Nicaragua

Defying global economic odds, Nicaragua has remained a bright spot in an otherwise mixed scenario for Central America’s economies.

The country, once besieged by political turmoil and still vulnerable to natural hazards, has been growing on average with Latin America over the past decade. Disciplined macroeconomic policies since 2001 combined with a steady expansion of exports and FDI helped Nicaragua to weather recent global economic turbulence of the 2008-09 crisis, rising food and petroleum prices.

After a quick rebound in 2010, economic activity grew at 5.1% in 2011, the highest rate in a decade. Inflation was also tamed to single digits–around 8% in 2011, down from a high of 25% in mid-2008. The macro economy remains stable and foreign direct investment and trade show an improved outlook.

Nicaragua’s economic turnaround has allowed the country’s decision makers to shift from crisis control mode to longer-term, pioneering strategies to fight poverty, particularly in remote rural communities. Massive debt relief by the International Development Association (IDA), the World Bank’s unit for the poor, has helped to make this shift possible.

Nicaragua is still one of Latin America’s least developed countries. Poverty, although declining steadily in recent years, remains high. And more than 80% of Nicaragua’s poor live in the rural areas; many in remote communities where the access to basic services is still a daily challenge.

To better reach the country’s vulnerable families, IDA projects leverage local initiatives that stretch limited resources further and deliver sustainable results. Examples of these include Casas Maternas, using NGOs and local volunteers to provide pre- and post-natal health care to expecting mothers, and the Módulos Comunitarios de Adoquines to build rural roads using local manpower.

To this end, Nicaragua’s National Plan for Human Development (PNDH) 2007-12, is being updated through 2016. Its overarching goal is to reduce inequality by increasing poverty- reduction spending and boosting investment in social sectors and rural infrastructure.

Nicaragua’s government officials and World Bank teams worked on the Country Partnership Strategy (CPS) for 2013-2017 to further address poverty reduction while promoting prosperity for more Nicaraguans.

The Nicaragua CPS hinges on supporting two strategic objectives:

• Improving social welfare by improving access to quality basic services, in particular by poor rural households

• Raising incomes by improving productivity, competitiveness and diversification

The Strategy will bolster activities to expand coverage and quality of preschool, primary and secondary education; improve maternal and child health; expand access to water and sanitation services, and promote efficiency and transparency in social investment. It will also help to improve infrastructure, increase productivity and exports diversification, and facilitate trade and access to financial services.

The work program for 2013-2017 comprises interest-free credits and donations from the International Development Association (IDA) for investment projects, South-South exchanges, technical assistance and analytical work. Additionally, the International Finance Corporation (IFC), the World Bank Group private-sector arm, will play a lead financing role in the energy and financial sectors, while the Multilateral Investment Guarantee Agency (MIGA) will be open to opportunities to support foreign direct investment in the renewable power generation, agribusiness and financial sectors through the provision of risk guarantees.

The current World Bank portfolio in Nicaragua includes 14 projects totaling around US$391.8 million. Some examples of results on the ground include:

Casas maternas, a grassroots initiative to improve maternal health in rural communities. With the help of a network of volunteers, the program provides key services to pregnant women in remote areas, such as pre-natal checkups, birth plans, and a post-natal follow up. IDA support has helped to boost the number of casas maternas from 12 in 2000 to over 80 in 2010, benefitting around 17,000 women in 2009.

IDA has also supported a land rights program benefitting 15 of Nicaragua’s 21 indigenous territories in the historically marginalized Atlantic regions. Over 104,000 people from 214 communities in five major ethnic groups have benefited, since 2005. Territory making up 17% of the national territory has been titled and registered.

IDA is supporting the Modulos Comunitarios de Adoquines which use cheaper, locally-made adoquine blocks that allow faster, more labor-intensive, and more sustainable road works. Over 200km have been constructed, generating over 24,000 direct jobs and 95 community-owned enterprises. IDA also supported development of 35 microenterprises employing around 400 persons which are routinely maintaining 2,400 km or 88 percent of the road network.

Under an IDA project that piloted public-private partnerships for rural electrification, almost 7,000 remote rural households (or 42,000 beneficiaries) have been equipped with solar home systems, marketed and installed by local enterprises with the participation of local micro-finance institutions.

IDA is working to improve Nicaragua’s rural telecommunications services. Broadband Internet access points were established in 101 municipalities, while 18 radio-based stations and 104 telecenters were installed in municipalities across the country, providing access to mobile phones and the Internet at affordable rates. The project is now working to bring high speed services to the remaining under-served areas in the Atlantic regions.