Report No. 39736-NI Nicaragua Poverty Assessment (In Three Volumes) Volume I: Main Report May 30, 2008 Central America Country Management Unit Poverty Reduction and Economic Management Sector Latin America and the Caribbean Region Document of the World Bank JICA Japan International Cooperation Agency KFW Kreditanstalt für Wiederaufbau (Reconstruction Bank) LAC Latin-American and Caribbean LSMS Living Standards Measurement Survey MAIS Integrated Health Care Model (in Spanish Modelo de Atención Integral de Salud) MARENA Ministry of Natural Resources and the Environment MAGFOR Agricultural and Forestry Ministry MDGs Millennium Development Goals MHCP Ministry of the Finance and Public Credit MINED Ministry of Education MECD Ministry of Education, Culture, and Sports MIFAMILIA Ministry of the Family MINSA Ministry of Health MOH Ministry of Health MTI Ministry of Transport and Infrastructure NDP National Development Plan NER Net Enrollment Rate NGO Non-Governmental organization PAHO Pan American Health Organization PAININ Comprehensive Care Program for Nicaraguan Children PRS Poverty Reduction Strategy PSS Public Social Spending PER Public Expenditure Review PINE Comprehensive School Nutrition Program PROCOSAN Health and Nutrition Community Program (in spanish Programa Comunitario de Salud y Nutrición) RAAN North Atlantic Autonomous Region RAAS South Atlantic Autonomous Region SDC Swiss Agency for Development and Cooperation SETEC Presidential Secretariat SILAIS Integral Health Service Local Systems (in spanish Sistemas Locales de Atención Integral de la Salud) SimSIP Simulations for Social Indicators & Poverty SNV Netherlands Development Organization SWAP Sector Wide Approach UNICEF United Nations Children's Fund UPA Primary Agricultural Unit (in spanish Unidad Primaria Agricola) USAID US Agency International for Development WFP World Food Program WDI World Development Indicators Vice President: Pamela Cox Country Director: Laura Frigenti Director PREM: Marcelo Giugale Lead Economist: J. Humberto López Sector Manager PREM: Jaime Saavedra Task Team Leader: Florencia Castro-Leal Renos Vakis TABLE OF CONTENTS Acknowledgments _____________________________________________________ 11 Preface ______________________________________________________________ 13 Executive Summary _____________________________________________________ i Chapter I. Poverty and its Macroeconomic Context _________________________ 1 A. The Evolution of Poverty and Inequality 1993-2005 ___________________________ 2 B. Employment and Labor Income ___________________________________________ 14 C. Will Growth Reduce Poverty in Nicaragua? _________________________________ 18 D. Priorities as Identified by the Poor_________________________________________ 22 Leaders and people agree on the top priority: Potable Water _______________________________22 The construction of roads and repair of existing roads is also listed as a top priority by leaders and people in general_______________________________________________________________23 Having limited productive opportunities is a resonant theme nationwide ___________________23 Health and education, infrastructure and services, are at the top of the list for leaders and for people _______________________________________________________________________23 E. Policy Recommendations_________________________________________________ 24 Chapter II. Opportunities for Human Development ________________________ 26 A. Progress and Prospects in Attaining MDGs _________________________________ 27 Progress toward meeting PRS long-term Goals and MDGs ________________________________27 Prospects for attaining PRS long-term Goals and MDGs by 2015 ___________________________29 B. Opportunities in Education ______________________________________________ 31 Does education pay in Nicaragua? ___________________________________________________31 Inequities in Access: Enrollments ____________________________________________________33 An analysis of current patterns in educational attainment__________________________________37 What are the constraints to access to schooling?_________________________________________39 Exploring Differences in Quality of Instruction _________________________________________40 Internal Quality Indicators__________________________________________________________42 Quality and Test Scores____________________________________________________________47 The challenges in education ________________________________________________________49 C. Opportunities in Preventive Health________________________________________ 51 Health Status ____________________________________________________________________53 Maternal Health__________________________________________________________________53 Child Health ____________________________________________________________________55 Morbidity_______________________________________________________________________56 Healthcare Utilization _____________________________________________________________57 Preventive Healthcare _____________________________________________________________58 Social Security___________________________________________________________________60 Healthcare Constraints_____________________________________________________________60 Health Policy Recommendations ____________________________________________________62 D. Opportunities in Water and Sanitation_____________________________________ 64 Water __________________________________________________________________________64 Water Quality ___________________________________________________________________67 Sanitation_______________________________________________________________________68 Water Constraints ________________________________________________________________68 Water Policy Recommendations _____________________________________________________71 E. Opportunities in Reducing Malnutrition ___________________________________ 73 Malnutrition Policy Recommendations________________________________________________76 Chapter III. Opportunities for Income Generation _________________________ 78 A. Productive Services And Infrastructure _____________________________________ 78 Roads__________________________________________________________________________79 Energy _________________________________________________________________________83 Telecommunications ______________________________________________________________86 Credit Services __________________________________________________________________87 B. Inequities in Intangible Assets_____________________________________________ 89 Networks and Organizations ________________________________________________________90 Titling _________________________________________________________________________92 C. Agricultural Productivity _________________________________________________ 94 Factors of production______________________________________________________________96 Agricultural Inputs________________________________________________________________98 Determinants of productivity________________________________________________________99 Findings on Impact ______________________________________________________________100 Policy Recommendations _________________________________________________________101 Chapter IV. The Distribution of Public Social Spending in Nicaragua ________ 103 A. Public Spending in Nicaragua: Basic Facts _________________________________ 104 B. Distribution of Spending_________________________________________________ 106 Fiscal incidence and simulations____________________________________________________109 C. Sectoral Distribution of Spending _________________________________________ 110 Education______________________________________________________________________110 Preschool education______________________________________________________________113 Primary education _______________________________________________________________113 Secondary education _____________________________________________________________115 University education _____________________________________________________________115 Health __________________________________________________________________ 116 Housing and local public services____________________________________________ 118 Water and Sanitation______________________________________________________ 118 Social Assistance__________________________________________________________ 119 Rural development and road infrastructure ___________________________________ 121 Policy implications: making public spending pro-poor __________________________ 122 References __________________________________________________________ 124 Annexes ____________________________________________________________ 128 Annex 1 ­ Summary of Statistical Tables _____________________________________ 128 Annex 2 ­ Statistical Appendix______________________________________________ 128 Annex 3 ­ Technical document about two aspects related to defining the Extreme Poverty Line based on the Nicaragua 2005 Living Standards Measurement Survey (LSMS) __ 128 Annex 4 ­ Poverty Map of Nicaragua ________________________________________ 128 Tables: Table 1.1: Main Macroeconomic Indicators, 1998-2006 (percent)................................................. 1 Table 1.2: Poverty Rates with and without Remittances (percent) ............................................... 15 Table 1.3: Evolution of employment by sectors 2001-2005 ......................................................... 15 Table 1.4: Employment by sector and poverty level, shares of total employment (percent) ........ 16 Table 1.5: Employment shares and productivity, by sectors of economic activity ....................... 16 Table 1.6: Wages by sector of economic activity.......................................................................... 17 Table 1.7: Poverty Headcount Elasticities with Respect to Growth: 1998-2005 .......................... 19 Table 1.8: Poverty Elasticities for Countries in Latin America and the Caribbean....................... 19 Table 1.9: Correlates of Consumption in Nicaragua: 1998-2005.................................................. 21 Table 1.10: Average Level of Education of Population 25 to 64.................................................. 22 Table 1.11: Priority Programs as Reported by Leaders and People .............................................. 23 Table 2.1: Nicaragua: Progress toward Meeting PRS Goals and MDGs ..................................... 28 Table 2.2: Nicaragua: Prospects for Attaining Long-Term PRS Goals and MDGs..................... 29 Table 2.3: Returns to education by gender and area of residence ................................................. 32 Table 2.4 ­ Education and Poverty................................................................................................ 33 Table 2.5: Youth from the poorest households and rural areas have the lowest literacy rates...... 34 Table 2.6: Enrollment rates in the Atlantic Region fall behind nationally, especially for preschool and secondary school..................................................................................................................... 35 Table 2.7: Reasons why children ages 7 to 12 are not enrolled (%). ............................................ 39 Table 2.8: Type of primary school by region and strata................................................................ 41 Table 2.9: Type of Secondary school by socio-economic group................................................... 41 Table 2.10: Basic Statistics Autonomous schools........................................................................ 42 Table 2.11 - Ratio Pupil/Teacher by Region and Area.................................................................. 45 Table 2.12: Students with knowledge levels lower than Minimum Level (%) ............................. 48 Table 2.13: Poor households tend to use health centers (percent of those being ill last month).. 57 Table 2.14: Poor individuals in rural areas are the least likely to receive care from doctors, even in emergency cases, when ill......................................................................................................... 58 Table 2.15: Access to water across regions in Nicaragua in 2005 (in % of total households)...... 67 Table 2.16: Continuity of Water Supply ....................................................................................... 67 Table 2.17: Stunting national, urban, rural and by poverty, 1998, 2001 and 2005 ....................... 73 Table 2.18: Stunting national and by regions, 1998, 2001 and 2005 ............................................ 74 Table 3.1: Descriptive Statistics on Household Infrastructure...................................................... 79 Table 3.2: In rural areas, only 26 out of every 100 households have access to a paved road. ...... 80 Table 3.3: Farmers living in less accessible regions rely on merchants to purchase their agricultural production .................................................................................................................. 81 Table 3.4: Statistics on main source of lighting by socio-economic group................................... 83 Table 3.5: Electricity theft is common in Nicaragua, especially among the poor......................... 86 Table 3.6: Telecommunications through cellular technology has become the leading way to access to phone services in Nicaragua........................................................................................... 86 Table 3.7: Descriptive statistics on loan amounts received by households................................... 89 Table 3.8: Household participation in Associations in Nicaragua ................................................ 91 Table 3.9: Descriptive statistics on house titling by socio-economic group ................................. 93 Table 3.10: About 20 percent of the urban poor claim to have obtained their land during the "reforma agraria"........................................................................................................................... 94 Table 3.11: Share of landowners who rented their land for profit during the 12 months prior to the survey ............................................................................................................................................ 