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Nicaraguan Economy
A press release issued on June 23, by the International Monetary Fund says Nicaragua’s economy is currently stable, however, “there are growing challenges from a deteriorating global outlook, notably rising prices of oil and other commodities.”
During a 12 day mission to review progress of the Poverty Reduction and Growth Facility Arrangement (PRGF), mission lead Luis Cubeddu met with government authorities and several other groups.
The press release states, “There has also been significant progress in the implementation of the structural reform agenda” Presumably referring to a new law approved by the National Assembly deterring the illegal consumption of electricity.
Various other subjects were discussed and Cubeddu states that talks will continue, “…to resolve outstanding isssues.” When resolved, “documents for completion of the first review under the PRGF arrangement will be presented to the IMF Board for its consideration.”
Ortega’s willingness to continue dialogue with the IMF may been seen as a small positive for Investors shaken by recent headlines out of Nicaragua. Considering Ortega’s developing dependence on Chavez and Ahmadinejad, two of the wackiest demagogues around, the IMF seems almost trustworthy.
Nicaragua’s Coastal Law
Investors in ocean front property in Nicaragua might need a pair of binoculars to see the surf, if the upcoming coastal law ends up reflecting the current property title suspensions.
Since 1937, Presidents, Somoza, Ortega (the Marxist one), Chammora, Aleman, Bolanos and now Ortega again, have all had their land reform agendas that have resulted in a hodgepodge of legal ambiguity. Throw in years of squatter’s rights, and Daniel Ortega was correct to announce that his administration would try and sort out the previous potpourri of property laws and create some definitive and reliable statutes. Statutes that international investors were hoping they could rely on to help build the future of tourism and retirement property in Nicaragua.
In an effort to correct the problem however, the administrations’ actions could be the death knell for investors in Nicaragua.
One of the most important issues that the pending new Coastal Law will establish, is how close to the shore (of any body of water) developers can build.
According to a recent article in the Miami Herald,
“In a series of memorandums sent out earlier this year, Attorney General Hernan Estrada ordered a suspension of all property titles within 2,624 feet of any body of water.”
That’s about 800 meters or half of a mile inland from the shoreline. In contrast, the previous restriction created 30 meters or about 96 feet of public beach.
The problem is that most of the ocean front property that has been sold or is currently on the market occupies land within that half-mile. The vast majority of these holding are owned by U.S. investors and are somewhere in a pre-construction stage. This means that if the Ortega administration so desired, and implemented the current suspension, it could effectively block any construction on beach front property within that distance. And that, has a lot of people worried.
Investors who have bought ocean front property in Nicaragua are cautiously hopeful that the new coastal law will be growth positive and reject any “confiscatory” implications. For now, we’ll just have to wait and see.
World Bank & Nicaragua Water/Small Business Funding
The World Bank’s board of Directors announced last week that it had approved “a zero-interest credit for $20 million to support the government of Nicaragua to improve water and sanitation services in rural areas.” An additional $20 million in zero-interest credit will go “to enhance the competitiveness of micro, small, and medium enterprises (MSMEs) and the business climate that affects those firms.”
According to the World Bank Press Release on June 12, 2008, the money earmarked for the development of the water and sanitation infrastructure is focused on improving the access to water in rural and indigenous communities.
The other $20 million for the MSMEs will be “implemented over five years and improve the quality and affordability of services to MSMESs through four components:
- Improvements to the business and investment climate for MSMEs.
- Matching grants for MSMEs to support, inter alia innovations, environmental improvements, and forward and backward linkages.
- Innovative financial services such as a plot partial credit risk guarantee system for MSMEs in coordination with regulated financial institutions.
- Improve strategic, technical and coordination abilities of MIFIC in the field of competitiveness… The primary focus of the projects’ interventions will be on urban MSMEs.”
“Both $20 million zero-interest credits funded by the International Development Association have a reimbursement period of 40 years with a 10-year grace period.”
If the credits are appropriately applied, this is good news for rural communities and small and medium businesses in Nicaragua that desperately need infrastructure assistance.
