It was a split vote of 5-2. Hopefully, by October, it will be slit the other way.

After the meeting, Colombian Minister of Finance Ricardo Bonilla commented that month-over-month inflation in August (0.7%) was above expectations. He gave a nod to increasing fuel prices, and noted that the government is now hoping for a year-end 2023 reading of 7%. Meanwhile, last week’s Fedesarrollo survey suggested it would be 9.4%.

August unemployment from the National Administrative Department of Statistics (DANE) continues to impress, with both urban and national rates dropping from 10.8% and 10.6%, respectively, to 9.6% & 9.3%. The numbers for those in work also rose to 66.4% and 64.4%, respectively. Total numbers in work rose by over 1 million, year-over-year, with the largest contributions coming from industry, public services, agriculture, and accommodation/restaurants.

That last one is a nod to fast-growing tourism — with the government now expecting 5.2 million foreigners to arrive in Colombia this year, which would be up 13.5% year over year. This appears low, given January-July there was an increase of 34%. The issue, according to ProColombia, is that the country has an infrastructure and hotel capacity for 7.5 million with a government target of 12 million tourists within four years.

Getting back to unemployment data, and to contextualize those numbers fully: You can only compare with the equivalent month, 12 months ago, if you want apples-apples. For national unemployment, it is the lowest August since 2016. And for urban unemployment, it is the lowest August — EVER!

Never miss Rupert’s latest commentary
Follow him now on LinkedIn to see What Jumps Out

Reflecting the strong institutions of Colombia, the Banco de la República has for the past six months ignored the carrion calls to stop raising interest rate — or even to lower rates — as they continued the battle against rising inflation, which was largely against the country’s control.

But what now?

Colombia’s Finance Ministry and the National Business Association of Colombia (ANDI) have spent weeks and months asking for rate cuts. Will they get what they want?

By June, the consumer price index (CPI) seemed to have been controlled, but the July and August readings, while coming down, have been higher than expected.

But, the central bank, at the same time, has choked off the economy.

Wherever you look at the data from the National Administrative Department of Statistics (DANE) — imports, retail sales, manufacturing production, new home sales, construction, and GDP — we are slowing like a hamstrung athlete.

Colombia’s Finance Ministry (MinHacienda) and the National Business Association of Colombia (ANDI) have spent weeks and months asking for rate cuts. Will they get what they want?

My guess is no. But, perhaps, they need to take a punt and cut a little bit, thereby sending a message to the markets.

One concern has been the arrival of El Niño, which would unquestionably drive prices upwards. We have already seen the impact on energy costs on the coast, but September was the arrival date for the phenomena and, as of yet, things are cooler than expected. The last forecast from IDEAM was a 90% probability of El Niño, but with no real understanding of how strong it will be. Perhaps it will be weaker than expected — although that could be the heart talking.

There will be much chatter leading up to Friday. During Friday. And afterwards.

Hopefully they will cut. But the committee has years of track record as overtly conservative — a fact reflected in last week’s Fedesarrollo survey, which raised its year-end 2023 Overnight Rate estimate from 12% to 12.50%.

Until then, it’s a case of wait and see.

Photo: Banco de la Republica, the central bank of Colombia.

Never miss Rupert’s latest commentary
Follow him now on LinkedIn to see What Jumps Out

Unemployment data from the National Administrative Department of Statistics (DANE) for July was once again favorable, with both the urban (9.8%) and national (9.6%) rates down (from 11.3% and 11.0%, respectively) from a year ago. Both readings (apples vs. apples) saw their lowest July reading since 2015. In nominal terms, on a national basis, there are 22.9 million persons working — up 3.8% (~847,000) from a year ago. There is still plenty of work to do on gender, with women seeing an occupancy level of 47.1% vs. 11.9% unemployment. This compares with 71.0% and 7.9%, respectively, for men.

Banco de la República sat down yesterday, but as we know it was a “coffee and biscuits” meeting with no decision on rate changes or subsequent press conference. All eyes will be on August consumer price index (CPI) next week and then waiting to see the size of the (expected) rate cut from Colombia’s central bank in September.

In terms of politics and reforms, it has been a week of jousting as opposed to hostilities and, as ever, you have to wade through the vested interests of both the press and politicians. The National Business Association of Colombia (ANDI) last week was asking to be part of a broad-based dialogue about the country’s future but, at least in terms of the lLabour reform, the government is suggesting that after 12 months of being criticized by the private sector, they will go it alone. It’s a shame when there isn’t dialogue but the ANDI and private sector are equally to blame.

