General Information

Political Climate

Corruption, embezzlement and nepotism have thrived in Nicaraguan politics for decades. The fight against corruption and wasteful government spending featured prominently in President Ortega's electoral platform. However, President Ortega has failed to show satisfactory results in relation to these problems, and according to Alberto Novoa, a former attorney general cited in Global Integrity 2011, Nicaragua is experiencing one of the most corrupt governments in its history. Since President Ortega took office in January 2007, no high-level politicians or officials have been prosecuted for embezzling public funds. Corruption and embezzlement are also fuelled by immunity from prosecution enjoyed by members of the National Assembly, who also belong to the Pacto Político. Furthermore, the Pacto Político gives outgoing presidents an automatic seat in the legislature, thus securing their immunity from prosecution. The Supreme Court has overturned the National Assembly's effort to maintain the two-term presidential limit, as defined in the Constitution. As a result, Ortega was allowed to run for re-election in November 2011, and he was re-elected for another five-year term, despite having reached the previous two-term limit. The opposition alleged electoral fraud, but electoral observers had not witnessed any significant irregularities, as reported by BBC News in November 2011. 

Poor governance and corruption have contributed to a further deterioration of living conditions, and distrust in political parties is prevalent both among the general public and the business executives surveyed in the Global Competitiveness Report 2013-2014. Interestingly, Nicaraguan citizens do not consider corruption one of the most important problems; instead, many perceive that unemployment, low wages and job instability as the top three most important problems, according to Latinobarómetro 2013 (in Spanish). However, the report further notes that many Latin Americans generally have a good knowledge of corruption in their countries, yet they do not often cite corruption as a problem. Global Integrity 2011 highlights how nepotism and political affiliation play a major role in the appointment of civil servants.

Business and Corruption

The Nicaraguan business environment has been substantially liberalised. Nicaragua has abolished all WTO-inconsistent non-tariff barriers and has no commercially based import prohibitions. Furthermore, the country has signed the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) that provides a framework for further market improvements and transparency as it requires each participating government to ensure that bribery affecting trade and investment is treated as a criminal offence. However, the Nicaraguan business environment still suffers from several deficiencies and, as stated by the Bertelsmann Foundation 2014, corruption and a weak legal system pose the greatest threats to the free market economy of Nicaragua. The same report cites a study which shows that 93% of the surveyed businesspeople working in Nicaragua consider corruption an obstacle for doing business; The businesspeople suggest that corruption includes not only facilitation payments paid to the authorities when carrying out commercial activities but also the government's favouritism towards certain economic groups. 

According to the Global Competitiveness Report 2013-2014, companies cite corruption as the third most problematic factor for doing business in Nicaragua, after inefficient government bureaucracy and policy instability. According to the same report, business executives report that the diversion of public funds to companies, individuals or groups due to corruption is quite common. The World Bank & IFC's Enterprise Surveys 2010 reports that over half of companies list corruption as a major constraint. However, it must be noted that few companies (8%) report that they pay informal payments 'to get things done' (compared to the world average of 26%). Cronyism and nepotism are banned, as is the payment of kickbacks for winning contracts. According to Global Integrity 2011, the previous Procurement Law contained no known sanctions, and was replaced by the Government Procurement Law (Law No.737, in Spanish). The new amendment closed many loopholes that existed in the previous version, especially the discretion given to the Controller General's Office to exclude certain purchases from competitive bidding in case of emergency or when in 'the public interest', according to the US Department of State 2013. However, as of February 2014, there is no data on its implementation. The Global Competitiveness Report 2013-2014 reports that the surveyed business executives continue to indicate that the degree of favouritism in decisions of government officials relating to policies and contracts is high. 

Companies should be prepared to deal with corruption when interacting with the registry and permit services, for example, when applying for construction and operating permits and when obtaining access to public utilities such as electricity, water and telephone connections, as illustrated in the Enterprise Surveys 2010. The absence of effective anti-corruption agencies and whistleblower mechanisms is a challenge for companies operating in Nicaragua as it limits the options for reporting cases of corruption. Operating in an environment of inefficient and corrupt public institutions and services poses a challenge to foreign and Nicaraguan companies. Business operations are complicated and investment is discouraged by a corrupt judicial system that is widely perceived as serving narrow political agendas. Foreign investors are advised to consult with experienced attorneys to develop, implement and strengthen integrity systems, and to carry out extensive due diligence before committing funds or when already doing business in the country. In addition, companies are also recommended to use a specialised public procurement due diligence tool to mitigate corruption risks during procurement processes in Nicaragua.