This is also encouraging news for investors in Nicaragua that rely on the govenments’ involvement to create a stable and reliable economic environment.
With his domestic popularity in decline, President Daniel Ortega should welcome the news too, and view this as a vote of confidence from the World Bank and the international community to continue the policy of opening Nicaragua to direct investment.
Daniel Ortega continues to butt heads with big investors in Nicaragua. This week Ortega’s Sandinista government slapped a lien on the country’s only all inclusive hotel. The Spanish owned Hotel Barcelo Montelimar considered by many as the finest hotel in Nicaragua, says it’s being “harassed” by the Nicaraguan government.
The government claims the owners owe back taxes and that the 1993 purchase price of 3 million dollars for the luxury hotel was “ridiculous.” They may have a point, albeit sour grapes. According the hotel’s web site, “The Barcelo Montelimar Beach Resort and Casino, a five-star Nicaraguan jewel is nestled amid the lush tropical rainforests on the glittering coast of the Pacific Ocean. This magnificent beachfront resort in Playa Montelimar boasts four kilometers of sandy shoreline, 293 guest accommodations, and the largest swimming pool in South America.” Sounds like someone got a killer deal.
The point being made in this week’s headlines is that the sanctity of Nicaragua’s “rule of law” and “judicial security” are being exposed by the government’s actions. On the investor’s side I can see their point. The owners of the hotel bought the property in 1993 when the country was still reeling from the Sandinista/Contra conflict. Back then, only those with a long-term vision and the deep pockets to back it up would even consider investing in Nicaragua’s unripe fruit. Consequently they bought at the right time and most likely weathered years of negative cash flow. Now that the hotel is presumably prosperous and Ortega is desperate for public approval and money he feels justified to challenge the legality of the Barcelo deal.
The Hotel Barcelo’s legal representation are scheduled to appear at a hearing this week at the National Assembly’s Tourist Commission. The results of this meeting and the subsequent decisions made by the government in the case could be a telling factor how other investors in Nicaragua should view the permanence of their speculation.
Nicaragua Investment
Investing in real estate in Nicaragua at this point is speculative. No one is getting rich and probably won’t for a while. Today Nicaragua is more of a lifestyle investment, or an educated long term speculation. I say educated, because there are two solid facts, Baby Boomers are getting older, richer, and are buying second homes, and China, Russia, and India are producing a new and vacation eager middle class. Both groups are, and will continue to look for their best options in fulfilling their desires. Development in Nicaragua is and will continue to happen because there is a market for competitively priced real estate in one of the most beautiful destinations in the world, (see Costa Rica, Panama, Mexico).
Like I and others have written, because it is underdeveloped, Nicaragua’s potential is what makes it so attractive to investors. Its pristine Pacific Coast, the diving off of the Corn Islands on the Atlantic Coast, and its historical treasures Granada and Leon, are just a few of the highlights ready for growth in this beautiful and proud country. Geographically, it’s a short plane ride away from the U.S., and there is enough existing infrastructure to access these areas with little effort.
Recently, I have posted about headlines regarding Nicaragua’s political and economic situation cautioning investors to be aware of the tumultuous atmosphere there. I think it is important for potential investors to know what’s going on, that’s what this blog is about. For example recently I’ve written about the many social issues that threaten the stability of the country, their leader’s volatile history, and that he is currently courting allies that are polarizing to say the least. With that said, Ortega is trying to open up the country for investors with the abilities he has, and, there are many (including the press) in Nicaragua who would benefit from seeing Ortega fail.
There is no denying Nicaragua’s prices are attractive to investors. But If you’re looking to put your life-long savings in an ocean front condo and expect immediate rental income to cover the investment costs, you might look elsewhere for the short-term.
Nicaragua is ready for investment input if you have time, there is a vacuum waiting to be filled and it will happen. The only question, is investing in Nicaragua’s future right for you?
The Price of Oil
Francisco Aguirre, president of the National Assembly’s Economic, Production and Budget Committee, recently said “ Nicaragua could be heading for its worst economic depression in 70 years.” according to a recent article in the NicaTimes reported by Tim Rogers.
