Coleen R. Littlejohn *, NicaNotes, July 1st 2021
https://afgj.org/nicanotes-nicaraguas-inspiring-social-and-economic-adv…
A woman receives her second dose of the COVID-19 vaccination in Managua.
There are 6,045 doctors in Nicaragua now compared to 2,715 in 2006
Even as a young girl, I knew I wanted to work in socio-economic development, though I wasn´t really sure where or with whom. I received a master’s degree at a prestigious university in the US since I figured I would need that to help open doors for getting a job. I thought about the Peace Corps, but they were looking for beekeepers in those days. Years later I thought about going back to get a Ph.D. but my favorite professor from grad school told me it would be a waste of time. And he was right, because living and working in Nicaragua for most of the last 41 years in different types of organizations has been the most incredible learning experience of my life.
Nicaragua has been creating, especially over the last 15 years, a model of equitable, green, pro poor economic and social development, and I have been a witness to this. It is a model that should be studied and shared throughout the world. The seeds of this model were planted in the first couple of years after the triumph of the Sandinista Revolution in July 1979 when there was relative peace and so much energy to start creating a new Nicaragua, especially in health, education and in the redistribution of assets.
There was the first national literacy campaign, a massive land reform, building of clinics and schools, promoting rural and urban cooperatives- and lots of other efforts. But the honeymoon did not last very long—US aggression intensified, to the point of exhaustion and then in 1990, 16 years and three presidents ago, most of the achievements were lost.
That changed with the elections of 2007, when 46% of Nicaraguans were still living below the poverty line. President Daniel Ortega finally had the chance of at least 6 years of peace to fulfill his dream of building a new Nicaragua, where the primary objective was wealth creation and poverty reduction through broadly shared economic growth. Key principles during those years and up to the present, included a commitment to sound macroeconomic and fiscal policy, as well as a healthy investment climate with private sector-led growth as a means to create national wealth and achieve poverty reduction and the reactivation of rural production, small and medium enterprises and targeted social programs – goals strongly aligned with the Millennium Goals for 2015.
I remember a meeting at a university in Managua when private sector and the government began to discuss a strategy to cooperate, a strategy which included labor unions in joint negotiations. I remember the government saying to the more endowed private sector that the state would not be giving them financing, they had their own sources, but that the government would work to create an effective business environment, with investments in energy, water, roads, etc. These were the times of 12 hour power cuts daily.
These strategies worked. Between 2007 and 2017, Nicaragua achieved incredible results in the reduction in poverty and extreme poverty, in economic growth, delivery of basic services in health, education, energy, water and sanitation, women and children´s rights, communication, foreign and local investment, land reform, agricultural development, and many other things. A new Nicaragua was emerging—especially after 2010 and when the country started to experience real socio-economic development.
The following examples speak for themselves:
Poverty was reduced from 48.3% to 24.9% and extreme poverty from 17.5% to 6.9%.
The country´s average growth rate between 2010 and 2017 was a booming 5.1%, one of the best in Latin America.
There were massive investments in basic infrastructure—you cannot reduce poverty without the basics. Today, Nicaragua is connected physically by the best highways in Central America, and in the top five in Latin America, according to the World Economic Forum. High speed internet also connects and unites the whole country.
Ninety-eight percent of the population now has electricity compared to 54% in 2006. At least 85% is generated from renewable sources, up from 26% in 2006.
In 2006, 65% of the population had access to potable water but that rose to 91.8% in 2018 and the projection for 2023 is 95%.
Significant resources were appropriated for the economic, social, technical and physical integration of the Caribbean Coast. Those investments greatly facilitated the emergency response of this past hurricane season. Getting emergency supplies in 8 hours or less by road before and after the hurricanes struck, instead of 3-4 days or longer, makes a big difference.
Sixty-six percent of the national budget goes for health and education, not military spending. This has meant that the community-based preventative health system, a heritage from the late 70s and the 80s has been incredibly strengthened. From 2007 to 2020, eight new hospitals were constructed, eight more are now under construction, and there are 6,045 doctors in the country now compared to 2,715 in 2006.
Affordable housing has also been a major priority in the last several years and has being strengthened now with a US$214 million loan approved for the construction of 23,500 houses all over the country. And that is only one of the housing projects being implemented at present.
Since 2007, the government of Nicaragua has also made significant investments in grass roots agricultural production and urban microcredit programs prioritizing women. With respect to food security, Nicaragua produces at least 90% of the food consumed in the country.
Nicaragua became a major world tourist attraction. In 2007, 749,000 tourists arrived in the country; by 2017 that number had risen to 1.78 million. Tourism has started to increase again, despite the US raising travel warnings to the maximum level four for US citizens. The excuse is the pandemic, although other Central American countries are at three or below despite higher levels of cases and deaths. Nicaragua was recently awarded the Safe Travels Seal of Approval from the World Travel and Tourism Council in relation to Covid 19 Biosafety Protocols for tourists.
Private investments continue, though perhaps not at the rate of a few years ago due to the current world health crisis. Last year, however, a major investment in building a natural gas plant on the site of one of the most important ports on the Pacific was announced and it will be functioning before the end of this year. This will lower the use of imported petroleum considerably and serve as a back up to the renewable grid fed by wind, sun, biomass and hydro.
So what are some of the factors that have led to these achievements in Nicaragua socio-economic development process?
Careful development planning and evaluation have been key. The government began to create a national development plan about a year after assuming power in 2007. Those plans have been evaluated and updated every five years. The latest for 2021 to 2026 was recently announced and will soon be presented.
