital and information hub, expanding connectivity to Europe and thus strengthening the connectivity and cyber-resilience of the region. Georgia’s aspiration to become an information and communications technology (ICT) hub and the digital corridor from Europe to Asia is the key strategic priority of the National Broadband Development Strategy of Georgia and Its Implementation Action Plan 2020–2025 (NBDS), as well as the Government Program for 2021–2024, Towards Building a European State. Sharing a border with Europe via the Black Sea, Georgia is well-positioned to strengthen submarine cable connectivity to Europe, which can positively impact Georgia and neighboring Central Asian countries, reducing the reliance on Russian connections and improving cyber-resilience for the region.

Pillar 2: Digital Society, Rights, and Governance

Digital government stakeholders are uncoordinated, and a cycle of underinvestment and a lack of awareness among the public has resulted in underutilization of digital services. This has resulted in frustration among government and civil society stakeholders, who desire greater leadership and political will for digitalization. At the same time, interagency and donor coordination is lacking on digital issues, partly resulting in ineffective implementation of digital-related strategies and a lack of interoperability between government systems. Existing digital government services suffer from a lack of uptake, which is likely due to a combination of low digital literacy, limited awareness by citizens, limited user-centric design, and limited utility outside of agent-facilitated transactions in public service halls.

Civil society organizations (CSOs) and independent online media outlets need continued support— financial, political, and operational. Georgia’s information ecosystem is notoriously polarized, with disinformation being spread both by malign foreign actors and by domestic actors. Civil society plays an essential role in flagging false or misleading content on social media but is generally understaffed and underfunded and struggles to keep up with disinformation spread through coordinated inauthentic behavior (CIB). Independent, online media outlets receive much of their support from donors like USAID yet still struggle to modernize and lack commercial viability.

Pillar 3: Digital Economy

The ICT workforce is talented, but there is a growing skills gap as graduates enter the workforce without the necessary skills demanded by the ICT sector. Local universities struggle to produce graduates who meet the needs of the private and public sectors, particularly in the ICT field. University ICT curricula often lag industry trends, and universities have trouble attracting qualified personnel. Many companies report that local graduates lack necessary skills and require additional onboarding and training. Informal training from private companies and donor or government programs is sometimes preferred to formal education programs because it focuses on providing the most in-demand ICT skills in the marketplace.

Digital financial services are a driver for innovation and fintech, but Georgia’s concentrated market restricts competition. Georgia’s two largest banks, which also control related nonbank financial businesses through subsidiaries, dominate the financial sector, limiting competition. Their presence in various market segments gives them the ability to steer customers to their own product bundles, making it difficult for smaller fintechs to compete for market share. There are concerns that growing market concentration may undermine incentives for future innovation.

There is untapped potential in tech startups, as innovative and technology-driven startups have difficulty accessing financing. Startups are important drivers of the Georgian economy but face challenges in accessing credit due to banks’ reliance on traditional physical collateral requirements. While some startups can access financing at the early prototyping stage, they often lack financing to scale their innovations, discouraging potential entrepreneurs and investors. Georgia’s Innovation and Technology Agency (GITA) is promoting entrepreneurship, but only well-connected fintechs can secure partnerships or funding from banks. However, efforts to implement new regulations, including the crowdfunding law,2 may improve access to financing for startups. 2 This law has not yet been named at the time of this report’s publication.

The e-commerce penetration rate in Georgia is low and compounded by poor inventory management, lack of modern handling solutions, low customer confidence in e-commerce platforms, and immature consumer financial literacy skills. The COVID-19 pandemic accelerated the growth of e-commerce in Georgia, causing a shift toward online consumption of products, services such as education and banking, and entertainment. However, this growth has been uneven and is limited by several factors, including costly and unreliable last-mile logistics, poor inventory management resulting in unfulfilled orders, and cybersecurity concerns. Although Georgia e-commerce performance is relatively good for its income level and compared to its regional peers, the share of online shoppers in the country is still low, with only 14.8 percent of the population having shopped online in 2020.

Georgia’s digital ecosystem faces significant challenges but also shows great opportunity for digital economic growth and for improving both national and regional digital connectivity. Through coordinated support and strategic interventions, Georgia can become a major digital hub in the region.

mAccess Indicators & Rankings

The information below is part of the mAccess Diagnostic Tool and is intended to help assess foundational components of Georgia’s digital ecosystem using indicators on internet availability, affordability, access, and use. Click here to explore the full tool.

Country Snapshot – Georgia

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Access – Georgia

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Affordability – Georgia

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Competition – Georgia

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Infrastructure – Georgia

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Usage – Georgia

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Digital Ecosystem Evidence Map

The information below is part of the Digital Ecosystem Evidence Map (DEEM) and displays up-to-date resources on digital development interventions and the digital ecosystem for Georgia. Click here to explore the full tool.

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