Regulatory Environment

Nicaragua's anti-corruption legislative framework is in place; however, there are problems with its implementation. Checks and balances on powerful politicians are reportedly inadequate, making it fertile ground for corruption. The judicial system is widely perceived to be corrupt and controlled by subjective political interests. Moreover, political connections and nepotism affect regulatory and procurement decisions, and regulators are reported to have personal business interests within the sectors they regulate. Although the country has enacted the Access to Information Law (in Spanish), lack of transparency and limited access to information remain serious problems, according to the US Department of State 2013. The same report states that the law provides exceptions for disclosure in cases related to national security and trade secrets.

Starting a business in Nicaragua is extremely costly compared to the regional average, and, according to Doing Business 2014, it amounts to 77% of GNI per capita – about 2.3 times the regional average and 21 times the OECD average. On the other hand, it takes 7 procedures and 36 days to start a business, which is similar to the regional average. Filing business taxes is also very time-consuming, forming a clear competitive disadvantage as the procedure is unpredictable. The time spent obtaining construction permits corresponds with the regional average but is much more expensive, amounting to 249.4% of the GNI per capita versus a regional average of 136.6%. Foreign companies interested in investing in Nicaragua may find useful information on investment opportunities and commercial partners through ProNicaragua, an investment promotion agency established by the Government of Nicaragua, or NicaExport, hosted by the Nicaraguan Centre for Export Promotion. In addition, the Ministry of Development, Industry and Trade (MIFIC, in Spanish) operates Ventanilla Unica de Inversiones (in Spanish), a one-stop shop that provides investment and business licencing information to foreign and domestic investors. The MIFIC also published an investment guide, Doing Business in Nicaragua 2013-2014, with practical information for investors.

According to the US Department of State 2013, resolving commercial disputes, particularly contract enforcement disputes, is one of the largest constraints to investment in Nicaragua. Resolving a dispute is very time-consuming, with Doing Business 2014 reporting that it takes an average of 409 days to enforce a commercial contract dispute at a cost of nearly 27% of the claim. Business executives in the Global Competitiveness Report 2013-2014 rate the independence of the judiciary as very low. Furthermore, in relation to commercial dispute resolution, investors should note that local courts, especially in the Atlantic regions, frequently act without effective central government oversight. Investors can consult with ProNicaragua, which seeks to facilitate resolution of investment disputes. Nicaragua is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and is signatory to the New York Convention of 1958 and Inter-American Convention on International Commercial Arbitration, while the DR-CAFTA establishes an investor-state dispute settlement mechanism. Companies are generally advised to include international arbitration clauses in their business contracts in light of the uncertainties posed by the Nicaraguan judicial system. Access the Lexadin World Law Guide for a collection of legislation in Nicaragua.

Judicial System

Individual Corruption

When asked how satisfied Nicaraguans are with the country's judicial system, a little more than two-fifths of the surveyed Nicaraguans in Latinobarómetro 2011 claimed to be satisfied with the way the judiciary works.

Business Corruption

Business executives in the Global Competitiveness Report 2013-2014 indicate that external interests heavily influence the judiciary, an area in which Nicaragua performs poorly and one that constitutes a significant competitive disadvantage for the country. One of the most serious obstacles for investors in Nicaragua is the difficulty in resolving commercial disputes in courts, particularly concerning the enforcement of commercial contracts. Furthermore, the US Department of State 2013 reports that national investors are sometimes favoured over foreign investors by Nicaraguan courts if they are well-connected. Due to the inefficient and corrupt judiciary, companies seek to settle disputes out of court. The investment promotion agency ProNicaragua may help with the resolution of investment disputes, but there are mixed reports of its efficiency.

Political Corruption

The US Department of State 2013 reports that judges are widely considered to be corrupt and subject to political influence. According to Global Integrity 2011, political loyalty is reported to be the dominant reason for the appointment of judges in the Supreme Court. Accordingly, Supreme Court judges then appoint lower-level judges, thus institutionalising political control over the entire judicial system. Furthermore, the same report also writes that political motivations, the interests of the members of the two major political parties, or bribery are often behind the reasoning of sentencing. Similarly, the US Department of State 2012 also reports that the courts are vulnerable to bribes and manipulation as well as other forms of corruption, especially by the Sandinista National Liberation Front (FSLN) and drug cartels. Moreover, there were reports showing that the FSLN heavily influenced Supreme Court of Justice (CSJ) ruling.

Frequency

The World Bank & IFC: Doing Business 2014:
- On average, enforcing a commercial contract in Nicaragua requires a company to go through 37 administrative procedures, taking 409 days and costing 26.8% of the claim.

World Economic Forum: The Global Competitiveness Report 2013-2014:
- Business executives give the independence of the judiciary from influences of members of government, citizens or companies a score of 2.6 on a 7-point scale (1 being 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal framework for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 3.4 and 3.1, respectively, on a 7-point scale (1 being 'extremely inefficient' and 7 'highly efficient').

