3.2.5.- Nicaragua
The evaluation of the seventeen key aspects to determine the business competitiveness of Nicaragua is given in the table below.
1. Political aspects (1). Politics in Nicaragua can be regarded as the weakest aspect of all investigated aspects and decisive for many companies in terms of possible investments or implementation of activities. The political situation in Nicaragua can be described as unpredictable and instable.
2. Social aspects (2). Nicaragua is, after Haiti, the poorest country of the Americas. There is a small upper class, lack of education, a high percentage of illiteracy but, surprisingly, a rather high level of security.
3. Safety (3). Nicaragua has the lowest crime rate of all Central American countries which is an important fact and not very well known.
4. Economic aspects (2). Although Nicaragua can be regarded as extremely poor, the economy is rather stable. Since the inauguration of the new Sandinist government of Daniel Ortega, foreign investments are dropping and fear exists that macro economic figures will start to decline.
5. Fiscal aspects (3). Nicaragua has a well organised tax system and control is rather strict. Tax levels are acceptable.
6. Investment capital (2). Investment capital is hard to obtain as non-traditional agriculture is not considered to be priority for banks. Loans for consumer goods can be obtained with any local bank. For any kind of agricultural goods, strict guarantees are required.
7. Infrastructure (local, 2). The road network in Nicaragua is well developed between major cities, although exceptions can still be found. Electricity is and has been a ‘hot’ issue in Nicaragua for many years. The change of government in January 2007 has not led to the expected improvement. Energy continues to be a major issue of concern.
8. Infrastructure (export, 1). (International) ports hardly exist and sea freight is carried out using Puerto Cortez in Honduras or Limon/Moín in Costa Rica. The airport has fairly good conditions although there are few connections with the main potential markets in North America. Costs of sea freight make low value export crops less interesting to cultivate.
9. Communication (3). Coverage of mobile phones throughout the country and quality of service is rather good in Nicaragua. Prices can be compared to most other Central American countries (except for Costa Rica which is cheaper). Availability of internet (broadband) is increasing and in most common urban places available.
10. Trade agreements (3). Nicaragua has more trade agreements with foreign countries / regions than any other country in Central America. Due to the lack of products to be exported, the country is not able to take full advantage of these agreements. Foreign investment from Western countries has been dropping recently due to fear for legal instability.
11. Climate and natural resources (3). Nicaragua has a favourable climate for various fruits, exotic plants and vegetables. There are just a few regions, near Matagalpa – Jinotega, where altitudes can be found to produce crops like leather leaf and potentially flowers and for instance strawberries. There is land available for agricultural production. Costs of land are low and due to actual political conditions, even lower than before.
12. Agricultural sector organization (3). APEN is the main organization taking care of the interests of local producers. APEN can be regarded as a pro active entity making efforts to develop infrastructure for future production. There are no sector organizations as such in Nicaragua. Other organizations mentioned in the report like ProNicaragua play a positive role within their span of action.
13. Phytosanitary service (3). Although there is a great lack of assets to fulfil the tasks of the Ministry, there is relatively little bureaucracy and administrative acts (‘red tape’) are limited.
14. Agricultural supplies (2). The agricultural sector in Nicaragua is very small and therefore, the supply sector as well. Quite some materials have to be imported making them expensive.
15. Labour (unskilled, 4). Availability is good and the cost of labour is low in Nicaragua. On top of the fact that unskilled labour is widely available, it is likely that immigrants now living in Costa Rica are willing to go back to their homeland in case work becomes available. Middle management (trained in Costa Rica) is therefore not regarded as a (future) limiting factor.
16. Labour (management, 2). Education on university level is present in Nicaragua and the level of education is quite acceptable. However, due to the fact that the agricultural sector is very small, it is hard to find qualified personnel with practical experience.
17. Subsidies (3). Being one of the poorest countries in the world and having faced many internal conflicts, Nicaragua can count on developing aid from organizations world wide. However, a tendency can be detected that countries (Sweden was the first) are reconsidering their policy. For Dutch investors, programs like PSOM, PESP and the Match Making Facility have become available in Nicaragua.
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