Perspectives 2018: The Way Towards 2030 Starts Today

Introduction

I appreciate the opportunity to be able to speak.  When I first arrived in the country, I attended a presentation where a vision of the future of Nicaragua was presented but only covered that same year.  Now I’m glad that we can have a longer-term vision. If “The Way towards 2030 Starts Today,” we must first understand where Nicaragua is today.  For me, the situation in Nicaragua can be described as uncertain, and I have chosen the word uncertain for two reasons:

First, due to the decisions that Nicaraguans have taken on the direction of the country.  And the second, due to the global trends that affect all countries.  I’ll start by explaining the first one:

First Uncertainty:

The Decisions of the Nicaraguans

The Nicaraguans’ doubts about the elections have led to a reduction in participation in the political process and a decrease in confidence in the country’s institutions.  The OAS came to the country and yet it is not possible to identify any changes that have occurred as a result of their involvement.  In turn, this uncertainty about the sustainability of the current political system, has an economic component.

The maneuvers to preserve the immunity of Roberto Rivas and allow the Supreme Electoral Council to continue functioning without any significant change, constitute a missed opportunity to show potential investors that Nicaragua is working to strengthen its institutions and fight corruption.  On the contrary, the actions taken reaffirm the general perception that in Nicaragua the Rule of Law, and institutionality are weak.  Investors are clear that risk and return are always linked.  If the level of risk increases, investors will demand a higher level of return. And in Nicaragua, the risk has increased but the chances of obtaining a higher return have not, which makes it less competitive.  Both the decisions Nicaragua has taken at the national level and its foreign policy have contributed to generate uncertainty.

In particular, I refer to: the NICA Act, the official recognition of South Ossetia and Abkhazia and the Global Magnitsky law.  These aspects together, affect Nicaragua’s relationship with its principal trading partner. Investment is necessary in order for Nicaragua to adjust to globalization and face the Fourth Industrial Revolution and thus continue to grow.

As the Nicaraguans know very well, the NICA Act, which is still pending in the Senate, would instruct the United States Government to vote against loans for Nicaragua.  This initiative comes as a consequence to the lack of democracy, the violation of human rights, corruption, and close relationship with Russia and Venezuela.  What many may not know is that the United States government prohibits a close working relationship with governments that have recognized South Ossetia and Abkhazia, with Russia, Venezuela, Nicaragua and Nauru, being the only countries in the world that have done so.

And if this were not enough, Roberto Rivas was sanctioned under the Magnitsky Global Act for corruption.  The purpose of the designation by the OFAC is to prevent funds from corrupt origins from entering the United States financial system.  It is well known that Nicaragua is affected by the sanctions that the United States has imposed on the Venezuelan company PdVSA, given that the company is a majority shareholder of ALBANISA.  The sum of the national political situation and foreign policy create uncertainty among potential investors and put future loans at risk.

Now, we move from the local to the global arena.

I am referring to the world trends that no particular country is able to control but that affects them all.  Some vocabulary terms of these global trends are: Globalization and the Fourth Industrial Revolution.  One of the main characteristics of the Fourth Industrial Revolution has been the increase in automation.  This is of great importance because Nicaragua’s main competitive advantage is the low-cost of its labor force.  But as more activities are done by robots, the cost of labor becomes irrelevant.  Then, innovation and knowledge become engines of development.

Another characteristic is that the Fourth Industrial Revolution provides opportunities for people around the world to participate in economic development in totally different ways than they did before.  To some extent, less development can be an advantage.  For example, Africa is far ahead of the United States in developing new and creative ways of doing mobile banking, because it does not have a pre-existing industry of considerable size that requires modifications to incorporate new technology.  Nicaragua is in a similar situation, although with greater economic resources than many African countries.

Addressing Uncertainty

I urge Nicaraguans to determine what actions you are going to take now so that by 2030 the word describing Nicaragua will be “sustainable” instead of “uncertain”. There are many possible paths to 2030. 

Future

I offer some ideas for your consideration. Companies take into account three fundamental aspects – the cost of labor, the cost of energy and the qualification of the personnel.  Until now, Nicaragua has depended mostly on the low cost of its labor.  But, in the Nicaragua of 2030 this option is not viable.

If you do not want to stay behind, you should focus on generating sustainable energy with competitive prices and preparing your youth.  In that sense, USAID helped to create the Nicaraguan Network for Technical Education (RENET), a multi-sectoral organization that brings together technical vocational centers, NGOs, universities and companies to improve the quality of vocational training and to satisfy the demand for skilled labor.  USAID is also helping youth prepare for the future by inspiring them through the use of new technology.  In a recently held hackathon, some young people developed very useful applications to address interesting topics such as solid waste management and translation of native languages to improve communication and understanding.

