Tag: investing in Nicaragua
Nicaragua has been making the news in international media, heralded as one of the world’s best kept secrets as far as affordable tourist destinations are concerned. True, but Nicaragua may not remain a secret much longer because of its increasing popularity as a retirement destination, and as a developing economy, it’s attracting foreign investment in its manufacturing section. Nicaragua’s location in the heart of the Americas means the country is in the perfect position to be a highly competitive export platform to world markets.
Nicaragua has become a very attractive investment prospect for export manufacturers. Because of its high productivity rates, competitive labor costs, close proximity to major markets, significantly improved infrastructure, benefits of being a DR-CAFTA member, attractive investment incentives, and the country’s Interpol rating as Central America’s safest nation, Nicaragua is the place for foreign investment.
Nicaragua’s textile and apparel industry accounts for nearly 60% of total free zone exports. The industry generates US$1.4 billion in earnings and employs 70,000+ people. “Made in Nicaragua” apparel is sold in the USA by major retail chains such as Target, JC Penney, Wal-Mart, and Kohl’s. Likewise, renowned international brands like Adidas, GAP, Liz Claiborne, Wilson, Under Armour, Wrangler, Levi’s, Lee Jeans, Patagonia, North Face, Docker’s and Dickies all trust their brands to Nicaraguan manufacturers.
In a study titled “Benchmarking the of Nicaragua’s Apparel Industry”, conducted by O’Rourke Group Partners, it was found that Nicaragua is not only a competitive option for sourcing numerous apparel products in this hemisphere, but in some cases compares to China, Vietnam and Bangladesh.
Furthermore, Nicaragua offers some of the most competitive labor costs in the region, making it an ideal investment destination for labor-intensive operations.
Nicaragua has actively engaged in negotiations to enable the country to integrate into the global economy. As a result, Nicaragua has gained preferential access to key markets such as the USA, Mexico and Europe. Still, the country continues to seek opportunities to further assure its successful engagement in world trade.
Nicaragua is part of the Central American Common (MCCA) and has established free-trade agreements with Mexico, Dominican Republic, the United States, Panama, Chile, and the European Union. The country also benefits from the Generalized System of Preferences (GSP) with countries such as Canada, Norway, Russia, Switzerland and Japan, and has signed bilateral investment treaties with a number of countries to promote and protect investments. In total, Nicaragua has earned preferential access to a global market of over 1.5 billion people.
The population of Nicaragua is young overall, with 77% being under the age of 39. The country’s labor force is approximately 3.2 million and one of the most competitive and productive in the region. Nicaragua also has a large number of English speaking professionals who have been educated and trained abroad.
The Government of Nicaragua has focused its efforts on improving the country’s business climate. It has created an Advisory Board, whose responsibility is implementing policies, structures and programs for investment and export promotion with the purpose of fostering the country’s economic growth.
To learn more about opportunities available investing in Nicaragua’s manufacturing sector, contact Nica Investments.
Nicaragua’s economy is predominantly agricultural. Arable land is approximately 6,100,000 acres, or about 21% of the country’s total land area. The planting season for most crops begins in May, immediately before the rainy season. The harvest season begins in November and lasts through January.
The main agricultural exports are coffee, cotton, sugar, and bananas. Non-traditional export crops such as honeydew melons, cantaloupe, sesame seed, onions, baby corn, asparagus, artichokes, and cut flowers are seeing increased production. Sorghum, cacao, yucca, tobacco, plantains, as well as various fruits and vegetables are produced mainly for local markets.
The agriculture industry in Nicaragua is the country’s number one employer, employing approximately 45% of the national workforce. Unfortunately it is also a seasonal employer with the majority of workers only employed while planting and harvesting.
Large-scale coffee growing began in Nicaragua in the 1850s. By 1870 coffee was Nicaragua’s principal export crop, and remained so for the next 100 years. Coffee grows only in the rich volcanic soil found on mountainous terrain, often making transportation of the crop to the market challenging. Road improvements throughout the country is helping to alleviate the transportation challenges, but many rural roads serving coffee plantations are still unpaved.
Production is centered in the northern part of the central highlands north and east of Estelí, and also in the hilly volcanic region around Jinotepe.
Cotton was a latecomer to Nicaraguan agriculture, but quickly became the nation’s second largest export crop. Cotton became feasible as an export crop in the 1950s when pesticides were developed that permitted high yields in tropical climates. Cotton soon became the crop of choice for large landowners along the central Pacific coast.
Lack of credit for planting, depressed world cotton prices, and competition from Chile discouraged cotton production in the mid 1980s. Cotton production is still a significant export crop but nowhere near what it once was.
Bananas, a native fruit of tropical Asia, were introduced to Nicaragua early in the colonial period. Small plots of the Gros Michel variety of banana were planted for export but political turmoil and transportation difficulties limited exports. Additionally, United States companies developed banana production in neighboring countries, so Nicaragua’s potential remained underdeveloped.
Politics and and outbreak of Panama disease in the 20th century kept banana production low. Panama disease is a fungus that kills the plant’s underground stem, virtually wiping out most of the banana plantations.
New plants of the Valery and Giant Cavendish variety were planted. Although Cavendish bananas yield three times the harvest of the older Gros Michel species, Cavendish bananas are more difficult to harvest and transport. They bruise easily and must be picked early and crated in the fields for transport.
Most banana production is in the Pacific lowlands, in an area extending north from Lago de Managua to the Golfo de Fonseca.
Much of lowland Nicaragua has a climate conducive to growing sugarcane. Most sugarcane is processed into whitish centrifugal sugar, the raw sugar of international commerce. Some plants further process the sugarcane into refined granulated sugar.
The first cattle were brought to Nicaragua by the Spanish in the 16th century. Drier areas on the western slopes of the central highlands were ideal for cattle raising, and by the mid-18th century, a wealthy elite whose riches were based on raising livestock, controlled León, Nicaragua’s colonial capital. In the late 20th century cattle raising was concentrated in the areas east of Lago de Managua.
Most beef animals are improved zebu strains. Smaller herds of dairy cattle, mostly Jersey, Guernsey, or Holstein breeds are found near population centers. A breed that is unique to Nicaragua is the La Reina. La Reina cattle possess genes that make them heat tolerant, a very useful breed in Nicaragua that are used for meat, dairy, and work purposes.
Tobacco and sesame are both produced for export. The first African palm oil plantations were established in the Caribbean lowlands and began production in 1990. Beans, corn, rice, and sorghum continue to be widely grown and consumed domestically.