Latinobarómetro: Annual Report 2011:
- 41% of the surveyed households stated that they are ‘very satisfied’ or ‘fairly satisfied’ with the judicial system in Nicaragua.

The World Bank & IFC: Enterprise Surveys 2010:
- 18% of companies believe that courts are fair, impartial and uncorrupted.

Police

Individual Corruption

Police are considered corrupt; they often react ineffectively and demand bribes or payments for gasoline when a crime is reported, according a June 2013 article in the Nicaragua Dispatch. The US Department of State 2012 reports delays in prosecution and criminal sanctions against police officers in corruption cases; this situation has made citizens think that the police enjoy quasi-immunity against these charges.

Business Corruption

Companies should note that accountability within the police force is low and that the police are widely perceived to be a corrupt institution. Business executives in the Global Competitiveness Report 2013-2014 indicate that police services are unreliable to protect companies from crime. As pointed out by the US Department of State 2013, there are increased conflicts over property ownership, and police refuse to intervene in property invasion cases and will not assist in the enforcement of court orders to remove illegal occupants.

Political Corruption

According to the US Department of State 2012, the Office of Internal Affairs dismissed 39 officers for police misconduct in 2012. Furthermore, the US Department of State 2013 also states that the Nicaraguan National Police (NNP) is highly politicised and influenced by President Ortega, and many question its independent and effective function.

Frequency

World Economic Forum: The Global Competitiveness Report 2013-2014:
- Business executives give the reliability of the Nicaraguan police services to enforce law and order a score of 3.9 on a 7-point scale (1 being 'cannot be relied upon at all' and 7 'can always be relied upon').

The World Bank & IFC: Enterprise Surveys 2010:
- 57% of companies pay for private security, which is below the regional average of 66%.

- 48.4% of companies surveyed identify crime, theft and disorder as a major constraint on doing business.

Licences, Infrastructure and Public Utilities

Business Corruption

According to the World Bank & IFC's Enterprise Surveys 2010, companies report that they expect to give gifts to obtain operating licences or construction permits.  

The Nicaraguan government has privatised many of its public utilities. It is unclear whether this has contributed to more efficient and corruption-free public services, but privatisation activity has slowed since the election of President Ortega. Global Integrity 2011 reports that business inspections are sometimes conducted arbitrarily, targeting companies owned by individuals critical to the government or those competing with companies with political ties.

Political Corruption

According to Freedom House 2012, public universities are mandated by the budget law to outline their spending budget; however, they have failed to fully comply with the law. According to the report, the allocation of approximately 15 percent of universities' registration fees to support the Sandinista-dominated university student union (UNEN) has been criticised as an aide to corrupt practices as well as for furthering political clientelism.

Frequency

The World Bank & IFC: Doing Business 2014:
- To obtain a construction permit, a company must on average go through 16 procedures and spend 208 days at a cost of 249.4% of income per capita.

- On average, starting a company requires the entrepreneur to go through 7 procedures, taking 36 days and costing nearly 77% of income per capita.

World Economic Forum: The Global Competitiveness Report 2013-2014:
- Business executives give complying with the administrative requirements (permits, regulations and reporting) issued by the government a score of 3.6 on a 7-point scale (1 being 'burdensome' and 7 'not burdensome').

The World Bank & IFC: Enterprise Surveys 2010:
- Senior management spends an average of 20% of its time on dealing with government regulation.

- 5% of companies expect to give gifts to obtain an operating licence.

- 18% of companies expect to give gifts to obtain a construction permit

- 7.8% and 3.7% of companies expect to give gifts to obtain electrical and water connections, respectively.

Land Administration

Business Corruption

According to the US Department of State 2013, foreign investors are affected by the poor enforcement of property rights. Registries are described as 'outdated' and are often not computerised, and accountability is weak. Third parties often collaborate with corrupt municipal officials, paving the way for illegal property seizures that are frequently accepted without challenge by the authorities. Companies should bear in mind that the courts have a reputation for being corrupt and politicised, and settling land disputes in court can be lengthy and involve bribery. The US Department of State 2013 recommends anyone interested in buying property in Nicaragua to seek legal counsel to represent their interests in the transaction.

Political Corruption

Despite an increase in land invasion in recent years, the government has declared on several occasions that it would not evict illegal land invaders, according to the US Department of State 2013. Police routinely refuse to evict illegal land occupants even in situations where court orders demand that they do so. This is particularly true for cases involving land invasion by Citizen Power Councils (CPCs), which are closely affiliated with the ruling government’s political party. In cases involving the CPCs, even the Municipal officials, court officers and Nicaraguan National Police have been unwilling to intervene. Furthermore, the same report also notes that the lack of action in updating the land registries makes it difficult to establish a title history.

