Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
NICARAGUA
FY 1997 FY 1998 FY 1999 Actuals Estimate Request Development Assistance.............. $9,994,000 $14,795,000 $15,900,000 Child Survival and Disease.......... $5,654,000 $8,800,000 $6,640,000 Economic Support Funds*............. $7,112,000 $1,000,000 P.L. 480 Title II........................... $1,489,760 $1,103,100 $2,362,000 P.L. 480 Title III........................... $1,385,000 --- ---
* LAC Regional request for FY 1999 includes $1,500,000
Introduction
Building a strong partnership with a peaceful and prosperous Nicaragua furthers U.S. national interests and strategic goals. A democratic, free market Nicaragua reduces national security threats near our borders, and offers an expanding market for U.S. products and investment. Promoting broad economic growth, creating new jobs, adherence to democratic principles, and respect for human rights slows immigration to the United States. Focused efforts to stem environmental degradation protects vital habitats and helps to assure sustainable development. The current U.S. program helped Nicaragua mitigate agricultural production losses from the El Niño-produced drought. Finally, this assistance will help to consolidate the rule of law, including resolution of U.S. citizen expropriated property claims, and help bring most citizens into the economic mainstream.
Development Challenge
Nicaragua continues to make measurable progress. The economy is in its fourth consecutive year of solid growth (estimated at five percent in 1997), led by the agricultural sector. Investment has jumped. Trade to and from the United States has soared. Unemployment and inflation have dropped. A new tax law provides incentives for private investment. 1997 witnessed a smooth transfer of power from one democratically-elected government to another. Potentially disruptive street demonstrations decreased. Remnant, armed groups from the war have demobilized. Fewer children repeat primary school grades and test scores are rising. Fewer mothers and children have fallen victim to health problems and the spread of infectious diseases. Nicaraguans have taken stronger measures to protect natural resources. However, the transition from past failed policies will take at least another four to five years to complete with sustained donor assistance levels to overcome the challenges to consolidate democracy and achieve broad-based economic prosperity. Graduation from U.S. assistance is not anticipated in the near-term.
The political challenge is to build trust in and legitimize Nicaraguan institutions and encourage civilian participation. Those in power must continue to reach out to the opposition to govern effectively and enhance reconciliation. The opposition must respect government actions and the decisions emanating from legitimate dialogue. Civil society groups need to provide an effective voice for people's interests. The National Assembly must have the tools and discipline to more professionally consider and draft legislation. The judicial system must continue modernizing to assure the rule of law in criminal and civil cases. The national and municipal bureaucracies must become more efficient, transparent and accountable to the people.
The economic challenge is to sustain growth in income and jobs. Nicaraguans must expand reforms, resolve fiscal imbalances, and reduce $6.1 billion in foreign debt of which $82 million is official U.S. debt (the USG forgave $284 million in official debt in 1991). Investors must feel secure, which means confiscated property cases must be resolved fairly and quickly. Commercial laws must meet the needs
of the global economy. The great potential of small farmers and microenterprises must be realized. The country must employ better incentives to save its rich natural resources. All avenues must converge to address stubborn un/underemployment, which results in nearly 50% of the people living at or below the poverty line.
The social challenge is to prepare children to participate fully in society. The primary education system must improve teaching and testing, reduce the years needed to graduate from the sixth grade, and encourage community and parental participation. The health system must better deliver preventive care and reduce public subsidies, while combatting still high infant and child mortality rates. Gains in economic growth are placed in jeopardy without reducing population growth rates.
Other Donors
The 1998-2001 timeframe is vital to Nicaragua. The government agreed with the IMF on a new economic reform program (Enhanced Structural Adjustment Facility or ESAF II) to sustain growth. However, the Nicaraguans must undertake formidable austerity measures, which could limit rural growth and social programs. Donors will provide the financial linchpin for addressing these needs. The World Bank and Inter-American Development Bank (IDB) are the top donors and bilaterals such as the European Union (EU), Japan, Sweden, Spain, Germany, and Taiwan are major actors with projects in economic, social and democracy sectors. In 1997, the U.S. ranked number seven, where the $27 million granted represented about six percent of official development aid to Nicaragua.