Citing terms such as, “grave, grim, tailspin, very, very critical, tragedy, and nightmare the article paints a portrait of Daniel Ortega as a president that is unwilling, or worse, unable to remedy Nicaragua’s growing economic decline.
Daniel Ortega and Iran
According to several sources, Daniel Ortega will be heading to Iran for meetings with President Mahmoud Ahmadinejad, to discuss debt forgiveness and Iran’s continued financial support. It is no surprise that Ortega’s developing alliance with Iran is prompting a “wait and see” attitude from the U.S. government and consequently sidelining investors’ confidence in Nicaraguan real estate.
Ortega and FARQ
Another dubious ally that Daniel Ortega seems to be cultivating is his association with FARQ, or, the Armed Revolutionary Forces of Columbia. Recent allegations that Ortega is sponsoring two terrorists and that he had supplied their guerrilla group with weapons, has many worried that Ortega’s past affiliations with the leftist violence is still an issue.
Nicaragua’s Food Crisis
Anti-Hunger demonstrations are capturing the headlines as reportedly over a thousand took part in the rally calling for a comprehensive program to deal with Nicaragua’s growing food shortage problem. On Sunday June 1st, participants in Matagalpa marched to bring attention to issue that has been worsened by the recent skyrocketing price of fuel.
Ortega’s Antagonism
Understandably Daniel Ortega is a polarizing figure. Animosity between the Sandinistas and other more conservative parties has been gaining traction since his election. However, Ortega must realize that his actions are not solely alienating the opposition, they now also threaten international investors pouring millions of dollars in to the country. Recent statements made by Ortega have only served to escalate the tension between these groups. Referring to western financial aid, Ortega recently rebuked, “the colonialist mentality” of countries that offer “conditional aid. There is no doubt that “loans” from the IMF and the World Bank and their Structural Adjustment Programs have hurt Nicaragua’s growth in the past. It is also arguably not constructive for Ortega to alienate foreign investors who are helping to develop Nicaragua’s principal future market, tourism.
There is a lot to consider right now when it comes to investing in Nicaragua. This week’s news out of Nicaragua regarding Daniel Ortega’s alleged involvement with the Armed Revolutionary Forces of Columbia (Farc) is disturbing, considering his past association with violence. As a reminder, Farc is considered by the United States and the European Union as an international terrorist group. The full story could cause investors to pause when considering the political stability of Nicaragua’s current administration and its relationship with the United States and Europe.
On the bright side, for investors whom are aware of the tremendous investment potential in Nicaragua and have not yet made the decision to buy, these headline merely extend the window to get involved at earlier prices. Existing developments need to have a stable political backdrop to sell their product and ongoing negative headlines out of Managua are not helping. This could give the investor a stronger playing hand at the negotiating table.
Whether you are already invested or are taking a wait-and-see stance, Nicaragua is still an investor darling at this point due to its substantial underdeveloped potential. Compared to its regional neighbors, real estate investments in Nicaragua may require a more long-term vision, but the potential is still worth the due diligence.
Ethanol as Biofuel
Today’s production of corn in the US destined to become ethanol accounts for over 25 percent of the traditional food/feed crop. That shift over the last two years has caused a dangerous increase in the price of corn, negatively impacting the growing but still fragile economy in Nicaragua.
Food As Fuel
Since corn is now seen an alternative fuel source, the agricultural commodity is now economically linked to the price of crude oil.
- Barrel price in 2006 - $66.00
- Barrel price today - $129.00
- Projected year end price - $200.00
- Bushel of Corn in 2006 - $2.00
- Bushel of Corn Today - $6.00
- Projected year end price - $8.62
Due in part to the negative economic impact from U.S. subsidized corn imports and recent soaring prices in gasoline, Nicaragua is facing some serious food shortage problems.
How does this effect the poor in Nicaragua? There are two results that are predictable, the first is social unrest. The World Bank estimates 33 countries face social unrest because of soaring food and energy prices. As Bob Marley once sang, “A hungry mob is an angry mob.”
