BCC #18 International Allies Newslatter

XVIII COLOMBIA NEWSLETTER

International Allies

Bogotá, march, 2023

CONTENTS

1. GUEST COLUMNIST

I recently attended my first meeting of Global Council of the International Chamber of Commerce World Chambers Federation in beautiful Bogota. The standout of my visit was a closed-door meeting with Her Excellency Vice President Francia Marquez who affirmed her government’s interest in developing strong ties between Colombia and Africa. The trip to the Salt Cathedral of Zipaquirá was a close second – an excursion which, in hindsight, our hosts from the Camara de Comercio de Bogota might have included for the sole purpose of building up the spiritual strength needed to process the wildly eccentric Andrés Carne de Res.

I was given the high honour of briefing Her Excellency on the opportunity spectrum that my home country Uganda presents to the business community in Colombia. I couldn’t help but express to Her Excellency, the difficulty I faced in getting an appropriate gift for my Colombian counterparts because our two countries have more in common than meets the eye.

Both countries straddle the equator, have good elevation, and an abundance of freshwater which affords them an enviable high rank on the global biodiversity table. It is no wonder, therefore, that our national flags have two colours in common which makes the all-important art of swapping football jerseys an uncomplicated affair. Further still, Uganda’s coat of arms seems to have drawn inspiration from the creative juices of Francisco de Paula Santander, given that ours highlights our cotton and coffee to Colombia’s fruit and vegetables.

The preceding, however amounts to nothing without the warmth of a people’s welcome. This ‘ubuntu’ – a term used to capture our common humanity, was evident right from the start when Jorje, the cab driver from the airport, found a way to wax lyrically about the flamboyance of Tino Asprilla and cliff-edge antics of Carlos Valderama despite neither of us understanding the other’s language.

In the same vein, the Bogota Chamber provided fertile ground for my fellow delegates and I to connect with a spread of business leaders. From my perspective, the matrix that provides a clear opportunity for collaboration is revealed in the sectoral breakdown and concentration of labour force in our respective economies. The 7.2% composition of total GDP provided by the agricultural sector in Colombia draws 17.2% of the labour force (the same metrics for industry are 31% and 21% of GDP and labour force, respectively). In Uganda, 72% of our labour force engages in agriculture (industry: 7%) – a sector that is responsible for 28% of our GDP (industry: 20%).

We offer a familiar template for Colombian investment to thrive in Uganda. Such would not only provide access the worlds 2nd largest common market but also routes to consumers in the Middle East and Europe.

I have been hard at work selling the need for collaboration to my government and the Chamber of Commerce since my return. Collaboration, which as Her Excellency Marquez and the Bogota Chamber emphasized, will allow us to jointly present the gift of our shared blessings to the rest of the world.

David Bikhado Ofungi Senior Advisor of the Uganda National Chamber of Commerce and Industry.

2. GOOD NEWS ABOUT COLOMBIA

NATIONAL NEWS

• Germany will support the energy transition and the transformation of the agricultural sector in Colombia with the aim of implementing a sustainable system and deepening the mutual exchange of experiences. Added to this, the Federal Minister of Food and Agriculture, Cem Özdemir, recognized the importance of strengthening the role of women, the inclusion of indigenous communities, and the most vulnerable in the rural sector. The minister highlighted the coincidence of both countries in advancing in the identification of investments, strategic alliances, and technical cooperation by Germany. For more information, see the following link

• Colombia and the United States held the X High-Level Dialogue (DAN) on March 27 and 28. During this dialogue, the Secretary of State, Antony Blinken, and the Minister of Foreign Affairs of Colombia, Álvaro Leyva, led, along with the heads of other portfolios, bilateral cooperation on issues such as the country's rural reform, climate action, energy transition, security, bilateral trade, and migration issues, among others. For more information, see the following link.