The transport strike on Monday, was a damp squib and with the government already stating that there is no intention to raise diesel prices — or to give taxi drivers preferential fuel rates — the subject looks closed. Prices for the next few months will continue to rise as the government continues to attack the fuel subsidy hole left by their predecessors.

Year to date, the government has now imported 309,000 tons of LNG in order to combat El Niño and falling reservoir levels. This is 60% above the 2022 total but necessary until the country can reverse years of declining production. Some elements are trying to pin this shortage on Gustavo Petro (nothing new here), but the shortfall in gas production has been years in the making.

Gonzalo Perez will retire from CEO of Grupo SURA after three years. The search is now on for his replacement (in reality, it will be from within the group).

On the equity markets, there has been little activity — and Asobolsa won’t change that. The peso was quiet around the 4,100 peso level to the dollar while awaiting the next FOMC meeting in the United States.

Photo: Loren Moss of Finance Colombia and Natalia Yepes Jaramillo of ANDI visit Collective Mining’s extraction site in Supía, Caldas.

Caldas is small but economically significant department in Colombia. It is best known as the capital of the Coffee Axis (Eje Cafetero), where Manizales sits as the largest city within the heart of the nation’s traditional bean-producing region.

But in the modern day, there is a rich, diverse blend of economic drivers fueled by the high-caliber labor force graduating from the respected universities in the department.

The mining sector, for example, is an important — yet controversial — industry both in Colombia and Caldas. Local communities have waged protests and legal challenges to several projects in recent years, causing disruptions and even some operational shutdowns. This has put additional pressure on industry companies operating in Colombia and forced them to navigate a climate that now also includes a national president who has been unwelcoming to exploration, especially in the oil and gas sector, but also with skepticism toward mining firms.

To better understand everything Caldas has to offer and shed more light on the state of the mining sector in the department, Loren Moss, the founder and publisher of Finance Colombia, recently met with Natalia Yepes Jaramillo, manager of Caldas region at ANDI (Asociación Nacional de Empresarios de Colombia). Together, they visited the exploration site of Canadian-Colombian mining company Collective Mining Ltd. (TSXV: CNL) (OTCQX: CNLMF) in Supía, Caldas near the border with Antioquia to better understand how Collective is working hand in hand with the local community, and how ANDI is working to support the industry and the region.

Finance Colombia: ANDI is an industry trade association. Can you explain what ANDI is? What is its purpose and value?

Natalia Yepes Jaramillo: We are a trade association that will be over 78 years old this year. Before we were the National Association of Industrials of Colombia, today we are the National Association of Colombian Entrepreneurs. It’s been a little over two years since we changed the name, because we became associated and affiliated with almost all economic sectors.

Finance Colombia: Why is it so important to have an organization that represents the interests of entrepreneurs and those who manage large companies?

Natalia Yepes Jaramillo:  Our importance lies in the ability we have to represent and be the spokespeople of the private sector — and of companies across the productive sector — in the face of different issues. In front of the national government, for example, with different ministries, or in front of Congress — but also in the regions.

We also do this work as representatives and spokespeople with the local governments and departments. For example, with the parliamentarians, we have permanent conversations where we represent different topics for our affiliates. This year, we are working strongly on everything related to health reforms, labor reforms. We know that these reforms, if they are presented as they are now, will have a big impact, not just for entrepreneurs but for the economy as a whole. So we try to be that bridge between a private company and the different government branches on both a national and departmental level.

Finance Colombia: It’s interesting because, this year, the national government proposes changing the health system and the employment regime. I imagine a lot of these things appear as big threats to the private sector.

Natalia Yepes Jaramillo: That’s right. And what we also have from ANDI is an economic studies center, a social studies center, and work studies center where we do a rigorous analysis. With that same rigor, and in a very technical manner, we go to the national government, and to the Congress in this case, and explain the implications and the effects of these reforms.

Why? Because we know that if the proposed labor reform is approved, it’s going to impact employment, employment generation, and the growth we’ve had as a country in the last years.

In the city I represent, Manizales, we are the city with the second lowest unemployment rate in the country, in part because entrepreneurs make a great effort to maintain productivity, competitiveness, and such factors. We know these policies, the way that they are proposed, would affect the economic growth as a whole. That’s why we know — in a very technical, rigorous, and organized form — that we can be that conversation channel.