94 Table 3.12: Descriptive Statistics on factors of production and output for agricultural producers in Nicaragua....................................................................................................................................... 98 Table 3.13: The share of agricultural producers using certified seeds and fertilizers is generally low, especially among poor and small producers.......................................................................... 99 Table 4.1: Public Social Spending (PSS) and PRS spending by Sector/Area in Nicaragua, 2005 ..................................................................................................................................................... 104 Table 4.2: Public Social Spending (PSS) and PRS spending by Sector/Area for Incidence Analysis Nicaragua, 2005............................................................................................................ 106 Table 4.3: Education Public social expenditure and PRS spending (Millions of Córdobas) ...... 110 Table 4.4 Primary education main characteristics (% of students) ............................................. 114 Boxes: Box 1.1: Measuring and Comparing Poverty................................................................................. 4 Box 1.2: Poverty Maps in Nicaragua .............................................................................................. 5 Box 1.3: Defining Poverty: Results from a Qualitative Survey ................................................... 13 Box 1.4: On-going Security Concerns and War Memories Negatively Affect Nicaraguans ........ 13 Box 1.5: Youth Priorities: Jobs, education, recreational facilities and family .............................. 24 Box 2.1: The Nicaraguan PRS Long-term Goals, Targets, and MDGs........................................ 27 Box 2.2: Monitoring PRS indicators and MDGs.......................................................................... 28 Box 2.3: Performance Evaluation Criteria for Attaining MDGs................................................... 30 Box 2.4: Analyzing the Prospects for Attaining Long-Term PRS Goals and MDGs in 2015 ..... 30 Box 2.5: Key factors identified by beneficiaries deterring children from attending school........ 50 Box 2.6: The Costs of Domestic Violence .................................................................................... 52 Box 2.7: Water and Sanitation Sector Institutional Framework.................................................... 69 Box 3.1: IDA Involvement on Roads in Nicaragua....................................................................... 82 Box 3.2: Property titles are required to access electricity services.............................................. 85 Box 3.3: IDA Involvement on Telecommunications in Nicaragua............................................... 88 Box 3.4: Association of Organic Coffee Growers of Matagalpa .................................................. 92 Box 3.5. Relationship between fertilizers, pesticides and agricultural productivity ................... 98 Box 3.6: Estimating a Cobb-Douglas production function ......................................................... 100 Box 4.1. Benefit-incidence Analysis Methodology.................................................................... 105 Box 4.2: Social Security in Nicaragua ........................................................................................ 120 Figures: Figure 1.1: Headcount Total Poverty Rates by Area....................................................................... 2 Figure 1.2: Headcount Extreme Poverty Rates by Area.................................................................. 3 Figure 1.3: Poverty Gaps by Region 1998-2005 (Extreme Poverty Line) ..................................... 3 Figure 1.4: Poverty Maps, 2005 and 1995 ...................................................................................... 6 Figure 1.5: Inequality 1993-2005.................................................................................................... 7 Figure 1.6: Growth Incidence Curve 1998-2005: National............................................................. 8 Figure 1.7: Growth Incidence Curve 1998-2005: Rural.................................................................. 8 Figure 1.8: Sources Of Household Income By Year....................................................................... 9 Figure 1.9: Sources of Household Income by Quintile, 2005 ......................................................... 9 Figure 1.10: Sources of Household Income for Poorest 10 percent: 1998, 2001, and 2005 ......... 10 Figure 1.11: Sources of Household Income for 2nd Poorest 10 percent: 1998, 2001, and 2005.... 10 Figure 1.12: Annual Growth Rates of Private Consumption, Income, and GDP per Capita ........ 10 Figure 1.13: Growth Rates of Consumption, Income, and GDP per Capita, 1998-2005 .............. 11 Figure 1.14: Basic Needs Index Components, 1998-2005 (National Level)................................. 12 Figure 1.15: Remittances as a share of household consumption................................................... 14 Figure 1.16: Terms of Trade for Major Agricultural Products...................................................... 17 Figure 1.17: Latin America: Growth and Poverty 1993- 2005...................................................... 18 Figure 2.1: Performance of selected PRS indicators in 2005........................................................ 29 Figure 2.2: Mean Years of Education in Nicaragua vs LAC (1999-2004).................................... 32 Figure 2.3: Rates of return by Educational Level.......................................................................... 32 Figure 2.4: Wages above the poverty line require at least 11 years of education ......................... 33 Figure 2.5: Gross enrollment rates in Primary [Nicaragua vs. LAC, period 1995-2004] ............. 34 Figure 2.6: Gross Enrollment Rates By Quintile and different dimensions Quintile and Gender 35 Figure 2.7: Net Presschool , Primary and Secondary Enrollment rates......................................... 35 Figure 2.8: The education of the household head and secondary enrollment ............................... 36 Figure 2.9: Still one -in-five poor children between ages 7 and 12 do not attend school ............. 36 Figure 2.10: On average, young individuals between 23 and 29 years old in Nicaragua have attained only primary school ......................................................................................................... 37 Figure 2.11: Only two-in-ten boys in the poorest quintile attains 6 years of education and only one attains 11................................................................................................................................. 38 Figure 2.12: Primary and secondary completion rates by five-year age groups. .......................... 38 Figure 2.13: Factors that keep individuals away from secondary and post-secondary school differ significantly by gender. ................................................................................................................. 40 Figure 2.14: Six out of every 10 children living in households engaged in agriculture attend a "multigrado" primary school......................................................................................................... 43 Figure 2.15: Private primary schools without subsidies and secondary non-autonomous school have lower repetition rates............................................................................................................. 44 Figure 2.16: Pupil/Teacher Ratio Primary and Secondary............................................................ 44 Figure 2.17: Percentage of Primary and Secondary Teachers Trained (1999-2004)..................... 46 Figure2.18: A very small proportion of students in 6th grade are found to be proficient............ 46 Figure 2.19: Nicaragua has the highest share of young women between 15 to 19 years old with at least one child in Latin America.................................................................................................... 53 Figure2.20: Maternal mortality rates are among the highest in Nicaragua (per 100,000 live births) ....................................................................................................................................................... 54 Figure 2.21: Births attended by trained personnel by quintile and region..................................... 55 Figure 2.22: Trends in under-five mortality show stubbornly high neo-natal deaths before the 28th day of life....................................................................................................................................... 55 Figure 2.23: Morbidity in Nicaragua 2005.................................................................................... 56 Figure 2.24: Preventive care for the highest quintile is three times higher than the poorest........ 59 Figure 2.25: Access to health insurance is concentrated among the urban non-poor in Managua and the Pacific ............................................................................................................................... 60 Figure 2.26: Reasons for not seeking healchare when ill by quintile............................................ 61 Figure 2.27: Expenditures on medicines are the most significant fraction of household health spending among the poor .............................................................................................................. 62 Figure 2.28: Access to water and sanitation in Latin America...................................................... 64 Figure 2.29: Access to water and safe drinking water (through piped system)............................. 65 Figure 2.30: Access to water and safe drinking water (through piped systems) by poverty......... 66 Figure 2.31: Access to basic sanitation infrastructure and connected to public sewage system ... 68 Figure 2.32: Access to water and prevalence of Acute Diarrhea Diseases in 15 departments of Nicaragua....................................................................................................................................... 70 Figure 2.33: Stunting national, urban, rural and by poverty, 1998, 2001 and 2005...................... 73 Figure 2.34: Stunting by age groups, 1998, 2001 and 2005.......................................................... 75 Figure 3.1: Indigenous households and households engaged in agricultural production are the ones with the lowest access rates to paved roads. ......................................................................... 81 Figure 3.2: Access to paved roads has roughly doubled since 1998 for households in all socio- economic groups............................................................................................................................ 82 Figure 3.3: Access to electricity in Nicaragua in urban areas is above regional standards given its level of development; however it is below regional standards for rural areas. ............................. 84 Figure 3.4: There has been significant progress in household access to electricity between years 1998 and 2005, especially among the poor. .................................................................................. 84 Figure 3.5: Among all potential members of the CAFTA, Nicaragua is the country with the lowest telephone mainlines per 1,000 people................................................................................ 86 Figure 3.6: About 60 percent of all household loans are issued by financial institutions (24 percent) and informal credit lines (31 percent). ............................................................................ 89 Figure 3.7: Economies of scale are important in Nicaragua: Large agricultural producers are 6 times more productive than small ones. ........................................................................................ 96 Figure 3.8: Inequality in access to Capital and Land is much higher than inequality in access to Labor and Agricultural Supplies. .................................................................................................. 97 Figure 4.1 Public Social Spending (PSS) and PRS spending by Sector/Area in Nicaragua, 2005 ..................................................................................................................................................... 104 Figure 4.2: Public Social Spending (PSS) and PRS spending by Sector/Area for Incidence Analysis Nicaragua, 2005............................................................................................................ 106 Figure 4.3 PSS and PRS Spending Participation by Quintiles.................................................... 107 Figure 4.4 Public Spending Progressivity by Program................................................................ 108 Figure 4.5 Education Public social expenditure and PRS spending (Millions of Córdobas)...... 110 Figure 4.6 Education concentration curves ................................................................................. 111 Figure 4.7: Education Concentration Indices .............................................................................. 112 Figure 4.8 Healthcare spending (Participation by quintiles) ....................................................... 117 Figure 4.9 Household onsumption and public social assistance spending (group participation by poverty level)............................................................................................................................... 119 Figure 4.10 Household consumption and public spending for rural development by quintiles .. 