FY 1999 Program
The USAID program in 1998-99 will continue a strategy of building strong democratic institutions, encouraging broad economic growth, improving maternal and child health, and expanding primary education. To help Nicaragua address its problems in the face of the government's austerity budget, USAID is requesting $24 million (DA/ESF) plus $2.36 million in PL 480 Title II (and any Title III resources that may become available in FY 1999). Years 1998-2002 are critical to the strategy, in order to use recent achievements as a springboard for longer-term development.
The results expected over the next several years require persistence and innovation in these strategic objective areas: (1) More political participation, compromise and transparency; (2) Sustainable growth in small producer employment and income; and (3) Better educated, healthier, and smaller families. Under the first objective, USAID requests $6 million (DA/ESF) in FY 1999 to advance judicial reform, strengthen democratic institutions, improve local government services, expand the role of civil society and upgrade property bonds. This assistance will help modernize the judiciary through reform of key legal codes, establishment of a public defender's office, and follow up of human rights abuses. It will help the National Assembly to perform its duties, and the executive branch to be more transparent and follow ethical procedures. By the end of 1999, Nicaragua will be a stronger, yet still developing democracy, with citizens showing support for the system (demonstrated by polling data over time) and 65% of its citizens receiving basic water/sanitation services via local governments.
USAID also asks $8 million (DA) in FY 1999 to improve technology and marketing services, strengthen farmer organizations, provide credit and training to microentrepreneurs, and help Nicaraguans manage natural resources effectively. The aid will improve basic grains yields, diversify crops, improve seeds, speed land titling and structure a land market, strengthen rural credit unions, provide urban and rural microenterprise loans, protect natural resources and manage national parks. By the end of 1999, agricultural growth will exceed five percent for the fifth consecutive year, coffee and basic grain production will grow to 65 metric tons and 795 metric tons each (national figure), over 50,000 urban and rural microentrepreneurs (75% female) will have jobs, nontraditional agricultural exports will exceed $110 million creating 14,000 jobs, and improved management will be in place in seven national parks.
USAID requests $10 million (DA) in FY 1999 to improve family health and strengthen primary education. The aid will foster efficient and effective preventive health care, improve the nutrition of young children, spread reproductive health techniques, reform primary grade curriculum and improve teaching, and stimulate parental participation in schools. By the end of 1999, infant mortality will continue its decline, dropping to 47 per thousand live births, the vaccination rate for childhood diseases will reach over 90%, primary school completion will approach 40%, test scores will rise, fertility rates will drop below four children per mother, and contraceptive use will increase.
NICARAGUA FY 1999 PROGRAM SUMMARY
($000s)
USAID
Strategic and Special
ObjectivesEconomic Growth and Agriculture Population and Health Environ-ment Democracy Human Capacity Develop-ment Human-itarian Assistance
TotalS.O. 1
Political Parti-cipation, Com-promise and Transparency
- DA
- ESF*
4,500
4,500
S.O. 2
Growth in Small Producer Employment and Income
- DA
6,700
1,300
8,000
S.O. 3
Better Educated, Healthier, and Smaller Families
- DA
- CSD
- PL480 Title II
3,400
3,640
3,000
2,362
3,400
6,640
2,362Totals
- DA
- CSD
- PL480 Title II
6,700
3,400
3,640
1,300
4,500
3,000
2,362
15,900
6,640
2,362
* LAC Regional request includes $1,500,000 attributed to Nicaragua democracy objective
USAID Mission Director: George Carner
ACTIVITY DATA SHEET
PROGRAM: NICARAGUA
TITLE AND NUMBER: More Political Participation, Compromise and Transparency, 524-SO01
STATUS: Ongoing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY1999: $4,500,000 DA; $1,500,000 ESF (attributed under LAC Regional request)
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2003
Purpose: To strengthen democracy by helping the government be responsive to the people, by consolidating the rule of law including protection of human rights, and by empowering civil society. Mistrust still exists in society. Some groups continue to threaten extra-institutional means to address perceived wrongs. The four branches of government (executive, judicial, legislative and electoral)-- slowly modernizing and becoming more open--are not coequal in power, capabilities and accountability. The judicial system operates under obsolete codes, inefficient systems and arbitrary decision-making. Human rights abuses, while diminishing, are still of concern. Civil society continues to strengthen, but nongovernmental institutions must provide more constructive avenues of expression for people's interests. The country needs to decentralize power and strengthen local governments while promoting improved management of public finances and greater transparency. Overall, broad and informed citizen participation will help de-concentrate power and lead to an effective, representative government.