In addition, the President has consistently appointed very competent and highly experienced government officials in top ministry posts. Nicaragua´s ministries in all sectors have been very respected by their counterparts in the multilateral development agencies, including the IMF. This has led to productive negotiations and discussions with the Ministry of Finance, but it is always clear who makes the decisions – the government. I will never forget the parting words of an IMF representative who was finalizing his mission in Nicaragua. He said something to the effect that he had learned that macro-economic stability management was not a thing of a right or left government, but of a responsible government, doing the best for its people.
Poverty reduction has also been promoted by direct support for low-income sectors including subsidies for public transportation for all and energy subsides under a certain usage, benefiting 80% of the population. Special half pensions are available for those senior citizens who were not able to pay into the social security system for the required 750 weeks required for a full pension at the retirement age of 60.
Transparency in the use of both national and international funds has also been a major factor. Multilateral agencies, such as the World Bank, the Inter-American Development Bank, the IMF and the Central American Economic Integration Bank have all affirmed at one time or another that their portfolios in Nicaragua have been very well and transparently managed.
I would now like to talk about what are the major threats to the continued economic development of Nicaragua, and to most other countries, around the world. The first is natural disasters, including pandemics.
After the devastation of Hurricane Mitch in October 1988, the Aleman government received huge flows of emergency aid, but economic growth dropped to less than one percent the following year. Even worse, very little preparation was put in place to mitigate the damage of Hurricane Mitch at the time—to the extent that President Aleman ignored the appeals of the mayor of a small town near Leon to evacuate her people and no help came. Several thousand people died.
Contrast that to the recent response of President Ortega´s government to last year’s two Category 5 hurricanes, ETA and IOTA, the most devastating to hit the country in 40 years. The difference was that the very efficient and tested national system of disaster prevention and mitigation, coordinated by a government agency called SINAPRED, was activated a week before the first hurricane hit. One hundred thousand emergency volunteers were mobilized, 160,000 people evacuated, 1195 shelters and 2,300 safe houses identified before the hurricanes hit and supplies of food, mattresses, medicine, water, etc. were sent days earlier. No deaths were attributed to ETA but 16 died in IOTA, all related to people who refused to leave their homes or went back against advice.
On November 24th, the Minister of Finance estimated that the economic damage from the two hurricanes was over US$742 million dollars, equivalent to 6.2 % of Nicaragua´s GDP. Two days later, Nicaragua received a check for $30.6 million dollars thanks to the planning competence of the government. Anticipating a worse than normal hurricane season, Nicaragua increased its tropical cyclone insurance coverage from the Caribbean Catastrophe Risk Insurance Facility and, as a result, the country received the much needed payout under the excess rainfall and tropical cyclone policies.
With respect to COVID-19, Nicaragua’s strategic response to the pandemic, using its own resources in the initial stages, has resulted in the lowest number of infections and deaths and the highest recovery rate in the region (and in the world) while keeping all of its borders open under rigorous safety protocols. Nicaragua´s response to the COVID-19 pandemic merits international recognition.
But probably the major factor of Nicaragua´s economic successes during the last 14 years has been that it has been a country at peace, internally and with its neighbors, and no one, except for the US, considers Nicaragua a serious threat to their national security.
Internally, the country has ensured high levels of citizen security for her 6.5 million people though the development of community policing. Nicaragua has the lowest homicide rate in Central America and efforts to neutralize organized crime, gangs, and drug cartels have been very successful
Internationally, Nicaragua is one of the few countries in the world that has regularly used the international justice system, mostly in border disputes with neighbors such as Honduras, Costa Rica, and Colombia. In all of those cases, Nicaragua accepted and implemented the judgement of the international court, unlike the United States, 36 years ago when Nicaragua sought justice because of US financing of the contra and direct US attacks on the port of Corinto. Nicaragua won the case but is still waiting to receive a US$17 billion indemnization from the US.
Years later, the most dangerous threat to continued growth and prosperity for Nicaragua was the violence of the attempted coup in the spring of 2018 which caused more economic damage than the emergencies which followed the pandemic and hurricanes. By end 2018, economic growth dropped to -4%, and at the end of 2019 it was still at a negative rate of 3.9 %. Towards the end of 2019 however, there were signs that things were starting to improve, but then came COVID-19 and the hurricanes. GDP growth was again negative for 2020, -2.3 %. Three years of negative growth.
But that is predicted to change this year. Exports and family remittances are rising, multilateral aid from several sources has been renewed and despite the effects of the pandemic and the hurricanes, there is a good possibility, according to the President of the Central Bank, that growth this year will be between 2.5 and 3.5%.
Like Nicaragua, the whole world urgently needs peace, security, stability and a new economic order which gives priority to life, health, and the fight against poverty. If the so called “developed” nations really want to learn about development, they should come to Nicaragua to see the lessons learned instead of using their so-called development assistance to finance “regime change.” Instead of strengthening illegal sanctions on the country and its leaders, they should be asking advice and learning from the experience of a country, whose people are NOT participating in the lengthy marches to the US via Mexico to escape the corruption, violence and abject poverty of those countries in the so-called northern triangle, which has been receiving substantial “development assistance” from the United States and others, with little results.
* (Coleen is an International development economist who has lived most of her professional life in Nicaragua since early 1980, working for different local and international NGOs as well as the World Bank in Nicaragua, Liberia and Ghana. She has also worked in Colombia and Chile.)