Nicaragua’s Increased Dependence on Family Remittances
The sacrifices of “Carlos”, “Donald”, “Patricia”, “Andrés”, and “Raúl” to send remittances, Nicaragua’s fastest-growing economic category
By Cindy Regidor (Confidencial)
HAVANA TIMES – People go, money comes. Tens of thousands of Nicaraguans have left their country, flowing like rivers to the north, the south and across the Atlantic. Many are fleeing political persecution, while others are migrating in search of better (or at least some) economic opportunity. Most go with the goal of being able to send remittances to family members back home.
The socio-political and economic crisis that has been dragging on for more than four years in Nicaragua has forced more than half a million Nicaraguans to leave for the United States, Costa Rica, Spain or other destinations. Lack of employment, insufficient wages, the high cost of living, hopelessness and uncertainty propel them to leave their country, although the dictator Daniel Ortega –self-isolated from the international democratic community– blames the U.S. sanctions imposed on his officials and political operators for their corruption and human rights violations.
By the end of 2022, remittances in Nicaragua will have increased by 38% compared to 2021, according to trends observed through August of this year.
In 2021, Nicaragua received $2.15 billion in remittances, and in 2022, remittances totaling $2.97 billion are expected. This amount would exceed the 2021 General Budget of the Republic, which was $2.92 billion dollars.
In a country of 1.6 million families, 850,000, or more than half of Nicaraguan families will be receiving remittances by the end of 2022, according to Manuel Orozco, researcher and specialist in migration and remittances at the Inter-American Dialogue think tank. Moreover, Orozco adds, these households are increasingly dependent on this income, as the remittances account for, on average, 70% of the households’ total income.
Remittances for household expenses and education
“Carlos”, a Nicaraguan who lives in a small town in Wisconsin, United States since the 1990s, says that sending remittances to Nicaragua “is a great boost for the family and, at the same time, we are injecting money, investing in the country’s economy”.
His mother and his one-year-old daughter stayed back, in a town in Granada, and he began to send money for their living expenses. Currently, Carlos sends about $800 a month: $500 to pay for a nephew’s private university tuition, and the rest for living expenses for his sister and those who live with her.
Like Carlos, tens of thousands of Nicaraguans send money home from the United States, representing more than 70% of the total remittances coming into Nicaragua, according to Orozco.
This statistic is confirmed by the most recent data from the Central Bank of Nicaragua: The principal origin of remittances in the third quarter of 2022 is the United States with 78.8% of the total, followed by Costa Rica (7.7%), Spain (7.5%), Panama (1.8%) and Canada (1.0%).
The fact that most of the money comes from the United States is not only because a greater number of Nicaraguan migrants who have settled in the U.S. are sending money to their loved ones, but also because there has been a recent substantial increase in the number of migrants who are opting to migrate to the U.S. Orozco estimates that there are already more than 500,000 Nicaraguans in the U.S., and that more than half of them arrived after 2018, when the socio-political and economic crisis in Nicaragua exploded.
“They arrived [in the U.S.] during the pandemic, but at the same time, the economy is going through a boom. The economic pace has been facilitated by foreign labor and that includes Nicaraguans,” said Orozco.
“Donald” is one of those Nicaraguans who arrived recently in the United States. Since last year he has been living in a city in Florida, where he does manual labor to make money and send about $200 a month to Managua to help his mother, sister, nieces and nephews. They use that money to help cover household expenses, although there have been months in which Donald has had to cover 100% of those expenses.
Donald says, “I usually send a maximum of $200, although one month I sent only $50. A few days ago I sent $170, because my sister didn’t have enough to make the payment on her motorcycle and on the cell phone she just bought. But I know that before the month is over, I’ll have to send a little more.” While the bulk of the funds are intended to ensure that his mother and the rest of the family can cover basic expenses, the money also serves to cover some debts, and “even to pay the expensive electricity bill”.
How much money do Nicaraguan migrants send back to Nicaragua?
Those who have been abroad longer tend to send more money, as in Carlos’ case but, says Orozco, the difference with those who have recently arrived is not substantial.
Nicaraguan migrants in the United States and Panama send larger amounts, and those amounts have increased over time. In 2019, they were sending, on average, $230 per month, while by June 2022 they were sending $340 per month.
Faced with the economic situation in Nicaragua, many migrants respond either by working more to earn more money or by decreasing what they spend on their own needs in order to save money and send more to their families. In general, the increase in amount sent from one year to the next might be 7%, but the number of annual remittances has increased. If they used to send money monthly, or 12 times a year, now they’re sending money 14 or 15 times a year.
Remittances as economic lifeline
The “lifeline” role of remittances in Nicaragua remains the same. “People send money regardless of whether there is a crisis or recession [in the countries to which they have emigrated], because it’s a family social responsibility that implies commitments, adjustments, sacrifices,” Orozco points out.
