First project to benefit from the Colombian green finance mechanism

A project supported by IKI funding has qualified to participate in Colombian’s green finance initiative that offers tax credits through a mechanism known as “obras por impuestos“.

The IKI project SLUS marks the inaugural entry into the obras por impuestos registry. The project promotes zero-deforestation agricultural practices, enhances the livelihoods of the project beneficiaries, provides ecosystem services, and contributes to peace building in Colombia.

Tax credits to support projects in local communities

Under the obras por impuestos guidelines, corporations with annual gross incomes exceeding 33,610 Unidad de Valor Tributario (approximately USD 406,000 in 2024) can opt to allocate half of their tax payments to projects in municipalities. covered under the Programas de Desarrollo con Enfoque Territorial (PDET - Territorially Focused Development Programmes) and Zonas Más Afectadas por el Conflicto Armado (ZOMAC - Areas Most Affected by the Armed Conflict). These areas have been identified by the government as being impacted by illicit economies, institutional deficiencies, poverty, and conflict.

The International Center for Tropical Agriculture, part of the Alliance of Bioversity International and CIAT, facilitated the structuring and registration of the project in the obras por impuestos registry. These activities constitute part of the work that CIAT performed under the IKI-funded SLUS project; it also had the support of the CGIAR initiatives on Low-Emission Food Systems and on National Policies and Strategies.

Milestone for IKI´s SLUS project

“We take pride in this milestone as this represents a huge achievement for the IKI-SLUS Project,” said Dr. Augusto Castro-Nunez, who leads the team at CIAT. The team directly engaged with the Colombian environment ministry to amend the policy on obras por impuestos so the mechanism can support activities of green businesses, that is, enterprises whose operations the ministry has certified to be generating benefits for the environment.

“Not many companies are aware that they can invest their taxes into obras por impuestos projects involving payment for ecosystem services and zero deforestation agricultural production,” says Castro-Nunez, adding that most investments so far have gone into infrastructure, transportation, education and housing projects. CIAT has therefore launched an outreach campaign to get eligible companies to invest in the registered project, which would benefit the cocoa producers’ association in Caqueta, Colombia, ASPROABELEN. 

Contribution to the sustainable development and the peace process

The CIAT team is keen to scale up the work done under the IKI-SLUS Project by having similar projects in more places and sectors. This is particularly for those linked with deforestation, carbon emissions and biodiversity loss, in Colombia funded by obras por impuestos and other existing government financing mechanisms, such as non-causation of carbon tax and Fondo para la Vida y la Biodiversidad. These financing mechanisms can make available EUR 566 million per year for projects that can support not only the peace process in Colombia but also the achievement of the country’s objectives on sustainable development, climate action and biodiversity preservation.

To scale the work done under the IKI-SLUS project will require support to build the capacity of local communities to structure and register projects and in turn get access to green financing for ending deforestation.