USAID Role and Achievements to Date: Recent public opinion polls indicate growing confidence in the democratic system, in particular the judiciary and municipal governments. The National Assembly has become a more functional, representative body, witnessed by its dealing with a number of important and controversial bills during the 1997 session such as property, tax reform, the judicial organizational code, etc. USAID contributed through its support to the Supreme Electoral Commission and to voter education and international observation efforts which helped assure free, fair and participatory elections. USAID support to the electoral council consists of assisting with completion of registration and voter cards for the Ad Hoc and the Atlantic Coast areas in preparation of the March 1998 regional elections. The program has spurred the formation of human rights committees at the community level, which encourage reporting/mediation of human rights violations. USAID is part of a multi-donor effort to reform governmental financial management systems to reduce fraud, waste, abuse and corruption. Hundreds of judges, prosecutors, court administrators have received training to improve skills, and key codes such as organization, penal, criminal, are being modernized. USAID, working through local NGOs, has improved the democratic functioning of local labor unions, fostered dialogue on civil-military relations, and supported domestic election monitoring.
Description: USAID will continue its democratic strengthening activities, focusing primarily in two areas: consolidating the rule of law and good governance. Under the former, USAID will undertake efforts to upgrade the efficiency, improve access and promote equity of the judicial system. In particular, the program will finance development of new codes such as administrative procedure, penal, criminal and others as necessary, plus a training program to assure proper implementation. It will establish and help initiate activities for a public defender's office, strengthen the attorney general's office, improve court administration with a view to address unique problems affecting the Atlantic Coast. It will continue to pursue a comprehensive system to protect human rights, by strengthening (through technical assistance) the peace commissions in towns and cities, improving the capabilities of human rights NGOs, and assisting the government's Human Rights Ombudsman, once he/she is appointed. Finally, USAID will continue to help improve the bond compensation mechanism for compensating owners of confiscated properties and support case resolution.
USAID will also undertake efforts to improve public sector transparency as well as provision of more cost effective and better quality services, and to promote greater citizen participation in community affairs. The program will emphasize municipal development and decentralization by improving the
capacity to deliver public services like water, sewer and garbage collection, helping local governments to increase locally-generated revenue and encouraging citizen participation in local decision-making by seeing that decisions are made more transparent and community views taken into account. It will improve the National Assembly committees' ability to research and draft legislation, train staff, foster better constituent relations, automate the information system and provide orientation to new deputies after the 2001 election. It will continue working with civil society groups to improve civilian-military relations, skills building for democratic trade unions, and to address women's rights through raising awareness of and opening avenues for protection from domestic violence. As groups graduate from our assistance, new ones that link closely to our democracy priorities like municipal development will be considered. The program will continue working on integrated financial management, but place more emphasis on public awareness of anti-corruption and ethics, and independent audits of government programs. After the 1998 Atlantic Coast election, USAID envisages small levels of technical assistance for the Electoral Council for the 2000 municipal and 2001 Presidential/Legislative Assembly elections.
Host Country and Other Donors: USAID takes the lead role in the rule of law, while Sweden, the U.N. and EU continue to support courthouse construction and penitentiary system reform. Spain, the U.N., the IDB and World Bank have funded complementary activities in police training, legal reform, statistics, and judicial administration. In good governance, the Danes and Swedes have worked on improving municipal administration in towns other than those USAID covers, while the World Bank, IDB and EU have financed construction and rehabilitation projects. The IDB (internal regulations) and Taiwan (building construction) have helped the National Assembly. The World Bank, IDB and USAID joined in a multi-donor effort to carry out financial management reform. Almost all donors have provided assistance to the election process.
