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Reducing Nicaragua’s Poverty Rate

Nicaragua’s Poverty Rate

Although Nicaragua remains one of the poorest countries in Central America,  the poverty rate has been cut in half in the last 10 years. Between 2005 and 2016, Nicaragua’s poverty rate fell from 48 percent to 25 percent. One reason for this dramatic reduction is industrialization. Over time, tourism and mining have become important to Nicaragua’s economic growth and stability.

According to the United Nations Industrial Development Organization, the key to reducing poverty is “to mobilize private and public investments […] around a long-term inclusive and sustainable industrialization plan for export-oriented and job-creating industrial capacity.” The following are three areas that both keep the U.N.’s policy recommendation in mind and hold promise in reducing Nicaragua’s poverty rate.

The Impact of Tourism

Tourism is the second largest industry in Nicaragua and has grown significantly since the Nicaraguan Revolution in the 1980s. For the first time in Nicaraguan history, there were more than one million visits to the country in 2010. This is an 8 percent increase from 2009. The tourism industry is currently thriving and provides revenue to small businesses. Additionally, it provides income to poor Nicaraguans in rural areas.

Tropical islands and volcanoes, such as the Mombacho volcano and the Corn Islands, are two popular destinations that attract tourists from the U.S., Europe and Central and South America. In 2010, gross income from foreign tourism was approximately $360 million. This is a $15 million increase in gross income from the previous year.

Mining Sparks Economic Growth

Alongside tourism, there has also been an increase in gold mining production. Between 2006 and 2016, production has gone from more than 109,000 ounces to 267,000. The results are even greater for silver mining, which increased from 94,000 ounces in 2005 to almost 682,000 in 2016. Mining is steadily growing to become one of Nicaragua’s driving economic forces.

Gold, beef and coffee are the country’s top three exports. Gold production has doubled and is emerging as an important source of income to the Nicaraguan government and their citizens. For each dollar earned from mining, $.66 cents go to taxes, remuneration and acquisition of goods and services. This revenue can aid in investing in better farming equipment for poor farmers and creating jobs through emerging industries like mining.

Agricultural Advances Combat Nicaragua’s Poverty Rate

Nicaragua still remains an agriculture-dependent economy. About 50 percent of its exports come from textiles and the agriculture industry. Bananas, cotton, sugarcane, rice and tobacco are some of Nicaragua’s other exports. However, Nicaragua’s poverty rate remains high, especially in rural areas where extreme poverty is heavily concentrated.

Many in the agriculture industry are migrants who harvest crops for half the year and search for other work during the other half. By investing in farm equipment and technology, farmers of smaller plots have a chance to increase their income beyond than $2 a day.

An example of increasing crop quality and yields is shown through conservation tillage, which is transgenic insect control. This system decreases erosion, increases organic matter in soil and conserves soil moisture. Additionally, marker-assisted breeding and biotechnology traits are new developments that have been shown to increase yields and improve traits, such as grain moisture in corn.

Other traits include providing resistance to corn rootworm and borers. Lastly, diversification is another way to help those in the agriculture industry. If crop prices are unfavorable, another crop’s production would offset the negative effect of those prices.

There are several ways to reduce Nicaragua’s poverty rate. A combination of improvements in quality and quantity alongside the diversification of crops can help increase income to those in poverty.

– Lucas Schmidt
Photo: Flickr

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Poverty in Nicaragua: Causes and Progress

Poverty in Nicaragua: Causes and Progress
Nicaragua is the poorest country in Central America. Rural poverty is a large portion of all poverty in Nicaragua. With a total population 6 million, 1.5 million of the rural populations are impoverished. Many factors contribute to the high rate of poverty, including political instability, natural disasters and lack of education. However, the government is implementing changes to improve the lives of impoverished Nicaraguans.

Political History

The Somoza family governed Nicaragua from 1930-1979. During this time, the unequal distribution of wealth left the majority of Nicaraguans in poverty. The Somozas allowed foreign companies to use Nicaraguan land and labor to make a profit off of agricultural crops and resources. With little government regulation, companies were able to keep wages low and deny their employees benefits.

In 1980, the Sandinistas National Liberation Front replaced the Somoza family. That same year civil war broke out between the Sandinistas and the Contras, a U.S. backed anti-communist group. The U.S., along with other countries, withdrew foreign investment and aid as well as halted trade with Nicaragua because they perceived the Sandinista government as a Communist threat. This put a strain on the economy since Nicaragua’s economy depends on agricultural exports.

Finally, in 1990 the civil war ended with the election of Violeta Chamorro. However, Nicaragua would continue to endure high rates of poverty caused by years of revolution and war.

