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Nicaragua: Striving to improve its image
The Packer / December 25, 1995

By Larry Luxner

MIAMI -- Nicaragua, long synonymous with dictatorships, leftist revolution and civil war, may finally be starting to shed its negative image in its bid to attract agribusiness and other foreign investment.

Earlier this month, the national legislature approved the partial sale of Nicaragua's state-owned phone monopoly, Telcor, in what is widely seen as the first in a rash of long-overdue privatizations. The $200 million generated from Telcor's sale will be used to buy back bonds that were given to citizens and foreigners whose property was seized during the long Sandinista regime of the 1980s.

According to The Journal of Commerce, Nicaragua has sold 325 of 350 state enterprises in the past three years. Hugo J. Paguaga, general manager of the Nicaraguan Export and Investment Center, told the newspaper that "we're working under a new constitution, because almost 80% of the constitution was reformed, and the main aspect of the reform was to guarantee the private property rights so foreign and national investors can feel confident in putting their money in Nicaragua."

In the fruit and vegetable sector, the struggling Central American nation seems to be having the most success with bananas.

Gerry Lamberty, director of the U.S. Agency for International Development's program in Managua, said that under Nicaraguan law, bananas are considered a non-traditional export.

"Bananas account for three times all other tropical fruits combined," he said, adding that Nicaraguan growers are also investing in sweet onions, mangoes and other crops -- aided by incentives that, among other things, entitle them them to import all their machinery tax-free.

"Nicaraguans are still impacted by the negative experience they went through with the Sandinistas. Investors are still leery," he said. "Nicaragua has very rich soil, and had a tradition of very advanced agriculture. In the 1960s, when I first got involved in the region, the Nicaraguans and Salvadorans were the most dynamic businessmen in Central America. But during the Sandinista period, the Nicaraguans got into some bad habits."

Lamberty, who moved to Managua after several years in Guatemala, is working with a very limited budget, since Congressional funding for AID programs around the world has been slashed to the bone. Nevertheless, he said his goal is to work closely with large U.S. firms that have ignored Nicaragua in the past but may yet see the country's advantages relative to neighboring Central American nations.

"We're trying to get the multinational companies to come back to Nicaragua, since 75% of U.S. trade is managed by multinationals, and 40% of that is commerce between branches of the same company," he said. "You can't do snow peas in Nicaragua, or broccoli, because they don't have the altitude. But it's very good for melons, mangoes and onions. Also, land in Nicaragua is 5% what it would cost on the other side of the border in Costa Rica."

One promising export is melons. Traugott Horsch, a German entrepreneur who has 400 acres of melons near Tipitapa and markets his fruits through Chestnut Hill Farms of Miami, said: "From an agribusiness point of view, Nicaragua has the best conditions in Central America for melon cultivation," he said. "The problem is transportation. There's no infrastructure in the country, so you have to do it all on your own. You have to improvise."

Another interesting development is the cultivation of sweet onions in the Sebaco Valley, about 115 kilometers north of Managua. The land around Sebaco -- fertile, flat, inexpensive and low in sulfur -- is believed to be among the world's best for sweet onions. In 1994, the country shipped 220,000 boxes at an average $17 per 50-pound box.

The idea is to make Nicaragua the leading U.S. source of sweet onion when Georgia's famous Vidalias aren't in season. Meanwhile, Lamberty's AID money is helping local farmers convert an obsolete, Bulgarian-built food processing factory into a modern onion sorting and packing facility for the entire Sebaco Valley region.

"The onion program is going very well. APENN (the Nicaraguan Association of Producers of Non-Traditional Exporters) is working with smaller producers, and they've found a niche," said Lamberty. "The problem is they don't have enough days or hours of sunlight so they can produce for the whole window. So they're not putting in a lot of new acreage every year."

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