Anaklia Special Economic Zone

Anaklia, Georgia

The Anaklia Port and City stands on the Black Sea coast, providing a trade route to Europe for Georgia and a number of Central Asian countries.

In order to build the regional economy and play its part in the growth of the nation’s international trade, the port city has targeted the development of a 2,000-hectare city-scale Special Economic Zone (SEZ), based on the transformational prospects for green and smart cities.

The ambition is to use the SEZ as a means to accelerate growth and diversification of the economy and drive trade and foreign direct investment, developing a role for the city within the “new silk road” trade links between China and Europe and growing trade with Turkey and EU countries.

Our experts worked with Anaklia City JSC to develop a port related Special Economic Zone (SEZ) on Georgia’s Black Sea coast.

An SEZ is an area that is subject to different economic regulations than other regions within the same country, with the aim of accelerating economic development.

In 2021 Georgia saw $13.4bn USD in trade imports and $9.1bn USD in export trade flows.

We prepared an economic feasibility study and business case and visionary concept masterplan to develop plans to support implementation of the zone.

Challenge

Buro Happold was commissioned to examine the obstacles to be overcome for the city to achieve this vision, with the preparation of an economic study and visionary concept-level masterplan.

An SEZ is an area that is subject to different economic regulations than other regions within the same country. These bespoke economic regulations are designed to be conducive to export oriented businesses and the attraction of foreign direct investment (FDI).

But as well as being created to facilitate rapid economic growth by leveraging tax incentives to attract foreign investment, the model often seeks to bring wider benefits, such as driving up the skills levels and sparking technological advancement to support the growth of new sectors.

Adding to Anaklia Port, JSC Anaklia City is also developing the Free Industrial Zone (FIZ) on the site. Initially located on 400 hectares of the 2,000-hectare parcel of land, the FIZ will complement the port and provide the infrastructure, real estate premises, services and incentives to attract business.

A key challenge was to provide a business environment in Anaklia commensurate with investments from some of the world’s leading manufacturing, business services, technology and logistics organisations.

Solution

Our experience in delivering complex integrated projects on economic growth, industrial strategy (including special economic/industrial zones) and strategic planning of ports was crucial to meet this challenge. We worked closely with the client to successfully deliver a sector and value chain analysis, competitive environment assessment, transport and logistics analysis, demand forecast, visionary masterplan and business model.

Through successful collaboration we also developed a financial forecast and implementation plan, which would see the SEZ developed in phases including an initial phase of 284 hectares and full development of 2,000 hectares.

The masterplan established spatial vision for the SEZ that would be fully integrated with the infrastructure of the deep sea port and national road and rail networks. Our team modelled the additional facilities that would be needed to allow the SEZ to flourish.

A range of sectors were studied by our team to find the most lucrative fit for the region to focus on. Our economic modelling highlighted a number of sectors in which Anaklia could play a useful and growing role in international supply chains. These included automotive components, pharmaceuticals, cleaning products, construction materials, beauty products and cosmetics, logistics, household appliances and electrical assembly, and food and beverages.  

We conducted a series of value chain analyses to examine where the city can be most competitive. The food and beverage industry was analysed in detail for its high value adding potential in the country, linking back into the agricultural production of Georgia.

The analysis looked in detail at the inputs (crop, wild, capture, aquaculture, and livestock) and identified two levels of activity within the food and beverage sector: primary processing (e.g. flours, syrups) and secondary processing (e.g. bread, alcoholic and non-alcoholic beverages). 

We also supported the client with a study examining the potential for an SEZ intermodal yard to the south of the zone, and the potential for a secondary shunting yard south of Phase One.

Our experts also provided insight into the residential and social infrastructure that will need to be developed in the area to fully service the SEZ as it takes shape. Our ecology team provided additional consultancy to examine how the SEZ can be successfully developed without making a significant impact on natural wetlands in the area.

Value

Drawing upon their extensive experience in this area, our experts established an economically viable proposition for the SEZ to establish the activities to be targeted and the quantum of demand forecast for each opportunity. Furthermore, we established the infrastructure requirements and associated costs to unlock the zone.

Working closely with the client, we provided a masterplan to establish the physical potential for development, accounting for environmental constraints and taking advantage of the synergies with the port and other infrastructure.

We also established a business and financial model demonstrating financial viability and how investment in the zone would be recouped over time from the different revenue streams relating to infrastructure, real estate and services.

The outputs from the study have been used to engage with potential investors and promote the project. The successful foundation of an SEZ at Anaklia will play a key role in scaling the port and developing Georgia’s capacity to build international trade and export routes, while building a more resilient industrial base and skills base within the city. It will provide an ideal environment in which target sectors are able to grow and flourish in the coming decades.