121 ACKNOWLEDGMENTS The Government of Nicaragua agreed for the World Bank to produce this Poverty Assessment to contribute as a key input for the Nicaragua Poverty Reduction Strategy Paper (PRSP) Progress Report and the World Bank Country Assistance Strategy (CAS). The World Bank's task team was led by Florencia T. Castro-Leal (Senior Economist and Task Team Leader) and was co-produced with Renos Vakis (Senior Economist, co-task team leader). Authors of Chapters and Background Papers are: Diego Angel-Urdinola (LCSPP), Rafael Cortez (LCSHD), Gabriel Demombynes (LCSPP), Maria Victoria Fazio (LCSPP), Norman Hicks (Consultant), Jose Ramon Laguna (LCCNI), Leopoldo López (Consultant), Leonardo Gasparini (CEDLAS), Ariadna Garcia-Prado (LCSHH), Catalina Gutierrez (PRMPR), Catalina Herrera (PRMPR), Ezequiel Molina (LCSPP), Edmundo Murrugarra (PRMPR), Janet Picado (Consultant), Carlos Sobrado (LCSPP), Kimie Tanabe (Consultant), Simon Zbiden (WSP-LAC). Research Analyst is: Kalpana Mehra (PRMPR). Ximena del Carpio (HDNSP and Task Team Leader of the Voices of Nicaragua study). Peer Reviewers are: Edmundo Murrugara (PRMPR) and Rita Babihuga (IMF). The team is grateful to participants and commentators to this report: Aline Coudouel (Senior Economist, LCSHS), Frederic De Dinechin (Senior Specialist, LCSAR), John Kellenberg (Sector Leader, LCSSD), Valerie Kozel (Senior Economist, HDNSP), Joseph Owen (Country Manager, LCCNI), Pierella Paci (Lead Economist, PRMPR), Laura Rawlings (Sector Leader, LCSHD), Ivonne Siu (LCCNI), and Renos Vakis (Senior Economist, LCSPP). David Gould (Lead Economist and Sector Leader, LCSPR) and Jaime Saavedra (Sector Manager, LCSPP) provided overall guidance. Special thanks are due to Diego Angel-Urdinola, Ximena del Carpio, Catalina Gutierrez and Jose Ramon Laguna for their excellent Background Papers, and their exceptional commitment and dedication to the completion of this report. Anne Pillay (Program Assistant, LCSPP) and Ane Perez Orsi de Castro (Language Program Assistant) provided outstanding administrative assistance and coordinated the production of this report. Nydia Betanco (Language Team Assistant, LCCNI) also provided excellent assistance. The team from the Government of Nicaragua included Rodolfo Delgado and Alvaro Montalvan (current and former SETEC Secretaries, respectively), Alberto Guevara and Mario Arana (current and former MHCP Ministers), and Antenor Rosales and Mario Flores (current and former BCN Presidents), members of the SETEC team: Marvin Torres, Armando Navarrete, Elizabeth Espinoza, Luis Angel Hernández and Claudia Guadamuz; members of the MHCP team: Ovidio Reyes, Karen Schneegans and Mauricio Chamorro; and members of the BCN team: Jose de Jesus Rojas, Mario Aleman, Francisco Morales and Jorge Luis Rocha. The National Institute of Statistics team included Juan Rocha, Berman Martínez, Eddy Roque and Benito Martinez (Poverty Analysis), Martha Vargas (National Coordinator, Living Standards and Measurement Surveys (LSMS), 1998, 1999, 2001 and 2005), and Melva Bernales (International Coordinator, LSMS, 1998, 1999, 2001 and 2005). Funding for this report, including the LSMS 2005 was generously provided by the Government of Nicaragua, the World Bank (including funding from TFSCB and FISE), DFID (Voices of Nicaragua study), and ASDI, NORAD and UNDP through the MECOVI-Nicaragua program. PREFACE Poverty Assessments (PAs) are core diagnostic studies periodically prepared by the World Bank to assess the country's poverty situation and recent trends, to analyze the impact of growth and public actions on poverty, and to appraise poverty monitoring and evaluation systems. This PA was undertaken at the request of the Nicaraguan government administration under President Bolaños, whose mandate ended in January 2007, and is mostly based on information up to 2006. Given that time horizon, its capacity to comment on the new programs that have been prepared or are being contemplated by the current government under President Ortega is limited. Furthermore, the analysis in this PA takes as its point of departure the market-based and private sector-led development perspective that was broadly shared by the Bolaños administration and which was reflected in the poverty reduction strategy that was in effect at that time. This perspective differs in several important ways from the more social-oriented and public sector-led development perspective adopted by the current administration. In this context, the reader is reminded that the views expressed in the PA are solely those of World Bank staff and do not necessarily reflect the views or positions of the Nicaraguan government. The staff has used internationally recognized methodologies and best practices involving mainly analytical work of the Living Standards Measurement Surveys (LSMS), which were collected by the GON, with technical and financial support from the Bank, among other donors, in accordance to standard parameters used in many countries. The authorities are currently is in the process of updating Nicaragua's poverty reduction strategy for the period 2008-2011, to be named the Plan Nacional de Desarrollo Humano (PNDH). The PNDH is expected to build on the longer term poverty reduction strategy presented earlier by placing greater emphasis on social development and inclusive growth. As indicated in several position papers presented in 2007,+ the Nicaraguan authorities are committed to maintaining continuity with certain key elements of the earlier strategies that have been considered successful. These include (i) maintaining macroeconomic stability and ensuring public debt sustainability as prerequisites for reducing poverty, (ii) advancing on key social indicators toward meeting the Millennium Development Goals, (iii) diversifying the export base and leveraging regional free trade agreements in order to increase access to external markets, and (iv) preserving a policy environment conducive to attracting more private investment, including from foreign sources. The authorities also have indicated a commitment to change certain elements of the earlier poverty reduction strategy. The most important strategic changes include: · refocusing attention from the "cluster development strategy" that figured prominently in the earlier growth strategy and which is viewed as favoring the larger, more established economic agents, towards supporting production by the poorest households and small & medium sized enterprises, including through increased access to credit for these sectors, +These documents refer to: Gobierno de Reconciliación y Unidad Nacional, "Programa Económico-Financiero 2007-2010 (Agosto 2007), Gobierno de Reconciliación y Unidad Nacional, Secretaría Técnica del Poder Ciudadano (SETEC), Nicaragua: Informe de Avance del Plan Nacional de Desarrollo 2006 (Agosto, 2007), y Gobierno de Reconciliación y Unidad Nacional, "Prioridades del Gobierno de Reconciliación y Unidad Nacional Proceso en Construcción Permanente, (Agosto, 2007). · discontinuing the privatization agenda, which is viewed as not having worked well especially in the electricity and social security sectors, and placing more emphasis on state intervention and oversight, · placing greater attention on promoting human development, instead of compensatory polices and what is perceived as too narrow a focus on eliminating extreme poverty, and · improving access to public services in health and education, in part by providing these services free of charge to beneficiaries and in coordination with other line ministries. This last strategic change is associated with a broader program reorientation away from the principle of targeted interventions toward one that aims for greater universality. While some of the recommendations offered in this report may require adaptation to these differences in development perspective, the most important poverty reduction challenges facing the Nicaraguan authorities remain unchanged. This PA is intended to provide a timely reference in drawing attention to these challenges and in helping to identify various opportunities for raising the impact of public actions on poverty, independent of the preferred development approach. This report does not necessarily reflect the policy outcomes of the country's most recent changes coincidental with a change in government that would have involved projection of scenarios not forecasted. EXECUTIVE SUMMARY 1. Nicaragua is a small, open economy that is vulnerable to external and natural shocks. With an estimated Gross National Income (GNI) per capita of US$1000 in 2006 (using the Atlas methodology) and a total population of 5.2 million, it is one of the poorest countries in Latin America. Forty six percent of the population lived below the poverty line in 2005 (while 15 percent lived in extreme poverty), and the incidence of poverty is more than twice as high in rural areas (68 percent) than in urban areas (29 percent). Nicaragua's social indicators also rank among the lowest in the region, commensurate with its relatively low per capita income level. 2. Nicaragua has made steady, albeit modest, progress on the economic and poverty reduction front in recent years. During 2001-06, economic growth has been stable (averaging 3.2 percent, about 1.7 percent in per capita terms), the external debt has been substantially reduced, and Poverty Reduction Strategy (PRS) spending has steadily increased. While poverty rates have fallen slightly and several welfare indicators have shown improvements, major challenges remain and it is projected that Nicaragua may only achieve half of the Millennium Development Goals (MDGs) by 2015. 3. Nicaragua's long-term development vision is set out in its National Development Plan (NDP), 2005-2009, which gives greater importance to economic growth than the strategy document that preceded it. This also serves as its second Poverty Reduction Strategy. The goals of the PRS incorporate the MDGs, and establish medium (2006-2010) to long term targets (2015). By 2005, the country had made satisfactory progress on meeting the PRS/MDG targets for reducing extreme poverty, increasing net primary enrollment, and reducing infant and child mortality. PRS/MDG targets that are currently off track and need additional efforts to sustain future improvements are: maternal mortality, access to reproductive healthcare services, chronic malnutrition, access to drinking water and sanitation, and illiteracy. 4. This National Development Plan is being revised by the new government that took office on January 2007, which has expressed interest in maintaining policy continuity in those areas that have shown progress and tackling pending development challenges. These include efforts to improve the country's growth performance while reducing poverty, macroeconomic stability as a necessary, although not sufficient, condition to stimulate growth and reduce poverty, a special focus on social issues that impact the poorest, including the MDGs, and environmental sustainability. Programmatic priorities for the new administration include a renewed focus on poverty reduction using a multi-sector approach, implementing pragmatic solutions to the energy crisis for the short to medium term; expanding water and sanitation services with environmentally sustainable solutions; sharing economic growth more broadly to tackle hunger, malnutrition and poverty; placing greater emphasis on preventive health and continuing social protection programs; extending illiteracy programs and improving education services; and, pursuing municipal decentralization, state modernization and good governance. Poverty, Employment and Welfare 5. Using household survey data and comparative poverty lines across time, in 2005 46 percent of Nicaraguans lived in poverty compared to 50 percent in 1993. Also, there has been some progress in reducing extreme poverty, which fell from 19 percent in 1993 to 15 percent in 2005. . Notably, in the period between the years of 2005 and 1993, there has been substantial progress in i reducing the poverty gap, a measure of how far the poor are below the poverty line. Even so, as in many developing countries, poverty is largely a rural phenomenon in Nicaragua: more than two-thirds of the rural population is poor, and 65 percent of the poor and 80 percent of the extreme poor live in rural areas. The new government has published slightly different figures for 2005 (see Chapter 1, Box 1.1), indicating that poverty in 2005 is 48 percent and extreme poverty is 17 percent. 6. The small drop in the poverty numbers, however, may be understating the progress made in other indicators of welfare improvement in recent years. There is evidence of improvement in living standards from the basic needs indicators over the 1995-2005 period; using either Census or LSMS data. All four such indicators have improved, that is, crowding (persons per room), access to water, quality of housing, and children enrolled in school (see Chapter 1, Figure 1.14). It is unlikely that these improvements would have occurred while consumption spending was declining, suggesting the importance of measuring poverty in a multidimensional and comprehensive fashion. 7. The small increase in income among the poor has primarily derived from a resurgence in agricultural earnings. Agriculture accounts for 50 percent of the income of the poorest 20 percent. During the 2001-2005 period, agricultural employment and wages both rose, although labor productivity in agriculture declined. The explanation of these rather paradoxical trends is that there was a substantial improvement in agricultural export prices, especially for such crops as beans, coffee and meat. Thus, farmers hired more workers and paid higher wages in order to realize the gains from higher output prices. The danger is, however, that this could be a temporary event that may not be sustainable, its reversal resulting in unemployment and decline incomes for the poor. 8. Another aspect beneficial to the poor has been a shift in labor force composition and the dependency ratio. With the aging of the population, the number of people aged 15-64 increased faster than the population growth rate, and the labor force participation rate also rose. The result was a growth of 2.7 percent in the labor force (2001-05), versus 1.7 percent growth of population, implying that more people were employed per household, with a subsequent decline in the ratio of dependents to workers, improving per capita welfare. However, this also generated a downward pressure on productivity even in sectors outside of agriculture. 