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The Republic of Nicaragua is the largest country in Central America, covering an area of 121,000 km². It is bordered on the north by Honduras, on the south by Costa Rica, on the east by the Caribbean Sea and on the west by the Pacific Ocean.

In 2002, the total population was 5.3 million. About 84 per cent of the people are mestizos (of mixed indigenous and European descent), about 6 per cent are criollos (of African descent ) and almost 5 per cent are of European descent. Three indigenous ethnic groups, the Miskito, Sumo and Rama, account for almost 4 per cent of the population. Nicaragua's population is very young. The average age of Nicaraguans is 20, and more than 40 per cent of the people are under 15. Average life expectancy is 69 years.

The country has three distinct geographic regions: the Pacific lowlands, the north-central mountains and the Atlantic lowlands. Lake Nicaragua, the largest in Central America, is located in the fertile Pacific lowlands. There are also 40 volcanoes in the lowlands. Sixty five per cent of the total population lives in this region, where Managua , the capital, is located. 

Sixty per cent of the rural population, including the majority of the country's rural poor people, live in the dry north-central region, which covers 34 per cent of the country's territory. The Atlantic coast is a sparsely populated rainforest area where most indigenous people live.

Agriculture and the economy

Agriculture plays a key role in the Nicaraguan economy, accounting for 23.4 per cent of gross domestic product (GDP), whereas the primary sector (agriculture, livestock, fishing and forestry) accounts for 31.4 per cent. In 2002, about half of total exports included so-called traditional exports, such as coffee, beef, sugar, lobster and shrimp, bananas, sesame seed and cotton. On average, between 1998 and 2002, agriculture accounted for 42 per cent of all employment.

The country's agricultural production is lagging. Agricultural yields in general are not improving and some are declining because technological progress is slow. During the 1970s, the country was considered Central America 's main provider of grain. Currently it has to import rice, maize and beans, the people's staple foods.

Yields increased for some products between 1994 and 2000, including coffee, sugar cane and bananas. Overall, there is little diversification of crops, and farmers' incomes are highly vulnerable to adverse weather and market conditions. Droughts are recurrent, and less land is irrigated than in the 1970s.

Farmers do not have access to extension and banking services to improve income-generating activities. Only 8 per cent of small- and medium-scale farmers benefit from technical assistance programmes. Only 6 per cent of all farmers have access to formal bank financing. Many families do not have access to land.

Rural areas in Nicaragua need renewed transport infrastructure, market access and electrical power. The Atlantic coast area needs an adequate port.

Nicaragua's recent history has been marked by natural disasters, economic crises (external debt, decreasing trade, low growth of GDP, and high fiscal deficit) and political crisis, particularly the civil war. Until the mid-1990s, these crises and the transformation of the economy fed a severe recession and caused an increase in poverty.

The country has recently achieved macroeconomic stability and sustained growth. In 2002, the GDP totalled about US$4 billion. Public spending for poverty reduction has increased. But Nicaragua is still the poorest country in the Americas, after Haiti, with a GDP per capita of US$754 in 2003. It is one of the countries where income distribution is most unequal: 40 per cent of the poorest people account for only 10 per cent of income, while the wealthiest 10 per cent of the people claim 45 per cent.

Source: IFAD