Beneficiaries: All citizens of Nicaragua who: enter the criminal and civil judicial system; have been the subject of human rights violations; want to participate in local and national decision-making; want to know the use of public resources; want more efficiency in government and better services; and want a level playing for private investment.
Principal Contractors, Grantees, or Agencies: Nicaraguan: Nicaraguan Association for Human Rights (ANPDH), Permanent Commission for Human Rights (CPDH), Ethics and Transparency (ET), Supreme Electoral Council (CSE), Nicaraguan Strategic Studies Center (CEEN), Women's Center for Research and Action (CIAM), CONCIENCIA, FUNDEMOS, Nicaraguan Center for Labor Studies (CENDEL), Association of Nicaraguan Municipalities (AMUNIC), Ministry of Finance, Supreme Court, Attorney General's Office and the Comptroller General. United States: National Democratic Institute (NDI), Academy for Educational Development (AED), Casals and Associates, the Planning Associates Development Collaborative (PADCO), Interamerican Institute for Human Rights (IIDH), Center for the Education for Democracy (CED), AIFLD and the National Center for State Courts (NCSC).
Major Results Indicators: Baseline (1995) Target (1999) Political system support 43% 53% Public confidence in judicial system 35% 45% Households access to basic services 52% (1996) 65% Human Rights Ombudsman named (yes/no) -- yes (1998) Independent audits of public institutions 0 20 made public (cumulative)
ACTIVITY DATA SHEET
PROGRAM: NICARAGUA
TITLE AND NUMBER: Sustainable Growth in Small Producer Employment and Income, 524-SO02
STATUS: Ongoing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $8,000,000 DA
INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2003
Purpose: To sustain growth of incomes and employment opportunities of small producers through helping small farmers produce more and diverse crops, increasing small and microbusinesses in rural and urban areas, and fostering more rational use of natural resources. Jobs remain the major concern of the average Nicaraguan. Including low-wage underemployment, largely in agriculture, over 50% of the labor force needs more or higher-paying work. Productive jobs are the result of investments-- primarily private--in capital, technology and marketing. Although Nicaragua has made substantial progress in encouraging private investment, impediments remain. The poorer members of society need to participate in economic gains. Continued progress will require a rapid resolution of property claims, clearer/simpler export regulations, appropriate fiscal and monetary policies, less external debt burden, continuing privatization of state enterprises, increasing the competitiveness of Nicaraguan products, a stronger and a more responsive financial system, and modernized commercial laws and regulations.
Encouraging small farmers to produce more, and higher valued crops will improve the rural economy. Doing so will require increased access to more productive technology, credit and secure land titles. Rural markets must function efficiently so small producers can sell their products profitably. Access to new markets - nontraditional and internal - are essential. Agribusiness must expand so on-farm and off-farm employment will increase. In addition, microenterprise programs can provide opportunities to the poor in both urban and rural areas. Natural resources management is critical to Nicaragua's ability to improve production and exports. Protection and wise use of these resources require linkages to production to make activities sustainable.
USAID Role and Achievements to Date: Growth rates over the last four years have averaged 4.5%, including an estimated five percent growth in 1997. Inflation dropped from over 13,000% in 1990 to an estimated seven percent in 1997. Agriculture has been one of the key engines behind the growth, with basic grains and coffee enjoying big gains; agricultural exports more than tripled between 1992 and 1997. Nontraditional agricultural exports generated more than 11,000 jobs. Over 25,000 small farmers and cattlemen have benefitted from USAID services as of 1997. Microenterprises have generated around 30,000 jobs in the last three years. The GON has resolved U.S. citizen property confiscation cases; thus far almost 1,750 cases have been settled although another 1,000 remain. USAID helped the environmental ministry develop and pass the first environmental law with accompanying regulations. The quality and amount of protected lands under effective management has risen dramatically since 1993, but still lags well below world standards.
