|Definition: Interest-free loan for food and other necessities, administered by local shopkeepers|
|Keywords: Georgia – FSU – Caucasus – Credit – Loan – Money – Trade – Community|
|Clusters: Informal entrepreneurship – Informal welfare|
|Author: Megi Kartsivadze|
|Affiliation: Alumna, School of Slavonic and East European Studies, University College London, UK|
By Megi Kartsivadze, Alumna, School of Slavonic and East European Studies, University College London, UK
|In Georgia, nisia refers to a post-purchase payment or an informal interest-free loan, common in Georgian urban and rural neighbourhood mini-stores. A shopkeeper administering nisia records all the borrowers and their debts in a notebook. A similar informal practice called na zeszyt or na kartke is common in Polish rural areas and can be found in cities as well (Rozanski 2015).|
The word nisia appears in literary works of the late nineteenth century suggesting that this practice was present in Georgian society before the formation of the Soviet Union (see Ardaziani 1861, Vazha-Pshavela 1893). In the literary works of the late nineteenth and early twentieth centuries, nisia is mentioned in descriptions of the practices of ordinary citizens (see Javakhishvili 1924, Shanshiashvili 1926). Nisia was resorted to by Georgian peasants excluded from the formal banking and credit system.
Nisia played a significant role in the second economy of Soviet Georgia. During the Soviet Union period, nisia became intertwined with blat, the exchange of favours to acquire goods or services in shortage (Ledeneva 1998). The second economy of the Soviet Union encompassed illegal and semi-legal retail activities such as fartsovka (selling goods brought from abroad) and retail spaces such as komissionki shops officially selling used clothes but offering illegal foreign goods under the counter and beriozka shops that traded in foreign currency, and were therefore not accessible for everyone (Zakharova 2015). Participating in these transactions required one to have influential connections, blati. In Georgia, those, who had blati allowing them to shop there also had strong and reliable connections which made them eligible for nisia.
After the collapse of the Soviet Union, privately owned enterprises emerged, among them many local mini-stores. The transition to a market economy was accompanied by a severe economic crisis (Papava 2005). Small shopkeepers faced a problem: while the competition among each other in the new market economy increased, their customers’ incomes significantly decreased. Anticipating the lack of their customers’ disposable income to afford the products at their stores, the shopkeepers focused on long-term profit by offering credit to attract and retain local customers. Nisia re-emerged in a new shape, disentangled from blat and more popular than before. By agreeing to sell something nisiaze (ʻon nisiaʼ), the shopkeepers created a circle of reciprocity (Fehr and Gächter 2000) through which they developed productive interpersonal relationships with their customers who spread positive information about the store through their networks.
Nisia could not have functioned without the cultural elements that created a fertile basis for its emergence. Based on the ethnographic accounts collected from the 5,000 newly-arrived immigrants from Soviet Georgia to Israel, Mars and Altman (1983) argued that Georgian society functions through four core values that form the basis of its second economy: (1) the competition for acquiring status in the society; (2) a high level of trust as a basis of honour; (3) the development of personal networks and (4) the ability of taking risks. These values were simultaneously revealed and reinforced through informal practices formed as a response to widespread shortage. Nisia was one of such practices. Without having a legal basis, nisia is based on trust. Engaging in nisia is a risk-taking activity for both the seller and the customer – the former is staking their funds, the latter their trust and honour. Nisia entails the punishment of social excommunication for those who are dishonoured by abusing the trust. Trust and honour have a cumulative impact on the development of personal networks – those who enjoy trust and honour expand their networks of connections while having large networks grants one further trust and honour.
Georgia’s sluggish economy started recovering in 2003 after the Rose Revolution, a peaceful change of the government followed by a wave of national anti-corruption reforms. As a result of these reforms, the role of connections, exchanging favours, gifts and other informal practices significantly decreased (Kupatadze 2012). However, some informal practices continued to thrive. Over 60 percent of Georgians reported that they still relied on private social safety nets such as nisia (Aliyev 2014).
While microfinance organisations have been proliferating in Georgia since 1999, totalling 69 organisations in 2016 (Dushuashvili 2016), Georgians on low incomes have had trouble accessing their services. Not certain that they will be able to repay the loan within the stipulated time, they tend to use nisia that does not carry any legal obligations. The uncertainty about when the amount will be reimbursed, if at all, poses financial problems for the local mini-markets shopkeepers. Yet shopkeepers report that they engage in the loss-making informal activity because they feel they cannot refuse giving nisia to their acquaintances who might live in poverty (Giorgelashvili, Vachiberadze and Taktakishvili 2016). The primary factor encouraging nisia in the decades after the dissolution of the Soviet Union is natsnoboba. Replacing blat, this Georgian use of networks of acquaintances developed in the 1990s out of the need to survive the economic crisis. The reciprocal relations on which Georgians relied during times of hardship and through which they have established strong connections and networks still persist today.
The emergence and proliferation of supermarkets affected the business of local neighbourhood shops. Shopkeepers find it increasingly difficult to retain their loyal customers through nisia ever since large retail chains started offering their own credit options. A credit card called ‘More’ launched by a large Georgian retailer Nikora allows customers to make purchases on credit and pay it with zero-interest rate within the next 45 days (Nikora 2017). Local mini-markets find these practices hard to compete with. The event of a robbery in Gori, a small Georgian town, where the only thing taken from the local mini-market was a nisia notebook (Pisadze 2018), illustrates that customers buying the products on nisia might be less likely to pay off the loan, since they would otherwise borrow from retail chains. Following Gel’man (2012), nisia can be understood as a subversive informal practice, slowly undermining the existence of the Georgian mini-markets. Adopted by the mini-markets to increase profits and maintain loyal customers in the 1990s, it has turned against these shops as it began to affect their profits by attracting customers less likely to pay off their debts.
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