China eyes expansion of Colombia’s Buenaventura port
Colombia is the only country in South America with access to both the Pacific and Atlantic Oceans. Yet the Colombian government has never taken advantage of this unique position to boost economic development.
The country has historically favoured trade infrastructure along the Caribbean coast, in cities Barranquilla, Santa Marta and Cartagena, which offer easier access to its hereto most important trade partners the US and Europe. But as Asian markets grow and Colombia begins to recognise the associated economic opportunities, it has pivoted towards the Pacific.
The star project aimed at kick-starting the development of Colombia’s Pacific coast is the Economic Activities Center in Buenaventura (CAEB). The promise of the CAEB is based on the rapid growth of cities like Shenzen. It aims to capitalise on Buenaventura Port’s dynamism to stimulate economic activity that would benefit Colombia and its trading partners on the Pacific.
Buenaventura isn’t a port city, it’s a city that happens to be next to a port
The Buenaventura Port has become Colombia’s most important link to international markets, generating 27% of the country’s total customs revenue. The potential of the port to facilitate trade with Latin American partners is enormous given its equidistance between Mexico and Chile.
Until now, Buenaventura port has developed on its own, generating little economic impact on the city itself. “Buenaventura isn’t a port city, it’s a city that happens to be next to a port,” says Julio Cesar Alonso, director of The Research Center in Economics and Finance at the ICESI University in the western city of Cali.
According to Alonso, because of its extreme poverty, low level of employment and industry, Buenaventura authorities collect little revenue from tax and nor has central government invested in the city. Therefore, it hasn’t been able to develop the infrastructure that port-related businesses need to survive.
Wealth generated by the port has been redirected towards other cities with solid infrastructure, like Cali and even capital Bogotá, some 500 kilometres away. “Any investment to develop in the Pacific coast must be linked with a social strategy,” Alonso says, adding that only by eradicating poverty can this project be a success for its investors.
The CAEB is the National Planning Department’s remedy for Buenaventura’s chronic economic malaise. It's the pilot project for its ambitious New Cities Program, which seeks to create new economic centers around the country and generate growth in the post-peace deal era.
The project aims to lift thousands out of poverty and put Buenaventura on the world map by allocating vast areas to residential, industrial, scientific, and technological development. Revamping infrastructure for roads, water and electricity is also central to the CAEB. This model seemed attractive enough for the governments of China and Colombia to sign a memorandum of understanding in which China expressed its intent to invest around US$16 million in the project.
Alonso, says that under the proposed model, a Chinese car manufacturing company would receive tax incentives to establish an assembly plant in Buenaventura. Aside from creating local employment, it would also benefit from cheaper shipping costs throughout the Americas. By investing in the CAEB, the Chinese government could create a new launch pad for Chinese businesses in Colombia, and the wider South America region.
A new Singapore?
As of now, the project is in the initial planning stages. But the Colombian government deems it important enough to have appointed its first manager, Buenaventura native Didier Sinisterra, “It’s true that Buenaventura is years behind other port cities like Panama,” Sinisterra told Diálogo Chino via telephone from Washington DC, from where he will return to Buenaventura to spearhead the project.
Whilst in Washington DC, Sinisterra had the opportunity to compare his hometown to other cities at this year’s Smart Cities Week conference. He has enormous faith in this project’s ability to transform Buenaventura. “Through this project Buenaventura will become a world class city able to compete with others like Singapore,” he claims.
However, there are underlying issues surrounding the project. One of the most pressing is the security threat. Buenaventura has been engulfed in violence associated with Colombia’s decades-long conflict and it still persists today.
Illegal mining and drug trafficking have not ceased since the historic signing of the peace accord with guerrilla group the Revolutionary Armed Forces of Colombia (FARC). Moreover, illegal armed groups, most of them consisting of paramilitaries who did not demobilise under former president Alvaro Uribe’s demobilisation plan, are fighting to fill the power vacuum the FARC has left behind.
The CAEB presents the difficult security situation in Buenaventura with a potential economic solution. The city suffers from a 62% unemployment rate and many Buenaventurans turn to illegal means of surviving.
Earlier this year, Buenaventura residents expressed their desperation in one of the biggest protests Colombia has seen in recent years. Protestors demanded an improvement in the security situation, more jobs and greater access to drinking water. The government appeased them by pledging millions of dollars towards better education, health, and electricity access, as well as water infrastructure. Some protest leaders oppose the CAEB, demanding that the government first focus on alleviating the city’s more pressing needs.
In response, the government has committed to improve basic living conditions, but suggests Buenaventura’s main problem is unemployment, something Sinisterra says will be most effectively addressed by realising the CAEB project. “The project will create 150 companies in 20 years, and more than 60,000 jobs,” he says. “Those figures make it clear that this is a project for the community.”
Another potential stumbling block for Chinese investors is the complexity of land ownership where the project is set to be built. Colombian law recognises the rights of black and indigenous minorities, who typically organise into community councils, thereby giving them authority and collective ownership over the territories they inhabit.
share of land owned by the Caucana and Gamboa councils in the area affected by the CAEB
As home to a large African diaspora around the time Colombia achieved independence in the early 19th century, the pacific coast accommodates many such councils. Some 70% of the land the CAEB would occupy is owned by two of these councils, known as the Caucana and Gamboa councils.
For a project like the CAEB to materialise, the government must first consult the councils who, as mandated by Colombian law, are collective owners of the land. The territories occupied by these councils are all in rural Colombia, which is notoriously underdeveloped compared to urban centers.
Consultations often resemble a negotiating phase, in which the councils come up with demands like the construction of schools or hospitals, before they grant approval for the project. The CAEB, however, will conduct things differently. It will be the first infrastructure project to make business associates out of these community councils, who will input into the development of the project.
The Gamboa and Caucana councils have already approved the project but in March 2017 a judge annulled the community councils’ land ownership titles, raising questions about who owns the land. A long appeals process has started, with a final ruling expected in around 5 years. If the councils lose the appeal, they would still have the power to negotiate in a consultation process, even though the land would become the property of the national government.
Representatives at the Foundation for the Integral Development of the Colombian Pacific Region, an NGO that works towards sustainable development in Colombia’s Pacific Coast, say the concept of community councils and their right to the land they inhabit has been very hard to explain to the Chinese government. They fear Chinese investors will be deterred by the time it will take to resolve this issue.
Still, the Colombian government is looking for a solution. As it waits for the final ruling, it has commissioned a new zoning plan of Buenaventura that revolves around the development of the CAEB. It has also directed the national registry agency to conduct an audit of land around the project so that it can commission a feasibility plan to present to foreign investors.
In May this year, Chinese delegations visited the site of the CAEB. Their assessment of the project’s costs and benefits could determine whether it will offer an economic alternative to illegal activities and a unique opportunity to empower disenfranchised black communities in a region plagued by conflict and poverty.