Description: The programs will provide the following services: 1) transfer technology to increase improved seeds and sustainable production practices; introduce new crops, including non-traditional high-value crops; and improve on-farm storage of basic grains; 2) marketing and business development; 3) agro-forestry, soil protection and training to better access financial markets; and 4) environmental education, implementing legislation and protecting selected biodiversity sites. The program will also strengthen artisanal seed production activities; develop and expand the use of inoculant for bean production; and build a national seed system. To accelerate titling and strengthen the land market, the activity will: support surveying and preparing topographical maps of farmers' land, and help to prepare legal title documentation; assist in analysis of the land market and current register procedures; study the feasibility of using partial mortgages for agricultural loans; and study the feasibility of establishing a land bank. It will support studies to: help non-conventional agricultural lending groups become more market-oriented; reduce costs of financial intermediation and promote lending for small
producers; and determine the barriers to inter-regional trade in agricultural products. The activity will target agricultural lands where ownership is not in dispute. P.L. 480 Title III activities (if any resources become available) will reinforce technology transfer and institutional strengthening capacity of small farmer service organizations.
The non-farm activity will strengthen twenty-eight credit unions and financial services in rural areas and provide technical assistance to national credit unions associations. It will develop a micro-enterprise program in rural areas to support value-added activities, including processed foods, post-harvest processing and storage, equipment manufacture and repair, and commercial services, such as small stores. It will also support microenterprise activities in the larger cities. Conservation of biodiversity and natural resource management will key on protected areas. Primary emphasis will center on increasing incomes of buffer zone communities through environmentally sound agricultural production and management practices, and increased tourism to national parks.
Host Country and Other Donors: Alleviating rural poverty has become a focal point for the government's economic strategy. They are increasing resources and requesting additional donor financing for small producer programs. The IDB provides credit for rural areas, funds for agricultural and livestock strengthening, a large property resolution program, and technical assistance to the government on privatization and the Superintendency of Banks. The EU is designing complementary efforts to promote agricultural production in various departments. The Netherlands, Sweden, and Norway provide credit for microenterprises and small producers, and Switzerland gives post-harvest assistance to basic grains producers. Germany and the World Bank are involved in protecting the Bosawas Reserve.
Beneficiaries: Small farmers, landless rural poor, small savers, small business people and micro entrepreneurs are the primary beneficiaries. Approximately 40,000 small farmers and 70,000 micro-entrepreneurs will directly benefit.
Principal Contractors, Grantees, or Agencies: Requests for proposals are being issued for our new small farmer and microenterprise activities. Therefore, grantees and contractors will not be known until later in FY98. For ongoing activities, U.S. partners include: Development Associates, The Nature Conservancy (TNC), TECHNOSERVE, Cooperative League of the United States of America (CLUSA), World Relief, and Center for International Environmental Law. Nicaraguan partners include: Nicaraguan Association of Producers & Exporters on Non-traditional Products (APENN), Nicaraguan Union of Agricultural Producers (UPANIC), National Union of Farmers and Cattle Owners (UNAG), Cocibolca Foundation, and the Ministry of Agriculture.
Major Results Indicators: Baseline (1993) Target Number of farmers w/access to improved production and marketing services 7,100 40,000 (1999) Agricultural Growth Rate (GDP) -0.5% 5% (1999) Coffee Production (metric tons) 40 70 (2000) Basic Grain Production (metric tons) 500 900 (2000) Microentrepreneurs receiving USAID credit 0 (1994) 65,000 (2000) Protected areas under effective management (index) 22 45 (1999)
ACTIVITY DATA SHEET
PROGRAM: NICARAGUA
TITLE AND NUMBER: Better Educated, Healthier, and Smaller Families, 524-SO03
STATUS: Ongoing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $3,400,000 DA; $6,640,000 CSD; $2,362,000 Title II
INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2003
Purpose: To develop human capital through basic education, health, and family planning. Education lays the foundation for an informed citizenry in a functioning democracy and productive workers in a competitive economy. The Nicaraguan education system requires a substantial effort to promote modern teaching methods, using improved curriculum. Parents and communities are beginning to participate in school activities, but need more assistance to assume a more positive role in their children's educational development. Sick citizens are unable to take advantage of job and educational opportunities, thereby increasing the burden placed on the social safety net. Particularly vulnerable segments of the population in Nicaragua are women and children. Primary and preventive health care are critical to mothers' and childrens' survival, full realization of their potential, and a more efficient, cost effective social support network. An unrestrained population growth rate can quickly reverse the gains achieved in other sectors. Family planning is an important ingredient in improving maternal health and child survival, and impacts on potential results in economic growth, environmental preservation, and poverty reduction activities.
