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Study: Extreme Poverty Still on the Rise

Nicaraguans are becoming poorer, according to a study released last week which reveals that some two-thirds of Nicaraguans live in poverty or extreme poverty.

The study found that in 2005, 48.3 percent of Nicaraguans lived below the poverty line – which is defined by expenditures of $427 a year or less, and 17.2 percent of the population lives in an extreme poverty, meaning they consume less than $234 a year, or $0.64 a day.

Poverty has grown since 2001, when 45.8 percent of Nicaraguans lived in poverty and 15.1 percent in extreme poverty, according to the study, which was conducted by the Council of Central American Ombudsman’s offices.

Nicaraguan soci ologist and policy analyst Cirilo Otero said the report’s data is already stale and that poverty has actually increased at a much more rapid rate since the turn of the millennium due to a lack of social investment, poor public policies, and crippling levels of debt on which Nicaragua has been paying some $360 million a year.

The government spent about $14 per person on social spending in 2001 and spent about $24 per Nicaraguan in 2006, Otero said.

“Health hasn’t improved. There’s not enough doctors, not enough clinics,” he said. The report on poverty in Nicaragua concluded that there aren’t even enough resources to do an updated report on poverty.

It encouraged the Ortega government to invest resources to study the problem and update government poverty statistics.

Though the data is a bit old, the report provides a glimpse into the devastating effects of poverty on people’s lives.

Of those living in extreme poverty, only 17 percent graduate from elementary school, while only 4 percent make it through junior high or high school. Virtually none goes on to any form of higher education.

Among Nicaragua’s poor, the majority of whom live in rural parts of the country, one in four pregnant mothers is an adolescent, and one in four children under 6 has diarrhea.

A quarter of the economically active population is unemployed, while two-thirds of them work in the informal sector. Nicaragua’s minimum wage is barely enough to cover half the cost of living, the report found.

Fourteen percent of Nicaraguan homes have at least one person living abroad, most of them having migrated to Costa Rica or the United States.

Some 800,000 people are malnourished. Because Nicaragua receives so much foreign aid, public policy is directed in many cases without the participation of Nicaraguan leaders, resulting in projects that are not sustainable, the report found.

“The local government never even has to think about how to invest resources,” Otero said. Policies, he added, end up being shortsighted, such as helping street kids instead of educating and preparing their parents to become productive members of society.

The vast majority of Nicaraguan producers are micro-, small- and medium-sized businesses. The government could support them with favorable fiscal policy but so far hasn’t, the report found. Small businesses continue to pay high interest rates and have scarce access to credit.

According to the report, only a quarter of households receive any type of credit, and most of those people live in the cities and receive informal lines of credit or credit from microfinanciers.

The good news is that in 2005, school enrollment increased by 3.2 percent. But Otero said the quality of education must improve for that to mean anything.

The analyst said the most effective way to combat poverty is threefold: Triple spending on education and overhaul the school system to meet today’s global demands; find ways to include Nicaraguans in development projects instead of letting foreign development agencies and organizations do the job for them; and create a fiscal policy that acts as an incentive for investment in production and productive infrastructure.



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