COLOMBIA: Support Colombia's Development Bank (FDN) in the establishment of a Project Preparation Facility

Colombia’s National Development Bank (Financiera de Desarrollo Nacional – FDN) has a portfolio of successful investments in the nationwide road program, 4G, but lacks investments in other key strategic sectors that could enhance the country’s competitiveness and accelerate meeting its national climate agenda.

Projects in those sectors are difficult to develop and invest in due to regulatory and sector-specific challenges. Further, FDN had internal capacity challenges in preparing and structuring bankable projects in climate-smart infrastructure sectors. If these pre-investment stage challenges could be overcome, Colombia could move faster in reaching its development and climate goals. As an institution, overcoming them would help FDN experience growth, which could free up proceeds to reinvest in more infrastructure projects—while crowding in green financing—and creating a virtuous cycle of economic development.

Between March 2021 and February 2022, PPIAF supported FDN in improving the quality of bankable projects that it could invest in. PPIAF studied 10 sectors, selected four high-potential priority sectors (airports, renewable energy, ICT, and water and sanitation) and identified roadblocks, strategies, and activities to overcome the challenges in each priority sector. To further enhance the country’s ability to account for climate co-benefits that enable it to attain its climate goals, PPIAF’s Climate Resilience & Environmental Sustainability Technical Advisory (CREST) supported the identification of opportunities for FDN to play a more proactive role in integrating climate mitigation and climate adaptation co-benefits as well as overall sustainability in the four priority sectors.

PPIAF advised on the creation of a “Unit for Investigation and Sector Development” and its governance structure to support the development of projects at the “upstream” or pre-investment stage. Ultimately, PPIAF helped strengthen FDN’s capacity to become a stronger actor in the four key sectors critical to Colombia’s economic development.

By ensuring these sectors have the potential to have investment-grade projects that are more likely to attract private sector financing and come to fruition, FDN can speed up the timetables to turn infrastructure concepts into reliable sources of green energy, clean water, faster ICT systems, and reduced travel times. FDN’s actions can catalyze investments that will create more jobs, reduce poverty, and improve lives in Colombia.