Colombia’s financial services industry flourishes despite domestic headwinds

Colombia’s financial services industry flourishes despite domestic headwinds 

The country has seen increased interest from foreign lenders amid a challenging environment  

By Michael Deibert 

Foreign Direct Investment 

(Read original article here)  

In recent years, successive Colombian governments have sought to diversify the nation’s economy beyond its over-reliance on commodities, and nowhere has this been more apparent than in the financial services industry.

Despite battling the devastating impact of the Covid-19 pandemic, the Superintendencia Financiera de Colombia (SFC) — the government entity charged with supervising the nation’s financial and stock market systems — has recently received a slew of licensing applications from entities wanting to expand into the country.

International expansion into Colombia

“The financial system in Colombia has changed a great deal in recent years,” says Sergio Olarte, chief economist with Scotiabank Colpatria, the local partner of Canada’s Scotiabank, in Bogotá. Scotiabank Colpatria is now partnering with the Italian multinational utility Enel to provide new financial services for residential customers, as well as small and medium-sized businesses. The move will be highlighted by an expansion of Scotiabank’s credit card business, which will enable customers to use the card for a wider range of services than previously possible. 

“Since 2012, the regulations in terms of capital markets have changed significantly: the taxes have been reduced by a great deal and that allowed a lot of offshore actors to come here,” Mr Olarte says, highlighting how the country’s floating exchange rate and the independence of the Banco de la República, Colombia's central bank, provide added incentives. 

“That’s big for Colombia because we have a very conventional financial system, but lately we have learned a lot about derivatives, forwards, hedging and aspects like that,” he says.

In addition to Scotiabank, international investment banks JPMorgan and Brazil’s BTG Pactual are seeking commercial banking licenses. The local Gilinski family, the moving force behind Banco GNB Sudameris, obtained approval to open Colombia’s first fully digital bank, named Lulo Bank, last month.

Troubling past

The expansion of international lenders into Colombia has come during what has been a tumultuous year for the nation, which has been led by centre-right president Iván Duque Márquez since August 2018.

The killing of a man by police in the capital in September set off days of riots in which at least 13 people were killed. A steady drumbeat of assassinations of environmentalists, social leaders and members of Colombia Humana — the political movement led by leftist senator Gustavo Petro, who Mr Duque defeated for the presidency two years ago — have rocked the nation.

According to the UN high commissioner for human rights, more than 30 massacres have taken place across Colombia so far this year, which some have charged is a reappearance of the large-scale violence that had largely dissipated since the right-wing Autodefensas Unidas de Colombia paramilitary organisation officially disbanded more than a decade ago.

As if that was not enough, former president Álvaro Uribe Velez, Mr Duque’s mentor, and founder and senator of the Centro Democrático party to which both men belong, was placed under house arrest by the nation’s supreme court in August as part of a complex case involving those same paramilitaries.

Promising future

Nevertheless, in addition to the large international banks, several smaller entities are seeking the go-ahead to operate as part of the Sociedades Especializadas en Depósitos Electrónicos, Colombia’s digital deposit and payment system, and remain bullish on the country’s prospects. Among them is the Chilean online payments platform Global66.

“We think that Colombia is going to stand up and even flourish even more in the next few years,” says Global66’s expansion manager, Cristóbal Valle. “We wouldn’t be investing to get the new license in place if we didn't. At this time, even with some of the things happening, we’re confident with Colombia’s capacity to overcome them.”

The growth of the sector has not entirely escaped Colombia’s political tumult, however. Two senators, David Barguil of the Partido Conservador Colombiano and Armando Benedetti of the Partido Social de Unidad Nacional, have been particularly aggressive in pushing for major changes in the sector regulation, including trying to get individual risk agencies to wipe out clients' histories to make them eligible for loans and lowering interest rates. 

In 2019, Barguil authored a bill limiting the fees that banks could charge and, earlier this year, he was one of the co-authors of a new financial law which stipulates that Colombians who catch up with any outstanding financial obligations in the 12 months after the law’s enactment will have negative records removed from these databases of credit bureaus within six months. 