The other expected consequence is increased emigration to the U.S.. According to a report today on China Radio International,
- “63.3 percent of Nicaraguans are inclined to seek jobs in other countries, up from 55.5 percent at the end of 2007…”
- Of those intending to seek jobs abroad, 44.5 percent prefer the United States.
- About 42 percent of respondents said the main reason for seeking jobs abroad was the lack of jobs domestically, while 23.6 percent cited poverty as the cause and 17.1 percent said the rise in food prices was triggering the exodus.
Food that should feed people is being converted to satiate the worlds hunger for gasoline, that’s just wrong.
Hey I Know!
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According to several news reports the planned month long national transportation strike is taking its toll on the capital city. Sources report that “…travel in the city [Managua] is both risky and tense…” with taxi drivers refusing to enter parts of the city where blockades are set up to disrupt traffic. A bus driver was killed on Wednesday in northern Nicaragua but reportedly there was no conection to the strike.
The strike which started on May 5th is expected to last for 30 days. Transportation organizations including taxis, bus lines, and the trucking industry are demanding a reduction of fuel costs and a freeze on future prices.
The U.S. Embassy in Managua recommends U.S. citizens buy fuel, food, and water to last for at least a week. It also advised that travelers avoid driving through barricades.
If you have to travel in Nicaragua it’s a good idea to review some travel safety tips and be aware of the tension on the specific routes to your intended destination.
World-Wide Food Crisis
Most headlines out of Nicaragua this week are regarding the food crisis. There are many reasons why there is a world-wide food crisis right now, and they are mostly political – but I won’t open that can of worms in this post. Memo to self: must remember this blog is about investment. The subject does remind me of a comment I heard recently. It went, “politics is about two things – the first is money, and…I can’t remember the second.”
Food Crisis In Nicaragua
I feel strongly that investing in foreign real estate ties an investor to that land in ways other than those that are self-serving. Fundamentally, that tie involves an ability to respond to the needs of the people on that land. That response-ability is an insurance that the investment made, like the people of that country will prosper. One won’t happen without the other. Investment supports people, people make investments grow, and in Nicaragua, both have a lot of room to grow.
Food Crisis Action Plan
One way you can insure that your investment in Nicaraguan real estate stays healthy, is to do your part and insure the people of Nicaragua stay healthy too. Here’s a short list of quality organizations to contact.
If you are considering investing in real estate in Nicaragua consider the “Community RE Fund Program” set up by Coldwell Banker in Nicaragua. According to their web site, “The REfund model encourages every participant in a real estate transaction to contribute funds at the time of closing. Investing that creates value in society and the environment while at the same time being financially profitable.” (read more)
Affiliated with the RE Fund program in Nicaragua, Dos Manos is a collection of non-profit organizations that focuses on children’s needs and education.
Unlike politics, investing in a country is about more than just one thing, today’s headlines make it easy to remember what it is. Do what you can to help with the food crisis in Nicaragua.
U.S. Economy - A Sinking Ship?
The first day of May is celebrated by many around the world as the day to acknowledge laborers and their contribution to the economy. Unfortunately, there’s not much to celebrate when it comes to economic news in the U.S. These three headlines sum up the news for the first day of May 2008.
NEW YORK (Reuters) - U.S. companies’ planned layoffs jumped 68 percent in April from the prior month to the highest since September 2006, pointing to further deterioration in the labor market, a report showed on Thursday.
AP Economics - The number of newly laid off workers filing claims for unemployment benefits soared last week. The economy is expected to lose 70,000 jobs, the fourth straight month of job losses.
NuWire Investor - America Losing Faith in Economy: Confidence Hits 5-Year Low.
I don’t know about you, but I’m really needing some good news right about now. I mean C’MON! It’s Spring time for crying out loud. I thought April showers brought May flowers. It looks like April’s bad news has turned into an economic down pour that is not letting up any time soon. Well, if I’m going to get wet, I might as well be in the sunshine.
Hey - I know, lets take a look at some economic news from Nicaragua.
- Nicaragua sees Foreign Direct Investment Up.