Frequency

The World Bank & IFC: Doing Business 2014:
- On average, registering property requires a company to go through 8 administrative procedures, taking 49 days and costing 5% of the property value.

World Economic Forum: The Global Competitiveness Report 2013-2014:
- Business executives give property rights a score of 3.3 on a 7-point scale (1 being 'poorly defined and not protected by law' and 7 'clearly defined and well-protected by law').

Tax Administration

Business Corruption

The US Department of State 2013 reports that tax audits of foreign investors have increased in frequency and duration to the point where they may hinder normal business operations. Furthermore, the same report also notes that the government has occasionally used the tax authorities to pressure individuals and companies into accepting non-commercial terms in concessions or contracts. The same source reports that investors cite arbitrariness in taxation procedures, as well as a lack of delegation of decision-making authority.

According to Global Integrity 2011, tax laws are not always enforced uniformly or without discrimination in Nicaragua. Nevertheless, only a small amount of the surveyed companies expect to give gifts when meeting with tax inspectors, according to the data from the Enterprise Surveys 2010.

Political Corruption

According to the Nicaragua Dispatch in February 2013, the president of the Supreme Electoral Council, Roberto Rivas, is accused of illegal tax exonerations. Roberto Rivas, who is one of the best paid public servants in Nicaragua, imported fourteen luxury vehicles in 2009 in the names of his family and evaded nearly USD 200,000 in import taxes for the vehicles.

Frequency

The World Bank & IFC: Doing Business 2014:
- A medium-sized company must make an average of 42 payments to the tax authorities every year, taking 207 hours to prepare, file and pay.

- The total tax rate is 64.9% of the profit.

The World Bank & IFC: Enterprise Surveys 2010:
- 4.2% of companies expect to give gifts in their meetings with tax inspectors.

Customs Administration

Business Corruption

According to Global Integrity 2011, some business groups have made the criticism that in order to avoid delays, businesses need to pay kickbacks to corrupt customs agents to make sure that their merchandise is allowed to go through without delays. Additionally, importers are required to work only with customs agencies associated with the ruling party if they wish to clear their merchandise.

According to the Global Enabling Trade Report 2012, business executives rate the pervasiveness of irregular payments in exports and imports, in terms of undocumented extra payments or bribes connected with imports and exports, as relatively high. This constitutes a competitive disadvantage for the country.

According to the US Department of State 2013, the government has on several occasions used the customs authorities to pressure individuals and companies into accepting non-commercial terms in concessions or contracts. The same source states that investors report of arbitrariness in customs procedures and a lack of delegation of decision-making authority and complain that customs authorities wrongly classify goods to generate tariff revenue.

Political Corruption

Global Integrity 2011 reports that from 2008 to 2009, about 470 customs officials were dismissed and subsequently replaced by friends of the new authorities or party loyalists. This has seriously affected the level of professionalism in the customs and excise agency in Nicaragua.

Frequency

The World Bank & IFC: Doing Business 2014:
- On average, a standard export shipment of goods requires a company to obtain and fill out 5 documents, taking 21 days and costing USD 1,140 per container.

- On average, a standard import shipment of goods requires a company to acquire and fill out 5 documents, taking 20 days and costing USD 1,245 per container.

World Economic Forum: The Global Competitiveness Report 2013-2014:
- Business executives give customs procedures a score of 3.5 on a 7-point scale (1 being 'extremely slow and cumbersome' and 7 'rapid and efficient').

World Economic Forum: The Global Enabling Trade Report 2012:
- Business executives give the pervasiveness of irregular payments in exports and imports (pervasiveness of undocumented extra payments or bribes connected with imports and exports) a score of 2.8 on a 7-point scale (1 being 'common' and 7 'never occurs').

The World Bank & IFC: Enterprise Surveys 2010:
- 0.3% of companies report that they expect to give gifts to obtain an import licence.

Public Procurement and Contracting

Business Corruption

According to the Enterprise Surveys 2010, a number of companies report that they expect to give gifts to secure government contracts, while business executives in the Global Competitiveness Report 2013-2014 report that favouritism of well-connected companies and individuals on behalf of government officials when deciding upon contracts is common. 

The US Department of State 2013 reports that there are still many allegations of irregularities in the procurement process, especially the splitting of procurements into smaller lots, an act which allows the government to use a different set of regulations that creates a less competitive bidding process. The same report also suggests that political connections and nepotism also affect regulatory and procurement decisions. Companies are generally recommended to use a specialised public procurement due diligence tool to mitigate the corruption risks associated with public procurement in Nicaragua. For more information, see Public Anti-Corruption Initiatives.