• Desde Colombia, la Alianza Digital Unión Europea-Latinoamérica y el Caribe, anunció inversión para apoyar la transformación digital en el hemisferio. Durante la visita de la Vicepresidenta Ejecutiva de la Comunidad Europea, Margrethe Vestager, a Colombia el pasado 14 de marzo, la Alianza anunció una primer inversión de 145 millones de euros para desarrollar la cooperación en materia de tecnología, ciberseguridad, desarrollo de economía digital, entre otros. Para más información, consultar el siguiente enlace.

• From Colombia, the European Union-Latin America and the Caribbean Digital Alliance announced an investment to support digital transformation in the hemisphere. During the visit of the Executive VicePresident of the European Commission, Margrethe Vestager, to Colombia on March 14, the Alliance announced a first investment of 145 million euros to develop cooperation in the areas of technology, cybersecurity, development of the digital economy, among others. For more information, see the following link

• El pasado 2 de marzo culminó en Bogotá la 16va macrorrueda Colombia Travel Mart, generando expectativas de negocio para el sector turismo de más de US $54 millones. El evento que reunió a más de 440 empresarios entre 222 exportadores nacionales y 218 compradores extranjeros de 32 países contó además con más de 4.700 citas de negocio. Para más información, consultar el siguiente enlace.

• On March 2, the 16th Colombia Travel Mart macro-round ended in Bogotá, generating business expectations for the tourism sector of more than US $54 million. The event that brought together more than 440 businessmen and women, including 222 national exporters and 218 foreign buyers from 32 countries, also had more than 4,700 business appointments. For more information, see the following link.

BOGOTÁ-REGION NEWS

• The Bogotá High Impact Route and the Scale Up Bog platform are launched to promote the entrepreneurial ecosystem of Bogotá. These platforms will allow the business fabric of the city to find information, promotion, and access services for strengthening, financing, and connection to markets, giving impetus to the ecosystem of entrepreneurship and innovation. In this report, sectors such as Fintech (45%), PropTech (19%), E-commerce (17%), and other sectors (19%) were highlighted, demonstrating that Bogotá is one of the protagonists of the ecosystem in Latin America. For more information, see the following link.

• The first Employment Mega-Fair in Bogotá ended successfully, offering more than 3,000 jobs in the mobility and construction sectors. This Mega-Fair received more than 1,000 job seekers and brought together companies dedicated to construction and mobility projects, such as Amarilo, Colpatria, Marval S.A.S, Bolívar, Prodesa, Sodimac, Magneto 365, among others. The District Employment Agency of the Ministry of Economic Development sought to connect citizens with companies that have current job offers. The main objective was the formal hiring of women and men with or without experience in important urban and mobility projects that are currently being carried out in Bogotá. For more information, see the following link

3. BCC NEWS AND UPCOMING EVENTS

• The seventh edition of ARTBO|Weekend arrives. The art program of the Bogotá Chamber of Commerce will take place from April 21 to 23 and proposes a new meeting of citizens with art through tours of Bogotá to learn about the local offer for free. In this edition, 56 exhibition spaces will participate, including galleries, museums, foundations, and self-managed spaces, located in the main artistic circuits of the city. For more information, see the following link.

• $9,000 million to support digital entrepreneurs who strengthen the popular economy. The Bogotá Chamber of Commerce (CCB) and the SENA Emprender Fund launch a call to support entrepreneurs from Bogotá or one of the 59 municipalities under CCB jurisdiction who incorporate digital technology into their business models. For more information, see the following link

4. ECONOMIC BEHAVIOR

4.1. GROSS DOMESTIC PRODUCT (GDP)1

Colombia presented a growth of 2.89% compared to the same fourth quarter of the previous year, which represents a decrease of 8.44 percentage points in relation to the growth of the fourth quarter of 2021. In the case of Bogotá, the growth was of 4.67%, a decrease of 7.87 percentage points compared to the same quarter of the previous year.

