Political Risk Analysis: Colombia Working To Improve Security
May 8, 2018
Colombia, Latin America's fourth largest economy, is a country that is experiencing dynamic growth in some sectors but is still characterized by immense inequality and deep seated social divisions. It's a country that is still affected by high levels of poltical risk. For half of century Colombia's social conflict has played out on the battlefield between guerilla groups such as the Fuerzas Armadas Revolucionareas de Colombia and a national government that has pushed a centralized top-down approach to both economic development and peace-building. After decades of armed conflict the country is moving forward with a peace process which will see the FARC put down their guns and form a political party.
Colombia may be starting a new chapter. Between 2000 and 2016, Colombia received more than $150 billion in total foreign direct investment. Starbucks, Glencore, General Motors, IBMand PepsiCo have already opened new operations in Colombia. Foreign companies in the mining, tech, and agriculture sectors are now considering making new investments. According to Santiago Angel, the head of the Colombian Mining Association, “If we get the investment conditions we want...as an industry, we could again bring in between $1.5 billion and $1.7 billion a year, for a five-year investment of $7.5 billion.” The peace process may open new opportunities for investment and economic development but Colombia still faces a long and difficult road ahead. Investors performing due diligence on projects in Colombia need to understand the potential impact of security risks.