Political Corruption

According to the US Department of State 2013, regulatory and procurement decisions are subject to political influence and nepotism. The Bertelsmann Foundation 2014 points out that there is a legal, political and administrative accounting system for ensuring transparency within procurement procedures, but enforcement is poor in most instances. Procedures and requirements for state contracts are hampered by corruption. 

For more information, see Public Anti-Corruption Initiatives.

Frequency

World Economic Forum: The Global Competitiveness Report 2013-2014:
- Business executives give the diversion of public funds to companies, individuals or groups due to corruption a score of 2.9 on a 7-point scale (1 being 'is common' and 7 'never occurs').

- Business executives give the favouritism of government officials when deciding upon policies and contracts a score of 3.2 on a 7-point scale (1 being 'usually favour well-connected companies and individuals' and 7 'are neutral').

The World Bank & IFC: Enterprise Surveys 2010:
- 4.5% of companies expect to give gifts to secure a government contract.

Environment, Natural Resources and Extractive Industry

Political Corruption

According to the US Department of State 2013, some investors complain that the Ministry of Natural Resources and the Environment takes political considerations into account when determining whether to issue an environmental permit. There is also evidence from illegal-logging that local governments are involved in the illegal logging of mahogany wood carried out by local communities and companies. Permits to harvest forest resources, granted by local governments to various communities and companies, have been observed to contravene with forestry regulations. Despite these violations, permits are issued and recognised by local authorities, including local offices of the Nicaraguan Forest Authority (INAFOR) by municipality and community leaders. It is thus believed that corruption lies behind these 'permits'. 

Public Anti-Corruption Initiatives

  • Legislation: Nicaragua has ratified the United Nations Convention against Corruption (UNCAC) and the Inter-American Convention Against Corruption. Nicaragua has a well-developed legislative framework criminalising acts of corruption. The Penal Code (in Spanish) and Law No. 581 of 2006 cover all relevant aspects of corruption, including briberyembezzlementextortion and money laundering. This has led Global Integrity 2011 to assess the Nicaraguan anti-corruption legal framework as 'very strong'. However, many legal inadequacies remain, such as in the field of whistleblower protection, public procurement and political financing. The Access to Information Law (in Spanish) requires institutions that receive or oversee state funds to make their documents publicly available, giving citizens the possibility to play an oversight role in relation to public expenditure and administrative decisions. The passing of the Information Law indicates a positive sign of increasing access to information initiatives in the country. Nevertheless, according to Freedom House 2013, the law preserves the government's right to protect information related to state security, and not all public institutions follow this law and publish their financial documents. Legal provisions are further hampered by the weak and corrupt judicial system whose decisions are often influenced by political interests. Observers have pointed to two major legal obstacles in the fight against corruption in Nicaragua: 1) Members of Parliament and of the government enjoy blanket immunity, which makes investigating and prosecuting cases of corruption extremely difficult, and 2) the electoral law does not limit individual or corporate donations to political parties, and there is no control or monitoring of expenditures of political parties. These problems increase the possibility for embezzlement of public funds and for corrupt deals between politicians and the private sector. Political parties are not required to keep financial records of donations, and the major political actors have shown little interest in reforming the current system. In general, there is a significant implementation gap between the well-developed legislation to combat corruption and the lack of enforcement of this legislation. This applies also to laws and rules anchored in the constitution, such as the article aimed at resolving conflicts of interests and the article aimed at securing public officials' declaration of assets. The Law of Probity of the Public Servants (in Spanish) regulates gifts and hospitality offered to civil servants; however, the absence of any efficient follow-up mechanism on the declaration of assets makes it difficult to root out corruption in the Nicaraguan civil service. Access the Lexadin World Law Guide for a collection of legislation in Nicaragua.
  • Government Strategies: The Inter-American Convention Against Corruption provides a relatively comprehensive international framework for fighting corruption. The Mechanism for Follow-Up on the Inter-American Convention against Corruption (MESICIC) reviews whether states are introducing effective measures to fight corruption in line with the convention. This imposes direct obligations on the Government of Nicaragua to adopt institutional and legal measures against corruption. Read more at the MESICIC's 2010 report on Nicaragua. Nicaragua has signed the Compact to Promote Transparency and Combat Corruption, which has resaulted in the G8 countries providing technical assistance to Nicaragua to improve public budgets and financial management. The compact defines six laws as 'priority legislative agenda items' for the government that, if successful, would have significant impacts. First, the Public Service Ethics Law will govern the ethics of public employees during their term in office and will require that civil servants declare their assets before assuming office. Second, the Judicial Career Law will ensure a merit-based, competitive and transparent process for selecting judicial officials, as well as provide for disciplinary sanctions. Third, the Reforms to the State's Contracting Law will make government procurement more cost-efficient and transparent. Fourth, the Fiscal Responsibility Law will seek to limit public debt to levels that are prudent and compatible with tax revenues and public assets, adopt a stable and predictable tax policy, establish a multi-year budgetary planning framework, adopt international public sector accounting standards, and create a fiscal stabilisation fund. Fifth, the Public Sector Financial Management Law will aim at establishing standards to regulate and coordinate the financial management system. Lastly, the Freedom of Information Law will include the right of citizens to access information about government officials and private companies that perform public functions (e.g., water and energy companies). For further information, read the compact between G8 and the Government of Nicaragua