The survey carried out by COSEP showed that one of the main challenges of the private sector is finding employees with a good level of English.  The Embassy is working hard to help Nicaraguans fill that expectation through various English teaching programs.  In addition to finding employment speaking English opens the doors to the latest information and research in different academic disciplines, which are only available in English.  The information acquired and the lessons learned online can be applied in Nicaragua to contribute to the prosperity of the country.

One of the most important sectors in Nicaragua is agriculture.  The projections show that in order to feed the world population, which in 2050 will reach 9 billion people, food production needs to increase by 70% worldwide.  What does that imply for Nicaragua?  This implies the use of the most advanced technology in genetics to increase the productivity of both crops and livestock.  The Embassy has facilitated the exchange between US and Nicaraguan companies to ensure that Nicaraguan producers have access to better genetics.  Genetic technologies not only improve productivity, but also profitability.  During the last 30 years, many countries in the Western Hemisphere, such as Brazil and Argentina, have adopted genetic engineering technologies, achieving greater corn and soybean harvests.  While those of Nicaragua have remained the same, not incorporating new technologies.  Also, the absence of an inclusive legal framework for transgenic crops prevents Nicaraguan producers from having access to this type of technology and thus be able to compete in the international arena.

The way to 2030 must address the way that the most innovative technologies are available to these cattlemen and farmers.  The construction sector has been a significant source of employment and development in recent years.  The movement of people and goods within Nicaragua requires the construction of new roads.  However, we all know how difficult it is to maintain  the roads free of potholes.  The Embassy is proud to have partnered with a U.S. firm which has developed specialized fibers, helping roadways, parking lots, and other surfaces last longer and use less material.  This innovative product, which no one will see once it is in the road, demonstrates that not all Fourth Industrial Revolution activities involve computers.  Traditional roads are not the only means of moving goods.

I want to highlight an innovative form of transportation that is being used in other countries.  Rwanda is a mountainous country in Africa that has had a violent past and currently has a GDP per capita of approximately one third that of Nicaragua.  Perhaps because of its historical challenges and in order to overcome them, the Rwandan Government and the private sector have collaborated to establish the first commercial drone delivery service in the world.  The product delivered is blood used in health centers around the country.  Since it is currently time consuming to deliver products and not possible to consistently store the product around the country, instead, the blood is stored in one  facility that meets the necessary health and safety standards and is sent via  drone to the local health clinic when requested.  Whereas delivery by vehicle could take two hours (assuming there are roads), drone delivery takes 20 minutes with no additional infrastructure needed.

This is another example in which technology anticipates laws.  Each country is different.  But countries that adapt their laws faster to conform to international standards are more likely to attract the positive attention of potential investors.  The financial sector plays a vital role in the economic development of any country.  The Financial Action Group of Latin America (GAFILAT) is a regional intergovernmental organization that works to prevent and combat money laundering, financing of terrorism and financing the proliferation of weapons of mass destruction.  Its October 2017 report concludes that Nicaragua “has made important efforts.”  But it also concludes that Nicaragua is not in compliance in a number of important areas.  Having the proper regulations and laws is important, but regulations and laws must be applied consistently and uniformly in order to have value.

Conclusion

In closing, this generation in this room has the opportunity and the responsibility to address these and other issues.  Nicaragua can choose to capture emerging markets and growth industries created by the Fourth Industrial Revolution, or can chose to be left behind as other countries seize those opportunities.

Some firms in Nicaragua are already taking action.  BANPRO is using Artificial Intelligence to respond to customer queries and NIMAC is using satellite technology to monitor the efficient use and proper maintenance of the equipment it sells.

However, too often, Nicaraguans settle for the same methods that their grandfather used, which honors tradition but sacrifices gains.

The citizens of each country must make their own decisions.  The important thing is that the conversation about the future be in a frank and open manner, respecting each other and with fidelity to the facts.  All members of society have to participate in these conversations, not just government officials or leaders of large companies – like many of you – also community leaders outside of Managua and the workers who will be in charge of implementing the decisions.

However, it can be said that this is easier said than done.  As one Chinese philosopher said, “a journey of a thousand miles begins with the first step.”  The road to 2030 for Nicaragua begins right now with the discussion of a panel of experts.

Thank you.