Georgia's One-Stop Shop for Citizens and Businesses

Georgia's One-Stop Shop for Citizens and Businesses
10 October 2011

Georgia's One-Stop Shop for Citizens and Businesses

In the seaside resort town of Batumi sits a glass structure with an open atrium and tinkling Muzak chosen by marketing gurus. The blonde-wood counters and children's play area suggest a Scandinavian furniture store. But this is a government facility in a country once pockmarked by Stalin-era concrete.
Welcome to the Batumi Public Service Hall, exhibit A in the Republic of Georgia's quest to treat citizens and business investors more like discerning shoppers. True to the slogan hung in the lobby—"Everything in one place"—the integrated center offers 250 different government services, from birth certificates to divorce papers, under one roof.
Uniformed greeters known as "consultants" welcome arrivals and direct traffic: simple requests, to self-serve computers; more complex cases, such as a visa for a family member from Azerbaijan, to staffed desks. The emphasis is on speed and convenience. Need a photo for that passport application? There's a booth in the lobby. Forgot cash to pay for a marriage certificate? Hit the ATM. The key point is that a citizen's problem is characterized by how quickly it can be resolved—fast, medium, or slow—not by the government department (say, a justice issue, a security issue, or a health issue) in which it falls. "The customer is king," explains Tamar Samsonia, who oversees the center. Citizens "don't need to waste money or time or energy. They just need to come here to receive their services very quickly."
All across Georgia, officials are erecting glistening new service centers like the Batumi hall, visible evidence of the shift under way in the government's management philosophy. From family land deeds to licenses for hydropower plants, Georgia's government is pressing to simplify and streamline its operations in the belief that one-stop service not only makes citizens happy but also entices investors.
So far, Georgia has three such one-stop government centers offering individuals and businesses a range of services, including customs clearance, new-business licenses, land deeds, and automobile licenses. Thirteen more public-service centers are scheduled to open by the end of 2012. While the halls currently provide services only from the Ministry of Justice, in the future they will include services from the Ministry of Energy and Natural Resources, the Revenue Service of Georgia, the Ministry of Finance, and more. Eventually it might be possible to register a car and a marriage at the same place.
In a nation still climbing out of deep unemployment—officially pegged at about 16.4 percent in 2009, but estimated by some nongovernment observers to be much higher-managers such as Samsonia can draw on large talent pools. Applicants, she said, fought for the 100 positions in Batumi because the pay is good, the atmosphere is pleasant, and they can compete for awards, such as shopping discounts and ski trips.
At the Batumi hall, which services about 1,500 people a day, the goal is to help visitors dispatch their business in less than 30 minutes. Operations are enabled by a technology platform built over a unified database, so citizens need not fill out multiple government forms. The centers aggressively monitor employee performance, collecting statistics on error rates and wait times. Customer surveys, mystery shopper programs, and even unannounced visits by cabinet ministers reinforce the performance goals.
By using technology to'simplify processes, the government is mimicking the efforts of many successful private firms to disrupt traditional service channels. The focus on business analytics and improving service has translated into real money. From 2005 to 2010, tax collections in Georgia rose to 28.2 percent of GDP, from 17.8 percent.
"The first phase was about getting rid of corruption," President Saakashvili told McKinsey. "The second phase is about moving toward government as a service." According to Nina Chichua, head of the Justice Ministry's Marketing Division, before the reforms citizens found it nearly impossible to receive passports for the official fee and within the official processing times; they paid about $100 in bribes and waited one month. Citizens can now receive a passport in ten working days for $59—and in just one hour for $120. Similarly, before the reforms, the wait time to register a business was about one month; businesses paid an unofficial "fee" of $150 and visited nine government institutions to get the 35 documents required. Registering a business at the Batumi Public Service Hall now takes four working days and a $29 fee.
Georgia's government is also using one-stop systems—both in person and online—to enhance the range of services it offers business. The numbers, from the World Bank, tell a story of improvement;
Georgia now ranks eighth out of 183 nations in the ease of starting a business and second in registering property.
It takes just three days to start a new business in Georgia, compared with an average of 14 days for the countries in the Organisation for Economic Cooperation and Development. Georgians spend about 2 days to register property, versus the OECD average of 33 days.
Average wait times for construction permits and property registrations have fallen, respectively, from six months in 2005 to 98 days and from 39 days to 2.
Perhaps the best example of change in action can be found along Georgia's borders. With the exception of hydropower, the country largely lacks natural resources. But its location—tucked between Russia to the north and Turkey to the south, with the Black Sea along the western coast—offers opportunities as an international transport corridor.
To facilitate trade, Georgia's government has brought one-stop customer service to its customs facilities. Similar in design and approach to the hall in Batumi, the customs houses combine creature comforts with modern technology to screen cargo and collect duties on goods rapidly. Customs cases are triaged for complexity to expedite the process.
Malkhaz Mukutadze, owner of the Martve-5 construction materials firm, agreed to let McKinsey follow him as he navigated the process at a customs house near the Turkish border. After parking his truck, Mukutadze draws a number in the reception area and sits in a sunny waiting room. Soon a neon sign directs him to a desk where he presents his documents—license, registration, and a manifest detailing the shipment.
Salome Mamulashvili, a newly hired customs officer, punches the information into a computer that runs an electronic "risk engine" identifying which loads to search. About 95 percent clear without inspection, but authorities say the system helps target high-risk cargo while speeding up legal trade.
With a few more keystrokes, Mamulashvili calculates the duty on Mukutadze's four truckloads of cement. Customers can pay immediately at a bank counter a few feet away or at other locations within a few weeks— an option Mukutadze, with his cash flow in mind, decides to take. "Before the new system, I would sometimes wait for an entire day and my number would not be called. I would have to come back for a second day," said Mukutadze through a translator. On this Saturday, he departed 30 minutes after arrival.
Despite the changes, Georgia has room to further simplify cross-border trade. The improvement is quite real, however. In 2006, it took 52 days and 15 documents to import a container into Georgia; today it takes 10 days and 4 documents.
Officials use continuous-improvement techniques to fine-tune customs operations. Early on, the government switched from paper forms to digitized records with electronic-signature machines, but it still takes too long to enter information, have customers verify it, and print out documents. The next move will be to equip each agent with a second computer monitor enabling customers to correct errors in real time, said Vano Merabishvili, the minister of interior, responsible for protecting Georgia's borders. Soon the government hopes to install a preclearance system allowing some businesses to submit manifests ahead of time, to avoid customs facilities altogether.
Georgia is still a long way from ensuring that its early innovations will deliver broader economic growth. Corruption still lingers in certain corners—most notably, health care. Tensions with Russia and unrest continue. President Saakashvili acknowledges that it is difficult to maintain the postrevolution "constant crisis" mentality that provided the energy and leverage to enact many bold, even radical, changes. Still, a customer-focused mind-set appears to be taking hold. "Our strategy is to mobilize our human capital through technology," said Saakashvili. "If we make it easier for people to work with the government, we do our jobs right and earn people's trust."

