According to a report by Informa Colombia on business dynamics in the country during the first quarter of the year The Colombian business panorama presents a scenario of contrasts.
According to the criteria of
Although there is a notable increase in the creation of new companies, with a total of 51,827, this data is qualified by a worrying trend: the lowest rate of business creation in the last four years for this period.
In fact, compared to the first quarter of 2023, business creation in 2024 has seen a significant decline of 30 percent.
If the contrast is made with the same period in 2022, it reveals an even more pronounced drop, of 42 percent. But this downward trend has extended to most of the country’s departments, with regions such as Huila and Santander.
In contrast to the downward trend, two departments, Putumayo and Nariño, present positive realities by experiencing growth in business creation.
The challenge in training human talent includes taking advantage of companies’ expertise in the process.
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The dynamics of company closures
In contrast to business creation, business closures experienced a worrying increase of 51 percent in the first quarter of 2024, compared to the same period last year.
Nariño and Putumayo, the departments with the greatest growth in business creation, also led the increase in closures, with percentages of 226 and 346 percent, respectively.
The sectors most affected by this trend were accommodation, food services, and artistic entertainment and recreation activities, with drops of 48 and 59 percent, respectively.
Regarding company insolvency, regulated by Law 1116 of 2006, which seeks to help companies overcome financial difficulties and is triggered when a company’s assets are insufficient to cover its debts and lack liquidity to meet its obligations.
The law provides a restructuring mechanism, allowing companies to commit to payment plans without compromising their operational continuity, thus protecting their assets and long-term viability. In the case of The first quarter of 2024 has witnessed the lowest number of bankruptcy processes in the last four yearswith only 60 cases recorded.
This figure represents a decrease of 54 percent compared to the last quarter of 2023. The reduction, according to the report It could indicate an improvement in the financial health of Colombian companies or a greater ability to adapt to adverse economic conditions.
The decreasing trend of bankruptcy processes, which refers to the bankruptcy of a company, which is when the firm is in difficulty paying its creditors in the first quarters of each year since 2021, there is a gradual recovery of the business sector.
For example, in the first quarter of 2021, 150 bankruptcy proceedings were registered, while in the same period of 2024 the figure was reduced to 60. which represents a variation of 60 percent in three years.
The effect of the pandemic on business closures
The closure of companies in Colombia during the first quarter of 2021 to 2024 first shows that in 2022, an increase of 23 percent in company closures was recorded compared to 2021, reaching a total of 27,960 closures, which the report indicates is possibly due to the prolonged effects of the pandemic.
In the case of 2023, there was a 20 percent decrease in company closures with 22,469, which for the analysis It could reflect a partial recovery or the adaptation of companies to new economic conditions.
However, in 2024, business closures increased again by 31 percent, reaching 29,453, suggesting that businesses continue to face significant challenges. “This fluctuation underscores the need to implement economic stability and support policies to mitigate closures and promote a more business-friendly environment in Colombia,” the study says.
During the first quarter of 2024, 29,453 company closures were recorded in Colombia. Bogotá leads with 7,040 closuresfollowed by Antioquia with 5,218 and Valle del Cauca with 3,463.
Likewise, Córdoba shows a notable number of closures, with 5,229, despite being less populated and industrialized. The Wholesale and Retail Trade sector leads the closures with 12,293 closed companies, especially in Córdoba (2,493), Bogotá (2,347) and Antioquia (2,073)which according to the analysis reflects changes in the country’s consumption habits marked by the El Niño phenomenon and inflation.
In fact, the Accommodation and Food Services sector is also seriously affected.
affected with 5,098 closures, in which Bogotá had 1,136 and Antioquia 998.
In the case of Manufacturing Industries, 2,591 closures were recorded, with high figures in Bogotá (629) and Antioquia (604), indicating problems in production and distribution.
The reasons for the closures
According to the study, the first quarter of 2024 shows a challenging outlook for the creation and sustainability of companies in Colombia.
“The decrease in the creation of new companies reflects the persistent post-pandemic adverse economic effects still present by department and sector and highlights the urgent need for policies that facilitate access to credit and tax incentives,” the report says.
Regarding closures in key sectors such as trade and manufacturing, the report says detailed solutions are required. “However, stability in certain financial and emerging sectors presents diversification opportunities and economic strengthening indicating an improvement in the financial management of companies or a favorable environment due to the reduction of interest rates,” he says.
