Colombia: Transition to sustainable peace

In September 2014, the World Bank wrote in an assessment of Colombia, that the country faced three fundamental development objectives for attaining higher levels of well-being for all Colombians: The achievement of sustainable peace, sharing prosperity, and above all eradicating poverty. We argue that the latter objective is going to be fulfilled soon. Whereas the share of extremely poor in the country rested at 7.1% in 2010, we forecast that it will fall as low as to 1.9% in 2030, representing a total decrease of 5.1 percentage points within 20 years.

More than fifty years of violence have affected at least three generations of Colombians at the national, subnational, community, and individual levels. According to the World Bank, between 4.7 million and 5.7 million people were internally displaced between 1985 and 2012. In the same period, an estimated 220,000 people were killed, 27,000 kidnapped, and 25,000 disappeared. The World Bank argues that without the armed conflict, the country’s annual growth rate would be 1.5 percentage points higher and that the poverty rate in 2014 would have been half – bringing it close to the World Bank threshold of 3%, beneath which extreme poverty is considered to be “eradicated”. Although some armed violence still occurs, the Government has made strenuous efforts to reduce violence and increase state presence. Because of these efforts, Colombia is no longer considered “high risk” for investment. It continues to maintain a solid macroeconomic framework that builds more resilience against external shocks. One main driver for this is the diversification, both of investment and production, into non-oil sectors. This model provides a contrasting but positive example for oil-dependent neighbor Venezuela.

Despite these improvements, the World Bank also argues that income inequality and vulnerability to poverty remain high. These struggles are especially visible within interregional and inter-ethnic conflict, as well as in terms of gender equality. According to the Colombian think tank CEPEI, even now there is still an average gap of “2.3 minimum wages” between women and men (Unidos por las ODS). Although women and men in Colombia in general have about the same spending power, World Data Lab’s data reveals that especially among the poor (less than $5 PPP daily spending power) the share of women dominates. In November 2018, 53.1% of the poor were women. By 2030, this figure is likely to increase to almost 54%.

The big picture
Though the general trend for almost all South American countries points to successfully achieving SDG 1 well before 2030, the continent as a whole might fail. This is due to the particularly poor performance of Colombia’s crisis-stricken neighbor Venezuela. The Bolivarian Republic counter runs the general trend share of extremely poor to almost 25% by 2030. (we reported here).

As can be seen in the graph above, Colombia’s neighbor to the south, Ecuador, was already considered to have successfully eradicated extreme poverty by the end of 2010, but in 2016, its share of poverty rose above the international threshold of 3%.  However, like Brazil (here), this proved to be a small hiccup. Since then it steered into clear waters again, keeping poverty below 3% until 2030.

Apart from Venezuela, Colombia and Bolivia will nevertheless be the last countries in the South American region to fulfill the SDG 1.1 target. Colombia is estimated to achieve success in 2024, with Bolivia coming in after the 2030 goal in 2035. Peru has already dropped below the 3% threshold in March 2016. Another South American neighbor, Guyana, will eradicate extreme poverty by the end of 2021, decreasing its share of extremely poor from 8.6% in 2010 to 1.2% by 2030. This is due to oil production starting in 2020. According to the IMF, this will drive the annual GDP growth rate up to 29% in 2020, causing a massive reduction in the country’s share of extremely poor from 5.3% in 2019 (on annual base) to 3.1% in 2021 – if the windfall gain is evenly distributed, that is.