2023 POLICY ROADMAP

The Colombian economy contracted by 0.3% in the third quarter of 2023, and is expected to end the year with GDP having grown by just 1% since 2022. Inflation, though decreasing for eight straight months, has remained persistently high, leaving entrepreneurs facing a negative economic outlook alongside political uncertainty with major reforms under way.

Colombia’s new government was implementing its strategic national plan (“Plan de Desarrollo, 2022–2027”), including measures to shift the economy away from extractive sectors towards more sustainable, knowledge-based sectors and a focus on the popular economy.

2023 Framework Conditions Review1

The overall quality of Colombia’s entrepreneurial environment had been assessed as improving from 2019 to 2021, but it faltered in 2022 and then fell again in 2023.

In 2023, only three of Colombia’s Entrepreneurial Framework Conditions (EFCs) were rated as sufficient or better (score ≥5.0), leaving 10 as insufficient, up from eight the previous year. Moreover, six conditions were scored as poor (<4.0), with, as usual, Entrepreneurial Education at School rated lowest of all, a score that has fallen even further since 2022. This was just one of 10 conditions with a score that had declined over the year, including both finance conditions and both ease-of- entry conditions, now rated 45th among the 49 economies. The only conditions with improved scores were Government Policy: Taxes and Bureaucracy and Physical Infrastructure.

As a result of these changes, the assessed quality of the overall entrepreneurial environment in Colombia declined from 4.5 to 4.1, much less than sufficient, and its rank fell from 28th to 37th. Just two years earlier Colombia had scored 4.7 and was ranked 23rd.

New questions in 2023 asked experts to assess Colombia’s social support for women entrepreneurs as well as their access to resources compared to that of men. Colombia scored 3.4 for social support (31st), and better for comparative access to resources at 5.1, just better than sufficient with a rank of 24th.

2023 Entrepreneurial Activity Review

More than one in three Colombian adults reported that their household income had fallen in 2023, a substantial proportion but much better than the seven in 10 just one year earlier.

Entrepreneurship has a high profile in Colombia, with more than seven out of 10 adults knowing someone who had started a business recently (fifth highest in GEM). A similar proportion considered themselves having the skills and experience to start their own, and six in 10 saw good opportunities to start a business locally. However, one in three of those seeing good opportunities would not start a business for fear it might fail. Despite this, nearly one in 10 of those not already starting or running a new business intended to do so within the next three years.

The proportion of adults who were currently starting or running a new business in Colombia in 2023 was high, at just under one in four. Women were more likely than men to be starting a business, with about five women starting a business for every four men. However, the share of adults owning an established business was very low, at about one in 30, among the bottom three in GEM along with Oman and Mexico. This implied around seven people starting a new business for every person owning an established one, suggesting that serious obstacles were preventing the transition from new to established business. The evidence of the analysis section pointed to access to finance possibly being one of those obstacles.

Four out of five new entrepreneurs agreed with the motivation to earn a living because jobs were scarce, and less than one in 10 had customers beyond Colombia. However, three in five intend to use more digital technology to sell their products in the next six months. Despite two in five of those starting or running a new business being solo entrepreneurs, with just one owner and no current employees, one in five new entrepreneurs expected to employ at least six more people over the next five years.

1 A brief description of the GEM approach is given in the footnote on p. 107.