Regarding the annual variation, Colombia's GDP grew 7.5% in 2022 compared to 2021, which represents a decrease of 4.5 percentage points compared to the previous year. For its part, Bogotá's GDP grew by 9.9% in 2022, which is equivalent to a decrease of 1.3 percentage points compared to the previous year.

Graph 1. Annual growth rate, by quarter, of GDP between 2019 and 2022 Colombia and Bogotá

Source: DANE – SDDE.

1 Source: DANE, Cuentas Nacionales. Publicado el 16 de agosto de 2022

4.2. INFLATION

In February 2023, the monthly variation of inflation in Colombia was 1.66%, which represents an increase compared to the 1.63% registered in February 2022. In Bogotá, the monthly variation was 1.89% , which also represents an increase compared to the 1.68% registered in February 2022.

Table 1. Monthly and annual inflation in Colombia and Bogotá during February 2022-2023.

Source: DANE - Índice de Precios al Consumidor (IPC).

In terms of the annual variation, Colombia registered a significant increase in inflation, with a rate of 13.28% in February 2023 compared to the 8.01% registered in the same month of 2022. For its part, the annual rate in Bogotá also increased, reaching a rate of 12.94% in February 2023, compared to the 7.03% registered in February 2022.

The data shows that, during February 2023, the consumer price index (CPI) for Colombia and Bogotá increased overall across all spending divisions, with a few exceptions. The greatest increase was observed in the education division, with an increase of 8.5% in Colombia and 7.87% in Bogotá; This increase is explained by the increases in higher education tuition prices, which is related to the start of the school year.

4.3. EMPLOYMENT

Employment has shown an improvement compared to the previous year. At the national level, the unemployment rate in January 2023 was 13.7%, 0.9pp less than in January 2022, which represents a total of 139,000 fewer people under unemployment. Meanwhile, the number of employed people increased by 796 thousand people compared to 2022. The global participation rate increased by 0.8pp, from 62.6% in January 2022 to 63.4% in January 2023.

Source: Gran Encuesta Integrada de Hogares - GEIH (DANE). Published on February 23rd, 2023.

In the case of Bogotá, the unemployment rate went from 13.9% in the moving quarter Nov 21-Jan 22 to 12.0% in the moving quarter Nov 22-Jan 23, which means that there are 64 thousand fewer people under unemployment In the same period, the number of employed people increased from 3,643 thousand people to 3,829 thousand people, an increase of 186 thousand people.

In January 2023, the gap in the unemployment rate between men and women was 6.4pp, while 11.0% of men are unemployed, 17.4% of women are in that condition, even thus, it represents an improvement compared to January 2022 when the gap was 8.2pp. In addition, in the last year the number of employed women increased by 476 thousand people, while the number of employed men only increased by 320 thousand people.

4.4. BUSINESS DYNAMIC

In January, 508,242 active companies were reported in Bogotá and the 59 municipalities under the jurisdiction of the Bogotá Chamber of Commerce. 85.5% of these were located in Bogotá, while 14.5% were in the remaining 59 municipalities. MSMEs continue to be the major players in the region, microenterprises represent 93.8% of the total, and only 0.6% of the companies correspond to large companies. When comparing with January 2022, it is observed that the number of companies increased by 6%. It is worth noting the 7% increase in microenterprises between January 2022 and January 2023.

The participation of companies by legal order in Bogotá and the region is made up of 57% physical persons and 43% legal persons. The services sector accounts for 54.3% of the companies, while commerce represents 31.8%, and the remaining 13.9% corresponds to companies in the industrial sector.

Table 2. TGP, TO y TD

5. EVOLUTION OF FOREIGN TRADE EXPORTS

The annual variation data for exports from Colombia, Bogotá, and Cundinamarca between 2021 and 2023 indicates a slowdown in exports, although with some fluctuations. In January 2023, the annual variation of Colombian exports was -2.8%, which represents a decrease compared to the same month of the previous year. However, compared to January 2022, Bogotá and Cundinamarca had an increase of 6.13% and 5.29%, respectively.

