The efficiency and productivity of Colombia’s urban system have been considered essential components in the country’s transition from a middle-income, commodity-driven society to a higher-income economy rooted in knowledge and manufacturing. The efficient management of Colombia’s cities and urban areas is recognized as central to reducing poverty and inequality. Although poverty rates are higher in rural areas, most of Colombia’s poor live in urban areas. In 2013, about 7 in 10 poor individuals in Colombia lived in an urban area (defined as metropolitan, medium, or small urban areas), and 6 in 10 were in the bottom 40 percent of national income distribution. Seventy-seven percent of Colombians live in cities, where unemployment has reached around 12 percent. Policies to improve productivity and living conditions in the nation’s cities thus have the potential, by focusing on urban areas, to contribute significantly to nationwide improvements in poverty reduction and shared prosperity.
The Productive and Sustainable Cities Development Policy Loans (DPL) provided an innovative instrument for use in the urban development and transportation sectors, which have traditionally relied on investment operations. The DPL was chosen as the financing instrument because it could provide the government with flexible financial support and foster the sector reforms essential for catalyzing investment and reducing the negative externalities of urban life (among them, pollution, congestion, and lack of affordable housing). DPLs were seen as complementary to knowledge services and technical assistance engagements.
The 2012 World Bank report “Colombia Urbanization Review: Amplifying the Gains from the Urban Transition” provided the government with concrete policy guidance on maximizing efficiency in urban governance. The report’s diagnostic analysis served as direct input into the National Development Plan 2014–2018. Moreover, each project-supported policy area was backed by analytical work under the Sustainable and Productive Cities Programmatic Approach.
Using a number of knowledge and convening services, the Bank supported formulation of the Congestion Charging Decree and the fourth-generation policy document of the Council of Economic and Social Policy (El Consejo Nacional de Política Económica y Social). In addition, the Bank’s Global Facility for Disaster Risk Reduction supported Colombia’s Ministry of Housing, Cities and Territory (Ministerio Vivienda, Ciudad y Territorio, MVCT) through the preparation, validation, and dissemination of a standardized methodology for the National Inventory of Settlements in High Risk Areas. These programs contributed to closing the gap in the availability of affordable housing. Finally, Bank studies on access to affordable housing, carried out in association with the Macroproyectos Social Interest Program Project, determined the supply- and demand-side constraints contributing to Colombia’s persistent housing deficit.