9. About 10 percent of the Nicaraguan population lives abroad, and about 20-30,000 migrate every year, chiefly to Costa Rica and the United States. Remittance flows are an important source of income for Nicaraguans at all levels, but the bulk of these flows go to families having more educated workers who go to better paying jobs in the United States (i.e. not the poor). Nevertheless without these remittances Nicaragua's poverty rate would have been 50 percent in 2005, instead of 46 percent. 10. Thus, the modest reduction of poverty in Nicaragua may be explained by three fundamental mechanisms, which underscore the fragility of this progress and the need for sustainable and pro- poor economic growth that provides employment opportunities in the future for the growing labor force. · An improvement in producer prices for coffee, meat, maize and beans, which are produced by small farmers, translating in better terms of trade for agriculture with substantial gains for the poor self-employed in rural areas, but which could be easily reversed by either trade or natural shocks. ii · A recent increase in migration by the poor, with Costa Rica as their main destination, whose remittances raise the household income of poor families, but are relatively modest and will tend to decline over time. · An increase in the number of family members working among the poor, with the consequent reduction of dependency ratios, but with declining labor productivity in agriculture and in low paying jobs with scarce benefits in manufacturing, such as maquila. The Growth Outlook and its Impact on Poverty 11. Overall economic growth has averaged about 1.7 percent per capita in real terms during 2001-2006, despite major shocks from Hurricane Mitch in 1998, a banking sector crisis (2001), and the collapse of coffee prices (2000). The improved performance in the past 10 years is the outgrowth of stabilization policies adopted in the early 1990's, which where concentrated in controlling hyperinflation, reducing the fiscal deficit and privatizing public utility companies. A second waive of reforms was initiated in 2002 designed to promote fiscal sustainability through the broadening of the tax base, the elimination of tax exemptions improved revenue, more effective budgeting and improvement of the financial position of the central bank. The government also sought access to the HIPC initiative to gain foreign debt relief. In 2004 Nicaragua reached the completion point under HIPC and bilateral and multilateral debt relief was granted for debt incurred prior to 2005. 12. Looking toward the future, Nicaragua is in a good position to build on its favorable performance. In contrast to previous periods, the stable macroeconomic environment obviates the need for a costly adjustment and its consequent negative implications for the poor. Furthermore, export growth is likely to be boosted by the implementation of the Dominican Republic­Central America Free Trade Agreement (DR-CAFTA). Nonetheless, the government faces several challenges in maintaining a stable fiscal environment conducive to growth. Chief among them are the need to: (i) resolve the current policy and regulatory impasse in the energy sector, which has resulted in increasingly frequent blackouts and rising financial losses in the electricity utility; (ii) transfer increasing expenditure responsibilities to the municipalities consequently with the legally mandated increase in central government revenue transfers; and (iii) restructure and contain the public sector wage bill, which has been increasing rapidly in recent years. 13. Rapid growth remains a key ingredient for reducing poverty. In recent years, Nicaragua's poverty elasticity with respect to growth (the response of poverty to changes in per capita income) has shown to be a modest -0.4, compared to the regional average for Latin America of - 0.9. In contrast, Nicaragua's elasticity for reducing extreme poverty has been much higher: -1.4. This means that Nicaragua will need GDP growth averaging 5.5 percent per year between 2005 and 2015 to reach its MDG goal of halving extreme poverty between 1990 and 2015 (goal is 9.7 percent, and the current is 14.9 percent in 2005). International evidence however, shows that poverty reduction is clearly linked to economic growth, and that with the right combination of policies Nicaragua's elasticity of poverty to growth can be increased. The observed relationship between poverty reduction and growth for many countries confirms that unfortunately growth can occur with no declines in poverty, but in contrast, countries have not experienced a drop in poverty rates where economic growth is nil or close to zero. Reducing poverty in the future in Nicaragua is directly linked to providing productive employment, particularly as the aging of the population implies substantial growth in the working age population (aged 15-64), a phenomenon which has already been happening in the past five years. This evolution, combined with higher labor force participation rates, increasingly puts pressure on labor markets and wages, and makes the expansion of economic opportunities even more important. iii Priorities for Poverty Reduction 14. Key challenges in the approach to poverty reduction can be gauged in terms of the standards set by the Millennium Development Goals (MDGs) and similar and intermediate goals of the PRS. Forecasts of recent trends in PRS indicators suggest that more than half of the MDG goals for 2015 are unlikely or very unlikely to be achieved if policies had not been modified. Present trends suggest the following results: · Goals that are likely or very possible to be achieved: 50 percent reduction in extreme poverty, two-thirds reduction in infant and child mortality. · Goals that are unlikely to be achieved: universal net primary enrollment, reduction in chronic malnutrition, access to safe water to 90 percent of the population, and declines in illiteracy rate falls to 10 percent. · It also very unlikely that the planned increase in access to reproductive health services suggested by the PRS, the fall in maternal mortality by three-quarters and the increase in access to sanitation to 95 percent will be achieved. 15. While attainment of each of the goals is important by itself, they should also be viewed together because they are mutually reinforcing. Better health care increases school enrollment and reduces poverty. Better education leads to better health, higher productivity and higher incomes. And increasing income gives people more resources to pursue better education and health care and a cleaner environment. Nicaragua clearly has a long way to go and will need a concerted effort by government, private sector and civil society organizations, a good governance environment and considerable donor resources in order to move faster towards the MDGs by 2015. 16. Policy priorities can also be informed by the direct views of the poor, using qualitative survey methods. In a study done for this report, the poor were asked to rank their development priorities in a qualitative exercise, methodologically similar to the Voices of the Poor initiative. The findings of the qualitative work tend to coincide to a large extent with the findings of the quantitative assessment. The most important development priorities voiced by the beneficiaries themselves ranked from the top are water, construction and repair of roads, productive opportunities and health. These priorities coincide with quantitative findings analyzed in this report, which, however also emphasize education and access to credit as very important. The major difference between the quantitative and qualitative is in education. Education, as reported here and in the abundant international literature on the subject is a key precondition for poverty reduction, although it is given a low ranking by the poor themselves. This is not surprising given that households see education as a medium to long-term investment for children, and place more emphasis on investments that will provide them a more immediate return, including job training. It is also consistent with the perception found in household surveys that the quality of education is generally good, particularly stated by the poor, despite the fact that the quality of inputs and schooling attainment in Nicaragua is among the lowest in the whole region. 17. Overall, this report stresses a strategy centered around the following objectives: · finding ways to accelerate growth, and to spread the effects of growth more equitably among the population, particularly by increasing the effectiveness of public programs in reaching the poor; · improving basic infrastructure, particularly water supply, sanitation, rural roads and electricity, in order to both improve welfare directly of the poor, and improve their productivity; iv · further improving basic health, nutrition as well as coverage and quality of education services in order to improve the productivity of the labor force; and, · focusing on programs that directly raise productivity ­ credit, networks and associations, land titling and land markets. Rural Development. Within the general strategy, a special focus has to be maintained on the development of rural areas, given the relatively higher concentration of the poor in those areas. Rural development needs to incorporate rural areas into government programs. However, it is crucial for a rural development strategy not to be separate from the country's overall growth strategy as well as the sectoral strategies for infrastructure (roads, energy, water, etc.), building a competitive investment climate, and improvements in basic social services such as education and health. Rural development must use integrated interventions to comprehensively tackle all aspects of poverty by finding ways to increase rural productivity, both in agriculture and in all other sectors, and using a growing economy to absorb increases in the labor force. The following sections look at these issues in more depth. Making Spending More Pro-poor 18. Nicaragua has made consistent efforts to reduce poverty and inequality, and has made important reforms to advance public policies. Despite improvements, further efforts are required to increase the impact of public resources on Nicaraguans' wellbeing. Improved impact from resources invested in poverty reduction and broad based growth is urgently needed. Nicaragua's budgetary allocations are constrained by significant fragmentation and earmarking, which limits the scope for improved prioritization and targeting of poverty reduction programs. 19. In 2005, the central government spent 43 percent of the government's total expenditures for social spending (Public Social Spending ­ PSS). PSS expenditures in Nicaragua include the areas of education, health care, water, housing and social assistance, and they represent 11 percent of the country's GDP.1, 2 The largest segments were education--representing 42 percent of PSS spending­and health, at 31 percent. The Government has also defined a set of programs aimed at implementing the Poverty Reduction Strategy (PRS). PRS spending excludes social spending not aimed at the poor (i.e., public universities), but includes non-social sector programs that are geared towards the sustained reduction of poverty (i.e., rural development).3 In 2005, PRS expenditures on represented 13.1 percent of the GDP, and 12.2 percent in 2006.4 20. In Nicaragua, PSS spending benefit the different strata of population approximately equally, so it is not pro-poor; more than 55 percent of PSS-related expenditures benefit people who are not considered poor. However, its distribution is much less concentrated among the non- poor than the distribution of consumption. For this reason, the PSS in Nicaragua is not pro-poor but progressive. This progressive impact of PSS spending generates a reduction of 6 points in inequality, as measured by the Gini coefficient of per capita consumption. In other words, while the Gini prior to PSS is 40.1, a calculation of the Gini that takes into account this public spending (and assuming proportional taxation) is close to 34; 83 percent of this redistributional impact 1PSS comprises all social spending (education, health care, water, housing and social assistance), including those items not necessarily targeted to the poor. 2This proportion is similar to the current one in neighboring Honduras. 3PRS includes all programs with a poverty focus, which includes many programs not considered to be in the social sectors. 4GON (June 2007). 2006 Poverty Spending Report. v comes from expenditures in education and health. Compared with the non-poor, the poor receive a higher implicit subsidy for health and social assistance, and a lower one for education and housing. 21. One of this study's main findings is the low level of targeting of many social programs. In fact, aggregate PSS is pro-non-poor, while PRS spending has a relatively better degree of targeting; 55 percent in contrast to 47 percent of expenditures, respectively, benefit people who are not considered poor. This is the consequence of the coexistence of programs that have very varied targeting. While the benefits of some programs are focused on the poorest, others, in contrast, benefit the non-poor to a greater extent. The programs most targeted on the poor are the adult and public primary education programs, several food programs (WFP and PINE5), and some FISE6 components (see Figure). Rural development programs also have a high degree of targeting, since they are geographically located in areas with high levels of poverty. Within the group of programs considered, at least half have a bias that favors the non-poor. Of these, however, only the higher education programs and subsidies to private education are regressive (i.e. their net impact is to worsen income distribution). Public Spending Progressivity by Program Concentration index Public spending (C$ millions) -40 -20 0 20 40 60 Adult Education WFP FISE ­ Social Protection Public Primary MAGFOR- Rural Develop PINE IDR-Rural Develop Pro-poor FISE - Education FISE - Health Preschool Healthcare MTI ­ Rural Develop FISE ­ Water and Sanitation PAININ Health Prevention Housing Programs Secondary Pro-non-poor progressive FISE ­ Community works Technical Education Subsidized Secondary Property Deeds Subsidized Primary Pro-non-poor regressive Public Universities Subsidized Higher Ed 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Source: World Bank calculations based on 2005 LSMS 22. This study's findings indicate that there is sufficient margin for significantly increasing the degree to which social spending is targeted, whether through reallocating budget to better targeted programs, or reassigning specific program budgets to poor beneficiaries, or extending the network of social programs--currently limited by the low coverage of numerous programs--to lower income sectors. The quality of public spending is partly determined by how well targeted and what level of coverage is captured by priority projects. Often, coverage of basic services en 5Programa Integral de Nutrición Escolar or School Feeding Program. 