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As Colombia Grows, Infrastructure Remains a Hurdle

Saturday, May 19, 2012

Going from a state on the brink of failure to the third largest economy in South America and a magnet for tourism and foreign investment, Colombia has seen a steady transformation over the last 15 years into a regional success story.

As a Latin America analyst and a Colombian, I ask myself if the country will sustain this trend into the future. Though the transformation has been deep in many areas, including security, trade, and investor confidence, a major lag is still a lack of adequate infrastructure. This has, arguably, been Colombia’s Achilles’ heel for growth in the past, and continues to be so in the present.

Progress in infrastructure over the last few years has been slow at best. It doesn’t matter who you talk to, you’ll probably hear that it’s cheaper to move a container from China to the city of Santa Marta on Colombia’s Atlantic coast than from Santa Marta to Bogota, the nation’s capital. I’m not sure if this is true, but it seems to describe the state of affairs pretty well.

The truth is that most highways, roads, ports, and airports seem to be made for a country in a different era, not one growing at an average of 6 percent annually. The Pacific coast continues to be poorly connected to the rest of the country, with only one main port on its 800-mile shore. Quibdo, the capital of the Choco Department on the Pacific coast, is 30 minutes away from Medellin, the country’s second city, or 8 to 17 hours by car, depending on the weather and the state of the road. This has been the case for years.

In Latin America, Colombia has the fewest miles of paved per inhabitant, trailing behind historically underdeveloped Bolivia and Ecuador. Between 1993 and 2008, public and private investment in infrastructure was a mere 0.6 percent of GDP compared to an average of two to four percent in the United States, five percent in Europe, and a staggering nine percent in China.

President Juan Manuel Santos’ government has announced ambitious plans to ramp up spending to 1.5 percent through 2014 and then 1.8 percent through 2021. A new regulatory regime was recently put in place to expand public-private partnerships and improve the bidding process for infrastructure projects. A new national infrastructure agency was recently created to prioritize spending, oversee a growing budget, and ensure the timely completion of projects.

Yes, airports are being built, ports are being upgraded, and overall it’s possible to see some things are changing. But are they changing fast enough to maintain the current growth rates of the country? Only time will tell.