The FINANCIAL

RENEE PARADISE AND KEN SCHWARTZ

About the Authors

Renée Paradise is an associate principal in McKinsey's London office, and Ken Schwartz is a consultant in the Washington, DC, office.
McKinsey & Company is a global management consulting firm. This is the trusted advisor to the world's leading businesses, governments, and institutions.
This article was originally published in McKinsey Quarterly, www. mckinseyquarterly.com. Copyright (c) 2011 McKinsey & Company. All rights reserved. Reprinted and translated by permission.
United States still ranks as the world's most prosperous country, with 31m affluent households, according to World-leading research company TNS. The study reveals that the emerging economies of India and China have overtaken many European countries in this measure of consumer wealth.
Based on interviews with 12,000 people across 24 markets including China, Brazil and India, TNS's Global Affluent Investor study shows that the growth of developing economic powerhouses is already starting to impact personal fortunes, among households with more than $100,000 investable assets.
It also shows that emerging markets now rival their developed counterparts in terms of the amount that people have to invest. UAE and India appear in the top five countries where the affluent have more than $1m investable assets on average, alongside Singapore and Hong Kong. The only Europeans to feature in this top five are the Swedish, whilst the UK and France are the least likely in Europe to have these levels of investable assets.
While incidence of affluence would naturally be higher in small, wealthy countries like Luxemburg (29%) and Singapore (20%), there are huge contrasts in markets with large populations; while 27% of the US are affluent this falls to around 1% in India and China. This demonstrates a great contrast in wealth distribution within emerging markets, even where the actual number of affluent households is high and highlights a need for very precise marketing strategies to reach the right audience.
"When examining global incidence of affluence, it's not only size that matters", Reg van Steen, Director Business and Finance, TNS, comments. "We wanted to identify the growth potential of each market - and our research confirms that emerging markets will become new centres of affluence in coming years. India and China have already surpassed major European markets like Germany and France. It's interesting to see that the entrepreneurial spirit of people in these markets is already paying off in terms of personal wealth."
Fundamental social shifts are unearthed when examining the demographics of the world's affluent. While they average 57 years old in North America and Northern Europe, this falls to the early 40s in Australia, Singapore and Hong Kong. While men are the primary decision makers among affluent households in India (80% men) and Central Europe (79%), the balance is spread far more evenly in North America (45% men).
TNS's findings also demonstrate regional contrasts in terms of what the affluent actually invest in. While the Chinese, Indian and German affluent are keen investors in precious metals (cited by 35%, 33% and 23% of respondents respectively), this falls to just 3% in Sweden, Norway and the Netherlands, and 2% in Denmark and Israel.
"Despite today's pan-global financial trends, it's important to recognise the diversity in local preferences when it comes to asset allocation. We detected big differences between markets, even when they border each other geographically: only 5% of Norwegians invest in bonds, compared to 31% of the Swedes. And while the popularity of commodities fluctuates at a global level, they are very popular among India's affluent. These are the insights that make all the difference when trying to engage the wealthy with a specific product or service," Reg van Steen continues.