6Fondo de Inversión Social de Emergencia or Emergency Social Investment Fund. vi Nicaragua, which are constitutionally mandated to be universal, is limited precisely by budget fragmentation and rigidities due paradoxically to earmarking constitutionally mandated allocations. In addition, the quality of public spending is also linked to the project's effectiveness or its impact to change the target indicator, the degree of efficiency or how much the intervention costs vis-à-vis alternatives, the prioritization of projects or selection on the basis of their highest economic and social return, and the satisfaction of the beneficiaries demand expressed by civil participation. Infrastructure 23. Economies with better and broader access to roads, electricity, transportation, credit, and telecommunications area associated with higher growth rates and lower income inequality and poverty. In Nicaragua, there has been significant progress in terms of access to basic infrastructure and productive services since 1998. The share of households with access to piped water, fixed telephone, cellular telephone, and trash collection services increased substantially between 1998 and 2005 in Nicaragua. Other housing related variables related to the household's dwellings, such as the share of dwellings with access to a toilet inside, good-quality floor, and good-quality walls also displayed a significant improvement both in rural and urban areas. However levels of infrastructure development in Nicaragua are still low relative to most Latin American countries. 24. Roads. The construction of roads and repair of existing roads is also listed as a top priority by leaders and people in general during the qualitative work undertaken for this report. This includes streets as well as roads leading to the urban area; other communication programs mentioned as lacking and affecting progress are bridges. Roads and bridges are key for maintaining access to schools and health centers, particularly in the rainy season when students often have to drop out of school because of flooded roads. 25. The emphasis on roads as a priority for public spending comes despite significant progress and expenditures in these areas in the recent past and significant donor support. This is due to reconstruction and rehabilitation, as well as because of a considerable back-log of paved and all- weather roads in Nicaragua vis-à-vis its level of development and in contrast to other Central American countries. For instance, IDA-financed projects restored over 3,000 km of secondary roads destroyed by Hurricane Mitch, rehabilitated the Pan American highway and improved 240 km of rural roads, linking the poor to markets, health centers and schools Consequently, IDA involvement has helped increase the road network in working conditions by almost 20 percent between 1999 and 2006.Though significant progress has been made, indigenous households and households engaged in agricultural production are still the groups with the lowest access rates to paved roads in the country. Further investments in roads are likely to improve welfare among the poor and increase rural productivity, as better roads are associated with higher yields per hectare among producers and better access to markets for all products. 26. Water and Sanitation. Water and sanitation access rates are among the lowest for Latin American countries. It is unlikely that Nicaragua will reach the 2015 MDG target for water, unless investment levels and patterns are altered and management practices improved. The target for sanitation is very unlikely to be achieved by 2015, because most past progress has been made in latrines with little follow up, so more than half of them are untreated, while almost no advances have been made in terms of connections to the public sewage system. Access to safe drinking water and basic sanitation is a key basic service with direct implications for human and economic development. In Nicaragua, access to basic water and sanitation services is closely associated to vii poverty;7 moreover, inequity in access to safe drinking water is as unequal as consumption. Given that the poor are mostly excluded from these basic public services, they tend to make their own inadequate arrangements or pay excessively high prices to water vendors for meager water supplies. By not having access to water, poverty is further aggravated and productivity constrained. 27. The relatively poor overall performance of the water and sanitation sector is predominantly due to: a) political and institutional shortcomings of the sector, and b) insufficient public budgetary resources.8 The sector's relative inefficiency and ineffectiveness is largely related to slow increases in coverage which is concomitant to its current lack of sustainability. In October 2005, CONAPAS elaborated and approved a coherent sector strategy in line with the National Development Plan, and further recent steps are promising.9 Nevertheless, a serious commitment at the political level is needed if the sector performance is to be improved significantly. 28. Achieving the MDGs in water and sanitation is particularly a challenge in rural areas. Taking into account increasing marginal costs, substantial social infrastructure investments will be required in rural areas, where the vast majority of the poor lives without access to water and sanitation, especially in the Atlantic and Central/Northern region. Poor and extremely poor population groups would benefit the most from such investments. Appropriate co-financing and local participation policies will be necessary to ensure adequate technology and service levels that can be managed and can be financially sustainable in the long run. Water infrastructure investments need to be accompanied with effective decentralization and capacity building strategies to strengthen local capacities, and a clearer role for municipalities. 29. In urban areas, one of the most urgent tasks in urban areas is to secure water provision and restore clients' confidence. A cash injection for service quality improvements in the short run will likely be inevitable to prevent a virtual collapse of the water provision in some areas. However, a profound structural reform of the urban service provider ENACAL needs to be initiated in parallel to prevent that investments turn into de facto consumption subsidies. Once visible service improvements have been achieved, a plan for a gradual adjustment of tariffs has to be elaborated, including a targeting scheme of water services to poor. Any tariff adjustment needs to maintain a pro-poor orientation for poor urban dwellers. Eventual loans and grants to ENACAL should be linked to measurable outcomes in service improvements, key management and technical efficiency figures. Additional funds will be required for expanding the urban sewage system in particular in peri urban areas and waste water treatment infrastructure in larger cities. 30. In order for water coverage to impact on health-related MDGs, sanitation and hygiene promotion deserves considerably more attention than it has received in the past. A more integrated approach should be seriously considered, as hygiene practices are as much a determinant of health outcomes as access to water and sanitation infrastructure. Sector resources should not only be allocated to sanitation infrastructure (hardware) but also to the aggressive promotion of better hygiene behavior (software). 7Jarman (1997) 8Further analysis of Public Spending is contained in the Nicaragua 2006 Public Expenditure Review. 9 The sector strategy also gave rise to the sector round table as a coordination forum between government and the donor community (including IDB, WSP-World Bank, SDC, UNICEF, PHO, CIDA, EU, JICA, Netherlands/SNV, and the German Cooperation KFW which currently heads the forum). In October 2006, the government and the donors agreed on a roadmap to complete a Sector Wide Approach (SWAP). In addition, a Code of Conduct on alignment and harmonization was signed. viii 31. Electricity. There is an urgent need for investments in expanding electricity networks in rural areas, in the Atlantic region, and among vulnerable segments of the population. Low access to electricity hinders welfare, especially for households working in agriculture and who deal with perishable products. Lack of access to electricity also lowers the capacity of households to run small businesses. The expansion of electricity networks will be difficult to achieve if the electricity tariff structure remains unchanged and as long as the country continues to be highly dependent on oil as the main source of energy. Furthermore, the government (through the utility service companies) should invest in monitoring electricity theft and in diversifying its sources of power away from oil-based energy. Between 15 and 20 percent of all households with access to electricity do not pay for the service. High rates of energy theft and high oil prices force suppliers to cut the service periodically in order to save costs. Social Sectors 32. Health. Inequity in public healthcare services in Nicaragua is such, that even services which are free-of-charge, like immunizations and reproductive health, tend to favor the better-off rather than poor households. Access, utilization and financing of essential healthcare services has been explicitly expressed as a priority of the new administration and it needs to be incorporated into the revised NDP. Most health expenses are covered by people themselves, and even the poor, who are typically seen as the target of publicly financed actions, often opt to pay a substantial proportion of health consultations, diagnostic services and medicines. Out-of-pocket healthcare expenditures represent up to 16 percent of non-food expenditures for the poorest quintile. Ninety percent of Nicaraguans are completely uninsured, but particularly poor families are vulnerable to health shocks that either keep them or take them into poverty. INSS has to play a key role in improving healthcare equity given that it receives a public subsidy for social insurance arrangements which tends to benefit mostly the non-poor. 33. Nicaragua's healthcare system faces major challenges to improve the health status of the population: (i) inefficiencies in allocation and use of public resources, (ii) low level of financial protection for health shocks, (iii) high out-of-pocket health expenses, particularly among the poor, (iv) constraints in quality, access and, thus, low utilization of healthcare services, (v) unregulated private sector, and (vi) limited capacity of MINSA to perform its stewardship role to ensure pro-poor strategies and an efficient health system. Efforts to face these challenges should be made within an equity framework, mostly because the poor and indigenous populations obtain very little benefits. 34. Specifically, an integrated healthcare model should have the following objectives: · Promote child, and maternal healthcare preventive services, with focus in earlier and more frequent prenatal visits, as well as broader coverage of postpartum care for women. · Expand access to medically assisted births, as the share of women delivering under medical supervision is still low for poor and rural women. · Avoid discontinuities in immunization coverage, particularly last doses of DPT and measles vaccine. · Integrate key interventions into basic packages that are managed and financed by the Ministry of Health (MOH). At present, most key health interventions have been partially supported by donors outside the MOH, e.g. family planning services. · Addressing inefficiencies in current health spending can markedly improve health outcomes of the poor, including: ix o Target public healthcare resources need to primary care, prevention, and health promotion interventions; o Use a results-based budgeting to strengthen a reversal in the allocation process which has favored metropolitan areas and hospital care; o Move away from historical patterns of deployment of human resources, which has meant few health workers for poor rural areas; and o Reduce human resource imbalances by decreasing over-reliance on physicians and increasing supply of nurses and auxiliary personnel, with special focus on primary healthcare. 35. Education. The most important factor to improve well-being is education, it is also crucial to finding and keeping a job and a decisive factor to improvements of the most of the MDGs as an associated factor. In terms of public policy, education is a top priority for Nicaragua, particularly as it is the second country with the lowest level of education in Central America, lower than expected for its income level, and only higher to Guatemala. The average years of schooling of the urban population is 6.9, compared to a regional average of 9.0; in rural areas the gap is between 3.1 and 4.9 36. Nicaragua still falls behind in Latin America in primary and secondary education service delivery (both in relation to access and quality). Education outcomes in Nicaragua have significant links with poverty and investing in education is very profitable for individuals. Indeed, estimates indicate that a Nicaraguan is expected to earn 10 percent higher wages for each additional year of schooling attained. However, despite this, 72 percent of the population does not attain complete secondary education and consequently earn wages below the poverty line. 37. While all income groups benefit from remittances, the majority go to families in the upper deciles, rather than the poor, unlike other countries in the region. The reason for this is that those people who migrate tend to be the most educated. In general, Nicaraguans who migrate with primary education tend to go to Costa Rica; while those with a secondary education tend to go to the United States where returns to education are much higher. The fact that the more educated tend to migrate suggests the need to expand opportunities within Nicaragua for education to translate into better job opportunities and higher returns to education. 