Urban Nicaragua Country Overview

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Introduction

Key economic and financial reforms enacted in the early 1990s have produced steady but fluctuating yearly growth in Nicaragua. Economic liberalization and privatization of state-owned industries have brought some relief to the Western Hemisphere’s second poorest country. The administration of President Daniel Ortega established a clear framework for Nicaragua’s development policies through its National Human Development Plan (PNDH) 2008-2012. The plan emphasizes social development over general economic growth by concentrating the government’s efforts on alleviating poverty, improving neonatal and infant mortality rates and increasing access to proper sanitation. Even though some of these efforts seem to be “well on track”, according to the World Bank, towards achieving the country’s Millennium Development Goals. Nicaragua has been hit hard in recent years by the global financial crisis, which has limited access to financial resources and the issuing of new credits in the national financial system. As a result Nicaragua saw the rate of its economic growth slide from 5.1 percent in 2004 to just 3 percent in 2008. During that same period, inflation more than doubled from 8.5 percent to 19.9 percent. [1]

Nicaragua is ranked lower than most of its regional neighbors in many development indices. It is last among Central American countries (and 111th overall out of 145 countries worldwide) in the World Bank’s 2009 Knowledge Economy Index, which measures a country’s capacity to generate, adopt and diffuse knowledge for the benefit of economic development. [2] Similarly, Nicaragua is the lowest ranking Central American nation in the International Telecommunications Union’s ICT Development Index (111th overall out of 154), which measures a country’s ability to effectively exploit information and communication technologies towards economic development. [3]

Chart 1

In addition to the economic boost that Nicaragua’s market reforms produced in the 1990s and early 2000s, the privatization of the country’s telecommunications industries has led to a substantial expansion in access to mobile telephony and the internet, particularly in urban areas. At the time the World Bank provided technical assistance for strengthening the institutional capacity and policy functions of Nicaragua’s telecommunications regulator, the Instituto Nicaraguense de Telecomunicaciones y Correos (TELCOR), and legal and financial assistance during the privatization process of the Empresa Nicaraguense de Telecomunicaciones (ENITEL). [4]

The project also included a pilot initiative to build a number of telecentres in rural areas, with the aim of expanding telephony into underserved regions. Telecentres have now become the most important access points for internet users in Nicaragua.

Prior to the reforms, ENITEL held a monopoly over fixed-line services and Bellsouth was the only mobile communications provider. Over the past decade, a number of changes have taken place within the telecommunications market that have contributed to the expansion of new ICTs in Nicaragua; opening up new opportunities for private competitors, including Spain’s Telefonica purchase of Bellsouth’s holding in Nicaragua and the entrance of Mexico’s Amėrica Movil into the mobile communications market.

Chart 2

As in many other Latin American countries over the past five to six years, mobile communications access has grown substantially in Nicaragua, albeit from a low base. According to the ITU, there were only about 470,000 mobile subscribers in Nicaragua in 2003; by the end of 2008 there were over 3.1 million. As Chart 1 shows, 84 percent of urbanites surveyed said they had household access to a mobile phone. However home access to more expensive ICTs such as computers, “smartphones” or the internet remains limited.

The prevalence of fixed landline phone connections may be a sign of promise for future home internet access for urban areas. The survey indicated that the great majority of internet users avoid the burdensome investment and recurring costs of home access by connecting to the web at internet cafés.


[1] “World Economic Outlook Database- Nicaragua.” International Monetary Fund. April 2009. Washington, DC. Accessed December 2009. http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/index.aspx.

[2] “KEI and KI Indexes (KAM 2009).” The World Bank Group. July 2009. Washington, D.C. Accessed December 2009. http://info.worldbank.org/etools/kam2/KAM_page5.asp.

[3] Measuring the Information Society - The ICT Development Index.” International Telecommunications Union. Geneva, Switzerland. Accessed December 2009. http://www.itu.int/ITU-D/ict/publications/idi/2009/index.html.

[4] “Nicaragua- Telecommunications Sector Reform Project.” The World Bank Group. Washington, D.C. http://www-wds.worldbank.org/external/default/main?pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000090341_20070208131953.