Political Information

Source: Economist Intelligence Unit

Political and Economic Stability

Harsh economic problems under Somoza’s leadership led to violent opposition to governmental manipulation and corruption in 1978 which resulted in a short-lived civil war that brought the Marxist Sandinista guerrillas to power in 1979. However, under the leadership of President Daniel Ortega Saavedra, Nicaraguan aid to leftist rebels in El Salvador prompted the US to sponsor anti-Sandinista contra guerrillas through much of the 1980s. After losing free and fair elections in 1990, 1996, and 2001, former Sandinista President Daniel Ortega Saavedra was elected president in 2006 and re-elected in 2011. Nicaragua’s infrastructure and economy which was hard hit by the earlier civil war and by Hurricane Mitch in 1998 – are slowly being rebuilt, but according to the CIA, democratic institutions have been weakened under the Ortega administration.

Nicaragua’s growth is at par with other Latin American countries. To combat the 2008-09 global economic crisis and the rising oil and food prices, Nicaragua relied heavily on macroeconomic policies, exports and FDI which yielded great results. By 2011, growth had accelerated to reach a record 6.2%. This however, declined to 5.1% and 4.6% for 2012 and 2013, respectively. Nicaragua’s GDP continued to shrink to a 3.9% in 2015, the lowest rate in the last five years. According to the IMF, the country’s economic outlook remains favorable. Real GDP is projected to grow by 4.5% while annual inflation is projected at 7% in 2016 (improved from 20% in 2008).

Moreover, Nicaragua’s exports have significantly increased in recent years. The country’s most successful exports include gold, textiles, coffee, sugar, and beef. Much trade is conducted in Nicaragua’s free trade zones or “maquila” zones. Nicaragua is a signatory to the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) and the EU-Central America Association Agreement (EU-CAAA). Canada and Nicaragua have a growing trade and investment relationship. Nicaraguan exports to Canada reached a five year (2009-2013) high of $402 million in 2013.

Nicaragua’s success in improving economic conditions has a shift of focus to be placed on long-term problems, such as poverty. Associations such as the International Development Association (IDA) have been helping to reach these goals.

Business Climate

The World Bank’s annual Doing Business report ranks economies from 1 to 189 (with 1 being the best) on their ease of doing business. In the 2016 report, Nicaragua ranked 125 overall and 81 for Trading Across Borders, which measures the ease with which a standardized shipment of goods can be imported or exported across its borders. The average time to ship goods out of Nicaragua was lower than the regional average at approximately 21 days, with an estimated cost of $CAD 1,215 per 20-foot container. To complete the export process, ten forms of documentation are required: Bill of lading, Certificate of origin, Commercial invoice, Customs export declaration, Export License, Export Permit, Phytosanitary certificate, Road Transport Document, Terminal handling receipt, Transit Document, and Quality Certificate.

Although there are many reputable exporters in Nicaragua, Canadian importers should be aware that corruption could be an issue when doing business in the country. Nicaragua ranked 130 out of 168 in Transparency International’s 2015 Corruption Perceptions Index where 1^st place indicates least corrupt.  Canadian companies are advised to exercise strict due diligence before working with a company from Nicaragua to ensure that it is a bona fide and reputable entity. It is suggested that Canadian importers commission a report by a credit information provider to verify the financial strength of the partner.

TFO Canada Export Offers

TFO Canada provides an information service for Canadian importers interested in sourcing products from developing and emerging economies such as Nicaragua. This includes practical advice on sourcing from developing country exporters, a customized news bulletin including new leads from Nicaragua as they come in, and a searchable database for sourcing new products and suppliers. The chart below provides a rough idea of the number of supplier profiles from Nicaragua, available online with contact information through TFO Canada’s searchable Supplier Database.