The World Bank’s Board of Directors have approved a zero-interest credit for US$20 million to support the government of Nicaragua to improve water and sanitation services in rural areas.  The Board of Directors today also approved a US$20 million zero-interest credit for US$20 million to enhance the competitiveness of micro, small, and medium enterprises (MSMEs) and the business climate that affects those firms.

Total support approved for both projects under the International Development Association, or IDA, is $40 million.

“Investment by small and medium enterprises will help Nicaragua’s economy to grow.  We are also very aware people need improved water and sanitation services in rural areas, so I am delighted the Bank can support the government in these key areas of its National Development Plan,” said Laura Frigenti, World Bank Director for Central America. “The approval of both of these projects will be integral to the success of the Country Partnership Strategy agreed with the government late last year,” Frigenti added.

The Nicaragua Rural Water and Sanitation Project seeks to increase access by project beneficiaries to sustainable water and sanitation services in rural areas and is aligned with the government’s development objectives, as improvements in water and sanitation have been explicitly outlined in the National Development Plan (PND). The plan outlines the government’s intention to promote the sustainability of water and sanitation infrastructure and service expansion in rural areas through community participation and education, and the coordination of agencies such as Fondo de Inversión Social de Emergencia (FISE) and the municipalities.

Specifically, the program will target rural and indigenous communities, improve access to water services, and have a stronger impact on women and children because they traditionally are tasked with fetching water from and washing clothes and children in far-located water sources.

The Nicaragua Micro, Small, and Medium Enterprise Development (MSMEs) will be implemented over five years and improve the quality and affordability of services to MSMEs through four components:

(i)  improvements to the business and investment climate for MSMEs;

(ii)  matching grants for MSMEs to support, inter alia innovations, environmental improvements, and forward and backward linkages;

(iii)   innovative financial services such as a pilot partial credit risk guarantee system for MSMEs in coordination with regulated financial institutions; and

(iv)  improved strategic, technical and coordination abilities of MIFIC in the field of competitiveness. The components have been designed to maximize complementarity. However, if the implementation of one component lags, this will not have a significant negative effect on the other components. The primary focus of the project’s interventions will be on urban MSMEs.

Both $20 million zero-interest credits funded by the International Development Association (IDA) have a reimbursement period of 40 years with a 10-year grace period.