Nicaraguan Government officials and UNCTAD experts met in Managua on 26 and 27 June to review the final findings of a Services Policy Review (SPR) of the country.
The participants at the meeting took stock of Nicaragua's achievements in reforming services policies. They also discussed current challenges.
Among various reforms, Nicaragua has introduced changes to its business environment, improved its macroeconomic management, and designed incentives that have led to increased investment in specific services sectors over the last decade. Investment has climbed notably in the telecommunications, energy and tourism sectors.
Other policy and regulatory changes that have been introduced relate to education, the road transport network, the stability of the financial sector, the modernization of internal trade, and the development of a long-term strategic framework for the tourism sector. Dialogue between the Government and the private sector on policy design in services has significantly improved in recent years, too.
In broad terms, the Nicaraguan services sector is affected by "informality" in employment and business operations, and faces challenges related to quality. The biggest barriers to development for services providers are a lack of access to finance, and burdensome procedures for the registration and operation of businesses.
Stakeholders at the meeting said that the challenges affecting the telecommunications sector in Nicaragua included ensuring universal access, coping with the tax regime (which currently increased the cost of importing equipment), high interconnection charges among different operators, and resolving weaknesses both in the legal regime and in the institutional framework for consumer protection.
In the case of road transport, the sector is affected by the lack of competitiveness of local service providers due to high fixed costs, burdensome procedures at border crossings, and regulatory frameworks that are not in line with the needs of services operators, who increasingly use multimodal transportation.
In tourism, the challenges lie in quality certification and in the business development of small and medium-sized enterprises (SMEs). SMEs make up the bulk of the firms operating in tourism.
In the case of the financial services sector, weaknesses identified by the SPR include shortcomings in institutional and policy frameworks that are intended to provide financing for the development of productive capacities.
To overcome these various challenges, stakeholders at the meeting discussed the recommendations emerging from the SPR.
UNCTAD Services Policy Reviews recommend policy reforms to help countries meet their development objectives through enhancement of their services sectors.
Among the issues discussed at the meeting were the SPR's recommendations with regard to strengthening competition regulatory and institutional frameworks, improved methods of payment and facilitation of business transactions, and the development of specific policy frameworks and incentives that maximize opportunities for SMEs.
In the case of telecom services, the recommendations included - for example - strengthening the institutional setting to monitor competition and the evolution of the sector. The SPR also recommended developing new legislation to protect consumers and to address their complaints.
In the case of road transport services, the recommendations focused on updating legislation, enhancing national and regional transport commissions, diagnosing the main bottlenecks at border crossings, and improving the inter-institutional coordination needed to resolve those bottlenecks.
In the tourism sector, the main recommendation was that the Government develop legislation to regulate quality standards and new entrants in the industry.
In the case of financial services, the main recommendation was to strengthen the policy and institutional framework and to expedite procedures related to financing for the specific services activities of SMEs.
By reviewing the economic, trade policy, regulatory and institutional frameworks characterizing the services sectors of Nicaragua, the SPR study can play an instrumental role in providing policymakers, regulatory authorities and other stakeholders with an improved understanding of the dynamics of the services economy and of the issues currently confronting it.
In turn, experts at the meeting said that this understanding could form the basis for effective reforms to the regulatory and policy frameworks underpinning these sectors. Ultimately, such progress can pave the way for policy reforms that advance both the nation's services economy and its broader national economic and social interests.