Finance Colombia: You specifically represent Caldas, a very important economic driving force for the country. What makes Caldas, Manizales, and the Coffee Axis unique? What are the specific advantages, and why should investors, especially international investors, pay more attention here when they do their due diligence and look for where to put their investments?

Natalia Yepes Jaramillo: Human talent is what differentiates us as a region, and it is what has made us grow in the way that we have in terms of employment. In Manizales, we are a city with an important industrial tradition, for over 80 years, and we have been improving on this and growing in sophisticating through our human talent.

This has been achieved with the academic offerings we have. We are a city with approximately 450,000 inhabitants and six universities — with five of them credited as high quality — so we have developed our advantages in relation to infrastructure.

We are also the most formal city in the country. When you check reports — for example in the “Doing Business” survey — we are first in quality of life. This gives us some important comparative advantages next to other cities.

We also have some interesting distinctions regarding providers, which we see with Collective Mining developing and learning to understand this region in Supía. There are some really good developments and opportunities for development.

David Reading, special advisor at Collective Mining, gives a presentation near the extraction site in Supía. (Photo: Loren Moss)

Finance Colombia: Today we visited the site where Collective Mining has their titles, where they are doing exploration. We have a new government that has been very hostile toward the petrol sector, and it isn’t too friendly to mining either. How important is the extractive sector? Is it positive or negative to have it in the region right now?

Natalia Yepes Jaramillo: It is very positive for the region. This is a region with a mining tradition, and we have promoted legal mining. Companies like Collective Mining have come to understand how the region works and entered in a friendly, conciliating way. They aren’t just arriving and doing exploration without knowing what happens in the region. They are learning a lot from the community. For us at ANDI, that is very valuable.

We also see very important practices in sustainability, environmental development, and social development. That’s what we look for in our companies — that they in one way or another boost what we have in the region. Because we consider this as a traditional mining region, we are going to support it being done in a legal and formal way.

Finance Colombia: Just recently, we have seen in Bajo Cauca that there was a strike supposedly from the miners. Some say it’s more complex, but there is a lot of not just informality, but illegality, in mining over there. But here, we see the role that formal companies play in providing formal employment and paying taxes to the government. You told me you saw what Collective Mining is doing as very positive, but we have also seen formal, commercial mining in this same region that didn’t have the same good relations with the town. What’s the difference between, say, Collective Mining and the companies that didn’t have the same success?

Natalia Yepes Jaramillo: I think the main thing is to understand the community before going in. It’s understanding the community, hearing them out. It’s having conversations with the people, with the social leaders, with the administrative leaders from the region, and understanding first how the community works. I think that’s the key to be able to enter and to have a successful result.

As the name says, it’s “collective” mining. Since one starts the route with the Collective staff members, you start seeing how they have improved the estates, how they have boosted the community, and they take their coffee, for example, from an estate that is part of the mining title they have. Honey is also produced in the area. And we see the development that women of the community have, being taught about providing clothing, helping them improve.

You can see the integration. You see how it can boost the community. And that generates formal employment. And there’s education, and there can be an organized health system that reaches many levels of the community. Even though we were going into some very far away areas on wild roads earlier, you can see how the community is working in a friendly way.

I think that is the difference, they didn’t come in to invade something that is ancestral and part of the area’s DNA. They entered to understand the community first and to integrate it into the mining work.

Rio de Janeiro in Brazil and Villahermosa in Mexico are the only two current Latin American cities that are members of the WECP. In joining, Barranquilla will join its peers in “finding creative and effective solutions to the new challenges that our cities face,” said WECP in a statement. “As the global energy scene changes and evolves, so too must our organization.”

WECP says that each new addition to the partnership will “facilitate business-to-business interaction, partnerships in energy-related activities and the sharing of industry knowledge, contacts, and experiences.” By including more members, the organization says it is also growing its “worldwide network of industry support services and resources” and helping member cities better collaborate with one another toward like-minded goals.

Halifax was this year’s host for the group’s annual general meeting, where a Colombian delegation led by Barranquilla Mayor Alejandro Char and representatives of ANDI (National Business Association of Colombia) and the University of Atlántico presented their achievements as an energy leader city. Others who traveled to the North American city included Madeleine Certain, the district secretary of economic development; Alberto Vives, manager of ANDI; and Diana Pérez of the University of Atlántico.