  • Anti-Corruption Agencies: The Oficina de Ética Pública (Public Ethics Office, OEP, in Spanish) was established to promote transparency and efficiency in public administration. The mandate of the OEP derives from the executive authority of the president. The office also administers the Programa de Eficiencia y Transparencia en las Compras y Contrataciones del Estado (Efficiency and Transparency in Public Procurement and Contracting Programme). Donors have confidence in the OEP, and the office is implementing and providing follow-ups in Nicaragua to the Inter-American Convention Against Corruption. According to MESICIC's 2010 report, the OEP has in the past carried out a total of 86 specialised training events for public servants from 43 agencies of the executive branch and local governments. According to the ITAD's Nicaragua Country Report 2011, the OEP has been given little political and financial support. Furthermore, the OEP does not have the authority to carry out investigations nor prosecution.

  • Procuraduría General de la República (PGR, in Spanish): The PGR (Attorney General's Office) and Controller General share responsibilities for investigating and prosecuting corruption cases, according to the US Department of State 2013. The PGR is, together with the Oficina de Ética Pública, in charge of implementing the Inter-American Convention Against Corruption, as well as formulating national anti-corruption strategies and priorities. Furthermore, the PGR has an online complaint mechanism on its website where citizens can file complaints of inappropriate behaviour by civil servants. Global Integrity 2011 evaluates the real independence of the institution as non-existent and states that political influence ranges from the appointment of affiliates to the ruling party to pressure to waive investigation in particular cases. Read more about the Procuraduría's priorities in the fight against corruption (in Spanish) and the PGR's Strategic Plan 2011-2014 (in Spanish).

  • Contraloría General de la República (in Spanish): The Contraloría General de la República (Comptroller's Office) is a formally independent entity who's Consejo Superior (High Council) is elected by the National Assembly. The unit is the primary watchdog for control of the public administration and undertakes financial audits of public institutions. The office has a mandate to initiate independent investigations, but it rarely uses this power. According to the ITAD's Nicaragua Country Report 2011, the Comptroller's Office is constitutionally independent and is mandated to investigate and refer cases of corruption. However, Global Integrity 2011 reports that in practice, like other agencies, the Comptroller's Office is subject to political influence. Partisan loyalties and friendships, and influences within a political party, rather than merit, play major roles in the appointment to the office. The work of the Comptroller's Office is also hampered by President Ortega's government managing two budgets: the official, legally approved budget and a budget with funds from Venezuela as a part of the Bolivarian Alliance for the Americas (ALBA) agreement. The latter budget is administered according to the executive's discretion and is not subject to review.

  • Ombudsman's Office: The Ombudsman Law 212 (in Spanish) creates an independent Procuraduría para la Defensa de los Derechos Humanos (PDDH, in Spanish), which functions as the national ombudsman in Nicaragua. However, according to Global Integrity 2011, the ombudsman is under strong political influence. It does not have authority to initiate investigations unless a case does not involve politics, and selective investigations are common. This is further supported by Freedom House 2012, which reports that the official ombudsman, as well as the PDDH, continue to be highly politicised. Moreover, the ombudsman’s office does not receive regular funding, and foreign donors have withdrawn their aid due to its lack of independence and professionalism. Citizens are not able to access specific reports except annual global reports and statistics: the law stipulates that only affected parties are allowed to access these reports. Hence, Global Integrity 2011 assesses the ombudsman’s office in Nicaragua as ‘very weak’.

  • E-Governance: E-governance is still developing in Nicaragua, and a commission, the Comisión para el Foro Permanente de Gobierno Electrónico(GOBeNIC), has been established to take responsibility for developing and implementing plans for e-governance in the country. The Ministry of Development, Industry and Trade operates the Ventanilla Unica de Inversiones (in Spanish), a one-stop shop that provides investment and business licencing information to foreign and domestic investors. The Ministry of Finance and Public Credit (in Spanish) operates an online portal for central government and municipality procurement (see below). Furthermore, two non-profit, public-private institutions host websites that provide relevant information to foreign investors. The first one is ProNicaragua, the Nicaraguan Investment Promotion Agency, through which investors can find useful information on investment opportunities, commercial partners and commercial dispute resolution. The second, the Export Promotion Centre (CEI), provides relevant information for exporters.

