Why invest in Nicaragua?
PRONicaragua's 2013 Investment Overview provides a summary of Nicaragua's main competitive advantages as an investment destination and its main investment opportunities.
Nicaragua, the largest nation in Central America, is located in the center of the isthmus between North and South America. The country is bordered by Honduras to the North and Costa Rica to the South, the Pacific Ocean to the West and the Caribbean to the East. The country has a total of 28 volcanoes (7 active and 21 inactive) and two spectacular lakes: Lake Managua (Xolotlán) and Lake Nicaragua (Cocibolca).
Originally a colony, Nicaragua claimed its independence from Spain in 1821, when it became a Republic. With a population of over six million, its culture reflects the heritage of the colonial period fused with native elements. It is a land of dazzling natural beauty, hospitable people, rich cultural traditions, and abundant investment opportunities.
Competitive Advantages of Nicaragua
1. High levels of personal safety
Nicaragua has become one of the safest countries in the western hemisphere, an advantage recognized internationally by tourists and investors who have relocated to the country. The Economist Intelligence Unit (EIU) confirms Nicaragua’s high security levels in its 2012 country risk evaluation, ranking the country as the second safest in Central America and the third in Latin America. This report measures indicators such as armed conflict, demonstrations, organized crime and kidnappings in different countries around the world.
2. Preferential access to international markets
In recent years, Nicaragua has actively engaged in multilateral, regional and bilateral negotiations, to become better integrated into the world. As a result of these efforts, the country has gained preferential access to key markets such as the United States, Mexico and Europe. Still, the country continues to seek opportunities to further assure its successful engagement in world trade and the global economy. Additionally, Nicaragua’s strategic location in the heart of the Americas has allowed the country to position itself as a very competitive export platform to markets worldwide.
3. Favorable business climate
The Government of Nicaragua has established the creation of a favorable business climate as top priority for the country, so as to foster the development of new and existing investment projects. In this context, a series of measures and policies have been undertaken to stimulate the sustainable growth of the country’s private sector. The results of these efforts can be seen in the 2013 Doing Business Report, published by the World Bank. The report ranked Nicaragua as the number one location in the Central American region in the indicators of Enforcing Contracts, Resolving Insolvency and Protecting Investors.
4. Abundant natural resources and strategic location
With a territorial extension of over 130,000 km², Nicaragua is a country with vast natural resources, including 7 percent of the world’s biodiversity, the largest rainforest north of the Amazon (Bosawas Reserve), the largest lake in the Central American region, 28 volcanoes, 800 km of coastline in the Pacific and the Caribbean, 22,000 km² of natural reserves and more than 10,000 km² of lakes, lagoons and rivers. In addition, Nicaragua has three biosphere reserves declared by the United Nations Education, Science, and Culture Organization (UNESCO): the Bosawas Reserve, the San Juan River and the Island of Ometepe.
5. Availability of a qualified labor force
Nicaragua’s population is young and dynamic, with 77 percent of its total population under the age of 39. The country’s labor force of 2.9 million is known to be flexible, with good working habits, a fast learning curve and low absenteeism and attrition rates; all of which have allowed this workforce to become quickly recognized as one of the most competitive and productive in the region. The country also has a large availability of English-speaking professionals that have been educated and trained abroad.
6. Competitive cost structure
The study titled “Benchmarking the Competitiveness of Nicaragua’s Apparel Industry”, conducted by O’Rourke Group Partners, found Nicaragua to be the single most competitive option for sourcing numerous apparel products, not just in this hemisphere, but in some cases also compared 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.
The 2012 Labor Market Risk, published by the Economist Intelligence Unit (EIU), ranks Nicaragua as the second country in Central America with the lowest labor market risk. The report measures various indicators such as union strength, labor disputes, wage restrictions and hiring and firing restrictions. Even more so, the Government of Nicaragua offers generous fiscal incentives to investment projects in key sectors of the economy, which, coupled with the competitive cost structure, allows companies to enjoy high levels of profitability.