The “lifeline” trend has been accentuated by the current unprecedented increase in the migratory flow. Orozco estimates that in just two years, between 2021 and 2022, there are more than 400,000 new migrants from Nicaragua, which, in practical terms, generates a minimum increase of more than 250,000 transactions or remittances from one year to the next. Seventy percent of these new migrants start sending money the same year they leave the country, so by 2022, the minimum increase will be 150,000 transactions.
Orozco explains that in some cases, the person who migrates is the only family member who had a job, but that the income wasn’t sufficient. This leaves the household without employed family members. The migrant ends up sending more than what he or she earned in Nicaragua and so the family’s conditions may actually improve.
The bleak economic outlook in Nicaragua puts pressure on migrants, who know the problems faced by their loved ones they left behind: inflation, the high cost of living –the most basic monthly food basket costs more than the equivalent of $500— and unemployment.
“Andrés” says that his mother’s quality of life has not improved, even though she receives more money from abroad. “She talks a lot about the price increases for basic food products, so even though I now send her $100 dollars instead of the $50 I used to send her, it’s the same, since expenses are almost double,” he says.
150,000 new Nicaraguan households depend on remittances
The families of “Carlos”, “Donald”, “Patricia” and “Andrés”, are part of the 850,000 households receiving remittances in Nicaragua. When the crisis started, in 2018, there were 650,000 households receiving money; now there are 200,000 more.
Before 2018, dependence on remittances as a function of total income in Nicaraguan households was, on average, lower than in the rest of Central America. Today it is more than 70% because, according to Orozco, “not only is the one sending money sending more, but those who are earning in Nicaragua are not earning enough.” He also points out that given all this, there is no disposable income to allow for savings. Basically, more than 90% of total household income goes to basic consumption.
The Ortega-Murillo regime benefits from the money sent by the migrants it drives out of the country
Remittances, in addition to being a “lifeline” for Nicaraguan families, end up financing the State controlled by the Ortega-Murillo regime, since “remittance-recipient households contribute 63% of sales tax on consumption items”, according to Orozco.
“It’s the perversity of the dictatorial system. The regime takes advantage of the circumstances so that families have to buy things under the system’s rules”, says Orozco. He points out that the money migrants send is spent in Nicaragua, and as such, contributes to the taxes that are used, in many cases, to maintain and strengthen the authoritarian regime, such as on “the salaries of the police officers who monitor and intimidate their family members”.
“I see the regime using migration and expatriation as a source of income, as remittance numbers have gone up. I am not recommending not helping [loved ones in Nicaragua], but [the fact is] it is a way for them to breathe air into their system,” laments Carlos.
The mother of “Andrés” in Jinotega thinks that without the remittances she receives, she would not be able to continue living in Nicaragua. Her neighborhood is known for the large number of migrants who have left and gone, mostly, to Costa Rica. She says her neighbors who are still in Nicaragua are in the same situation as she is and that things do not seem to be getting better. First it was mostly adults who emigrated, but now more young people and adolescents are traveling, and the increased flow to the United States and Spain has already begun. “The government does not assure an improvement in the economy. As long as this continues, migration will remain the same or get worse”, says “Andres”.
“Patricia” is a Nicaraguan who will soon travel from Panama to Nicaragua, but she says that the plan is to go to the United States with her entire family. Her husband works for the Ministry of Education, but the salary is low and he feels lots of pressure from the Sandinista party. The family is scraping together the money needed to make the long trip and start a new life. Patricia does not want to leave, but she can’t see any alternative. The family will definitely leave, but the remittances will continue to arrive, this time from the United States, and the recipient will be her mother-in-law, who will stay behind in Nicaragua.
“Raúl,” like Patricia’s husband, also worked for the government, in this case a public hospital. He resigned because he felt a growing sense of danger as he noticed that the hospital’s political functionaries did not like him questioning the criminal way in which the Covid-19 pandemic was being handled.
The story of “Raúl” is told by his uncle Juan, who is unemployed. He is approaching a half century of life, which makes it more difficult for him to find a job despite his long experience in accounting and administrative work. He lives with his retired mother, whose food and medical expenses, thanks to Raul’s help, can be covered.
Juan has plans to emigrate, as does his nephew Raúl. “I want to go to the United States, where I have family. I could also go to Costa Rica, but I hear there are a lot of Nicas in that country, and I don’t know what the salaries will be like there.” Whatever the destination, Juan thinks it will be better than staying in Nicaragua. By leaving, he will become another Nicaraguan who will send remittances to his loved ones and will add to the official figures that the current regime boasts about when it assures people that the Nicaraguan economy is “responding well” to the crises it refuses to solve.
This article was originally published in Spanish in Confidencial and translated by our staff.