Nicaragua - Country Commercial Guide
Market Challenges

Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.

Last published date: 2021-09-26

Political instability, reputational risk, and the arbitrary application of government regulations and trade barriers remain the primary challenges facing U.S. companies.  Given the Ortega regime’s increasing human rights abuses and erosion of democracy, the potential for further civic demonstrations and violent repression exists.

U.S. companies face arbitrary enforcement of laws and other abuses by government authorities.  The Nicaraguan Customs Authority (known by its Spanish initials DGA) regularly subjects shipments of goods to bureaucratic delays, arbitrary valuations, and excessive fines.  In some cases, shipments are held for weeks or months with no justification.  The Nicaraguan Tax Authority (known by its Spanish initials DGI) 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.  In addition, some businesses report that up to eight different government entities – including labor authorities, social security authorities, and city and regional tax authorities – have arrived at the same time to conduct audits. 

These issues are exacerbated by an extremely weak legal environment and limited rule of law.  Businesses facing adverse administrative actions are unlikely to find legal remedies in the judicial system.  The judicial system is not independent, subject to corruption, and frequently used by the regime to punish political opponents.  Property rights are difficult to defend.  The number of property expropriations, land invasions, and property confiscations have increased significantly since 2018. 

For several years, leading business chambers filled policy voids left by inadequate government institutions and procedures, meeting with influential government officials to resolve common business issues.  This model collapsed, however, as business chambers recognized the reputational risks of making ad hoc deals with the Ortega regime following popular protests in 2018.  There are currently few options to resolve commercial issues with the government.

Businesses operating in Nicaragua must contend with energy prices that have long been the highest in the region.  Despite a 35-percent drop in global prices, the price of electricity in Nicaragua increased by 20 percent in 2019.  The government partially phased out subsidies and the dominant distribution company, Disnorte-Dissur, demanded higher margins.  According to energy analysts, the Nicaraguan Energy Institute – meant to be revenue-neutral – may have earned a $50 million profit in the first half of 2020.  A complicated tariff structure subsidizes some users at the expense of others, with larger consumers generally paying the steepest costs.  The issue is compounded by lack of transparency, not only in the rate-making process but also in the energy industry overall.  Many suspect the energy industry is controlled by front men who funnel profits to Ortega and his family.  The U.S. government sanctioned the national Fuel Distribution Company (known by its Spanish initials DNP) that was purchased with public money and then transferred to the Ortega family.  Following a period of uncertain ownership, the GON announced in 2020 they had fully nationalized Disnorte-Dissur.  Businesses in Nicaragua face considerable uncertainty in planning for long-term energy costs.

A sampling of entities sanctioned by the United States, Canada, or the European Union demonstrate the pervasiveness of abusive and anti-democratic behavior throughout the government. 

  • Vice President and First Lady Rosario Murillo, who has systematically sought to dismantle democratic institutions and loot the wealth of Nicaragua
  • 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 of Health 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 to 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
  • Laureano Ortega Murillo, son of Ortega and Vice President Rosario 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
  • 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 entire Nicaraguan National Police, which implements the repressive policies of the Ortega regime