Caribbean & Central America - June 2017 (ISSN 1741-4458)

A high-level Nicaraguan government delegation headed up by Nicaragua’s trade & industry minister, Orlando Solórzano, paid a recent visit to Spain aimed at promoting trade and investment. The efforts by the Frente Sandinista de Liberación Nacional (FSLN) government led by President Daniel Ortega to shore up ties come amid uncertainty about cooperation with one of its key partners – the US – given the ongoing threat that the US government will approve the so-called Nicaraguan Investment Conditionality Act (NICA) (see sidebar).

At the event which took place on 22 May, and was attended by over 70 Spanish private sector representatives, Solórzano presented a portfolio of investment possibilities in sectors which included infrastructure, agroindustry, fishing, and energy, among others.

One notable outcome of the meeting was the inking of a Memorandum of Understanding between Nicaragua’s official export and investment promotion agency, ProNicaragua, and the Spanish Institute for Foreign Trade (ICEX), an agency of Spain’s ministry of trade, tourism, and industry. According to Nicaragua’s export agency, Cetrex, Nicaragua’s exports to Spain reached US$14.9m in 2016 (out of Nicaragua’s total US$2.36bn worth of exports), down 22.8% on 2015. Meanwhile according to ICEX, Spanish foreign direct investment (FDI) in Nicaragua was worth 17.3m euros (US$19.3m) in 2016.

These efforts by the Ortega government to boost investment follow a June 2016 report by the United Nations (UN) Economic Commission for Latin America and the Caribbean (Eclac) which showed that FDI inflows to Nicaragua declined by 5% in 2015, to US$835m. The Eclac report noted that since 2014 Nicaragua’s maquiladora (assembly plant) industry has felt the effects of the change in US policy, which entailed removal of the tariff preference level (TPL) provisions. It is estimated that some 3,000 jobs have been lost and textile exports have fallen by 5% as a result of this change.

• NICA

The NICA was reintroduced in the US Senate on 27 April by US Senator Ted Cruz (R-TX), a companion to the bipartisan measure introduced in the House of Representatives on 5 April. It is the latest version of an initiative first debated last year which would prevent the Nicaraguan government from accessing international financing until reforms are implemented that “promote democracy, strengthen the rule of law, respect human rights…until Nicaragua holds free, fair, and transparent elections overseen by electoral observers”.