The challenge of entrepreneurship in Nicaragua
The enterprises are an abundant source of jobs and production for the country. It is known that most of the companies in Nicaragua are family businesses and that they are currently the main creator of new jobs.
The World Bank establishes three arguments in benefits of the enterprises:
- They foster competition and entrepreneurship, and therefore create efficiency, innovation and aggregate productivity growth.
- They are more productive.
- The expansion of entrepreneurs promotes employment.
At a general level, entrepreneurship continues to be a trend that allows to invigorate financial systems and create an alternative to face unemployment rates.
According to the Global Institute of Entrepreneurship and Development, Nicaragua on issues of entrepreneurship is positioned at number 122. Said study makes an analysis of the capabilities of entrepreneurial ecosystems, the opportunities that each country has to develop innovative projects and ventures.
In Nicaragua, Law number 645, “Law for the Promotion, Encouragement and Development of Micro, Small and Medium Enterprises”, aims to promote and develop Micro, Small, and Medium Enterprises in an integral manner, fostering the creation of a competitive environment for the proper functioning of this economic sector of high importance for the country.
However, even with all the benefits that this economic sector has contributed to the country’s economy, it has one of the fundamental problems which is the high degree of informality and dispersion that they face. This issue is very important and transcendental for the good development of the sector, and is a limitation for obtaining credits and generation of formal employment from Micro, Small and Medium Enterprises.
That is why the Law created the Unique Registry of Micro, Small and Medium Enterprises, whose main objective is to identify and categorize entrepreneurs. To avoid the high degree of informality and that can be generators of formal employment, entrepreneurs must meet certain requirements established by Nicaraguan law to formally establish themselves as merchants:
- Register as a trader natural person or legal entity.
- Have a RUC card.
In conclusion, Micro, Small and Medium Enterprises or entrepreneurs in Nicaragua continue to be the main source of employment and contribute satisfactorily to the Gross Domestic Product. However, in order to be formally considered companies, they must comply with obligations in commercial, tax, labor and social security matters, and in this way they are constituted as a formal source of jobs and income.
Valeska Fonseca Torrez
Associate
García & Bodán
Nicaragua