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South America / Colombia

The state of play: FDI in Colombia

Colombia’s emergence from its troubled past continued in 2019, as its FDI levels rose once again, but its reliance on commodity exports, combined with the impact of Covid-19, pose a threat to this progress.

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More than one-third of Colombia’s FDI inflows in 2019 went into the oil and mining sector, but does this over-reliance give cause for concern? (Photo by Guillermo Legaria/AFP via Getty Images)

According to the UN Conference on Trade and Development (UNCTAD) World Investment Report 2020, foreign direct investment (FDI) inflows into Colombia increased in 2019 to a value of $14.5bn, compared with $11.5bn in 2018, a rise of 25.6%. The report also stated that net outflows from the country in 2019 added up to $3.2bn.

For the first quarter of 2020, CEIC data shows that $3.6m-worth of FDI came into Colombia, compared with a figure of $3.8bn in the final quarter of 2019. However, it has been widely reported that FDI in Colombia contracted by 21.9% to $4.67bn between January and July 2000 when compared with 2019 figures.

Oil and mining dependency

More than one-third of Colombia’s FDI inflows ($4.6bn) in 2019 went into the oil and mining sector, data from the country’s central bank shows. According to UNCTAD, 21% of the country’s FDI went into the financial and professional services sector, with manufacturing accounting for 11%.

FDI flows in the oil industry increased by 11% to $2.8bn in 2019, and in the mining industry by 29% to $1.8bn. The US was the largest investor in Colombia last year.

Covid-19 hit Latin America relatively late but has had severe consequences, highlighting political, social and structural weaknesses in the region. For a commodity exporter such as Colombia, the impact of the virus has the potential to be particularly perilous.

According to UNCTAD, the country’s extraction and processing of oil, coke and petroleum make up 40% of total FDI.