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Juana García and Juan David Martínez, Universidad de los Andes

The role of the private sector in consolidating peace in Colombia

Oct 03 2017

The role of the private sector in consolidating peace in Colombia


by Juana García and Juan David Martínez, Universidad de los Andes

The implementation of the Havana Agreement, between the Colombian government and the FARC guerrillas in 2016, opens a new possibility for peacebuilding and consolidation in the country. The perceived benefits in the economy and Colombian society with the implementation of the agreement has led the National Planning Department to make positive estimates in the medium term such as a 1.1 percentage point bump to the current GDP growth rate.

The challenges in the years to come implicate all relevant social actors, including Civil Society Organizations (CSO), Colombian institutions, citizens and the private sector. At first glance, the state carries the greatest responsibility in transforming itself in order to provide basic public services to all through strong and effective institutions and to reach areas where its presence has been null or weak. However, the great challenge is the social and economic development of areas that, until now, have been in the margins of a middle-income country like Colombia.

This situation requires the participation of other social and development actors with the capacity of having a favorable impact on the living conditions of the population that is immersed in the conflict. Hence the need to have the support and interest of the private sector for the construction of a peaceful Colombia. This idea does not arise only from the national conjuncture. Indeed, different international calls have been made to include private agents in development initiatives. It has already been done in 2012 by the United Nations (UN) in its Annual Peacebuilding Report; in 2014 in the first high-level meeting of the Global Partnership for Development Cooperation; as well as by the 17 UN Sustainable Development Goals.

The analysis of the country's peace dividends has predicted an increase in the inflow of Foreign Direct Investment (FDI), which would reach US $ 23 billion, compared to the record achieved in 2013 of US $ 16.2 billion. It is foreseeable that many multinationals would consider the country as a possible investment destination in the short and medium term. However, there are many considerations that must be taken into account. Incoming FDI to Colombia has declined since 2013—the rebound that occurred in 2016 was due to the sale of the state holding in ISAGEN. The oil sector, which attracted on average one-third of incoming FDI since 2008, has also seen its participation decline, accounting for less than one-sixth of the income. In addition, the international context favors the reduction of FDI in developing countries due to higher interest rates in the US and the protectionist policies that will promote its president.

The absence of conflict in different areas of the country would allow the entry of domestic and foreign companies to previously unknown areas, where they will be able to find growth opportunities through new clients or new suppliers of raw materials. However, the diversity of companies involved in the private sector must be considered when understanding their role in the post-conflict period.

The participation of private companies in the post-conflict era can have two interpretations. The first of these is that public actors (mainly the State) must create and guarantee favorable conditions for the development of private initiatives. Within this proposal, public institutions at the national and local level must provide a clear legal framework with a coherent tax system and foreseeable judicial decisions with due process, as well as physical security, macroeconomic stability favorable to FDI and clarity regarding property rights. Another relevant public actor in this discussion is the international cooperation that offers local knowledge of these remote areas to public and private entities that enter them.

The second reading builds on the previous one. At this point, the efforts in the first proposal are assumed, but it now suggests understanding and supporting the development ideas of those remote areas. As a result, microfinancing alternatives should be offered for local associative initiatives or for strengthening established cooperatives. Productive linkages can be promoted within the national market as well as value chains that encourage the creation of formal employment. The development of conflict-free zones includes the provision of technical training programs to teach the local workforce the skills required by the companies operating there.

It is thus possible to conclude that the latter view of private actors in the post-conflict should consider the perspective of large companies and SMEs, as it aims to involve as many organizations as possible. This second vision fits with the idea of ​​pushing the private sector to go beyond the current law-abiding behavior in the safe regions of the country, as it happens in Colombia, and to promote the generation of shared value which also benefits them. Implementing actions that are derived from this perspective are the true dividends of peace in Colombia.

In short, the consolidation of a durable peace in Colombia contemplates not only great challenges in terms of security and institutional transformation by the State, but also an active commitment from the private sector to collaborate with national and local institutions on to jointly transform the living conditions of all Colombians.

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