Like its famous mountains, Colombia’s economy occupies some pretty rare air these days. Just look at the numbers:
- Average GDP growth from 2001 to 2014 of 4.37%
- 2014 growth of 4.6% – among top 5 worldwide
- Foreign direct investment grew from $6.8B to $16.8B since 2010
- This past March saw the lowest unemployment rate in 15 years (8.9%)
- Poverty index fell from 50% in 2003 to 25% in 2014
- Middle class doubled in size in the last decade
But for all these positive statistics, public perception of Colombia remains relatively grounded.
“Right now there is a big difference between the public’s perception of Colombia and what is actually going on in the country,” says Andres Trivino, President of the Canada-Colombia Chamber of Commerce.
“In 2001 the country was having a tough time with safety and security and the government had to enforce rules that held the economy back in terms of attracting business and investment. Today the country is much safer, public institutions like the judicial system are stronger, and the government is offering a number of incentives to attract foreign firms.”
If you’re a Canadian investor or exporter, adds Trivino, now is the time to establish yourself in Colombia, before the rest of the world catches on. Get to the party early, in other words, before the price of admission goes up or the place gets too crowded.
Opportunities in Colombia abound
This is particularly true of infrastructure development, which Trivino calls the most promising opportunity for Canadian exporters and investors right now. Colombia’s government is planning to spend more than $20 billion on roads, airports, seaports, and railways, to improve transportation within the country and make trade easier.
Considerable amounts of foreign investment will be needed to finance these projects which, once underway, will require consultancy firms, contractors, and suppliers – of which Canada has many.
To help companies gain access to these projects, Export Development Canada (EDC) signed a Memorandum of Understanding (MOU) with Colombia’s National Development Bank (Financiera de Desarrollo Nacional “FDN”) in June 2015. The MOU lays the groundwork for EDC and FDN to collaborate on infrastructure projects in Colombia, which will help EDC identify opportunities for Canadian companies.
Other promising sectors include renewable energy (mostly hydro-electric, with opportunities in solar and wind further down the road), extractive sectors (mining, oil and gas), banking and private equity investment, as well as information and communications technology and light manufacturing.
Use some on-the-ground connections
“There are enormous opportunities for exporters and investors in Colombia, but in this hyper-competitive market, success will only go to the best prepared, those that have done their homework and have quality support on the ground in Colombia and at home in Canada,” says Stephen Benoit, EDC’s Chief Representative in Bogota for eight years.
“And don’t enter the country with a view of making the sale right away. Instead, you should look at business in Colombia as a long term investment. Get to know the people, the local culture and the language, and business will come.”
There are a number of organizations that can help in this regard, like the Canada-Colombia Chamber of Commerce, EDC, Trade Commissioner Services, and ProColombia (the Colombian export and Investment promotion agency).
Trivino agrees that using these resources is essential, especially for making connections in market.
“It’s much easier to find business in Colombia when you have well-connected organizations with boots on the ground making introductions for you, rather than having to go around by yourself knocking on doors. Trust and who you know is very important to doing business in Colombia, so an introduction goes a long way,” says Trivino.
What the future holds for Colombia
For those needing extra encouragement to enter the market, consider Medellín, Colombia’s second largest centre. In the late 1980s it was recognized as one of the world’s most violent cities, home to gangs backed by the likes of infamous drug lord Pablo Escobar. But jump ahead to 2013 and Medellín was recognized by the Wall Street Journal as the World’s Most Innovative City, beating out 200 other candidates.
It’s an impressive turnaround, one that’s being mirrored across the country. Whether it’s planning infrastructure mega-projects, offering corporate incentives to foreign firms, or strengthening public institutions, Colombia seems to be making all the right moves to sustain economic growth.
Public perception may be lagging behind, but therein lies the opportunity for companies and investors willing to take on some risk.