In the last years, Colombia has managed to sustain the growth of its Gross National Product (GNP): according to the estimates of the National Administrative Department of Statistics (DANE) during 2007 the Colombian economy grew 7, 62% in respect to 2006. Also, according to the DANE, "the number of people working went up and the unemployment rate went down in the whole of the national territory, particularly during the last two trimesters of the year." The employment rate on national territory went from 50, 31% in the last trimester of 2006 to 53, 24% during the same period in 2007, which represents a growth of 2, 94 percentage points. According to the National Planning Department, poverty went down from 56% in 2002 to 45% in 2006 and extreme poverty went down from 22% to 12% during the same period. Nevertheless, although these factors together with the drop in insecurity have generated increased confidence in national and foreign investors, the country estimates show diminished growth (4%) during 2008, due to the current behavior of the American economy. The official concern in dealing with poverty persists and the country is working on structural reforms to raise its levels of income per capita, although poverty and inequality rates continue to be elevated.

The following data are noted for Colombia in World Bank’s  World Development Indicators 2008:

- Per capita income is USD 2.740
- Life expectancy at birth is 73 years
- The mortality rate for children under 5 years of age is 21/1000
- 17.8% of the population lives with less than 2 dollars a day and 7% with less than a dollar a day

Recent polls show that a majority of Colombians have adopted as their own the public order objectives of the government that started its term of office in the middle of 2002, and that was reelected in 2006. The peace negotiations with the paramilitaries have progressed and, according to official figures, more than 40 thousand combatants have been demobilized in the last four years. Although economic development does not equate to peace, sustained growth of the economy contributes positively to the process.

It is a fact that violence in Colombia has cost dearly, both in human terms as well as socially and economically. The economic impact of the conflict is significant: if Colombia had been in peace for the last 20 years, the per capita income of the average Colombian would be 50% higher today, and it is estimated that 2.5 million children would live above the poverty line.

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While other Latin American and Caribbean nations are fighting against inequality, poverty or violence, Colombia has to face all three at the same time. Despite advances in the subject, poverty remains one of the country’s main challenges, alongside inequality, which is one of the highest in Latin America: Colombians at the top 20% of the scale receive 60% of national income, strongly contrasting with Sweden, where the top 20% receive 34% of national income.

One of Colombia’s most deeply rooted characteristics, and a factor supporting violence, is that inequality persists even in periods where strong economic growth has reduced poverty.

In the economic front, Colombia has to prepare for the challenges it will face with the eventual approval and signing of the Free Trade Agreement with the United States. Although the Colombian economy has shown solidness, there are certain categories, like agriculture, where small scale producers will have to go through an adjustment period. The approval of reforms such as the fiscal one is also important in order to consolidate the economic growth registered these last years. Colombia also needs investments in infrastructure to consolidate growth.

Achieving a sustainable peace agreement is another priority factor for Colombia’s economic and social development. Colombian authorities are sure that ending violence is a long term challenge that will require efforts from several administrations. There are some issues subsequent to those demobilizations like the regrouping of those demobilized into crime bands that control some communities and illegal trafficking, or the strengthening of armed illegal players in the areas left by the demobilized.

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The Country Partnership Strategy (CPS) covers the fiscal periods 2008-2011 and is in line with the country’s development objectives as expressed in the National Development Plan 2006-2010, as well as the long term development strategy "Visión Colombia 2019."

This CPS proposes to maintain an active credit program from the International Bank for Reconstruction and Development (IBRD) of up to US$4.000 million (about US$1.000 million per year), together with a program that includes greater activity by the International Finance Corporation (IFC) in the range of US$300/US$400 million per year, complemented with a diverse array of analytical and consultancy services, as well as specialized subsidies. The CPS incorporates the World Bank’s evolutionary strategy of work in middle income countries and presents many of the characteristics expected of the new CPSs.
The following are the strategic elements of the CPS with Colombia 2008-20011:  (i) Reduction of poverty and equal opportunities, (ii) peace, (iii) Equitable and sustained growth (iv) Environmental and natural resource management (v) A State at the service of its citizens: efficient and effective government.  