During 2022, Bogotá and Cundinamarca had mixed results. Bogotá had a maximum growth of 84.42% in February, and a maximum decrease of -12.32% in November, while Cundinamarca had its highest increase in June (98.42%) and its lowest growth in September (11, 33%).

In terms of total export value in January 2023, Bogotá represented 6.4% of Colombia's total exports, while Cundinamarca represented 5.4%. Although these figures may seem modest in comparison to Colombia's total exports, they show continued growth and a significant contribution to the region's economic growth.

IMPORTS

On January 2023, Colombia registered imports for a total of $5,529.67 million CIF dollars, which represents a decrease of 8.61% compared to the same period of the previous year. It should be noted that the BogotáCundinamarca region represented 60.67% of the country's total imports, with a value of $3,357.61 million CIF dollars.

Bogotá, for its part, registered an increase in its imports of 3.30%, with a total of $2,933.66 million CIF dollars in January 2023. Cundinamarca, however, showed a decrease of 25.76%, with imports worth $423.96 million CIF dollars. In terms of participation, Bogotá represented 87.37% of imports from the Bogotá-Cundinamarca region, while Cundinamarca contributed 12.63%. The United States was the country with the most imports, with a value of $1,115.89 million CIF dollars, which represents 33.23% of the overall total China ranked second with a participation of 21.33% and a value of $716.08 million CIF dollars, and Brazil completed the podium with imports worth $233.94 million CIF dollars, contributing 6.97% of the total.

6. FOREIGN DIRECT INVESTMENT

According to the Ministry of Trade, Industry and Tourism of Colombia, Foreign Direct Investment (FDI) stood at US $1,964 million in February 2023. This represents an increase of 24.3% compared to the same month of the previous year.

For its part, investment in the oil and mining sector stood at US $1,498 million, thus increasing by 36.3% compared to February 2022. Regarding sectors other than oil and mining, FDI amounted to US $466 million, presenting a reduction of 3.1% compared to the same month of 2022.

In the first two months of 2023, FDI in other sectors (other than oil and mining) represented 23.7% of the total. FDI in mining-energy companies participated in 76.3%.

Source: Central Bank – Ministry of Trade, Industry, and Tourism. February 2023.

7. SOURCES

• For more information, refer to the Observatory of the Chamber of Commerce of Bogotá. https://www.ccb.org.co/observatorio

• DANE. Cuentas Nacionales. Recuperado de: https://www.dane.gov.co/index.php/estadisticas-portema/cuentas-nacionales/cuentas-nacionales-trimestrales

• DANE. Mercado Laboral. Información recuperada de: https://www.dane.gov.co/index.php/estadisticaspor-tema/mercado-laboral/empleo-y-desempleo

• Registro Mercantil, CCB, 2019 - 2020 – 2021 - 2022. Recuperado de: https://www.ccb.org.co/Inscripciones-y-renovaciones/Matricula-Mercantil/Boletines-del-RegistroMercantil/Boletines-ano-2021

• DANE. Encuesta Pulso Social. Recuperado de: https://www.dane.gov.co/index.php/estadisticas-portema/encuesta-pulso-social

• DANE, Exportaciones. Diciembre 2022. Recuperado de: https://www.dane.gov.co/index.php/estadisticas-por-tema/comercio-internacional/exportaciones

• DANE, Comercio internacional importaciones diciembre 2022. Recuperado de: https://www.dane.gov.co/index.php/estadisticas-por-tema/comercio-internacional/importaciones

Graph 2. Foreign Direct Investment. February (2015-2023)

• Ministerio de Comercio, Industria y Turismo. Informes de Inversión Extranjera Directa. Recuperado de: https://www.mincit.gov.co/estudios-economicos/estadisticas-e-informes/informes-de-inversionextranjera

• Observatorio de Desarrollo Económico de Bogotá. Recuperado de: https://observatorio.desarrolloeconomico.gov.co/expectativas/indice-de-confianza-industrialvuelve-terreno-positivo