In a paper jointly published by Colombia Risk Analysis, a political risk consulting firm based in Bogotá, and the consulting firm Monodual, the two companies concluded that Colombia's financial sector had “been the target of all sorts of criticism since the beginning of the economic crisis of Covid-19” and “the inability of the sector to understand this enormous challenge and respond to citizens with generosity and empathy has led to the real possibility of greater regulation of the financial system that may affect the profitability” of the banks.

“I think the sector is under a lot of pressure, both from investors to continue the very positive results the Colombian financial sector has had and more in terms of regulatory pressure from populist legislators who want to cajole the sector even more,” says Sergio Guzmán, the director of Colombia Risk Analysis. “A lot of politicians see this with a mixture of jealousy and frustration that, even with a 15% contraction in the last quarter, the financial services sector posted COP8.5tn ($2.2bn) in profits. And it’s to a large degree because their costs are passed onto the consumer.”

Next year will be one of positioning for candidates ahead of Colombia’s general elections, to be held in 2022. As Mr Duque cannot run for office again, it is likely that some of those vying to replace him will present themselves as champions of Colombia’s consumers. Colombia’s financial services sector, despite its robust growth, will no doubt have to navigate these waters carefully if the industry is to expand and thrive.

This article first appeared in the October - November print edition of fDi Intelligence. View a digital edition of the magazine here.

Le rôle de la communauté internationale dans le royaume de l'impunité d'Haïti

Le rôle de la communauté internationale dans le royaume de l'impunité d'Haïti

Publié le 2020-09-24 | Le Nouvelliste

Par Michael Deibert

(Read the original article here)

Pendant que Haïti implose sous le regard vigilant du Bureau intégré des Nations unies en Haïti (BINUH) et de l’ambassade des États-Unis, il est difficile pour les observateurs, à l’intérieur et à l’extérieur du pays, de ne pas se demander quel a été le résultat de la longue présence internationale dans le pays et de son implication intense dans ses combats politiques.

En à peine plus de 25 ans, Haïti a reçu la Mission civile internationale en Haïti (MICIVIH), la Mission des Nations unies en Haïti (MINUAH), l’intervention militaire «Operation Uphold Democracy» menée par les États-Unis en 1994, et pour la plus longue période, de 2004 à 2017, la Mission des Nations unies pour la stabilisation en Haïti (MINUSTAH), grâce à laquelle BINUH a trouvé sa place.

Pendant ce temps, les Haïtiens ont enduré plusieurs chocs systémiques. Certaines catastrophes naturelles (plusieurs ouragans dévastateurs, dont l’ouragan Jeanne en 2004 et le tremblement de terre en janvier 2010) et d’autres des affaires d’hommes. Les élections - toujours contestées - ont eu lieu de manière régulière, mais les défaillances structurelles du système politique d’Haïti sont restées obstinément intactes. En effet, l’organisation des élections a souvent eu comme coût de maintenir l’avantage d’impunité pour ceux disposés à y participer.

Plutôt que d’atténuer ce problème, l’implication de la communauté internationale l’a souvent intensifié, même ses politiques économiques, en particulier celles des États-Unis, ont contribué à faire sombrer Haïti dans cette mer d’instabilité.

Aussi récemment que dans les années 80, Haïti produisait plus de 80% de ses denrées alimentaires ; mais en 1995, dans le cadre d’un ajustement structurel sponsorisé par la Banque mondiale (World Bank) et le Fonds monétaire international (FMI) avec le support du président des États-Unis Bill Clinton, Haïti a réduit les taxes d’importation sur le riz de 50% à 3%, et est rapidement devenu le 5e importateur mondial de riz des États-Unis et l’un des piliers de son économie a disparu. Ceux qui ont quitté la campagne pour la ville ont constaté que l’embargo des Etats-Unis du début des années 90 qui a aidé le régime militaire de Raoul Cédras a également ruiné l’industrie manufacturière d’Haïti, réduisant les emplois d’usine de la région de Port-au-Prince de 100,000 à 20,000 en un peu plus de 10 ans.

