Foreign Direct Investment grew to $ 1,016.9 million in the year of the pandemic, leveraged on mining investment

The Central Bank published the figures for Foreign Direct Investment (FDI) for the year 2020. The amount is less than that of neighboring countries

Foreign Direct Investment (FDI) in Ecuador was $ 1,016.9 million in 2020, as reported by the Central Bank of Ecuador (BCE). Despite the fact that it was a pandemic year and in most countries of the region there were falls with respect to the previous year,Ecuador's figure reveals a slight recovery compared to the FDI registered in 2019 ($ 961.5 million). However, it is lower than that achieved in 2018, which was $ 1,388.2 million.

For Alberto Acosta, editor of Weekly Analysis, Foreign Direct Investment in Ecuador has been very low throughout history. Although in 2020 the result is relatively good, it is a low percentage, in relation to the economy and even more so when compared to neighboring countries. Indeed, the amount of Ecuadorian FDI is far from the amounts of countries such as Colombia and Peru, but in 2020 these countries had a sharp fall, due to the pandemic, while Ecuador had a growth. A) Yes, Colombia had an amount of FDI of $ 6,788 million in 2020. However, it is 35% lower than in 2019 when FDI had been registered for $ 10,465 million. Peru also obtained a higher result than Ecuador, but it was $ 1,558 million. The figure represents 75% less FDI than in 2019 when $ 8,882 million had been obtained.

These results are in accordance with the forecasts ofECLAC, which predicted a fall in FDI in Latin America of between 45% and 55% in 2020, due to the pandemic.

For Acosta Burneo, the important thing about FDI is that in addition to the money that enters the economy, it helps to generate production and wealth and for this it introduces new technology to the country. You have to understand that the investor does not only collect wealth, but creates it, he says. At the end of the day, he gets more than he invested, because he makes a profit, but in the process he has created sources of work and wealth.

According to the classification by activity made by the ECB, it can be seen that$ 411.1 million came from the exploitation of mines and quarries. In second place are services provided to companies with $ 217.1 million and in third place construction with $ 170 million.

According to theChamber of Mining Mining investment has generated an important contribution in the inflow of FDI. In 2018,the mining sector captured53% ($ 742 million)Foreign Direct Investment (FDI);in 2019, mining reached 42.11% ($ 394 million); Yin the year 2020Those $ 411.1 million represented 40% of the investment.Thus, the Chamber indicates that mining has become the economic activity that has attracted the most foreign capital to Ecuador in recent years.

Additionally, according to the ECB, in a favorable scenario, the projected investment for 2020-2023 of strategic and second generation projects would amount to $ 1,058 million. On this issue, the Chamber said that investors require clear rules, legal uncertainty keeps investments away. He also commented that despite the global crisis, investors continue to bet on Ecuador, At the end of 2020 and at the beginning of 2021, important capital placements have been seen in the projects Warintza de Solaris $ 80.6 million, Fortuna de Lucky $ 5 million, Loma Larga de INV $ 6.1 million, Salazar Resourses $ 6.5 millions.

One of the largest projects in the world, Cascabel, aims to start its production in 2025. Large-scale mining is looking forward to 2021 with two mines in production and a significant investment for feasibility studies.

Education, priority in mining investments for the community

The two large-scale mining companies that have mines in the south of the country, ECSA (Mirador) and Lundin Gold (Fruta del Norte), have invested several million dollars in community plans, as well as in responding to the pandemic.

The company EcuaCorriente S.A. (ECSA) made an investment of $ 7.8 million in ten years as part of compliance with the Community Relations Plan and the Mirador Mine Environmental Management Plan; while Lundin Gold, between 2015 and 2020 has invested $ 22 million.

Regarding the social responsibility programs, both companies have given importance to the training and education of the population.

ECSAreported that within the educational field they invested$ 465,000 in its college scholarship program,through which 25 young people have managed to study a university degree and obtain a third-level professional degree.

Meanwhile,Lundin Goldhighlights educational projects such asExtraordinary Baccalaureate with more than 200 graduates from the province.There is also the Training Program for Mining Operations, with which it trained 306 Mine operators and Zamora Chinchipe Process Plant operators. They have also trained to take the university entrance exam and there are 170 students enrolled in 56 university degrees at various universities in the country.

Due to theCOVID-19 pandemic, ECSA, in coordination with different institutions, local and sectional governments, implemented the Health Emergency Support Plan, with an investment of more than $ 200,000.In addition, the company has supported with vaccination and deworming campaigns for cattle, preventive health programs such as support for the government strategy "Doctor of the Neighborhood", among other activities.

Lundin Gold also worked on health issues and reported that it has invested approximately $ 570,000 in this planin strengthening government programs and prevention initiatives such as "Doctor of the Neighborhood" and "Give a hand without giving a hand"; as well as provision of hospital infrastructure, medical equipment and disinfection materials; financing of food kits for vulnerable groups, among others.

Both companies have also provided the surrounding towns with infrastructure, including parks, bridges, and roads, among others.