To achieve this, the priorities of the CPS include advances in economic progress specifically focused on the poorest sectors, as well as improving the government’s operational efficiency and transparency. This strategy is based on the success of the previous CPS which managed to bring about the participation of civil society organizations in planning as well as executing, thus allowing local governments to carry out their projects. In addition, the analytical investigations conducted for this strategy contributed in the debate on options for social and economic development.

Some of the Characteristics of the current portfolio:

* Total commitments between 2004 and 2007: US$3,100m
* BRD operations at the end of fiscal year 2007: US$4,700m
* Fiscal year 2008 closed with: US$940m in approvals
* Between 2003 and 2008, 33 projects have been approved by the Directory and 29 analytical studies have been turned in
* The International Finance Corporation (IFC) registered operations for US$264m during fiscal year 2007 and currently manages a total of approximately US$800m

There are, at present,  23 projects with World Bank financing that are being executed in Colombia, and 11 donations. Among them:

USD 300 million to widen access to higher education: The USD 300 million loan to support the Colombian Institute of Educational Credit and Technical Studies Abroad (ICETEX) finances the access to higher education by students from low-income families.

This is the first operation approved within the framework of a new policy that significantly extends the maturity period of the Bank’s loans. The new operation will be exchanged from dollars to pesos in order to minimize currency exchange risks and future liquidity. The loan, which has a 22.5-year maturity period, is the first one approved under the new policy allowing the extension of repayment terms for World Bank loans.

The ICETEX has especially emphasized those students that are registering in technical and technological post-secondary education programs, given the importance of the capabilities and knowledge that these graduates bring to the labor market. Moreover, the Institute offers students favorable conditions and interest rates that are not available in the private market for student loans.

Educational scholarships are designed to meet the requirements of low income students by:

- Establishing partial payments at very low interest rates during the period of study, and segmented payment levels according to the debtor’s profile;

- Offering a one-year grace period after graduation before the debtor needs to start paying interest rates and the overall debt;

- Establishing a long (but flexible) maturity period of up to 22 years;

- Subsidizing the interest rate for the neediest students, offering interest rates which fall much lower than market rates;

- Allowing advance payments without penalties;

- Incorporating new characteristics of flexibility that apply in the case of temporary unemployment. These include: the option to postpone any payment for up to two semesters and the option to renegotiate terms or restructure the loan creating a new repayment schedule.

US$30 million for the Peace and Development Program implemented in the five regions and 109 municipalities most affected by the conflict. This program is aimed at increasing the assets of the vulnerable population in order to reduce displacement risks and restore the livelihoods and social fabric of 20,000 households that are currently displaced.

US$87 million to support government efforts to reduce poverty and inequality and to promote human capital investments among underprivileged groups. The project includes the consolidation and expansion of the Familias en Acción Program, extending it to 400,000 extremely poor families living in areas affected by violence. This project also seeks to improve the monitoring and assessment system of the social protection sector.

US$90,000 to undertake a study on the demobilization and social and economic reintegration of ex-combatants in order to provide the government with an analysis in light of related international experiences, as well to offer information and recommendations to adapt the program and increase implementation success.

USD 250 million to develop high quality and sustainable rapid transit systems in large and medium cities in Colombia, in order to improve mobility between the most strategic public transportation corridors, as well as improving access for poor people through fare integration.

International Finance Corporation

Since the  International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, began its operations in Colombia in 1959, it has supported corporations in the industrial, banking, utilities, and crude oil sectors, with a commitment of over US$1.6 billion to 58 companies.

