Why investors should give a FARC about Colombia

Colombia’s recent progression of its peace according with rebel group Revolutionary Armed Forces of Colombia (FARC) could further pique interest within the international investment community.

In the middle of December, the peace agreement that would end more than five decades of civil unrest was ratified by the congress two months after the people of Colombia rejected a referendum.

International investors can see the decision to fast track the agreement following the failed referendum as commitment made by both to ensure that the country sees lasting peace, which will be welcomed by those looking to Colombia as an investment destination.

Part of the peace agreement entails that the government follow through with a social policy to ensure that the country’s youth do not become radicalized, in turn feeding into guerrilla groups, such as FARC. And that means investing in infrastructure and human capital. The country plans to funnel money into underdeveloped rural areas that have been historically held by FARC rebels, as the issue of land rights lie at the heart of grievances during the 52-year war against the government. Furthermore, Colombia is poised to undergo more education reforms to ensure that the graduates are meeting the needs of the labor market.

While the peace deal may end up costing Colombia around $44 billion over the course of ten years, according to one Colombian senator, in August Fitch ratings claimed that the deal could yield positive results in the medium- to long-term, particularly with regards to security considerations.

While some details still require fine tuning – such as the 300 or so rebels that have defected since the peace deal has been put into effect – the overall dedication to the peace process bodes well for the security and stability of the country, making it a conducive environment for investors to do business.