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Developing a new economic model through the social economy

News from Nicaragua | Friday, 29 March 2019 |

Women in Action Bakers' Co-op, Managua

Women in Action Bakers' Co-op, Managua

‘We believe that we need to transform the current model into a more humane economic model, in which human beings prevail, where people’s rights are respected, where there is work and equal treatment for women and young people.’ Adrian Martinez

The social economy in Nicaragua is the largest in Latin America, generating 40% of the country’s wealth and employing 80% of the workforce. It is made up of co-operatives, associations, small and medium businesses and farms, and self-employed workers such as street sellers.

Nicaragua is unique in having a government ministry called the Ministry of the Family, Community, Cooperative and Associative Economy (MEFCCA) responsible for empowering and facilitating the social economy.

Since July, 2018 the organisations that make up this sector have grouped together to form the Council for the Social Economy (CONADES) which is playing a leading role in economic reactivation.

NSC interviewed Adrian Martinez, General Secretary of the Confederation of Self-Employed Workers (CTCP), which has 65,000 members across the country, and participates in CONADES.

NSC: The members of the CTCP - street sellers, mechanics, carpenters, money-changers, porters, etc - are sometimes referred to as ‘informal’ sector workers. Why do you reject this term?

Adrian Martinez: For us there is no such thing as ‘informal’ work. All work generates wealth. We create work and produce wealth; therefore our work is not ‘informal’.

NSC: What sectors of workers are involved in the social economy?

AM: When we talk about the social economy, we are talking about families, co-operatives, associations, micro businesses and small and medium size enterprises. We call it “social” because it is made up of family capital, the capital of the members, and those who are beginning to form part of this new economic development model.

We believe that we need to transform the current model into a more humane economic model, in which human beings prevail, where people’s rights are respected, where there is work and equal treatment for women and young people.

This sector is of great economic importance in Nicaragua. Eighty per cent of food production is in the hands of this sector as well as 75% of urban and intercity public transport, 65% of business. This means that 80% of employment is in the social economy.

NSC: What impact did the attempted coup have on those in the self-employed sector?

AM: It has had a very strong negative impact on the economy, principally in the most developed sectors such as business, and production. But the self-employed were hardest hit because they don't have a consistent income or savings and lack the resources to face a long period of economic stagnation.

The economic damage to households was severe, as was the social impact. What's more, the majority of self-employed workers depend on tourism, business and transport: the economic activities worst affected by the failed coup.

NSC: In what ways has the Government recognised and supported the social economy?

In order to recover, we need to prepare our people, to train them, and give them technological skills; and to help them to become the protagonists in the efforts to find solutions to these problems.

Government support for the social economy is a top priority especially the sector that guarantees the country’s food supply. As CONADES we are analyzing with the Government how this sector, which underpins the economy, can be given a higher status in the country’s economy, commerce and politics.

State institutions have been providing support. For example, the Family Economy Ministry have been backing training and modernising of the sector. The Nicaraguan Institute of Tourism (INTUR) and the National Technological Institute have been providing training and preparation so that self-employed workers are represented and are in a position to make decisions.

Many colleagues are registering their small businesses with the Ministry of Development, Industry and Trade (MIFIC). They are certifying and patenting their products to be able to buy and sell directly in the national and international market. This wouldn't have happened previously: it was a privilege reserved for large businesses.

We are working towards a situation where this sector can make commercial transactions with various organisations both within Nicaragua and internationally thereby increasing revenue, improving business relations, and improving our market position in the Nicaraguan economy.

We are also working to increase production and to improve our products to compete better in the market place. We don’t just need to meet people’s demands for goods, but to ensure that we meet their demand for high quality goods that are competitively priced. All of this requires resources, means of production and improved infrastructure across a sector severely affected by the crisis.

NSC: What are the main challenges you face?

AM: The most important problem we face is the lack of resources. For example, we cannot get credit from private banks and so we have to create our own sources of finance. We are creating cooperatives financed from our savings but this is a very limited and slow process.

To speed this up the fundamental need is access to credit and technical assistance from state institutions. This will allow us to make a qualitative leap in the economic, social and political status of the people in our sector, as well as having a positive impact on the country’s economy.

One challenge is how to train our people, to organise ourselves and to quickly obtain the resources we need to improve our infrastructure.

Family Economy Fair: fresh products at fair prices...from the producer to the consumer

Family Economy Fair: fresh products at fair prices...from the producer to the consumer