Ambitious development plans given green light
THROUGH FONDO DE SOLIDARIDAD AND CONAM, ECUADOR IS OPENING THE DOOR TO FOREIGN COMPANIES WITH THE VISION TO INVEST IN THE COUNTRY'S FUTURE

MORE THAN A PIPE DREAM The OCP pipeline, set for completion in 2003, is a key private development.

The Ecuadorian government has launched a process of modernization reforms and two key institutions, Fondo de Solidaridad and Conam (Consejo Nacional de Modernización del Estado) are involved with putting these policies into effect. Conam, created in 1993, is a state-run organization responsible for transferring state-owned companies into private ownership.
“I see Ecuador as a very sick person who has made a sudden unexpected recovery,” says its Conam president Ricardo Noboa, whose task has been made easier by an economic revival which has seen the country go from a negative growth of 7% in 1999 to a positive growth of 1.5% in 2000 and drop from 90% to 22% inflation over the same period.

Though there has been some political and social discord, confidence is largely restored and positive international attention has increased with countries, as exemplified by Canada’s interest in the newly-opened up telecommunications network. The OCP (Heavy Crude Pipeline) and Mazar dam are two of the country’s largest private developments and it is hoped large sums will be invested in electricity, depending on the success of negotiations being carried out with distributors. The water and postal services are also in the process of modernization and are looking for foreign investors.
Ambitious plans to convert Ecuador into a communications hub for the whole continent still need to be further developed. “We have to improve port and airport infrastructure first,” admits Mr. Noboa, though private investments are planned for Quito and Guayaquil airports and concessions have been granted for four Pacific ports.

LUIS BURBANO DAVILA Director General of Fondo de Solidaridad

Fondo de Solidaridad is the first shareholder in businesses representing the state and its function is to administer companies until they are privatized. Director General Luis Burbano Davila is optimistic. “If we all pull together, we could see an important growth by 2003,” he says. “The construction of the new OCP pipeline alone shows we could reach record low inflation figures of 11-13% soon.”
Other plans include an improved road infrastructure, large scale hydroelectric projects and the long-delayed exploitation of gas oil, for which a National Council of Modernization concession has been pending for 30 years. “We act as state shareholders in areas such as telecommunications, where we own 100% of the shares of principal phone companies; we also have 100% shares of hydro and thermo power companies and between 44 and 99% of shares of 19 electricity distributing companies,” explains Dr. Burbano.

Fondo de Solidaridad is committed to helping reduce crime and poverty. Investment-generated funds of around $200 million a year, representing 20% of the country’s social budget, goes into programs for “free maternity”, school meals, health, drinking water and cultural and educational programs.
Diversification is an important factor in an economy which is largely dependent on oil revenue. Dr. Burbano would like to see other key products given bigger shares. However, the banana sector has recently become static, the shrimp industry is still suffering from the early virus problem, and while the fresh cut flower market is developing impressively, it is hampered by transport costs and consumer demands.