Colombia: playing catch-up

For infrastructure investors, Colombia represents a compelling blend of the new and the familiar. “New” in the sense of a fresh pipeline of deals to feast on – in 2012, the country’s National Infrastructure Agency (ANI) launched a $27 billion public-private partnership (PPP) programme mainly focused on road and rail.

“Familiar” because – unlike in many other emerging markets – investors in Colombia are not being asked to put their faith in a fledgling deal framework. The Latin American nation has been applying the concession model to its transport infrastructure for the last 25 years, and half of the country’s transport expenditure in GDP terms has come in the form of PPPs.

The reason for the latest infrastructure push is that Colombia has not been keeping pace with its trading partners. In the World Economic Forum’s Competitiveness Rankings, the country was placed 109th for its roads and 99th for its rail out of 142 countries in total. Now aiming to increase transport infrastructure funding to 3 percent of GDP, the figure has historically been only 1 percent.

But investors are getting behind the latest initiative. With domestic banks unable to meet the financing requirement on their own, foreign banks are flocking to the table – as are domestic pension funds. Much of this finance will be needed for nine road projects worth a combined $23.2 billion that were up for tender in September last year as part of the “Highways for Prosperity” initiative.