- In 2007 Nicaragua’s export sector grew 16.5 per cent to $1.26 billion.
- Exports overtake remittances and foreign aid as economic drivers.
- CAFTA driving agricultural productivity, expected to exceed $2 billion by 2010
- Great Opportunity for Smart Real Estate Buyers
- Real Estate and Business Opportunities
May Day might just be the time to see what opportunities are waiting to blossom for you in Nicaragua.
Nicaragua Real Estate
Why invest in Nicaragua real estate, especially now? Here in the U.S. gas prices are crowding four dollars a gallon, the housing market is stalled in many key areas, and fear of a prolonged recession is becoming a reality. The US economy is definitely rattled. In a recent New Yorker article by Ian Buruma titled After America the author puts into words the fears on a lot of investors’ minds, he writes regarding this year’s meeting of world leaders in Davos, Switzerland,
“The first time I visited this august assemblage, around the turn of the century, the received opinion was that the United States was so far ahead of the rest of the world that no one could ever catch up. This year in Davos, America’s fall was on everyone’s lips.”
What “fall” means is up for speculation. However, it could be that now is the perfect time for US investors to seek investments that have future global potential for growth. While real estate investment in the U.S. is a can of worms, real estate investment in Nicaragua is continuing to grow. In a recent post, Mike Cobb, CEO of Gran Pacifica and Barry Dufresne, President of Stealth Financial Services on their Nicaraguan real estate investment new letter write,
“Although the flow from the US has slowed down considerably, investments from other nations in the region, Europe and Asia continue to be strong and new ventures are springing up around the country.”
The development of millions of new middle class wage earners in countries such as India, China, and Russia, is and will create immense amounts of disposable income. Some of this new income will be earmarked for tropical vacations. Many investors see the potential of Nicaragua’s pristine coasts as poised to become major new tropical tourist destinations. Now is not the time for savvy U.S. investors to get caught up in domestic fear by thinking inside the box, perhaps it’s time to think about investing outside the country, in Nicaragua.
Ortega and the Opposition Media
Recent headlines in Nicaragua suggest there are rising tensions between Daniel Ortega and the “opposition” media due to upcoming regional elections. It is interesting that the party that lost the last election in Nicaragua is called the opposition. If that term were to be used to describe the Democratic Party in the U.S. over the last 8 years, the label would be considered a pejorative because it suggests opposites, like good and evil. Opposition, implies that there is no possibility of reconciliation. Which leads to the question, what party would benefit the most by embracing an unyielding stance.
Nicaragua and Foreign Investment
The opposition media represents Nicaragua’s conservative contingency of well entrenched business and landowners to whom economic change means competition. It’s not surprising that the conservative aristocracy of Nicaragua are skeptical of Ortega’s moves to organize campesinos and his stated commitment to open the country to foreign investment. However, as reported in a recent blog, Nicaragua’s export sector grew 16.5 per cent to $1.26 billion over taking remittances and foreign aid as the country’s primary economic driver in 2007. In fact, CAFTA driven agricultural productivity is expected to exceed $2 billion by 2010. To foreign investors and the populace of Nicaragua these are encouraging statistics. For the opposition the stats may represent something different - a business model that is too inclusive. Incidentally, until 2007, remittance money from the U.S. was the largest source of income for many wealthy business owners in Nicaragua.
Tropical Breeze or Hot Air
As a foreign investor, one has to differentiate between the upcoming media battle between the current administration and the opposition, and something that may be more sinister. The opposition (read losing party) uses its media for one purpose. Their goal is to needle, antagonize, undermine, say anything, and do everything in its power to discredit the Ortega administration regardless how effective his policies are. And many times that kind of media works, remember the wacko swift boat tactics used against John Kerry in the 2004 U.S. elections.
The conservative opposition party lost in the last election and they represent the old guard of Nicaraguan power. It’s no wonder they’re butting heads with the current administration who have taken some controversial measures to stifle the opposition’s media hyperbole. So how serious is Ortega’s reported media interference to those who are or are thinking about, or are investing in Nicaragua real estate? Most sources say that the rising tensions between the current administration and the conservative party will have no long term consequences. Ortega is too smart to impose any kind of real censorship on the media. It’s too risky for his credibility with the foreign investors. And the “opposition” can’t cry wolf too loud, after all, the country’s in better shape than it’s been in years.