Char was eager to sign the agreement and has praised the energy potential of the city due to its strategic location in Colombia at the end of Magdalena’s river, the longest in the country with a delta that empties into the Caribbean. For her part, Madeleine Certain and her team have attempted to show Barranquilla’s economical and social accomplishments and highlighted the city’s competitive advantages in the energy market.

According to WECP head Michael Savage, who is also the mayor of Halifax, the global organization that was founded as a nonprofit in 1995 “is an essential aspect of modern development.” He added that “our members know that energy is more than just an industry.”

To Savage, the partnership’s essential pledge is to work toward “sustaining the ever-growing movement of people and commodities throughout the world, supporting millions of jobs and funding the scientists, educators, and engineers who continuously push the boundaries of innovation.”

The WECP’s member cities include Houston, United States; Perth, Australia; Doha, Qatar; Cape Town, South Africa; Kuala Lumpur, Malaysia; Calgary, Canada, and Aberdeen, Scotland.

Photo: Barranquilla contingent goes to Canada for the World Energy Cities Partnership. (Credit: Alcalde de Barranquilla)

During the head of state’s trip to Washington, according to White House Press Secretary Sean Spicer, the two leaders will “discuss ways to reinforce the strong ties that the United States and Colombia enjoy.” The main topic is expected to be the Andean nation’s peace accord with the Revolutionary Armed Forces of Colombia (FARC) that was finalized late last year.

On Friday, Trump formally signed a spending bill that ensures $450 million USD in aid for Colombia, the bulk of which will go toward helping to finance the military, development, and social programs called for under the peace deal.

Discussing the Crisis in Venezuela

The press secretary said that Santos and Trump also plan to “exchange views on a range of bilateral and regional issues,” which will include the ongoing humanitarian, economic, and political crisis occurring in Venezuela. The press secretary specifically mentioned the White House’s concern for “countering democratic backsliding in Venezuela.”

As the oil-rich socialist country continues to face food shortages and massive protests against President Nicolas Maduro, Colombia is continuing to see areas, particularly in the border city of Cucutá, have to confront migrants crossing the border as well as other issues related to having a neighboring nation in such turmoil.

To help formalize legal cross-border migration, officials in Bogotá last month instituted a new policy in which Venezuelans visiting Colombia will be required to carry a migrant card that allows them to enter certain departments closer to the border while prohibiting travel to other central locations in the country.

Hospitals, both in Colombia and Brazil, have also reported financial hardship due to the number of Venezuelans pouring across the border to seek medical care that they cannot find in their home country. According to the Colombian Ministry of Health, at least 2,600 Venezuela patients were cared for by public Colombian hospitals in 2016 and that number has been on pace to double in 2017.

“Putting Venezuela at the top of the region’s foreign policy priorities is key to addressing a problem that is already having an impact outside of Venezuela’s borders,” José Miguel Vivanco, Americas director at Human Rights Watch, recently stated.

The Close Ties Between the U.S. and Colombia 

The White House meeting will be a next step in a relationship that has become one of the strongest in the hemisphere. Over the past 20 years, Colombia has become among the closest allies of the United States, with the two countries having collaborated and shared a similar mind across multiple presidential administrations in both Washington and Bogotá on matters including coca eradication, the fight against narcotrafficking, and combating guerrilla factions in the country.

Even prior to the $450 million USD pledged to Colombia this year — an increase of $74 million over 2016 assistance levels — the United States had contributed more than $10 billion USD to the South American country since former President Bill Clinton helped devise the so-called Plan Colombia policy in the late 1990s.

Funding for the policy has enjoyed wide bipartisan support for the most part since its inception, although the erratic and still-developing nature of Trump’s foreign policy in the region, on top of policy disagreements over strategies to fight rising coca production, has raised questions about whether or not the relationship between the two nations may change in the years to come.

Santos’ Other Washington Meetings

While in Washington, Santos will also meet with U.S. Vice President Mike Pence, other Trump administration officials, and U.S. Congress members, including Speaker of the House Paul Ryan (R-WI), according to the Presidencia de la República.

The president will join U.S. Senators Roy Blunt (R- MO) and Ben Cardin (D-MD) at a dinner on May 17 hosted by the Colombia Peace and Prosperity Task Force of the Atlantic Council, a Washington-based group that promotes Latin American ties with the United States.

The same day as his White House meeting, on May 18, Santos will also participate in the Binational Business Summit of the United States and Colombia, a recently formed initiative supported by both the U.S. Chamber of Commerce and National Business Association of Colombia (ANDI).

Photo credit: Ad Meskens / Wikimedia Commons