Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Inadequate rule of law, political instability, reputational risk, and the arbitrary enforcement of government regulations are top challenges facing U.S. companies in Nicaragua. The regime’s crackdown since mid-2021, including the arrests of prominent business leaders, presents additional challenges and has driven many in the private sector into exile and terrorized others into silence.
The Nicaraguan Customs Authority (DGA) regularly subjects shipments of goods to bureaucratic delays, arbitrary valuations, and excessive fines. In some cases, shipments are held for weeks or months without justification. The Nicaraguan Tax Authority (DGI) has increased the frequency, duration, and scope of audits on businesses. In some cases, these audits take several months and require businesses to dedicate office space and support staff to the auditors. Some businesses reported that up to eight different Nicaraguan government entities – including labor authorities, social security authorities, and city and regional tax authorities – have simultaneously conducted audits.
Nicaragua’s extremely weak legal environment and vanishing rule of law give affected businesses limited options to address these issues. Businesses facing adverse administrative actions are unlikely to find relief in the judicial system, which is not independent, subject to corruption, and frequently used by the regime to punish political opponents. Property rights similarly are difficult to defend. The number of property expropriations, land invasions, and property confiscations have increased significantly since 2018.
Businesses operating in Nicaragua must contend with some of the highest energy prices in the region. Local experts note power losses (including theft), nontransparent local power generation, opaque regional power purchase contracts, and dependency on fossil fuels for power generation drive high energy costs. A complicated electricity tariff structure subsidizes some users at the expense of others, with larger consumers generally paying the highest proportionate costs. Key information about monitoring and auditing of the electricity market is not publicly available. The Nicaraguan government nationalized the electricity distribution company Disnnorte-Dissur in 2020. Businesses in Nicaragua face considerable uncertainty in planning for long-term energy costs.
The range of entities sanctioned by the United States, Canada, or the European Union demonstrates the pervasiveness of abusive and anti-democratic behavior throughout the government. Sanctioned entities include but are not limited to:
- Vice President and First Lady Rosario Murillo, who has systematically sought to dismantle democratic institutions and loot the wealth of Nicaragua.
- Laureano Ortega Murillo, son of Ortega and Murillo, who serves as Promotion Advisor of Nicaraguan business facilitation agency Pro-Nicaragua and engaged in corrupt business deals in which foreign investors paid for preferential access to the Nicaraguan economy.
- President of the National Assembly Gustavo Porras, who presided over significant National Assembly actions or policies that undermined democratic processes or institutions in Nicaragua.
- Then-Minister of Health Sonia Castro, whose Ministry refused to treat victims of violent regime repression, fired hundreds of medical personnel who treated protesters, and reported admitted protesters to parapolice, who then removed them from hospitals.
- Then-Director of the Institute of Telecommunications Orlando Castillo, who silenced independent media.
- Minister of Finance Ivan Acosta, who arranges financial support for the Ortega regime.
- Commander-in-Chief of the Army Julio Aviles, who armed “parapolice” that carried out acts of violence and human rights abuses against the Nicaraguan people.
- Then-Acting President of the Supreme Electoral Council Lumberto Campbell, who manipulated the electoral process to ensure Ortega and his allies prevailed in fraudulent elections.
- Director of the Nicaraguan Social Security Institute Roberto Lopez, who orchestrated Ortega’s use of public retirement funds to reward loyalists, defraud Nicaraguans, and target political opponents.
- The Nicaraguan National Police, which implements the repressive policies of the Ortega regime.
- The state-owned mining company, ENIMINAS, which funneled profits from gold mining to the regime.