Region/Countries: Central and South America and the Caribbean Industry: Other Date: June 2016

Why this is important to Wisconsin businesses: After years of delays, construction is beginning on this major project in Nicaragua.

After a year of delays, construction is expected to begin on a $50 billion canal across Nicaragua. Hong Kong-based HKND Group will begin by constructing a fuel terminal and ship wharf on the country’s Pacific Coast; the new port facility will then be used to import the machinery needed for subsequent phases of construction. Financing for the 170-mile-long (274-kilometer) canal will come from debt and equity sales and a potential IPO, according to HKND Group Vice President KW Pang.

"Many businessmen from Latin America, China and Europe have come to talk with us," Pang said. "The project’s financing does not depend on the state of the stock market in China. It is an international project. Funding will come from many countries and many investment sectors."

The project is expected to cost $50 billion and to be completed in 2021. It is expected that the canal’s development will generate between 40,000 and 50,000 jobs a year during the construction phase, 200,000 jobs during the operational phase, and 113,000 more jobs for the free trade area. The channel will have a width of 230 to 520 meters, a depth of 27.6 meters and a length of 276 kilometers, and is expected to reduce travel time to transport in the area by up to two months.

General Alvaro Baltodano, Nicaragua’s presidential delegate for the promotion of investment, said conditions are stable for investment in this project, citing an average annual growth rate of 5 percent over the last three years; macroeconomic stability, exchange and inflation; increasing employment rates; and growth in foreign direct investment (FDI) in Nicaragua. Since 2007, FDI growth has averaged 22 percent per year, for a total increase of 279 percent, to a total of $1.5 billion for 2014.

Opportunities to invest in Nicaragua continue to grow for all sectors, especially those related to the construction of the Grand Canal. Nicaragua placed 17th on TMF Group’s Global Benchmark Complexity Index for 2014, and dropped two positions in the World Bank’s Ease of Doing Business rankings. Wisconsin companies wishing to do business in Nicaragua should be aware of the market’s complexities, and Wisconsin’s trade representative for the market is available to assist.