USAID Role and Achievements to Date: USAID plays a major role in supporting basic education, health and family planning. Primary school completion rates have risen since 1993 from 23% to 30% in 1997. High repetition rates in the first grade have been cut in half over the past three years. Test scores for boys and girls in core subjects of math and Spanish have begun to rise. Infant mortality has dropped from 58/1000 to 49/1000 since 1993. Immunization coverage rates have sustained relatively high levels of close to 90%. The percentage of children with Vitamin A deficiency has dropped to below 20% from a 70% level in 1993. Fertility rates are estimated to have dropped from an average of 4.6 in 1993 to a bit more than 4.0 children per woman in 1997. Contraceptives have become more acceptable and more widely used in restraining unwanted pregnancy and preventing the spread of infectious diseases.
Description: In FY 1998-99 USAID will design and implement second phases of its maternal/child health, reproductive health, and primary education activities. We will continue to support curriculum reform, training in modern teaching methods; and increased community participation in the school system. The nationwide program will emphasize the higher primary grades (4-6), and provide a special focus on multi-grade schools and examine problems with bilingual education on the Atlantic Coast. USAID will continue civic education activities in primary and secondary school systems. In health, we support: an expanded program of immunizations; community health education through private voluntary organizations; technical assistance for decentralized health centers; training and commodities for AIDS control programs. USAID and the government will begin to explore realistic cost recovery activities, while assuring the rural and urban poor receive adequate coverage. USAID promotes Vitamin A and micronutrient fortification of foods, focusing on women and children under five years of age; support food supplements through P.L. 480 Title II programs in geographic areas where malnutrition is most severe; and encourages exclusive breast feeding for the first six months. We are financing the expansion of Profamilia, a local private voluntary organization; training MINSA and Profamilia personnel in contraceptive technology and patient counseling techniques; and supporting local NGOs and U.S. PVOs active in family planning and reproductive health services.
Host Country and Other Donors: The Swedes support regional health departments complementing USAID's activities. The World Bank and Japanese provide funding to improve health infrastructure including hospitals, water and sanitation projects. The Pan American Health Organization supports the immunizations program, while the U.N. helps in reproductive health activities. The World Bank and Japanese finance school construction. The Dutch provide support in education planning and curriculum development. The European Union is planning to focus on secondary education relative to teacher training, curriculum development and construction.
Beneficiaries: In the health sector, the primary beneficiaries are mothers and children under age 5. In education, our customers are approximately 800,000 primary school kids and 26,000 teachers.
Principal Contractors, Grantees, or Agencies: U.S. partners include: Management Sciences for Health (MSH), Ministry of Health (MINSA), The Pan American Health Organization (PAHO), Academy for Educational Development (AED), Save The Children, Project Concern and Development Associates. Nicaraguan partners include: Ministry of Education (MED), The Nicaraguan Association for the Promotion of Family Well Being (PROFAMILIA), and ADRA
Major Results Indicators: Baseline Target (2000) Total fertility rate 4.6% (1993) 3.8% Infant mortality rate (per thousand) 58 (1993) 46 Children with Vitamin A deficiency 67% (1993) 28% Women Breastfeeding exclusively for 4 Months 11.5% (1993) 20% Immunization coverage for children under 1 year of age 65% (1994) 90% Primary school completion rates (6th grade graduate) 23% (1993) 40% Achievement Test scores 4th grade Spanish 58% (1995) 84% Math 33% (1995) 58%
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