Although Nicaragua has experienced economic stability and sustained economic growth over the last decade, it still is the country with the lowest per capita income among Central American countries at US$2,086 in 2015.
In 2011, poverty stood at 42.5 per cent overall, with 14.6 per cent of the population living in extreme poverty. In rural areas, however, up to 63.3 per cent of the population is poor, and some 26.6 per cent is extremely poor. Despite significant progress, reducing poverty remains a significant challenge.
Smallholder farmers play a decisive role in the Nicaraguan agricultural sector: 75 per cent of farmers possess less than 3.5 hectares but produce 80 per cent of basic grains and 65 per cent of livestock products. Smallholder farmers generate 56 per cent of the sector's exports, which include coffee, meat, peanuts, sugar, sesame, beans and dairy products.
Nicaraguan agriculture development is hindered by lack of infrastructure, qualified workforce, basic services and transport. In 2016, informal workers comprised 75 per cent of the agricultural labour force; yet employment in this sector has stagnated, compared with other sectors such as industry, construction and commerce.
The 2014 rural poverty rate (50.1 per cent) is more than three times higher than urban poverty rate, and 70 per cent of poor people are rural. This percentage is even higher for disadvantaged groups like indigenous and Afro-descendant communities.
The performance of the agricultural sector is highly influenced by Nicaragua's vulnerability to climatic events. Past extreme events, such as hurricanes, have disproportionately affected the agricultural sector.
In Nicaragua, IFAD loans support the efforts of farmers’ organizations and the Government to increase inclusive growth in the agriculture sector as a vehicle for reducing poverty, generating employment and improving family food consumption, as well as contributing to sustainability and the replication of good practices.
IFAD’s projects have transitioned from a focus on food security to an approach to jobs and business development through rural microenterprise, and then towards a focus on including smallholder farmers in larger-scale businesses and added value products.
Key activities include:
facilitating access to assets, markets and income-generating activities, and job opportunities;
increasing labour productivity through incentives that facilitate access to information, technology and technical and financial services; and
improving environmental, fiscal and institutional sustainability.
Moreover – and in association with other cooperating partners, public institutions and farmers’ organizations – IFAD promotes knowledge management, standardizing successful innovations in order to achieve more effective rural development practices.
The results and lessons of project implementation provide input for dialogue with the Government and the development of sector policy instruments, especially in terms of including women and small-scale farmers in value chains and access to markets, as well as self-employment and the generation of job opportunities.
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