Currently, the IFC has US$399 million in investments in Colombian companies. The portfolio includes loans to Davivienda, Banco Caja Social, Fundación Social, Titularizadota Colombiana, Carvajal, Promigás and Triple A, among others. IFC’s strategy is to increase growth support with broader measures that include support for companies with potentially large impacts, specifically on the poor, in priority areas such as infrastructure. For more information go to http://www.ifc.org/lac

Multilateral Investment Guarantee Agency

The  Multilateral Investment Guarantee Agency (MIGA), also part of the Work Bank Group whose mission is to promote foreign direct investment into developing countries to increase economic growth, reduce poverty and improve people’s quality of life, has been working to promote both Colombian investments in neighboring countries and foreign investments in Colombia. The availability of MIGA guarantees is being marketed as a risk mitigation tool for investments in Colombia. MIGA also disseminates information on investment opportunities in Colombia.

Global Environmental Facility

By providing grants to developing countries, the  Global Environmental Facility (GEF) supports projects in the areas of biodiversity, climate change, international waters, land degradation, ozone depletion, and persistent organic pollutants.

Currently, the World Bank supports environmental projects such as the  Andean Region Conservation and Sustainable Use of Biodiversity Project;  Integrated Ecosystem Management Through the Use of Forest Pasturing Systems; the  Naya Biological Corridor in the Munchique-Pinche Area; and the  National Protected Areas Conservation Trust Fund.

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The cultivation of bananas in the Montes de María Region garnered popular will, strengthened social networks and generates peace and development.

Maríalabaja Municipality, Bolívar Department.

The production of bananas in the Maríalabaja municipality is a tradition among its peasant inhabitants. During the present decade and due to a wide range of reasons, economic, social and the conflict’s own, the profitability of banana cultivation fell remarkably.

However, efforts like those made by the first 15 peasant families that created the base organization ASPROAGROFOR have reached a point where their legendary economic gamble is focusing the community’s goodwill, both public and private, around a dream: the sustainable cultivation of bananas, the production and marketing of which is already improving the quality of life among the more than 250 peasant families at Maríalabaja.

The dreams of these Maríalabaja peasants started with the implementation of a pilot project led by ASPROAGROFOR to associatively sow 19.5 hectares of bananas in alliance with many social actors from their location; by inviting private enterprise represented by Continental Foods, the PBA Corporation that transfers organizational capacity and develops communitarian farming technologies, public institutions through the Maríalabaja mayor’s office, and the Agriculture Secretariat of Bolívar Department, and entities such as ICA and CORPOICA which, by being strategically articulated, have now renewed the tradition of growing this crop that has an ample potential in the processed food market due to the demand from international markets.

The objective of the project is to commercially grow organic bananas, their processing by Continental foods and marketing the processed product in international markets. The scheme, consisting of strategic public, private and community alliances, guarantees training in farming best practices and technology transfer from the private sector to peasant farmers, the strengthening of their base organization, and marketing of the entire crop at prices agreed beforehand between business and producers, with the result that the alliance becomes a scheme where everyone puts something, everyone risks something and everyone wins.

The successful performance of ASPROAGROFOR and the will of its members to teamwork, in alliance with strategic partners that provide business acumen, technology and guarantee the product’s marketing, has resulted in the expansion of the productive project to 220 hectares, with the support of the Productive Alliances Program from the Colombian Ministry of Agriculture and Rural Development, and the Peace and Development Project from the Presidencies for Social Action and International Cooperation Agency. Support from the civil society organization Development and Peace Network Foundation for Montes de María makes it into another strategic partner for ASPROAGROFOR around the goals of social cohesion, coexistence and the creation of conditions for a lasting peace in the region.

Maríalabaja’s bananas becomes another experience, of the many that exist in Colombia, that come out of people’s heart to demonstrate that even in the midst of conflict you can forge ahead, and that roots and cultural identity are enough motivation for every single one of ASPROAGROFOR’s families to get up every day and sow an new future.

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CONTACTS
Fernanda Zavaleta, Communications Officer
E-mail: fzavaleta@worldbank.org

María Clara Ucrós, Public Information Service
E-mail: mucros@worldbank.org

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For more information on World Bank assistance to Colombia, including lending breakdown and project reports, see: All Projects

Updated Sept 2008

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