Costly Natural Disasters

Nicaragua constantly endures hurricanes, floods and earthquakes that leave many individuals destitute. The 1972 Nicaraguan earthquake killed between 3,000 and 7,000 people and left 250,000 homeless. Hurricane Mitch caused severe rainfall in Nicaragua which left 750,000 homeless. It destroyed schools, crops and livestock. The damages totaled to over a billion dollars.

In response to the destruction from these disasters, government agencies and organizations like the Nicaraguan Red Cross created educational campaigns to inform Nicaraguans on how to prepare for natural disasters. They also distributed pamphlets and emergency phone numbers.

Local communities are also making natural disaster preparation a priority. Teachers on the Caribbean Coast of Nicaragua, one of the poorest regions in the country, along with the Neighborhood Committee for Prevention, Mitigation and Disaster Response organized the School Safety Brigade. Children in the brigade are taught first aid, rescue and evacuation.

Education Reconsidered

Lack of education is also an issue in Nicaragua. Primary school is free and mandatory, but schools are often located far away from rural areas and are underfunded. The government only pays teacher salary, training and some school repairs. Therefore, school supplies and transportation become the parent’s responsibilities.

Often, children of poor families are removed from school and put to work or are forced to drop out because parents cannot afford the cost. According to the Education Policy Data Center, 37 percent of Nicaraguans ages 15-24 have not completed their primary education. Of that percentage, 28 percent live in rural areas.

To address educational issues, the Nicaraguan government created a plan that includes facilitating access to primary schools, especially to rural households, assuring completion of primary and secondary school and improving the quality of education. Funds from the U.S., European Union and the World Bank helped remodel schools and provide new textbooks and supplies.

Future of Nicaragua

Nicaragua has come a long way since the government of Somoza and the violent civil war. Nicaragua has shown promising improvements in the past few years specifically in addressing the problem of rural poverty such by increasing access and funding to schools so poor children can attend and helping citizens prepare for earthquakes and hurricanes that can potentially destroy farms. However, 29.6 percent of the population still lives under the national poverty line. Therefore, much still has to be done to minimize poverty in Nicaragua.

– Karla Umanzor

Photo: Flickr

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Poverty in Nicaragua

poverty in nicaragua
Nicaragua is one of the poorest countries in Latin America, second only to Haiti. Most of the poverty in Nicaragua exists rurally (more than 80 percent,) but there are also very impoverished neighborhoods in the capital of Managua.  In fact, 43 percent of the Nicaraguan population lives in rural areas and 68 percent of them are trying to survive off just over $1 per day. Overall, 46.2 percent of the population lives below the poverty line.

 

Implications of Poverty in Nicaragua

 

The poverty in Nicaragua has caused extremely poor health conditions. HIV and AIDS have been a big issue; there have also been frequent reports of violence against women. Many organizations have been working to prevent the spread of HIV and AIDS and provide support for those with it, to empower women in their fight for freedom from violence and to empower the youth to encourage them to change their society.

Over the last 40 years, there has been extreme inequality and the country has had to overcome a cruel dictatorship, a gruesome civil war and multiple natural disasters. Another big problem is that the central government has historically marginalized the areas with large populations of indigenous people. The gross domestic product (GDP) per capita has decreased to only one-third of what it was in 1977 because of the combined impact of continued civil strife, trade embargos, unsuitable macroeconomic policies and institutional changes that are leading toward an even and more centrally-controlled economy.

Unemployment across the entire country is at 12 percent, but among the poor rural families, it is over 20 percent, so many rural families are migrating to other countries or urban areas within Nicaragua to find work. Remittances are vital sources of income for one in every five families and account for 20 percent of the country’s GDP.

Fortunately, the Nicaraguan economy has been growing substantially and has recently received lots of attention, having grown 30 percent since 2006, when the Sandinistas came back into power. Also, the GDP per capita has increased from $1,239 to $1,582 in the past year alone. Also, the Nicaraguan government has signed a lucrative memorandum of understanding with a telecommunications company from China to fund and build an inter-oceanic canal that is said to rival the Panama Canal.

Nicaragua is presently importing oil from Venezuela at solidarity rates, so Nicaragua pays extremely low prices up front for the first half of the oil and then pays low-interest loans over time for the rest. The Central Bank has said that macro-business development and social programs are funded by 62 percent of the Nicaraguan oil revenue.

Because of all of this news in the last five years,  extreme poverty (measured by a familial income of less than $1.25 per day) in Nicaragua has fallen from 11.2 percent to 5.5 percent. In 2011, Nicaragua was reported to have an economic growth of 5.1 percent, which was the highest in Central America.  Despite all of this good news, a considerable amount of work still needs to be done before it can fully eradicate poverty.

– Kenneth W. Kliesner

Sources: World Bank, Rural Poverty Portal, Health Poverty Action, The Tico Times
Photo: Pacific Lots