38. There are substantial inequities in access and quality of preschool, secondary and post secondary education between richer and poorer households, between urban and rural areas, and between regions. Late enrollment, high dropouts, and high repetition rates altogether are preventing children, and especially those from poor families of completing primary and secondary education. Young individuals who are poor, indigenous, and who live in households engaged in agriculture attain less than 5 years of education on average. Despite progress, still 20 percent of poor children do not enroll in school at all, and simple projections show that among current young children, probably among 20 percent will not finish primary and 45 percent will not finish secondary. Late enrollment in first grade is common among children in the poorest quintiles, especially in rural areas. While first-grade enrollment should begin at age 7, only 20-30 percent of children are actually enrolled at that age. Repetition rates for primary education are on average 12 percent, above the regional average, and the annual cost of repetition at the primary level is estimated at US $12.0 million. Moroever, only 32 percent of young people between 20 and 24 complete secondary education. Thus, most Nicaraguans accumulate little human capital before joining the labor force in their early teen-age years. x 39. Both supply side limitations that hamper access to school, as well as affordability constraints limit access to school. While lack of access to facilities and financial constraints constitute important reasons why poor children do not attend primary school (especially in the Central and Atlantic regions), lack of interest and family problems have risen in importance as factors explaining school non-attendance among urban children. The need to work, financial constraints, and lack interest are the main reasons for boys not to be enrolled in secondary/post-secondary school, while family problems, child care responsibilities, and pregnancy are the main reasons for girls not to be enrolled. Among the poor, out of pocket expenses related to sending children to school, mainly transportation, are a factor precluding attendance. 40. Regarding education quality indicators, Nicaragua has the highest pupil-teacher ratio in Latin American in both primary and secondary schools, and its teacher work force is also one of the least qualified in the region. Therefore, improvements in teacher training as well as improved teacher incentives are critical to both improve the quality of teaching and to keep the best teachers within the educational system. 41. Across the system, differences in quality of inputs seem to generally favor private over public schools; within the public system the differences are not clear cut. Quality deficiencies are also reflected in the fact that less than 14 percent of all students in 3rd and 6th grade are found to be proficient in their curriculum. In this case, private schools fare better than public, and within public schools, autonomous ones seem to have an advantage. The inequities in the system are reflected in lower performance among rural students, and those living in poorer regions. Moreover, the positive effect of the family environment and the importance of parental education as factors affecting student curriculum proficiency point to a system where inequities might grow larger if access and quality of education do not improve dramatically among the poor. 42. The net result is that many of the currently enrolled children, and those in the cohorts of youth that have already passed the years of primary and secondary schooling, have accumulated so little human capital by the time they are outside the educational system, that they are destined to remain in the 50 percent of the population in poverty. Consequently, there will continue to be large social returns to investments in basic education, adult education and technical training in the future, and this will continue to be a challenge and a need for Nicaragua. 43. Nutrition. Health, education and sanitation are directly linked to problems of malnutrition. It is a common perception that child malnutrition is related to insufficient access to food, however, other factors can be even more important. Inadequate maternal and child caring practices, often due to inadequate or inappropriate knowledge/education, are critical for the actions or behaviors that can translate available food into good child growth and development. Water/sanitation and adequate healthcare services are crucial for the children's health status and the incidence of disease. All three factors work synergistically; a child who does not eat well, either because there is insufficient food or because of inadequate caring practices, is more susceptible to illness, consequently disease increases nutrient loss and suppresses appetite. Thus, sick children living in areas lacking adequate water/sanitation and healthcare services, tend to be ill for long periods and eat poorly, and so a spiraling cycle downwards may lead to malnutrition. 44. Stunting is strongly linked to poverty. In Nicaragua, stunting is 2.5 times higher in children in extreme poverty compared to non-poor children; 37.2 versus 14.6 percent, respectively. Among extreme poor families, stunting levels were above 45 percent in the Central region, the highest levels in the country. Many of the poorest and most remote municipalities are found in the Central region. The Atlantic rural follows, with 36.9 percent stunting among extreme poor children. xi 45. Most malnutrition programs are more effective in the short-term if they use integrated approaches to address simultaneously more than one of the immediate and underlying factors associated to malnutrition. In Nicaragua, it is important to support multisectoral programs that focus on prevention and target the age group at highest risk of stunting; starting in-utero and continuing through the child's 2nd birthday. This integrated approach should focus on several factors that occur at child/family and community level, and which include not only insufficient access to food, but also inadequate maternal and child care practices (actions or behaviors that translate available food into good child growth and development), often related to poor knowledge/education. Low access to water/sanitation and healthcare services are also concomitant factors linked to malnutrition. Raising Productivity 46. The poor identify low productivity as a key element in determining their poverty. While improved social services (health, education) can help raise productivity, ways need to be found to directly increase the productivity of the poor, particularly in rural areas. 47. Agricultural Productivity. Households engaged in agricultural production are a vulnerable group of the Nicaraguan population, showing higher poverty (at 70 percent) and lower education levels than average (93 percent of all households heads in this group have only a primary education or less). Agricultural productivity is an important determinant of welfare for the poor. Gaps in productivity are large, especially by producer size and region. Large agricultural producers display productivity levels that are more than six times than small producers. Not surprisingly, urban producers, often having better access to infrastructure, technology, and credit; are more productive than rural producers. Large inequities in productivity are also observed across regions. The Atlantic region displays the lowest levels of agricultural productivity while the Central and Pacific regions display productivity levels above the national average (in part because they are also more urban). Small-rural producers in the Atlantic region are likely to be one of the most vulnerable groups in Nicaragua: they display higher levels of poverty, low levels of education, low productivity, and limited access to infrastructure, equipment, and qualified labor. 48. Inequality in productivity is a reflection of the observed differences in quantity and quality of capital, labor, and land available to producers. Poor and small producers use more labor and less capital and land for production. Not surprisingly, farm size is generally larger among non- poor producers, especially close to urban areas. Differences in land size between poor and non- poor producers are much larger in urban areas than in rural areas: in urban areas non-poor producers have on average 7 times as much land as poor producers; in rural areas the factor is about 2. While poor and small producers generally have less access to land and capital, they employ more labor (generally unskilled) in order to conduct activities that other producers undertake using equipment (such land irrigation, seeding, and harvesting). 49. The use of agricultural inputs in Nicaragua is generally low: only 11 percent of all producers use certified seeds, 6 percent use organic fertilizers, 37 percent use chemical fertilizers, and 67 percent use insecticides. Large and non-poor producers as well as producers in the Pacific region use more inputs than poor, small, and rural producers. In particular, use of fertilizers is an important determinant of agricultural productivity. Estimates indicate that using fertilizers increases productivity levels by 22 to 34 percent nationally; moreover, it generates even larger increases in productivity (23 to 50 percent) among small and poor producers. Returns to labor are high, especially for poor producers. Estimates suggest that for every extra worker per hectare, xii yields per hectare increase between 50 and 70 percent, but there are diminishing returns to additional laborers. Estimates suggest that for every 1,000 Cordobas invested in capital per hectare (about US$60 per hectare), productivity is expected to increase by 7 to 10 percent. Having access to a paved road increases average yields per hectare by 17 to 20 percent. 50. Credit Services. With the exception of indigenous households, about 25 of every 100 households in Nicaragua received a loan in the 12 months prior to the service at all socio- economic groups. A little more than half of all loans given to households were issued by informal creditors (such family, friends, NGOs, merchants, or informal credit lines). Poor, rural, indigenous households, and households engaged in agriculture are likely to obtain their loan from an informal credit source. Surprisingly, having a land/house property title does not influence the probability that households access formal credit. The analysis reveals that loans (per capita per year) among the poor account for a large share of their yearly per-capita income. In particular, they are an important share of income for agricultural producing households (roughly 20 percent). 51. Results suggest that informal credit lines and credits from merchants are the providers of 45 out of every 100 loans in Nicaragua. These providers ­ generally more available to the poor ­ charge very high interest rates as compared to formal credit providers such as private banks, cooperatives, and other financial institutions. Estimates indicate that while interest rates charged by informal lenders can be as high as 12 percent per month, interest rates charged by formal lenders fluctuate around 4 percent per month. 52. Estimates using the 2005 EMNV suggest that about one third of loans acquired by households are used for investment purposes, while the rest are used for general household consumption (purchasing cars, houses, and other non-investment items). Households engaged in agriculture are more likely to use loans for investment-related purposes than the average household (40 vs. 30 percent). Indigenous households display the highest rate of loans used for household consumption at 76 percent. 53. Networks and Organizations. Access to networks and associations has become a mechanism for households to promote social participation, empowerment, and better to access markets and services. Since community-based development relies on the capacity of individuals and communities to self-organize and to use their social capital productively, the concept of participation in association becomes essential. In general, participation in association is important to access markets and inputs (e.g. producer associations); to protect individuals against other institutions (e.g. unions and consumer associations); to gain political power (community committees); and to access goods, programs, or services (e.g. religious associations and government programs). 54. In Nicaragua, participation in productive organizations increases the probability that households benefit from social programs by 15 to 16 percent. Poor households and especially those engaged in agriculture are more likely to belong to local committees and professional associations. Results indicate that nationally about 4.4 percent of all households participate in local committees, 2 percent in professional associations, 2 percent in credit unions, 8 percent in religious associations, and about 6 percent in other type organizations (such as women organizations, clubs, etc...). Participation in productive associations (such as local committees and professional associations) is higher in rural areas and especially in the central region, among agricultural producers, and among households in the bottom 3 quintiles. 