Guidance

Overseas business risk: Nicaragua

Updated 20 July 2023

1. Overview

At the heart of the Americas and bordered by 2 seas, Nicaragua, the largest nation in Central America, is home to a vast amount of natural resources, talented human capital, and abundant investment opportunities with geo-strategic advantages.

2. Politics

Nicaragua is a presidential representative democratic republic and is made up of 4 political branches including the executive branch, legislative branch, electoral branch and the judicial branch. The current government system follows the Constitution of 1987 which establishes the framework for the country’s political and legal system.

The President of Nicaragua, currently Daniel Ortega of the Sandinista National Liberation Front, serves as both the head of state and the head of government. Ortega has been re-elected three times: once in 1990, once in 2012 and finally once 2021, for a total of 26 years in office. The current Vice President of Nicaragua is Rosario Murillo, who is also Ortega’s wife.

Nicaragua has faced criticism from the international community for its handling of elections such as a lack of transparency and neutrality from the Supreme Electoral Council (CSE), restrictions and limitations faced by the opposition regarding their participation in the electoral process, and biased media. As stated by the EU Election Observation Mission, overall the electoral process failed to meet international standards for free, fair, and transparent elections.

Persistent problems include severe restrictions on freedom of expression and association, as well as political discrimination and persecution.

3. Economics

As of 2021, Nicaragua’s GDP was $11.97 billion and the general government gross debt as a percentage of GDP was 48.7%. The leading sectors include agriculture, forestry and fishing, manufacturing, and personal and business services. In 2020, Nicaraguan exports of goods and services totalled $4.4 billion, while imports of goods and services totalled $6.4 billion. As of 2021, Nicaragua’s unemployment rate was estimated to be around 5.5%.

Nicaragua has experienced considerable economic growth since 2009. In 2020, Nicaragua’s GDP growth rate was -2.2% due to the impact of the COVID-19 pandemic but in 2022, the Central Bank of Nicaragua reported a 2.6% growth in the third trimester that same year.

Economic growth in Nicaragua has been led by pro-business legislation and administrative procedures. In 2020, foreign direct investment in Nicaragua totaled $390 million. In recent years, Nicaragua has joined regional, multilateral, and bilateral agreements in an attempt to become an increasingly globalized country. The country is currently part of the Central American Common Market (MCCA) and has established free trade agreements with several countries, including the United States, Mexico, Dominican Republic, Panama, Chile, and the European Union. Nicaragua is also part of the UK-Central America Association Agreement.

4. Business and human rights

According to the 2021 Foreign and Commonwealth Office’s Human Rights and Democracy Report, the Nicaraguan government continued to restrict civic space, limit freedom of expression, and restrict access to justice. The report noted that there were significant limitations on political opposition, media, and civil society, as well as ongoing concerns about electoral integrity. The report also raised concerns about alleged human rights violations, including cases of torture, extrajudicial killings, and enforced disappearances.

The UK government urged the Nicaraguan authorities to take steps to respect and protect human rights and to ensure that all allegations of human rights violations are thoroughly investigated and prosecuted.

In September 2021, the International Labour Organization’s Convention on Domestic Workers remained ratified by Nicaragua but despite this, child labour remains a concern in Nicaragua with local organizations estimating over 400,000 children working though there have been no recent official reports on the matter. Also, concerns about freedom of expression and association persist, with reports of attacks on government critics, journalists, and civic society activists.

According to the 2021 World Bank’s Doing Business Index, Nicaragua’s ranking for ease of doing business improved to 119 out of 180 countries from 127 in 2011. In the Latin American and Caribbean region, the country ranks 8th out of 32 countries and 3rd in the Central American region, with a score of 63.1 out of 100.

5. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or Scottish Partnerships, to commit bribery anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. It does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

According to the most recent Corruption Perceptions Index released by Transparency International in January 2022, Nicaragua ranked 170 out of 180 countries and territories evaluated, with a score of 21 out of 100. In other words, Nicaragua is perceived as a highly corrupt country, with a lower score then it’s ranking in 2016.

6. Terrorism and security

Read the latest on terrorism and protective security in Nicaragua on FCDO’s travel advice for Nicaragua.

7. Commercial disputes

Nicaragua has engaged in several treaties for dispute resolution including the International Centre for Settlement of Investment Disputes (ICSID), the Multilateral Investment Guarantee Agency (MIGA), the Overseas Private Investment Corporation (OPIC), the United Nations Commission on International Trade Law (UNCITRAL), and the Inter-American Convention on International Commercial Arbitration.

In addition, Nicaragua has the Law on Conciliation and Arbitration (Law No. 540), which provides for the use of alternative methods to the judicial process to resolve commercial disputes. The law also establishes the National Conciliation and Arbitration Centre as the entity responsible for promoting and administering arbitration in the country.

According to the most recent data from the World Bank’s ‘Doing Business’ report, Nicaragua ranked 140 out of 190 countries in the ‘Enforcing Contracts’ category, indicating that the country has some room for improvement in terms of its legal and regulatory environment for resolving commercial disputes.

8. Intellectual property

Nicaragua has several laws, World Intellectual Property Organization administered treaties, multilateral treaties, and bilateral treaties pertaining to the adherence of intellectual property rights.

The Foreign Investment Promotion Law (344) ensures foreign investors various guarantees including full protection of intellectual property rights, patents, and brands.

For additional information, please see the United Kingdom´s Intellectual Property Office or the World Intellectual Property Organization´s section on Nicaragua.

9. Contact

If you require more information about Nicaragua, contact: enquiries@trade.gov.uk +44 (0) 20 7215 5000.

The Department for Business and Trade covers Nicaragua from the British Embassy in Costa Rica. To contact the team in Costa Rica directly:

UK Department for Business and Trade
British Embassy San José
Centro Colón
Piso 11
Calles 38 y 40
Paseo Colón San José
Costa Rica
Telephone: + (506) 2258-2025
Fax: + (506) 2233-9938

Stuart Atkinson, Trade and Investment Director

Email: ukin.costarica@fco.gov.uk