  • Public Procurement: Nicaragua's public procurement law criminalises discrimination among suppliers and requires that government contracts be advertised on the internet and in national newspapers. The Dominican Republic Free Trade Agreement (CAFTA-DR, in Spanish) sets up rules to ensure the fairness and transparency in procurement procedures. Procurement procedures, such as open bidding and qualified bidding, are detailed in the Government Procurement Law (in Spanish) and the Municipal Procurement Law (in Spanish). The Municipal Procurement Law gives municipalities autonomy in acquisition procedures and the freedom to decide whether to offer a tender for the purchase of goods and services. However, procurements between municipalities or with state institutions are excluded from the Municipal Procurement Law since they are covered by the Government Procurement Law. According to Global Integrity 2011, competitive bidding is required for tenders when a contract is over NIC 3 million, and selective bidding is allowed for a contract worth between NIC 500,000 and NIC 3 million. According to the US Department of State 2013, the Government Procurement Law was amended to eliminate many ambiguities that allowed favouritism and unfair competition. However, there are still many allegations of irregularities in the procurement process, especially the splitting of procurements into smaller lots, an action which allows the government to use a different set of regulations that creates a less competitive bidding process. The same report suggests that political connections and nepotism affect regulatory and procurement decisions. The government has established the Sistema de Contrataciones Administrativas del Estado (SISCAE), a portal for public contracts through which investors may register, obtain information and bid on public contracts. Global Integrity 2011 assesses the procurement system in Nicaragua as being ‘strong’.

  • Whistleblowing: The Office for Complaints of Corruption handles citizen corruption complaints, financial fraud and other offences that are against the state. However, according to Global Integrity 2011, the results have been meagre and the office rarely receives complaints. It is widely believed that the low number of reports can be traced back to the insufficient protection of whistleblowers in Nicaragua. No specific whistleblower protection law is in place, and such protection is not offered by other legislation. Global Integrity 2011 assesses whistleblowing measures in Nicaragua as being 'very weak'.

Private Anti-Corruption Initiatives

  • Media: According to Freedom House 2013, the Nicaraguan Constitution provides for freedom of the press but permits restrictions such as libel. Under the rule of President Ortega, the independent and the opposition press have continued to be demonised, while pro-government outlets are being favoured. La Prensa, an opposition newspaper in Nicaragua, alleged that their journalists faced insults and intimidation and that officials from the Supreme Judicial Council (CSJ) responded aggressively or refused to respond to sensitive issues including corruption, according to the US Department of State 2012. An example of journalists being intimidated, according to a February 2011 article by Reporters Without Borders, occurred when a reporter from El Nuevo Diario received death threats after he published two different corruption stories in January and February the same year. Although some newspapers are partisan and generally toe either PLC or FSLN party lines, Nicaragua has a large number of newspapers and radio and television stations. According to another Freedom House 2013 report, investigative journalism plays a major role in exposing corruption and political misconduct, but cases of harassment, such as judges intimidating and restricting reporters from publishing certain stories, often result in self-censorship. Reporters Without Borders 2014 ranks Nicaragua 71st out of 180 countries, while Freedom House 2013 ranks Nicaragua 106th out of 197 countries and describes the press environment in the country as 'partly free'.

  • Civil Society: Civil society tradition is fairly strong and active in Nicaragua, particularly in comparision to other countries in the region, according to the Bertelsmann Foundation 2014. Despite the Ortega government limiting opportunities for civil society participation during its two terms, some civil society groups remain active. According to the US Department of State 2012, human rights NGOs are allowed to operate freely without government intervention, whereas NGOs that are deemed to pose a threat to the government are often harassed, with some alleging that their emails and telephones are monitored by the government. It is reported that every time opposition rallies and protests have been organised by CSOs, they have been suppressed by pro-government supporters in order to silence opponents of the government.

  • Grupo Cívico Ética y Transparencia (in Spanish): Grupo Cívico Ética y Transparencia is the local chapter of Transparency International. The organisation has been successful in putting corruption on the agenda in Nicaragua, despite difficult working conditions in the form of limited access to information. The group has been assigned as the Nicaraguan civil society component in the reviews conducted by the follow-up mechanism of the Inter-American Convention Against Corruption (MESICIC). Grupo Cívico Ética y Transparencia produced a new internet tool (in Spanish) that allows citizens to report on irregularities regarding electoral processes and any violations of civic or human rights.