55. Land Titles. In Nicaragua, 77 percent of all households claim to own the house where the dwell. However, 34 percent of all homeowners do not possess a property titles on their property. xiii This is more common in rural areas and in the Central and Managua regions, where informal home ownerships reaches 34 to 46 percent. Even in urban areas and among households in the richest quintiles, informal house ownership is as high as 30 percent. Informal ownership is the highest among indigenous households (at 59 percent) and among households working in agriculture (about 43 percent). Despite these high rates, few households have benefitted from titling programs in Nicaragua (less than 1 percent overall). Titling programs are more common in urban areas and especially Managua where about 2.5 percent of all households claim to have benefited from a titling program within a year prior to the survey. 56. Lack of titling is also common among agricultural producers who claim to own land. Data suggest that 21 percent of all agricultural producers do not possess a title on their land. This fact is more frequent in the Atlantic region where about 32 percent of all producers claim to own their land without having any documentation. Interestingly, only 10 percent of all landowners who do not have a title on their land (and this holds true at all socio-economic groups) fear that they may have problems with their land in the future or that the land may be expropriated. There is also anecdotic evidence suggesting that households do not have incentives to register their property: without a title they avoid paying property taxes and using it as credit collateral. 57. Generally, having a land title is associated with better outcomes in relation to access to credit and productivity as well as with a higher probability of households renting their land for profit. In situations where land tenure insecurity is pervasive, as in Nicaragua, systematic efforts of land regularization can have positive effects on land values as well as equity. Receipt of a registered title raises land values by 30 percent and greatly increases the propensity to invest. Greater demand for regularization of land rights, especially from the poor, suggests that titling can have a positive distributional effect. Having a land title is a necessary but not sufficient condition to transform modest landholdings into viable collateral for commercial loans. Titles are as important as a well developed market for land and property in general for financial institutions to forsee associated gains above the costs involved in collateral processing, such as foreclosure and resale of land properties, and to be able to legally repossess without political impediments. In addition to efficient land markets and credit systems, titled land needs to be complemented by training, technical assistance and improved market access for increases in productivity and profits to take place. xiv CHAPTER I. POVERTY AND ITS MACROECONOMIC CONTEXT 1.1 Nicaragua is one of the poorest and least developed countries in Latin America, with a per capita income officially valued at US$1,000 in 2006 and a total population of 5.2 million. Despite a steadybut smalldecline in poverty indicators since 1993, Nicaragua still has very high poverty rates and weak social indicators. 1.2 The economic base for poverty reduction continues to improve, with a continuation of economic reforms and slow but steady economic growth. Despite major shocks from Hurricane Mitch in 1998, a banking sector crisis (2001), and the collapse of coffee prices (2000), overall economic growth has averaged 1.7 percent per capita in real terms during 2001-2006. Recent growth has accelerated, fueled by a surge in investment and rapid growth of exports (see Table 1.1). Inflation throughout the period has been moderate, exchange rate policies have been flexible, and democratic institutions have been maintained despite political volatility. Table 1.1: Main Macroeconomic Indicators, 1998-2006 (percent) 1998 1999 2000 2001 2002 2003 2004 2005 2006p GDP real growth 3.7 7.0 4.1 3.0 0.8 2.5 5.1 4.0 3.7 Real GDP per capita growth 1.8 5.1 2.3 1.5 -0.4 1.6 3.4 2.3 2.0 Share of Value Added, primary sector 21.3 20.8 22.3 22.1 21.8 21.6 21.3 21.2 21.1 Share of Value Added, secondary sector 26.7 27.5 27.1 27.5 27.1 26.8 27.6 27.8 27.8 Private consumption per capita real growth 2.8 4.0 3.5 3.4 3.2 0.8 3.1 3.0 1.4 Gross fixed investment real growth 4.3 27.1 -16.8 -8.4 -7.1 -1.0 4.3 10.1 5.4 Consumer price inflation (year to year) 13.0 11.2 7.1 6.0 3.8 5.3 8.4 9.6 9.2 Real effective exchange rate 2000=100 98.9 96.9 100 100.9 96.9 91.2 88.6 87.7 88.2 Urban population, share of total 54.9 55 55.2 55.3 55.5 55.6 55.8 55.9 55.9 Export growth, constant prices 5.8 12.4 12.5 7.3 -3.5 9.2 16.1 5.3 12.1 Source: INEC, BCN, and World Bank. 1.3 The improved performance in recent years has been the outgrowth of stabilization policies adopted in the early 1990's, which were concentrated in controlling hyperinflation, reducing the fiscal deficit and privatizing public utility companies. A second waive of reforms initiated in 2002 were designed to promote fiscal sustainability through the broadening of the tax base, the elimination of tax exemptions to improve revenue collection, more effective budgeting, and improvement of the financial position of the central bank. The government also sought access to HIPC initiative to gain foreign debt relief. In 2004 Nicaragua reached the completion point under HIPC and bilateral and multilateral debt relief was granted for debt incurred prior to 2005. On the international front Nicaragua joined the DR-CAFTA in 2006 and has signed several trade and integration agreements with its Central American partners. Trade with Honduras, El Salvador and Guatemala is gaining importance, although the United States still remains the main trading partner. 1.4 Nicaragua's long-term development vision is set out in its National Development Plan (NDP), 2005-2009, which gives greater importance to economic growth than the strategy document that preceded it. However, this Plan is already under revision by the recently installed Ortega administration (January 2007). The focus of the new administration has been on maintaining policy continuity, where appropriate, and tackling the pending development challenges, with a special focus on social issues that impact the poorest. These include efforts to improve the country's growth performance while reducing poverty macroeconomic stability as a 1 necessary, although not sufficient, condition to stimulate growth and reduce poverty, a special focus on social issues that impact the poorest, including the MDGs, and environmental sustainability. Programmatic priorities for the new administration include a renewed focus on poverty reduction using a multi-sector approach, implementing pragmatic solutions to the energy crisis for the short to medium term; expanding water and sanitation services with environmentally sustainable solutions; sharing economic growth more broadly to tackle hunger, malnutrition and poverty; placing greater emphasis on preventive health and continuing social protection programs; extending illiteracy programs and improving education services; and, pursuing municipal decentralization, state modernization and good governance. A. THE EVOLUTION OF POVERTY AND INEQUALITY 1993-2005 1.5 Given this rather positive macro environment, what happened to the welfare of the poor? Despite favorable economic environment, the country as a whole saw essentially no change between 1998 and 2005 in the percentage of Nicaraguans living in poverty, as measured using the standard consumption-based general poverty line and the national household surveys. While overall poverty rates dropped between 1993 and 2001 (Figure 1.1), the current poverty rate of 46 percent is about the same as it was in 2001. Figure 1.1: Headcount Total Poverty Rates by Area 80% 76 69 70% 68 68 1993 1998 2001 2005 60% 50 50% 48 46 46 40% 32 31 30 29 30% 20% 10% 0% All Nicaragua Urban Rural Source: LSMS 1993, 1998, 2001 and 2005 1.6 More progress has been made in rural areas, with a substantial drop in rural poverty (from 76 percent to 69 percent) between 1993 and 1998. However, since 1998, rural poverty has been virtually unchanged at about 68 percent. In fact, none of the 1998-2005 changes in the overall poverty level are statistically significant. As in many poor countries, poverty is largely a rural phenomenon: 65 percent of the poor and 80 percent of the extreme poor live in rural areas. 1.7 Despite the slow progress in overall poverty reduction, there has been a surprisingly large and statistically significant drop10 in the fraction of Nicaraguans living in extreme poverty, from 19 percent 1993 to 17 percent in 1998 and 15 percent in 2005 (see Figure 1.2.)11 This implies a 40 percent drop in the extreme poverty rate, compared to only an 8 percent drop in the overall 10At the 10 percent level. 11While the poverty line is defined in terms of a minimum basket of food and non-food requirements, the extreme poverty line is defined as the food requirement only, and is sometimes referred to as the food poverty line. 2 poverty rate. However, most of this decline occurred before 2001. Since then the level of extreme poverty has been constant. Figure 1.2: Headcount Extreme Poverty Rates by Area 40% 36 35% 1993 1998 2001 2005 30% 29 27 27 25% 19 20% 17 15 15 15% 10% 7 8 6 5 5% 0% All Nicaragua Urban Rural Source: LSMS 1993, 1998, 2001 and 2005 1.8 Because of these substantial changes in extreme poverty, the poverty gap has fallen, particularly the extreme poverty gap. The poverty gap is an index which measures the average distance, or "gap," between the consumption level of the poor and the poverty line. The index averages the gap over the entire population and takes it as a percentage of the poverty line. Declines in the poverty gap can be driven by a drop in the fraction of the population that is poor (the headcount) and also by increases in the average level of consumption among those who are poor. The extreme poverty gap is simply the poverty gap using the extreme poverty line. Figure 1.3: Poverty Gaps by Region 1998-2005 (Extreme Poverty Line) 9% 8.3 8% 1998 2001 2005 7.0 7% 6.4 6% pag 4.8 5% rty 4.1 ve 4% 3.4 Po 3% 1.9 2% 1.4 1.0 1% 0% All Nicaragua Urban Rural Source: LSMS 1998, 2001 and 2005 1.9 Large declines in the extreme poverty gap are shown in Figure 1.3. For the nation as a whole, the poverty gap has declined from 4.8 percent to 3.4 percent. This represents a decline of nearly 30 percent. Likewise, the extreme poverty gap for urban areas dropped almost by half 3 from its already low level of 1.9 percent to just 1.0 percent. What this indicates is that while 15 percent of Nicaraguans still live in extreme poverty, the depth of their poverty is notably less than it was in 1998. Box 1.1: Measuring and Comparing Poverty This poverty assessment has the key objective of assessing poverty in 2005, and consistently and reliably comparing poverty in the period between the years of 2005 and 1993.12 Internationally recognized methodologies that are used in many countries have been applied to the Nicaragua Living Standards Measurement Surveys (LSMS) of 1993, 1998, 2001 and 2005 to determine the poverty lines and poverty rates. Poverty comparisons for 1993, 1998, 2001 and 2005 are deemed technically valid because the level of welfare associated with the extreme poverty line is kept constant by means of pricing the same minimum caloric intake and by updating the nonfood portion of the general poverty line. In all years, a person is considered extremely poor if his/her total per capita annual consumption is below the extreme poverty line, and a person is considered poor if his/her total per capita annual consumption is below the poverty line. The 2005 extreme poverty line is determined by computing the annual cost to buy a bundle of food that provides 2,187 Kcal/day.13 The per capita annual extreme poverty line in 2005 is C$3,691 or US$221 (equivalent to C$10.25 per person per day or US$0.61). The 2005 poverty line is the sum of the extreme poverty line plus an additional amount for the share dedicated to nonfood consumption. This share of nonfood consumption used for the poverty line is the same as that for households whose food consumption is around C$3,691. The per capita annual poverty line in 2005 is C$6,918 or US$413.53 (equivalent to C$19.22 per person per day or U$1.15). Nicaragua: Poverty 1993, 1998, 2001 and 2005 2005 Total Poverty 50 Headcount (INIDE) Comparative Trend Total Poverty Headcount 40 30 20 2005 Extreme Poverty Headcount (INIDE) Comparative Trend Extreme Poverty Headcount 10 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 The new government of Nicaragua that took office on January 2007 revised upwards the minimum caloric intake to 2,241 Kcal/day and consequently both poverty lines are higher. INIDE's (National Institute of Information for Development, previously called INEC, National Institute for Statistics and Census) per capita annual new extreme poverty line for 2005 is C$3,928 or US$235 and the per capita annual new poverty line for 2005 is C$7,155 or US$428. As a result, the new poverty rates are not comparable with those published for previous years and it cannot be established if poverty goes up or down with these new lines. The new government figures for 2005 indicate that poverty is 48.3 percent and extreme poverty is 17.2 percent; for these rates to be comparable, the entire series of poverty rates would need to be revised backwards for 2001, 1998 and 1993 with the larger minimum caloric intake. 12 See Annex 3 for more detailed information on the consumption aggregate and poverty lines. 13 This minimum caloric requirement was estimated for Nicaragua using INCAP's (Institute for Nutrition for Central America and Pánama) and PAHO's (Panamerican Health Organization) Table for Daily Dietary Recommendations (Guatemala, April, 1996). 