Nicaragua - E-CommerceNicaragua - E-Commerce
Nicaragua ranks as the country has the least internet access in Central America with only a fifth of the Nicaraguan population using the Internet, based on estimates by the CANITEL. During the protests in 2018, the government has disrupted internet service in some cities. Publically available WiFi internet is unreliable and unsecure. Loss of access to internet remains a concern for Nicaraguans. Nicaraguan authorities may electronically monitor individuals concerning their activities.
CAFTA-DR's Electronic Commerce chapter requires nondiscriminatory, duty free treatment of digital products and encourages cooperation in numerous policy areas related to electronic commerce. However, electronic commerce is still developing in Nicaragua and there are no laws or regulations restricting its use. All eCommerce businesses must be incorporated with a physical address in the country.
The Digital Signature Law (2010/729) extends legal validity to electronic signatures and digital certificates to facilitate business and government transactions, especially international transactions. The governing body for the accreditation of an electronic signature is the Director General of Technology, which is part of the Ministry of Finance and Public Credit. There is no indication, however, that the system necessary to accredit electronic signatures has been implemented.
Current Market Trends
Although a growing middle class promises opportunities for this modern market, Nicaragua lags behind in online business. A first obstacle is lack of pertinent legislation for the sector, as the country has no legal framework regulating online transactions. While the few businesses offering online transactions generally have reliable security measures, there are no public incentives to conduct online sales initiatives and little public awareness or training available.
Nicaragua’s commercial banking system is conservative and highly concentrated, restricting electronic transaction options. According to online marketing experts, commercial banks ask for up to $10,000 in security deposits to guarantee online transactions. Some entrepreneurs use Pay-Pal and other foreign payment systems to avoid high transactions costs, but these systems are not integrated into Nicaraguan banks. Because of a lacking modern national mailing system, most Nicaraguan online stores do not offer home delivery.
Another major constraint is the size of the national market, which is still small and for the most part does not have the purchasing power to obtain credit or debit cards often needed for online purchases. According to the World Bank's global financial inclusion database (Global Findex), only 31% of adults had access to financial services in 2017 in Nicaragua.
During the violent repression of pro-democracy protests, social media was weaponized to feed misinformation to the public and to identify, threatened, persecute citizens involved in the protests. Whatsapp was used to disseminate pro-government rhetoric as part of social media campaigns to undermine the civic unrest in the country. mass Facebook groups representing student movements and were hacked and all social media activity has been closely monitored. Notions of privacy have been eroded, as police confiscate phones during traffic stops to search through citizen’s social media accounts for involvement in any protests.
Although the Nicaraguan government has encouraged broadband infrastructure projects with $1.7 billion of foreign direct investment being injected into the telecommunications sector over the past 13 years, moderately low levels of internet penetration (20%) and the limited scope of internet usage remains a challenge to the development of the e-commerce market. 3G and 4G LTE mobile network coverage now extend to 100 percent and 42 percent of the population, respectively, and fiber optic networks extends to nearly 95 percent of municipalities in the country. Despite these gains in internet connectivity, only 2.1 million people with smartphones have internet data plans, and there are less than 212,000 fixed line connections in Nicaragua, most concentrated near populated urban areas along the Pacific coast. This is largely due to Nicaragua having the highest average subscription costs in the region for both mobile data plans and broadband services.
Of the less than one third of Nicaraguans that subscribe to dedicated internet services, the majority of them are using the Internet primarily for social media and entertainment purposes. Most mobile phone subscribers only use software applications such as Facebook (28 percent) and WhatsApp Messenger (13 percent), both of which are typically included as part of a standard subscription or offered separately at minimal cost due to their vast popularity. Those with full internet access still spend the majority of their time accessing entertainment sites such as YouTube (12 percent) and Spotify (5 percent), or other social media platforms like Instagram (6 percent) and SnapChat (6 percent). Most Nicaraguans confine themselves to this limited scope rather than utilizing the Internet for broader information, educational (11 percent), and business purposes. As a result, most local companies do not have an incentive to develop websites and instead use the Facebook platform to create business pages and perform digital marketing or WhatsApp groups to advertise to their target audience or communicate with their clientele. Opportunities for U.S. companies to enter Nicaragua may improve as internet penetration and digital literacy continue to increase.
CAFTA-DR's electronic commerce chapter requires nondiscriminatory, duty free treatment of digital products and encourages cooperation in numerous policy areas related to e-commerce. As electronic commerce is still developing in Nicaragua, there are currently no laws or regulations restricting its use. However, all e-commerce businesses must be incorporated with a physical address in the country. The Digital Signature Law (2010/729) extends legal validity to electronic signatures and digital certificates to facilitate business and government transactions, especially international transactions. The governing body for the accreditation of an electronic signature is the Director General of Technology, which is part of the Ministry of Finance and Public Credit. There is no indication, however, that the system necessary to accredit electronic signatures has been implemented.
Despite the limitations, the last three years have revealed an accelerated growth in the volume of income from online sales. Social media is active and growing, with Facebook dominating the market. Nicaragua reported the largest growth in active Facebook users in the Central American region in 2017 with a penetration rate of 39.8%, up from 1.9 million users in 2016 to 2.7 million in 2017. Some local firms have succeeded in attracting large Facebook followings, including: Movistar (619,114), Banpro (613,013 followers), Claro (584,011), and Eskimo (349,359). Prior to the civic unrest, local online-marketing experts had noted that future business opportunities were likely in tourism, entertainment, nostalgic products, fashion, florists, bookstores and payments for various services, among others. Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Nicaragua eCommerce Industry Trade Development and Promotion eCommerce