  • Coordinadora Civil (in Spanish): Coordinadora Civil is a coalition of 350 social movements, NGOs, sectoral networks, territorial networks, producers' associations, unions and federations collaborating  in and articulating common goals and action plans for improving social development in Nicaragua. The work of Coordinadora Civil consists of monitoring the national budget and legal reforms and of proposing strategies for social development, including the fight against corruption.

Resources

The websites listed below provide useful facts on Nicaragua as well as contacts and tools for companies operating in Nicaragua:

 

Sources for further reading:

Conventions and Indices

UNCAC Status: Signed 10 December 2003. Ratified 15 February 2006.

Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC websiteRead more about the UNCAC.

Other Relevant Conventions or Treaties:

 

Transparency CPI: 2013: 127/175 (Score: 28)

Transparency CPI
This field consists of the ranking and the score for the country in question on the Corruption Perceptions Index from Transparency International.

World Bank CORR Index (-2.5 - +2.5): 2012: -0.8

World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the Worldwide Governance Indicators (WGI): 1996-2012.

OECD Country Risk Classification (0-7): 2013: 7

Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: An assessment of the country's economic/financial situation and its overall political stability. Access the complete list of OECD Country Risk Classification figures.

Data Verification:

Publication Date: March 2014

Data verified by: GAN Integrity Solutions 

Information Network

 


Relevant Organisations

 

Fundación Groupo Cívico Ética y Transparencia (Transparency International Nicaragua, in Spanish)

Oficentro Vieja Managua,
Primer Piso
Las Palmas costado sur Iglesia Mormona
Managua

Tel: +505 2268 1036/1037
Fax: +505 2250 2438
E-mail: eyt@ibw.com.ni

Anti-corruption NGO. Local chapter of Transparency International.

Coordinadora Civil (in
Spanish)

Reparto, Los Robles
Casa No. 34
Funeraria Monte de los Olivos una cuadra arriba y 2 cuadras y media al lago.
Managua

Tel: +505 2277 3416
Cell: +505 885-7660
E-mail: recopilacion@ccer.org.ni

Coordinadora Civil is a coalition of more than 350 social movements, non-governmental organisations, etc., which monitors the national budget with the aim of detecting corruption.

ProNicaragua

Km 4.5 Carretera a Masaya,
del Restaurante Tip-Top Los Robles
1 cuadra al Oeste, frente al Hotel Casa Naranja
Managua

Tel: +505 2270 6400
Fax: +505 2277 3299
E-mail: LOADEMAIL[info]DOMAIN[pronicaragua.org]

Investment promotion agency.

Ventanilla Unica de Inversiones (in Spanish)

Ventanilla Unica de Inversiones
Ministerio de Fomento
Industria y Comercio
Shell Plaza el Sol
1 1/2 cuadra al sur
Frente a Zermat, mano derecha

Tel: +505 277 3860/3871/ 2278 9820

One-stop shop for domestic and foreign investors.

 


Partner Embassies

 

Consulate General of Denmark

MiMuseo
Calle Atraverzada, frente Bancentro
Granada
Nicaragua

Tel: 25527777 or 8889 4272
Email: nicaconsulate@gmail.com

Consulate General.

Consulate General of Norway

De la Rotonda El Gueguense
300 metros al Oeste y 15 mts al Sur
Oficinas de NORTEAK
Managua
Nicaragua

Tel: (+505) 2254-4773
E-mail:norconsulategeneral@norteak.com.ni,
asistenteconsular@norteak.com.ni

Consulate General.

Consulate General of Sweden

Consulado General de Suecia 
Taboada & Asociados
Del Hospital Militar,
1 cuadra al Lago,
Residencial Bolonia
Managua
Nicaragua

Tel: +505 2254 5454
Fax: +505 2254 5295
E-mail: consuladodesuecia.managua@gmail.com

Consulate General.

The British Embassy in San Jose represents the UK government in Costa Rica as well as in Nicaragua

Edificio Centro Colon,

Paseo Colon and Streets 38 and 40

San Jose, Costa Rica

Tel.: +5062258-2025

Email: 

Embassy.

Austrian Development Cooperation (Nicaragua is covered by the Austrian Embassy in Mexico)

Rotonda Plaza Espana 1 c. al lago
Oficina de Cooperación para el Desarrollo
Plaza Espana 1 c.
al lag
Apdo 3173
Managua

Tel: +505 22 663 316
Fax: +505 22 663 424
E-mail: LOADEMAIL[managua]DOMAIN[ada.gv.at]

Public development agency.

Country Profile Sources

General Information Sources

Corruption Levels Sources

Judicial System

Police

Licences, Infrastructure and Public Utilities

Land Administration

Tax Administration

Customs Administration

Public Procurement and Contracting

Environment, Natural Resources and Extractive Industry

Public Anti-Corruption Initiatives Sources

Private Anti-Corruption Initiatives Sources

Web Statistics