Take Home
To Daniel Ortega - It is important for the government of Nicaragua to realize that the mere suggestion of controlling the media makes foreign investors nervous, especially during elections.
To Nicaragua’s Conservative party and its Media - It is important to realize that foreign investors, indeed nobody takes a dog that barks at the breeze seriously.
To Nicaragua’s Investors - a) It is important to keep an eye on these municipal elections and the issue of free speech. b) Remember that Nicaragua is fundamentally moving forward and there are still plenty of investments to be made.
Agriculture Driving Nicaragua’s Exports
Just as small businesses are the engine that drive the U.S. economy, it’s no surprise that small businesses are leading Nicaragua’s economic recovery. Recently, Blake Schmidt writing for the Nica Times interviewed Fransisco Mayorga one of the architects of Nicaragua’s transition economy. The article points out that the economy of Nicaragua is shifting from remittances and foreign aid, to one that is export based. And, those exports are coming from small agricultural businesses.
Nica Numbers
- In 2007 Nicaragua’s export sector grew 16.5 per cent to $1.26 billion.
- Exports overtake remittances and foreign aid as economic drivers.
- CAFTA driving agricultural productivity, expected to exceed $2 billion by 2010
“Power-Sharing Cooperatives”
President Ortega’s policy to “organize Nicaragua’s poorest campesinos into agricultural cooperatives - [is] a move that he [Mayorga] says will help small producers get their share of the country’s booming export sector.” Mayorga says about Ortega, “They want to promote a model in which cooperatives and corporations coexist and compete.” Not unlike the Grange Movement in the late 1800s rural U.S., (which led farmers to demand stable prices and fair wages for their efforts) Ortega is implementing a more organized system of production in rural Nicaragua. These cooperatives will help small businesses compete with corporations that often times return little to the local economy. In the near-term, these cooperative will help increase profits for small and medium-sized businesses which will help circulate more money in their regions.
It’s not a stretch to see that more profit and better organization at the local level will make Nicaragua more powerful competitor with its neighbors, not only with its exports and its economy, but also with the strength of its democracy. And for the investor interested in Nicaragua, that’s big news.
Check out this week’s news about Nicaraguan Coffee exports.
Little Corn Island - Que Rico
If you are looking for an adventurous new destination for world class diving or fishing Nicaragua’s Little Corn Island might be the spot. If you’ve dived Roatan and Utila islands off Honduras or Cano Island off Costa Rica, and are looking for a more “tranquil” island experience, Little Corn Island is both isolated and oh so unaffected.
Island in the Mainstream - Not!
That isolation means it’s more difficult to get to and most likely, not have the amenities you’ll find at the more mainstream islands, but, it also mean that Little Corn doesn’t have the tourists, traffic, or troubles either. In a humorous forewarning to those considering visiting Little Corn Island, local Hotel “Casa Iguana” has a test list for the,
Top 10 Reasons We Might Not Want You to Visit Casa Iguana
1. Your favorite travel destination thus far in your life has been Nassau, Bahamas.
2. You assume hotel owners have degrees in meteorology.
3. You are unable to distinguish between a mild case of diarrhea and the Ebola virus.
4. Until recently you thought Nicaragua was an African nation.
5. Terms such as “Type A” “anal retentive” and “A.D.D.” are things you have discussed with your analyst.
6. You actually HAVE an analyst.
7. Upon arriving at Casa Iguana one of your first questions will be: “Hey, where’s a guy go around here for a good-time (wink-wink)?”
8. The last time you tried something new and different to eat was when your mother bribed you with ice-cream.
9. Small boats, small planes and BIG seas give you a long lasting case of the heebie-jeebies.
10. Three words: “picky, picky, picky.”
Sounds like a dare to me. I’ll ask my analyst.
