Monday, June 6, 2011

Passport Series: Nicaragua: Part 1: Country Background

Each month, the Kiva Blog profiles a country we work in through a three-part segment call the Passport Series. This month, we are taking a look into Nicaragua! Nicaragua has one of the most interesting histories in Central America as well as a complex and controversial political economy. Follow us throughout the month of June while we learn about the country, their microfinance sector, and finally narrow in on the life of a borrower.


Nicaragua’s name comes from the Nicarao indigenous tribe that resided around Lake Nicaragua in the 1400s and 1500s. In the mid-16th century, Spanish settlers dominated this region; however, their power was lost when Nicaragua gained independence from Spain in 1821. Much of Nicaragua's current politico-economic situation can be accredited to more recent historical events. In 1936, the Somoza dynasty began its dictatorial reign in Nicaragua, which lasted for more than 40 years. This hereditary dictatorship started with Anastasio Somoza, whose power was handed down to his sons after his assassination in 1956. In 1979, the leftist Sandinista National Liberation Front and anti-Somoza guerrilla movement overthrew the Somoza regime. This revolution of the Sandinistas over the Somoza family was a very violent time, which led to a ten-year civil war. The Contra War not only brought about the destruction of the Sandinista regime, but also the country's infrastructure and economy. Presently, Nicaragua is one of the poorest nations in the western hemisphere (after Haiti).

Shoe Shiner, Streets of Granada (Photo credit Joshua Rome)
Nicaragua is the largest country in Central America. It is located above Costa Rica and below Honduras, with the Pacific Ocean to the west and the Caribbean Sea to the east. Nicaragua has many coastal cities and San Juan del Sur is one of the most popular beach towns. Volcanoes are sporadically found among coastal plains along the Pacific Coast, leading to a mountainous central area and giving way to the coastal plains in the east. The prevalence of volcanoes, earthquakes, and hurricanes has led to destructive landslides, floods, and lava flows, which wiped out whole farms and buildings in the past. Nicaragua has a tropical climate with cooler weather in central mountainous region. It also has two large lakes, Lake Managua and Lake Nicaragua. The latter is the largest lake in Central America.
Landscape Granada, Nicaragua (Photo credit Alyssa McGarry)
Lake Managua (Photo Credit Alyssa McGarry)
Nicaragua is the second poorest country in Latin America. The country has a GDP of $17.34 billion and is expected to grow at a rate of 3% this year. Nicaragua’s economy strongly depends on exports of textiles and apparel as well as the cultivation of products in its agricultural sector, such as coffee, sugar, tobacco, peanuts, and bananas. In 2008, 45% of Nicaragua’s population is estimated to live below the poverty line and underemployment reached a rate of 46.5%. In 2009, only 52% of the population had access to improved sanitation facilities, and this statistic is elevated among rural communities.
Nicaragua’s external debt resulted in the country’s strong dependence on international economic assistance. To meet debt-financing obligations the country secured aid from the IMF. Between 2001 and 2003, Nicaragua received $195.5 million in HIPC interim assistance from multilaterals, including $22.2 million from IDA and $3.6 million from the IMF (IMF). Nicaragua was granted relief from more than 80 percent of its foreign debt under the Highly Indebted Poor Countries initiative (HIPC).
Trash Outside of the Entrance to San Juan Del Sur (Photo Credit Alyssa McGarry)
People and Culture
Granada, Nicaragua (Photo credit Alyssa McGarry)
Nicaragua is the least densely populated country in Central America, and one quarter of the country’s estimated 6 million population reside in the capital city Managua. Nicaragua’s capital is Managua but Granada is one of the most historical cities and represents a lot of colonial heritage through its architecture. Granada is full of vibrant colors and horse drawn carriages, accompanied by a cool lake breeze. The plaza is covered with locals selling a variety of goods including the typical Nicaraguan snack “quesillo”. Quesillos consist of mozzarella-like cheese, fresh sour cream and pickled onions all wrapped together in a tortilla – Yum!
Quesillo Cart, Granada Plaza (photo credit Alyssa McGarry)
The major languages spoken are Spanish and Miskito, while English and other indigenous languages are often spoken on the Caribbean coast. More than half of the population practices Catholicism, but the country has seen the rapid spread of other faiths. Nicaragua’s culture reflects a mixed Ibero-European heritage with indigenous ancestry. The eastern half of the country remains primarily indigenous and maintains native customs and traditions, while the Caribbean coast is home to a minority of Afro-Caribbean decedents. Nicaragua is home to many folk, music, and religious traditions that are represented by various festivals, parades, and parties. For example, the piñata is a longstanding tradition in Nicaragua and they are primarily used during holidays and birthdays. Below, children break open the piñata on New Years Eve!
Piñata New Years Eve Party (photo credit Alyssa McGarry)
Stay tuned this month to learn about the Microfinance in Nicaragua and hear stories from those directly involved in the industry. Kiva has several field partners in Nicaragua and we look forward to sharing exciting updates and stories! Lend to a borrower in Nicaragua today!