Incentivizing Private Sector Investments in Conflict-Affected Communities in Colombia
In Colombia, decades of violence and armed conflict created significant obstacles to human development and sustainable peace. Cauca, one of the Colombian regions, was heavily affected by the conflict until the signing of the Colombia Peace Agreement in August 2016. In the aftermath of the conflict, the people of Cauca, especially women, struggled to create steady sources of income for their households. As part of the stabilization strategy set in the Peace Agreement and to attract and encourage private sector investments in communities most affected by the conflict, the Peacebuilding Fund (PBF) financed an innovative, one-of-a-kind initiative through the Multi-partner Trust Fund (MPTF) in Colombia in 2018.
The ‘blended finance’ facility supports local agro-businesses and conflict-sensitive investments in conflict-affected territories prioritized under the Peace Agreement. By investing PBF’s resources through blended finance instruments, the facility helped to significantly reduce the risks for seven private companies that otherwise would not invest in these types of high-risk ventures.
Mélida Montero, a resident of Cauca witnessed the consequences of the armed conflict.
Through this specific initiative, implemented by the alliance between the startup Wegrou and Mercy Corps, 50 women, all heads of households and coffee producers in El Tambo, Cauca, have been empowered to start their business and get direct access to promote their coffee internationally.
Trained in marketing and equipped with the technical knowledge in organic coffee production, the women coffee growers developed their own brand of organic roasted coffee, ‘50 Amigas – Valiant collective’, representing the rich history of the Cauca mountains and the tenacity of its women. The small-scale coffee production of their brand has helped them to significantly improve their incomes.
With the use of technological tools, the entire coffee production process is 100 percent traceable and transparent via Indiegrow, a digital platform, and marketplace developed by Wegrou. The platform also helps link the women producers to the international markets, initially starting with the U.S.
Within this blended facility developed by the MPTF in Colombia, the PBF has explicitly tried to catalyze peace-positive private investments. As a result, the facility leveraged six times the capital invested by private sector actors. PBF, with an initial investment of $2.2 million, leveraged almost $13 million from non-state actors, thus, strengthening sustainable production cycles for more than 2,300 farmers, and providing over 5,500 loans to farmers and micro-entrepreneurs in the agriculture sector.
In response to the Secretary-General’s call to explore innovative finance solutions for peacebuilding, the PBF supported seven private sector investments in conflict-affected areas through different blended finance instruments.