Nine miles from Big Corn Island, Little Corn Island hosts several places to stay, from the rustic to more traditional. As Casa Iguana points out, visitors should keep in mind that Little Corn is a tiny island, in a really remote part of a country that is still very underdeveloped. It will be an adventure just getting there.
Diving Little Corn Island
Once you arrive though, there are several diving guides including www.divelittlecorn.com. a “PADI”certified shop. When you’re out of the water, most of the hotels have guides that will take you fishing, or direct you to horse back riding or the hiking trails. The food is generally fresh fish, lobster and conch that is caught daily, and fruit and vegetables that are grown on the island.
Unlike Roatan, and other well exposed Caribbean diving destinations that can be less than receptive, Little Corn Island is a burgeoning business community that is eager to host international travelers looking to snorkel or scuba dive or just kick back and untie some city knots. In fact, while visiting Little Corn Island, you might spend as much time diving into a hammock as you will on the reefs.
There have been several stories written, and lots of blog action about the recent riots in Puerto Cabezas on Nicaragua’s Atlantic coast. The question of the motive for the government to cancel the election is valid and suggests that Ortega and Sandinista allies would lose the elections if they went forward.
Postponing elections due to hurricane damage seems random and could be an excuse to hold on to power in the region. But for what reason? How valuable is the northern Atlantic coast to the Ortega administration? Considering the recent go-ahead for oil exploration penned by the administration and MKJ Xploration, Puerto Cabeza could literally be the future well-head of revenue for the entire country. And that, makes it very valuable indeed.
Nicaragua could start drilling for oil off its Atlantic coast within four years, according to Prensa Latina. “Nicaragua legalized oil exploration in its Caribbean waters Wednesday and it will start exploiting a resource that might turn Nicaragua into a Central American exporter…”
Two concessions contracts were signed with MKJ Xploration, a U.S. company based in New Orleans. “U.S. enterprise MKJ president Eric Conrad said 48 precent of the extracted crude will remain in Nicaragua.” Which might suggest that Nicaragua could build a refinery?
“Signed by General Prosecutor Hernan Estrada, the agreement opens doors to a project that may produce incomes up to 20 billion dollars” according to the article.
This is good news for Nicaragua’s economy, its citizens and for international investors. Currently, Nicaragua imports a costly 80 to 100 percent of its oil and gas to meet the country’s energy demands. The signing of this agreement clears the way for creating desperately needed revenue for the struggling nation as well as energy independence from Venezuela and the Chavez administration.
Read this for some background on, Oil in Nicaragua.
Development In Nicaragua: Civic Debates Mark Positive Sign
Development in Nicaragua is progressing rapidly, and, there are signs that reflect that growth. Yet, reservations about Daniel Ortega’s long term political ambition have led to trepidation for some investors looking at the future of Nicaragua. If you look closely at stories coming out of Managua, however, there are indicators that Ortega’s administration recognizes that a democratic approach is the ticket to economic gr.In a recent article, Jose Adan Silva writes about the conflict in Managua between the construction and real estate industry, and the future of the water supply. The article suggests that changes are on the horizon. Regardless which side you’re on, both sides are arguing for development.
Natural resource officials say that the 355 urban development projects that are under construction are excessively stressing the city’s water treatment infrastructure. City planners argue that, there needs to be a moratorium on building until suitable water treatment facilities are operating. The real estate and construction industry argue that, hundreds of millions of dollars and thousands of jobs are being infused into their city which is helping to buoy Managua out of poverty.
For the investor, the most positive note in Silva’s article comes from lawmaker, Agustin Anaya “an ally of the leftest governing Sandinista Front, who said, “the ban on housing construction is ‘healthy and commendable,’ but alternatives for the private investment projects affected by the measure should be explored.” Anaya goes on to say, “We should not be so drastic. Alternative solutions that seek to preserve water sources and that do not affect the country’s economic growth should be sought.”
Development in Nicaragua real estate, or Managua’s infrastructure, both sides have valid arguments. Each side believes their argument should be the priority. For the investor, both real estate and infrastructure have potential, because they are both signs that Nicaragua is moving in the right direction.
