An expanding economy and state-sponsored reforms add up to a booming investment climate for Colombia, as Simon Duffy reports.

Colombia is experiencing a strong wave of foreign investment, helped by reforms backed by president Iván Duque that aim to build a more business-friendly environment and shift South America’s fourth largest economy away from its dependency on oil.

Colombia won a record amount of foreign investment in 2019, worth more than $5.8bn in associated capital expenditure, according to fDi Markets, a Financial Times data service that tracks greenfield cross-border investment. Within this, foreign investment into Colombian financial services surged, with eight greenfield projects and $232m invested, accounting for a 56% increase in investment value compared with 2018’s $149m.

Profits of peace

Helped by the uptick in foreign investment and the ongoing development of large-scale infrastructure projects, the Colombian economy has become one of the fastest growing in Latin America, expanding by 3.3% in the third quarter of 2019 from 2.7% in the same period of 2018. The World Bank’s Global Economic Prospects survey published in January 2020 forecasts Colombia's economic growth to increase to 3.6% by the end of 2020 and accelerate to 3.9% in 2021.

Some economists believe Colombia is benefiting from a ‘peace dividend’ following the 2016 signing of a historic accord between the government and armed rebels, formally bringing an end to 52 years of armed conflict.

Alongside economic growth, the government’s pro-business reformist agenda is the other contributory factor to the rise in foreign investment. A recent tax reform package, pushed through Congress in December 2019, includes measures to gradually reduce corporation tax to 30% by 2022.

FDI on the up

According to fDi Markets data, the total value of foreign direct investment (FDI) projects into Colombia’s financial services reached $753.5m between December 2014 and November 2019. Bogotá was by far the largest recipient of FDI, attracting 38.5% of the total investment during the review period. Colombia’s fourth largest city, Barranquilla, a seaport on the country’s Caribbean coast, also performed strongly.

US finance firm Berkshire Hills Capital is among the recent foreign investors in Colombia. In November 2019, it announced the opening of an office in Bogotá to meet increasing demand for its services from locally based investors.

Meanwhile, Credicorp Capital, a provider of investment brokerage services and a subsidiary of Peru-based Credicorp, recently closed the $41m acquisition of Colombian broker-dealer Ultraserfinco. The purchase will give Credicorp a nationwide presence, with offices in Barranquilla, Bogotá, Bucaramanga, Cali, Cartagena and Medellín. In addition to Colombia, the firm has also expanded its operations into Bolivia and Chile.

Another notable investment has come from France’s Crédit Agricole Corporate and Investment Bank. According to Marc-Andre Poirier, a senior Americas regional officer at the bank, establishing a representative office in Bogotá “marks an important step” in developing Crédit Agricole’s investment strategy and presence in the Americas. The representative office, opened in 2018, augments the bank’s regional footprint, which includes offices in Argentina, Brazil, Canada, Chile, Mexico and the US.

Colombia FDI

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