Le manque d’emplois rémunérés dans les campagnes aussi bien que dans les villes ait entrainé un grand nombre de jeunes hommes inactifs – les baz – dont les politiciens de la nation utilisèrent les muscles pour assurer des voix au moment des élections. Quasiment chaque élection de ces deux dernières décennies a été contestée par le parti perdant et la politique est vue comme une voie vers la richesse, le pouvoir et l’impunité. Les «baz» n’ont jamais manqué de travail.

En dépit d’être les descendants, d’une certaine façon, d’autres forces paramilitaires irrégulières de l’histoire d’Haïti – des Zinglin de Faustin Soulouque à l’armée souffrante de Louis-Jean-Jacques Acaau aux Tontons Macoutes de François Duvalier – le modèle baz était l’œuvre pionnière de Jean-Bertrand Aristide et du Parti Fanmi Lavalas à la fin du siècle dernier et depuis, s’est avéré une irrésistible tentation pour les politiciens haïtiens de toutes orientations. Le modèle baz s’est métastasé dans tout le corps politique, et quasi aucun parti n’est irréprochable, y compris le parti au pouvoir, le Parti haïtien Tèt Kale (PHTK), qui l’a adopté avec enthousiasme.

Rétrospectivement la communauté internationale a eu l’opportunité, à un moment précis, de suggérer une façon différente d’avancer.

Dans le cas du massacre d’au moins 27 personnes dans le quartier de Saint-Marc de la Scierie en février 2004 - survenant seulement quatre mois avant que la MINUSTAH débute son mandat - commenté par des organisations haïtiennes de défense des droits humains, par des journalistes locaux et des correspondants internationaux (dont moi) et par des chercheurs de l’organisation Human Rights Watch ; il fut décidé que poursuivre en justice serait trop incommode politiquement. Les auteurs présumés (ceux encore en vie) ont quitté la prison un à un, avec la bénédiction de la communauté internationale. Le cas de la Scierie n’a jamais fait l’objet d’une enquête complète et les atrocités commises restent impunies comme l’a noté Human Rights Watch en 2007. Les survivants d’un des plus importants massacres politiques des Amériques du 21e siècle n’auront pas - et n’ont pas - vu de justice. La politique a éclipsé la responsabilité historique. Ce message a été reçu clairement par les dirigeants politiques du pays.

Entre la justice et la « stabilité », la communauté internationale et les autorités haïtiennes ont choisi la stabilité et depuis, connaissent non seulement l’injustice mais aussi l’instabilité. Les meurtres de la Scierie étaient un « kafou danjere » et les acteurs du moment mal choisis.

Depuis, le tambour des crimes – leurs actes impunis et leurs victimes non vengées – est devenu une réalité de la vie. Le kidnapping et meurtre du journaliste Jacques Roche en juillet 2005 ; le meurtre de Bruner Esterne, pilier de la communauté du quartier de Grand-Ravine, en septembre 2006 ; la disparition du directeur général de la Commission nationale des marchés publics (CNMP), Robert Marcello, en janvier 2009 ; l’assassinat du précèdent gouverneur de la Banque République d’Haïti, Joseph Venel, en mars 2012 ; le meurtre d’Oriel Jean, ancien chef de la sécurité du Palais national en mars 2015 ; la disparition du journaliste Vladjimir Legagneur en mars 2018... la liste n’en finit pas. Haïti est vraiment devenu un royaume d’impunité.

Les troupes de MINUSTAH ont souvent agit bravement pour empêcher l’effondrement. Si ce n’était pour MINUSTAH, la présidence de René Préval aurait bien pu finir durant les émeutes d’avril 2008 contre le « lavi chè ». Et personne ne peut ignorer que dans le tremblement de terre de janvier 2010, ce sont 96 soldats de l’ONU, en plus des dizaines de milliers d'Haïtiens, qui ont péri, beaucoup loin de chez eux. Mais ils étaient mal servis par leurs dirigeants politiques.

