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Republic of Nicaragua

With a surface area of 129,494 km2, Nicaragua is the largest country in Central America. It has two coastlines, the Pacific Ocean to the west and the Caribbean Sea to the east. Nicaragua has a tropical climate on the coastal plains, and a cooler climate in the mountainous regions in the north. The Pacific coast is bordered by a chain of volcanoes, some of which are still active. Nicaragua has two substantial freshwater reserves: lakes Cocibolca and Xolotlan. The country lies in an active tectonic zone, making it vulnerable to earthquakes, with the Caribbean coast exposed to hurricanes.

The population of Nicaragua has topped six million and, owing to the country’s geographic profile, a substantial proportion of the inhabitants is concentrated in the Pacific region. 60 % of the population lives in urban areas; it is also very diverse, and over 50 % of inhabitants are aged under 24.

Nicaragua was colonised by Spain in 1524 and won independence in 1821. After forming part of the United Provinces of Central America, it became a sovereign republic in 1854. Its history was marked from the beginning by military interventions by the United States, especially due to the potential for building a canal between the two oceans. The country has also been troubled by lengthy military dictatorships; the last, dominated by the Somoza family, ended in July 1979 with the symbolic victory of the revolution led by the FSLN (Frente Sandinista de Liberación Nacional).

After 1979 Nicaragua was led by the FSLN and its leader Daniel Ortega. The country experienced a difficult period with a US embargo and the internal war with the “Contra” financed by the United States. The elections in 1990 were won by Violeta Chamorro and paved the way to gradual stabilisation with free elections and political alternation. After 15 years in opposition, the FSLN returned to power in 2006. The next presidential elections will be held in November 2016.

Nicaragua is one of the poorest countries in Central America with a GDP of USD 1,904 per inhabitant in 2014. Agriculture, livestock, forestry and fishing account for 15% of GDP, trade 14.5% and manufacturing 13%. Beef, coffee, gold, sugar and peanuts represent 59% of total exports. Tourism is also an important source of foreign currency and accounts for 17% of exports. Approximately 9% of GDP is contributed by emigrants sending money back to their families.

Public spending on education represents 2.8 % of GDP and on health 3.2%.

Furthermore, the economy of Nicaragua relies heavily on the informal sector, which employs 75% of the workforce, many of whom have not had the opportunity to finish the six years of compulsory primary education.

This is one of the reasons why the development cooperation work between Luxembourg and Nicaragua focuses on training, professional integration and the promising tourism sector. This policy makes it possible to develop training programmes with the assurance that they meet the needs of workers and businesses, and to strengthen economic activities linked to tourism, which can be considered a tool for local development (both in urban areas and rural regions).

There is a high incidence of poverty in Nicaragua (42.5% of the population were living under the poverty line in 2009) and there are still considerable inequalities (in 2010 the richest 20% of the population held 51% of the country’s revenues, whilst the poorest 20% held only 4.6%).

Working with a partner from China, Nicaragua recently embarked on a major project to construct a trans-oceanic canal that intends to rival the Panama Canal. However, the plans are arousing a great deal of controversy and opposition: whilst some view the scheme as an engine for the national economy, others see it as a threat to biodiversity and national sovereignty.

Nicaragua has been a partner country of the Luxembourg Development Cooperation since the 1990s, and a General Cooperation Agreement was signed in 2000. The first ICP was developed in 2003, which gradually led to more structured interventions. On signing the second ICP in 2007, training and vocational integration, tourism and health were identified as focal sectors, and remain so to this day.

The year 2014 saw new programmes being identified and the negotiation of an amendment that provides for the extension of ICP III over a three-year period to ensure the transition to a joint programming method with the European Union from 2018.

Evolution of activities in Nicaragua (in thousand EUR)

Distribution of the 2014 disbursements by sector

All projects in Nicaragua

Projects in preparation in Nicaragua

Project Code Title Sectors Indicative Budget
NIC/028Support to Tourism Sector ProgrammeLocal Development3,875,147 EUR