Wise Colombian Investment

Colombia spearheads the list of second tier emerging markets (also known as CIVITS nations – Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa).  Colombia's strong and steady growth has made it very attractive for some time now.  As an emerging market, the South American nation inherently has structural problems, but its active responsiveness to certain economic hurdles is a solid indicator of the country's ability to sustain positive strides. The World Bank notes “The efficiency and productivity of Colombia's urban system will be a key determinant in the ability of the country to transition from a middle income to a higher-income economy.”  While success is always is the details, the example presented below shows how Colombia is laying the foundation for ambitious and much needed urban planning projects, mixing in the physical, the social and the institutional needs of the country.

Colombian coal mines and port locations
Note: Distances may not be large,
but transportation is hindered by obstructive
mountains and poor rail/road infrastructure 
Source: Inter-American Coal

Problem: “In Colombia, physical distances are exacerbated by economic distances. Costs for freight transport on domestic roads from Bogotá to the Atlantic are about $94 per ton, while international maritime transport to the United States is about $75 per ton. Moving products from Bogotá to Barranquilla costs $88 per ton, and Bogotá to Buenaventura $54 per ton. Shipping goods from Cartagena or Buenaventura to Rotterdam or Shanghai is about $60 per ton—that is, less than the transport costs from Bogotá to the ports for the Atlantic and slightly higher for the Pacific. Logistic costs are also high…Lowering transport costs will catalyze growth and improve overall efficiency across the system of cities in Colombia. The Colombia Urbanization Review identified two possible ways to reduce costs: improvements to intermodality and investments in specific corridors that will face high congestion as soon as 2020.” – Planning, Connecting & Financing Cities Now: Priorities for City Leaders

Project Description: The objective of the program is to
support the strengthening of the Government of
Colombia’s policy framework on productive and
sustainable cities.

Colombia Planned Highway  Investment
(beyond scope of World Bank Loan)
Source: Tunnel Talk

Response: A $150M World Bank loan "to support the strengthening of the Government of Colombia's policy framework on productive and sustainable cities."  The World Bank's “Programmatic Productive and Sustainable Cities Development Policy Loan (DPL) Program will support a comprehensive set of policy and regulatory reforms that aim to: (i) improve access to basic water and sanitation and urban transport services, and mitigate vulnerability to natural disasters for the urban poor; (ii) promote the provision of affordable and safe low-income housing solutions; (iii) strengthen the ability of sub-national entities to coordinate and finance the structuring and implementation of regional and metropolitan development initiatives; and (iv) improve the productivity of the system of cities through improved connectivity within the network of cities and between cities and ports to external markets. These reforms are vital to support the system of cities in Colombia, in which cities are able to grow to their highest potential, and be engines for sustainable growth in the country.” – Productive and Sustainable Cities Development Policy Loan

For more details, see Tunnel Talk's article on Colombia Highway RFPs, the World Bank's Program Information Document, Colombia Urbanization Review or Planning, Connecting & Financing Cities Now: Priorities for City Leaders (pg 92).

Wise Colombian Investment