Même si les Nations unies ont visiblement travaillé à accomplir leur mission de renfort sur les structures d’état de droit de Haïti, y compris dans la Police nationale d’Haïti (PNH), pendant plusieurs gouvernements successifs ; ceux qui osaient envisager la PNH comme quelque chose de plus qu’une matraque politique à disposition de ceux qui ont l’avantage du pouvoir - comme le policier Walky Calixte -, ont souvent payer de leur vie pour leurs convictions.

Dans les zones marginalisées du pays, la force des armes n’est pas mise en œuvre par l’application des lois officielles ou par le gouvernement, mais par les légions de baz employées par tel ou tel acteur politique. Depuis le milieu des années 90, Haïti s’est dégradé en un système balkanisé qui en vient à ressembler de plus en plus à la République centrafricaine, où un chef de guerre différent règne tous les quelques kilomètres (ou tous les quelques pâtés de maison). Comme nous l’avons vu avec l’arrivée du groupe de policiers dissidents du Fantôme 509, cet effilochage du contrat social a maintenant pris racine au sein de la police elle-même.

La démocratie n’est pas simplement l’organisation d’élections. C’est le peuple qui ressent un intérêt dans le processus politique, et qui souhaite que ce système politique réponde à ses besoins. Au moment où Haïti se prépare pour de nouvelles élections – avec un Conseil électoral provisoire, et un scrutin d’ores et déjà rejeté par de multiples organisations avant même que le vote n’ait eu lieu – y-a-t-il encore un moyen d’avancer ? Peut-être.

Un exemple qui peut être instructif dans le contexte haïtien est celui de la Commission internationale contre l'impunité au Guatemala (Comisión Internacional contra la Impunidad en Guatemala, CICIG), qui existait entre 2006 et 2019 ; son mandat malheureusement tronqué par la connivence du Président des États-Unis Donald Trump. Pendant son existence, la CICIG – avec une hybride de personnel local et international – a poursuivi avec succès un certain nombre de figures politiques et économiques, allant même jusqu’à l’arrestation et l’emprisonnement du président alors en place Otto Pérez Molina. Des factions au firmament politique avec une sincère détermination à renforcer l’État de droit là où elles étaient appuyées et encouragées. Une telle entité pourrait accomplir beaucoup à Haïti pour traduire en justice une litanie de crimes encore impunis. Guatemala, une nation elle aussi ayant une histoire de violence politique et un dur noyau d’impunité, a démontré que cela était possible dans une certaine mesure. Ses méthodes pourraient fonctionner à Haïti également.

Si la communauté internationale souhaite sincèrement réparer ses faux pas à Haïti au fil des années, et si le gouvernement haïtien et ses opposants souhaitent vraiment créer pour les jeunes du pays un futur autre que le combat sanglant pour un pouvoir misérable dont on a été témoin ces 20 dernières années, la création d’une entité haïtienne basée sur le modèle de la CICIG serait un bon point de départ.

Michael Deibert est un professeur invité de l’Instituto de Ciências Sociais da Universidade de Lisboa. Il est l’auteur de deux ouvrages sur Haiti : Haiti Will Not Perish: A Recent History (Zed Books, 2017) Notes from the Last Testament: The Struggle for Haiti (Seven Stories Press, 2005)

 

Haiti’s long road to energy self-sufficiency

Haiti’s long road to energy self-sufficiency

Clean energy could offer Haiti a more secure energy system and a way to reduce its devastating poverty, but the road ahead will be long.

By Michael Deibert

 

16 Sep 2020 

 

Energy Monitor 

 

(Read the original article here)

 

The same day René Préval was inaugurated as Haiti’s president for the second time in May 2006, a Venezuelan oil tanker appeared in the harbour of the capital, Port-au-Prince, bearing 10,000 barrels of oil, part of the Petrocaribe oil alliance with Venezuela. Entering into the alliance was Préval’s first official act as president.

