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Nicaragua’s crisis deals a crushing blow to businesses large and small
MANAGUA, July 1, 2018 (BSS/AFP) – With hotels, restaurants, bars, stores,
workshops and even tortilla sellers driven out of business or struggling to
survive, and with thousands of people left jobless, the turbulent political
crisis sundering Nicaragua has taken a broader toll, plunging its economy
into a tailspin.
The wave of violence unleashed during harshly repressed anti-government
protests has left some 220 people dead.
What had been a vibrant tourism industry has been devastated, with ripple
effects on the broader economy in a country that was already one of the
poorest in the Americas.
Business closings have left 200,000 people jobless, and unless the crisis
ends soon, some 1.3 million of Nicaragua’s 6.2 million people “risk falling
into poverty,” according to a study by the Nicaraguan Foundation for Economic
and Social Development (Funides).
The Nicaraguan central bank (BCN) has sharply lowered its projection for
economic growth this year, from 4.9 percent to one percent, while the
productive sector — including manufacturing and farming — has accumulated
losses of $430 million, with more than 85,000 jobs lost.
But for Funides, the situation in the private sector is even “more
dramatic.”
If the crisis continues into August, the foundation predicts the economy
will contract by a jolting 5.6 percent, with losses of $1.4 billion in GDP.
The demonstrations, which began April 18, were sparked by an unpopular
social security reform.
But after government forces responded with a repressive crackdown,
protesters stepped up their demands, calling for the ouster of President
Daniel Ortega and his wife, Vice President Rosario Murillo.
“Ortega has no choice but to move up the elections” that are now set for
2021, as the Catholic bishops serving as mediators have suggested, former
central bank president Mario Arana of Funides told AFP.
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– Adios to the tourists –
Tourism had been growing for the last decade, with more than a million
visitors a year, luring foreign and domestic investment in hotels and
airstrips, mainly along the Pacific coast.
But now touristic areas like Granada, on the shores of Lake Nicaragua in
the south, as well as the Pacific resorts and beaches, so recently teeming
with visitors, are nearly empty.
Some tourist areas seem on the verge of collapse.
The Hotel Mukul, part of the Auberge Resorts Collection on the southern
Pacific coast, once attracted the likes of movie stars Michael Douglas,
Catherine Zeta-Jones and Morgan Freeman. It has now “indefinitely” closed its
doors.
“The crisis… has negatively and dramatically affected the hospitality
industry throughout the country, and Mukul is no exception,” said a statement
on the website of the hotel owned by multimillionaire Carlos Pellas.
“It has become necessary to suspend operations due to the country’s loss
in tourism and due to the lack of visits to the resort.”
No less dramatic was the closing of the famous Casa de los Mejia, owned by
singer-songwriters Carlos and Luis Enrique Mejia Godoy, after 20 years in
operation.
A hostel owner in Managua who gave his name only as Marcos said that the
credit card company had sent someone to check his payment terminal because it
had been inactive for so long.
“They thought the machine was damaged, but we haven’t had a guest in two
months,” he told AFP.
Tour operators are reporting cancellation rates of more than 90 percent,
said Claudia Aguirre, president of the Nicaraguan Association for Incoming
Tourism.
While the sector had been expecting revenues of $924 million, it instead
faces losses of $231 million, the central bank said.
According to the Nicaraguan Chamber of Tourism, at least 700 of the 2,000
bars and restaurants it counts as members have had to close their doors,
along with 400 small hotels. Some 60,000 workers have lost their jobs.
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– Like an earthquake –
The crisis has hit big and small businesses alike. Many have tried to
survive by cutting corners, trimming staff or sending workers on forced,
unpaid vacations while they try to ride out the worst of the troubles.
“I thought this was going to be over faster, but it has dragged on,” the
owner of a small plastics factory told AFP, requesting anonymity. He said his
revenues had plummeted, and he has been unable to pay wages or make tax or
social security payments.
“It breaks my heart” to lay off long-time employees, he said. His company
has been in business for 50 years, even surviving the earthquake that
destroyed central Managua in 1972.
In Masaya, in the south, Daysi Mercado’s small dressmaking business
“collapsed” because there were no more customers. Because of the crisis, food
— not clothing — has become the priority, she said.
On a street in Managua, Marina Oviedo, who buys and sells dollars, waves
bundles of bills to attract customers. But no one comes. Her daily average of
$30,000 in transactions before the crisis has fallen to a mere $1,000.
Oviedo explained that most of her customers are the owners of small
businesses that have gone bust during the protests.
“No one is investing,” she said. “They say they’re going to wait for
everything to blow over.”
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