Nearshore Americas

As Nicaragua Drifts into Political Oblivion, Great Talent Remains

It should come as no surprise to note that Nicaragua is not the Nearshore darling it once was.  Strangled by President Daniel Ortega’s authoritarian rule and the ongoing crackdown on political dissent, Nicaragua is a much harder sell to foreign investors that it was ten years ago.

Frustration runs deep among local entrepreneurs who watch opportunities slip away. Many fear speaking out. Among many interviewed executives, only one was willing to explain the landscape under anonymity. He insisted his name shouldn’t be mentioned, “or else I may be kicked out of my own country.” Silence is a testament to the oppressive climate that stifles open dialogue.

President José Daniel Ortega
President José Daniel Ortega

President Ortega’s new media and cybercrime laws have weaponized censorship even beyond borders. The regime has gone as far as to punish even social media users for so-called “fake news.” In today’s Nicaragua, even liking the wrong post can land someone in trouble—another chilling reminder of a country where fear rules and potential fades.

Free speech limitations result in extreme difficulty to gauge risks and therefore attract foreign direct investment. However, beyond political tension, Nicaragua’s structural complexities and advantages are worth examining.

Hard-Core Roadblocks

A major roadblock for foreign businesses in Nicaragua is the lack of streamlined setup processes. While investment incentives exist, the elimination of ProNicaragua and the absence of a government office dedicated to BPO policy dialogue have made entry and adaptation increasingly difficult.

Bureaucratic delays only add to the frustration. The 2024 U.S. State Department Investment Climate Report highlights the sluggish pace: “According to the Ministry of Growth, Industry, and Trade (MIFIC), registering a business takes at least 14 days. In reality, it often takes much longer. Establishing a foreign-owned limited liability company requires eight procedures and a staggering 42 days.”

Our expert added: “Foreign investors have reported significant delays in obtaining residence permits, forcing them to travel abroad periodically to renew their visas.”

Perhaps the most significant challenge is the government’s ongoing tension with the U.S., which has resulted in economic sanctions and diplomatic friction, deterring potential investors.

Just like nearshoring companies operating in Venezuela, most experts interviewed mentioned that they felt the need to understate their operations in Nicaragua to avoid the U.S. scrutiny.

Our sources express deep concern that the Donald Trump administration could escalate tensions even further than the Biden administration. Specifically, they fear that the U.S. president might seek to review the DR-CAFTA trade agreement, which governs trade between the U.S. and several Central American nations, including Nicaragua.

Additionally, the expert pointed to inadequate infrastructure for office spaces and BPO sites, as well as high export and supply chain costs. Nicaragua’s dependence on Costa Rica and Honduras for deep-water ports only adds to these logistical challenges.

Thriving Workforce

According to the EF English Proficiency Index, Nicaragua ranks 6th in Central America, 14th in Latin America, and 59th worldwide. This places the country ahead of nearshoring heavyweights like Colombia (17th in Latin America, 71st worldwide) and Mexico (20th in Latin America, 87th worldwide).

However, the growth in English proficiency has been slower than expected. With demand growing, leading to companies have recently been forced to a $100 increase in salaries for entry-level BPO agents.

To address this, nearshoring businesses have developed English education programs throughout the country. They serve as preparation phases prior to call center agent operation or other jobs.

Brain drain has long been a challenge for Nicaragua. All interviewed experts agreed that it has worsened under Biden’s “humanitarian parole” policy.

Large-scale emigration is common in Central America. In 2024 alone, 98,000 Nicaraguans legally emigrated, with 58,000 heading to the U.S. Nicaragua’s central bank reported that remittances hit an all-time high of $5.2 billion in 2024, accounting for nearly 30% of the country’s GDP.

Experts have expressed uncertainty about the potential revocation of humanitarian parole by Trump administration, which could involve mass deportations and the rollback of immigration facilitation policies.

Ortega’s Outlook

Despite the challenges, interviewed business leaders agreed that Nicaragua’s active investment incentives are attractive and that the country offers a high quality of life despite political instability.

“There are many corporate tax exemption benefits for the BPO industry. To put it into perspective, the corporate income tax rate is 30%, and this falls under the umbrella of free zone incentives. This alone allows companies to generate savings compared to operations in other regions.”

Due to the absence of a free press, access to comprehensive national data is challenging. However, it’s safe to say that labor arbitrage has remained highly advantageous for an extended period.

When asked about the chances of overcoming these major productivity barriers, the response was overwhelmingly pessimistic.

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“The government is focusing all its energy on strengthening its new relationship with China while letting trade with the U.S. move on autopilot. I seriously doubt that nationwide programs will be launched to increase the number of bilingual English speakers.”

Juan Diego Barrera Sandoval

Colombian business, politics, and cultural journalist. Managing Editor for Nearshore Americas and El Enemigo.

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