For the tumultuous and impoverished Caribbean nation, which Préval had previously governed from 1996 to 2001, many hoped the agreement would be the first step in refounding its teetering power grid, diminished by years of corruption and political upheaval. Days-long blackouts have been a part of daily life in the country for years.

It hasn’t quite turned out that way, however. Far from helping buttress the country’s resources, the Petrocaribe affair became a vortex of controversy, encompassing not only Préval (who left office in 2011 and died in 2017), but those of his three successors as president, including Haiti’s current leader, the former agribusinessman Jovenel Moïse.

Successive audits revealed what investigators charge was a vast scheme of embezzlement, leaving the impoverished Caribbean nation with a debt of almost $2bn. Much of the funds are believed to have been siphoned off by corrupt political and business operators.

Haiti’s recent battles to modernise its energy sector serve as a stark lesson for how fraught the business of energy transition can be. In the wake of the scandal, the struggle to provide Haiti’s 11 million people with reliable energy – and the desire to attract foreign investment to do so – has taken on an evermore politically charged hue.

Global reform needed

Haiti’s state electricity company, Electricité d’Haïti (EDH), was created in 1971 following the privatisation of the Compagnie d’Eclairage, at the time managed by a US firm. Tasked with the mission of producing, transporting, distributing and marketing electricity throughout this mountainous nation, in recent decades EDH has struggled to achieve those aims.

The second independent nation in the Americas after the US and site of the only successful slave rebellion in history, Haiti also holds the rather more dispiriting title of being the region’s poorest country. It has seen wild swings in its political compass since the overthrow of the Duvalier family dictatorship 34 years ago allowed many to dare hope for a brighter future.

One of the most ubiquitous sights in Haiti is the orange glow of kerosene lamps at night as roadside vendors attempt to sell pots of boiling fritay or chicken fried on makeshift grills. One of the most common sounds is the roaring of private generators behind the walls of the homes of the elite. Power outages in some areas of the country can last for weeks, while in neighbourhoods near Haiti’s National Palace in downtown Port-au-Prince – always politically restive – jerry-rigged siphoning of current has gone on for decades as successive governments dare not act against it.

“We have to have a global reform of the energy sector,” says Etzer Emile, a Haitian economist, professor at the capital’s Université Quisqueya and author of the book Haiti a choisi de devenir un pays pauvre (Haiti has chosen to be a poor country). “It is not just about the production, we have to diversify the energy matrix and we have to liberalise the market as they have done in the Dominican Republic. Companies need to be able to produce, transport and sell the service.”

Until the late 1990s, the energy market in the Dominican Republic was controlled by the state-owned Corporación Dominicana de Electricidad, whose history of non-technical energy losses (pirating) and shoddy bill collection made it somewhat analogous to EDH. Under the first presidency of Leonel Fernández, the sector was unbundled and partially privatised and now, in addition to the state generator, includes 12 private and mixed companies, which has resulted in far greater efficiency.

Clean energy potential

For Haiti’s Moïse, who has made the provision of energy nationwide the cornerstone of his presidency, the promise has taken on added urgency as the nation approaches general elections slated for 2021.

A new contract signed with General Electric would produce an additional 55MW of electricity for EDH, Joiséus Nader, Haiti’s Minister of Public Works, Transport and Communication, suggested recently. He had previously said the entity was “in tatters”, lacking even basic equipment such as pylons and meters. Earlier this year, Haiti launched its second solar microgrid in the south of the country. The microgrid was created by US-based EarthSpark International in collaboration with Enèji Pwòp, Haiti’s in-country social enterprise arm, with plans to create 22 additional grids over the next four years.

