Sharing Out Colombia's "Peace Dividend"

Sharing Out Colombia's "Peace Dividend"
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What does a "peace dividend" look like and who gets to enjoy a piece of it?

Clearly, the Colombian people will be the prime beneficiaries, once the still-provisional return to peace and security becomes definitive.

In September a Peace Accord was reached with the rebel group Farc. In October the result of the referendum delivered a slight majority to reject the Accord. President Santos immediately initiated a frank dialogue with all sectors of society and all political factions.

Although Farc leaders agreed to adjust the agreement to keep the goal of peace alive, President Santos acknowledges the environment remains unstable and demands restraint on both sides. Nevertheless we are all confident that Colombia will ultimately find its way to stable and lasting peace.

The State Visit (Nov 1st -3rd) to the UK by President Santos (the first by a Colombian head of state) confirms his administration's commitment to build an open and vibrant economy based upon transparent markets with clear rules for foreign investors, while guaranteeing security for all.

The recent award of the Nobel Peace Prize to President Santos is a fitting symbol of the international community's admiration, respect, and growing recognition that the nation is today living a moment of historical importance.

While the era of peace and optimism opens up large swathes of the country to development for the first time in two generations, "peace dividend" has other meanings too. These signify progress, jobs and opportunities for investors.

Great Britain is already Colombia's second largest investor, with over $7 billion invested in sectors such as hotels, IT, financial services and biofuels.

There are very solid reasons for such investor optimism. Despite the global downturn, Colombia has over the last 15 years grown at an average annual rate of 4.3%, making it the market with the second best outlook for GDP growth in Latam for 2016 and 2017, according to the IMF. It is an attractive marketplace, where the spending power of an increasingly well-educated population is growing rapidly. In the first six months of 2016, foreign investment (FDI) grew 16.5% to $8.3 billion.

The World Bank's latest Doing Business 2017 report notes improvements including reduced corporate taxes and lower business licence taxes, as well as streamlined registration procedures for new businesses. Colombia now hosts business operations from over 700 international companies that generate revenues of $25.5 billion.

Investors, both domestic and foreign, are now eyeing Colombia's newly-pacified areas for their potential for a range of industrial and service activities. Regions such as these are certainly rich in minerals and natural resources. But a recent feature of Colombia's development has been that investment in non-commodity sectors has grown five times faster than the extractive sector in a nation straddling the Andes with borders on the Pacific, the Caribbean, and the Amazon basin.

In the hotels sector, for instance, there has been $7.1 billion worth of foreign investment since 2010, with the tourism sector growing at 12% yearly - almost four times the world average. During the first half of 2016 international visitor numbers were up 10.3% and tourism is now Colombia's second largest revenue earner.

Newly opened up districts including Chocó, Cauca, Putumayo, Caquetá, Guaviare, Vaupés, Meta, Vichada and Arauca, offer significant opportunities. Many of these areas contain pristine forest and natural habitat, making them suited to niche travel activities. So Colombia is looking to adventure tourism, ecotourism, and travel or gourmet hospitality related to high-end production of premium regional foods such as cacao, coffee, quinoa and local specialties.

Projects to revive agricultural production of these commodities will generate thousands of rural jobs. For instance, one cacao project will benefit 50,000 families, while another handicraft related project will benefit 35,000 families.

Of course, more urban industrial and service sectors expect to share their "peace dividend" too.

To enable such progress, the Santos government is overseeing the region's most ambitious infrastructure development programme, with projects such as the 4G toll roads, rail, ports and airport construction already delivering counter-cyclical benefits to diverse economic sectors.

Colombia's film and TV sector is firmly on the radar of international producers, offering generous rebates and incentives as well as prime local talent. In the apparel industry, Medellin is now recognised as the fashion capital of Latin America.

In the IT sector, foreign investors have put more than US$7 billion into dozens of software and outsourcing projects, while the startup scene is buzzing. In fact between 2012 and 2014 the IT sector trebled in size, accounting for 2% of GDP. There are now almost 700 Colombian IT companies exporting know-how, supported by initiatives like the Colombia Bring IT On campaign.

From the perspective of a UK government now actively seeking new international trade pacts, Colombia must be a highly attractive partner. With open access both to Latin America's most vibrant regional economies and to markets in Asia, Colombia's location on the Pacific seaboard offers major strategic benefits to British companies.

So, as President Santos noted in his recent address to the UN General Assembly, Colombia has very good reasons to be optimistic. The nation is making decisive steps along the growth path, with a clear policy framework and above all, dialogue based upon desire for peace.

This, we firmly believe, is Colombia's moment, in which the country is stepping into of the most important periods in its history. This is the time to come and join us.

For more information, visit http://www.procolombia.co/en