“We have had this energy crisis for a long time, more than 20 years,” says Evenson Calixte, managing director of Haiti’s Autorité Nationale de Régulation du Secteur de l’Energie (ANARSE), the nation’s energy regulatory authority. “And we believe that one element that can help reform this sector is private investment.”

In April 2016, Haiti signed the Paris Agreement to reduce greenhouse gas emissions. At the beginning of Moïse’s term, Haiti also hosted a Haiti Sustainable Energy Forum in Port-au-Prince with the World Bank and the Korea Green Growth Trust Fund.

Many see clean energy as the potential future for energy generation in Haiti.

“There is an opportunity to provide renewable energy access and create this new trajectory for development,” says Sandra Kwak, CEO and founder of San Francisco-based 10Power. “It is exciting to merge the social justice aspect with the renewable energy aspect.”

10Power recently partnered in Haiti with SimpliPhi Power, a US manufacturer of non-toxic, cobalt-free lithium ion energy batteries, to distribute energy storage systems powered by solar power. The organisation also completed a solar-powered water desalination project on the vast and little-developed Île de la Gonâve in the bay of Port-au-Prince. The initiative will provide clean drinking water for up to 40,000 people. Its next projects are solar installations on the UNICEF Haiti headquarters and an engineering school.

Public versus private

The struggle over Haiti’s power grid has put Moïse at loggerheads with some elements of Haiti’s private sector. In August 2020, a government anti-corruption task force published a report on the last ten years of the petroleum industry. It concluded that private oil companies operating in Haiti made $94m in undue profits between March 2019 and May 2020 at the expense of the state.

The report recommended strengthening the country’s Bureau de Monétisation des Programmes d’Aide au Développement, an entity tasked with optimising the efficacy of government contracts and programmes, and increased transparency in the price of imported petroleum products, among other measures. Haiti’s Association des professionnels du pétrole said the structure of fuel prices had been managed for 30 years by the Ministry of Finance, and that the devaluation of Haiti’s currency, the gourde, over the past decade had resulted in significant reductions in taxes collected because of increases in the cost of fuel.

Whereas Moïse says there has been “state capture” of the energy sector by corrupt private sector entities, his opponents have pushed back, claiming his is an increasingly autocratic and unaccountable government. After the terms of local mayors around the country expired this summer, when Moïse and the political opposition were unable to agree on a timetable for elections, Moïse simply issued a decree stating that, until elections were held, he would appoint mayors at will.

Opportunity and chaos

But even, amid such tumult, some argue that opportunity for the clean energy sector remains present.

“The situation in Haiti right now is everything but easy, and the Covid crisis has added another level of complexity, but there is opportunity there,” says Christian Schattenmann, fund manager at Bamboo Capital Partners.

The Luxembourg-based global private equity firm was selected in 2019 by Haiti’s government and the World Bank to act as the international fund manager for their dual Off Grid Electricity Fund (‘OGEF’). A $17.22m renewable energy access fund, the OGEF aims to electrify 200,000 households in Haiti within the next ten years.

“We want to electrify these households through renewable energy and investing in solar distributors, through mini grids, and by replacing diesel generators with new systems,” says Schattenmann.

Haiti’s political firmament continues to boil. The recent murder of well-known attorney Monferrier Dorval coincided with a series of armed incursions by street gangs (many rumoured to be linked to the government, others to the opposition) into various poor neighbourhoods in the capital, and has sent protesters back to the street demonstrating against insecurity.

On 5 September, in the presence of various dignitaries and the Taiwanese ambassador, Moïse launched a new project – financed to the tune of $157m by Taiwan’s Export–Import Bank – to construct four new substations and rehabilitate nine others to supply power to the Port-au-Prince metropolitan region. Of that, $27m will be used to build 43 solar and thermal microgrids across the country.

Despite the grinding violence and political battles, Moïse seemed sanguine, calling the project “a dream come true” and noting he would have done so before but “they” – his opposition – “stopped me”.

Michael Deibert is a journalist, author and Visiting Scholar at the Instituto de Ciências Sociais at the Universidade de Lisboa.