4 1.10 Regional poverty also shows clear gains for almost all regions, but particularly along the Atlantic and Pacific coasts. Less progress is evident in the Central Region. The 2005 poverty map shows the distribution of poverty on a geographic basis (see Figure 1.4 for the map, and Box 1.2 for an explanation of poverty map). In comparison to 1995, the map shows where poverty has been reduced by municipality. Box 1.2: Poverty Maps in Nicaragua Poverty indicators for Nicaragua are generated from household surveys at the regional level, but lack the the required sample size to produce indicators for small geographical areas. Censuses do have information for the entire population of the country, but do not have information on income or consumption, or other poverty indicators. Using the poverty map methodology developed by the World Bank14, it is possible to take advantage of combining poverty indicators obtained from household surveys with the Census data, to generate poverty estimates for small areas (such as municipalities). To classify each municipality by poverty level, the poverty gap is used, which is a measure of how far each poor individual is below the poverty line. Each municipality is then classified according to its need for more or fewer resources in relation to the aggregate national poverty gap. If the total amount of resources needed to close the national poverty gap is 100 percent, then each municipality would receive a corresponding share based on its muncipial gap. For example, 0.4 percent of national resources are assigned to San José de Cusmapa --municipality with the worst poverty (92.5 percent are poor) --share corresponding to the proportion of this municipality's poverty gap contribution to the aggregate poverty gap for the entire country. Often municipalities with lower poverty account for a larger share of resources because of the size of their population. For example, Tipitapa in Managua where 9 percent are poor is assigned a 1 percent share of resources. An updated poverty map has been generated for 2005, which makes poverty estimates available by municipality. This poverty map is a useful tool for targeting public investments aimed at reducing poverty. The map is clear and easy to interpret. The methodology is not complex, and decision-makers can easily explain and justify the use of this tool. In addition, poverty maps for 199515 and 2005 can now be contrasted to identify poverty changes by municipality. The poverty map may also be combined with other data to provide tailored information for specific programs. For example, to allocate resources from a health project it would be very useful to know which municipalities are poor and at the same time have low health coverage. Information available at the local level from the beneficiaries themselves may also be used for identifying pockets of poverty at the community level that are not detected at the municipal level. Source: Sobrado et. al. (2007). "Nicaragua Poverty Map." Annex 4 to Poverty Assessment. 14Hentschel et. al. (2000) 15The 1995 Map for Extreme Poverty was used by the Emergency Social Investment Fund (FISE), among other public programs, to allocate funds for poverty reduction. World Bank (2001). Nicaragua Poverty Assessment, Report No. 20488-NI. 5 Figure 1.4: Poverty Maps, 2005 and 1995 Nicaragua N 2005 Poverty Map W E Honduras S Atlantic Ocean Range of Poverty Pacific Severe Ocean High Medium Costa Rica Low Definitions for the Map's range of poverty: Severe Poverty = poverty gap higher than 40 percent, High Poverty = 30 to 40 percent, Medium Poverty = 20 to 30 percent, and Low Poverty = poverty gap below 20 percent. Nicaragua N 1995 W E Poverty Map Honduras S Atlantic Ocean Range of Poverty Pacific Severe Ocean High Medium Low Costa Rica Source: Sobrado and Rocha (2007). "Nicaragua Poverty Map" Annex 4 to Poverty Assessment. 6 1.11 According to survey data, there has been a substantial decline in inequality. The Gini coefficient16 for the country as a whole has dropped from 0.49 in 1993 to .45 in 1998, and to .40 in 2005, and urban and rural areas separately have seen similar drops (see Figure 1.5).17 Given that Gini indices tend to be stable overtime, this is quite a remarkable change in a relatively short period. Figure 1.5: Inequality 1993-2005 0.60 1993 1998 2001 2005 0.49 0.50 0.45 0.45 0.43 0.44 0.43 0.40 0.41 0.40 0.38 0.37 0.350.34 ficient 0.30 coef Gini 0.20 0.10 0.00 National Urban Rural Source: LSMS 1993, 1998, 2001 and 2005 1.12 However, there is good reason to believe that these changes are more of a statistical nature than a reality. The changes in distribution over time can be disaggregated using growth incidence curves (GIC). A GIC is a plot of the growth rate for each decile of the distribution of per capita consumption. The curves are constructed based on the two household surveys, and the annual growth rates reflect average changes over the period. Figures 1.6 and 1.7 examine changes over the 1998-2005 period. The horizontal scale shows percentiles within each area--national or rural--so points at the same percentile different sectors correspond to different levels of consumption. To make this clear, the position of the poverty line in 2005 is shown in each graph as a dashed line at each figure. The extreme poverty line is shown as a dotted line in the rural GICs the figures also show 95 percent confidence intervals for the curves. 1.13 The national growth incidence curve shows the decline in inequality has been driven by two factors: an increase in consumption levels of the poor and particularly the extreme poor, and a sharp fall in consumption at the top of the distribution. Likewise, in rural areas, there are particularly strong gains for those below the extreme poverty line. Of these two factors, however, the drop at the top is by far the most important to the drop of the Gini coefficient. This can be illustrated by the fall in a "trimmed Gini" estimated by dropping the top 10 percent of the population in the national GIC curve. This trimmed Gini fell from just 0.31 to 0.30 between 1998 and 2005. 16A measure of inequality in which zero is perfect equality and one is total inequality. 17 Note that because the 1993 consumption aggregate is not identical to that used in later surveys, comparisons between 1993 and later years should be taken as only suggestive. This is particularly relevant for measures like the Gini coefficient that are sensitive to the entire distribution of consumption. 7 Figure 1.6: Growth Incidence Curve 1998-2005: 1.14 There have been real gains National among the poor, their weight in the total Gini is small and most of the 2 changes in the Gini are because of a noitp decline of the consumption in the upper umsnoc deciles. However, it seems hard to believe that this has actually occurred; 0 ta piacr there are two complementary and more likely explanations: one is that there is pe ni underreporting of income by the richer ge anhc -2 households, and the level of al underreporting has increased over time. nu an The second likely reason, is that there % may have been an increase in the -4 propensity to save, which would tend 0 10 20 30 40 50 60 70 80 90 100 Percentiles of consumption per capita to reduce consumption. These two possibilities that cannot be Source: LSMS 1998 and 2005 disentangled.18 Note: The dashed vertical line indicates the normal poverty line in 2005. The extreme poverty line is not shown. 1.15 Nevertheless, there has been Figure 1.7: Growth Incidence Curve 1998-2005: substantial progress in reducing Rural extreme poverty. As shown in the national and rural GIC curves, there 4 noitp have been substantial gains for those living below the extreme poverty line, umsnoc 2 although not sufficient to push most of at them over the line. Thus, extreme pi car poverty has remained relatively pe 0 ni constant over the period, but the ge extreme poverty gap has fallen. What anhc happened to cause the increase in al -2 nu welfare by the extreme poor? an % -4 1.16 We can get some insight on this 0 10 20 30 40 50 60 70 80 90 100 question by looking at the sources of Percentiles of consumption per capita income for the poor and non-poor, and Source: LSMS 1998 and 2005 their situation with regards to Note: The dashed vertical line indicates the normal poverty line in employment and labor earnings. 2005, and the dotted vertical line is at the point of the extreme poverty line in 2005. 18 It is important to recognize that the GICs are based on cross-sectional data, not panel data which tracks individuals over time. As a result, the GICs do not reflect changes in consumption for particular households. 8 Figure 1.8: Sources Of Household Income By Year 100 Remittances 80 Other 60 % Non-ag self- employment 40 Non-ag wages 20 Agriculture 0 1998 2001 2005 Source: LSMS 2005 Note: Percentages shown are averages of percentages across households, weighted using household sampling weights. 1.17 On average, the profiles of household income sources look very similar in 2005 and 1998. Figure 1.8 shows a breakdown of household income by major sources over this period. Of the five major categories, non-agricultural wages is the largest source of income for the average household, followed by agriculture and a broad category of "other" sources, followed by non- agricultural self-employment and finally remittances. Figure 1.9: Sources of Household Income by Quintile, 2005 100 Remittances 80 Other 60 % Non-ag self- employment 40 Wages, non-ag. 20 Agriculture 0 1 2 3 4 5 Consumption Quintile Source: Own analysis of EMNV data. 1.18 However, among the poorest twenty percent of households--those in the bottom quintile--the largest source of income is agriculture (see Figure 1.9). This sector accounts for over 50 percent of the income of lowest 20 percent (compared to less than 10 percent for the 9 upper quintile). For the poorest, wages and self-employment income constitutes only about 20 percent of their income. Figure 1.10: Sources of Household Income Figure 1.11: Sources of Household Income for Poorest 10 percent: 1998, 2001, and 2005 for 2nd Poorest 10 percent: 1998, 2001, and 2005 100 100 Remittances Remittances 80 80 Other Other 60 60 % % Non-agself- Non-ag self- employment employment 40 40 Wages, non-ag. Wages, non-ag. 20 20 Agriculture Agriculture 0 1998 2001 2005 0 Year 1998 2001 2005 Year Source: LSMS 1998, 2001 and 2005 Source: LSMS 1998, 2001 and 2005 1.19 What happened to the income of the lowest quintile since 1998? Looking at the income of those in the bottom 20 percent of the distribution, it is clear that agriculture has grown in importance for this group. For the poorest 10 percent, agricultural income has risen from 50 to 60 percent of income (1998-2005, see Figure 1.10), while for the second poorest decile it rose from 42 to 48 percent (Figure 1.11). This suggests that the rise in income, and thus consumption, of the poorest may be due in part to an increase in agricultural earnings. Figure 1.12: Annual Growth Rates of Private Consumption, Income, and GDP per Capita 4% 3.0 3.0 3% 2.1 2.3 2% 1.4 1.6 1% % 0% -1% -0.4 -2% -3% -4% -3.4 1998-2001 2001-2005 GDP per capita Consumption per capita Income per capita Consumption per capita (National Accounts) (National Accounts) (Survey) (Survey) Source: BCN National Accounts, LSMS 2005 10 1.20 Another factor explaining the sluggish decline in poverty numbers is an apparent gap between the growth of income and the growth of consumption. Following international best practice, poverty is measured here in terms of consumption, rather than income, because consumption is more stable over time and more likely to be correctly reported. However, if we examine the changes in consumption and income over time, we note that income has been rising faster than consumption. 1.21 Income in the household surveys roughly follows the growth of per capita income and per capita private consumption in the national accounts (see Figure 1.12). Yet consumption in the surveys shows a decline. Between 2001 and 2005, per capita consumption rose by 1.6 percent per annum in the national accounts, but declined by -.4 percent if we rely on the survey data. Between 1998 and 2001 the survey shows a decline of -3.4 percent in per capita consumption, but grew by 3.0 percent according to the national accounts. Yet, both national accounts and surveys show positive gains for per capita income. How is this possible? 1.22 A comparison of survey income and consumption by deciles also shows substantially higher growth rates for income over consumption, particularly pronounced in the upper decile and in the lowest decile (see Figure 1.13). This gives further weight to the argument that consumption by the upper decile is underreported, but also supports the idea that there has been substantial growth of income and Figure 1.13: Growth Rates of Consumption, consumption in the lowest deciles. But Income, and GDP per Capita, 1998-2005 why is the growth of consumption so noitp much lower than the growth of income? .1 Normally, income is underreported, mus although the survey does include such onc/ non-monetary items as owner occupied 5 meocni .0 dwellings, gifts and payments in kind, cp and self production/consumption. There ni are three possible reasons for this large ge 0 gap. anhc · First, there may have been a large al nu increase in household savings, which an % 50-. squares with the significant increase 0 2 4 6 8 10 in fixed investment in 2004-2005; Deciles of income/consumption per capita · Second, households may have Consumption Income purchased consumer durables in Source: LSMS 2005 increasing amounts ­ the consumption aggregate reported here only includes the pro-rated use of the asset. (e.g. the "consumption" of a refrigerator designed to last ten years would be recorded only at one-tenth of its cost); and/or · Third, it may be traced to the underreporting of consumption or errors in the values placed on the consumption items in the survey, such as the selection of prices for own production, and these biases have increased over time. 1.23 In fact, survey income seems to be much more in line with the growth of GDP per capita and private consumption (see Figure 1.11), while survey consumption is inconsistent with both. How can this idea of improved welfare over time in Nicaragua be tested? One way is to look at how the various basic needs change over a period of time. Figure 1.14 shows changes in four basic needs indicators between 1995 and 2005. These are crowding (people per room), access to water and sanitation, housing materials, and school attendance. The Government has defined 11 levels of adequacy for each of these indicators, to indicate when these basic needs are unsatisfied19. All four indicators show improvement over the 1995-2005 period; using either Census or LSMS data. Figure 1.14: Basic Needs Index Components, 1998-2005 (National Level) 50 45 40 35 30 25 % 20 15 10 5 0 Overcrowding Inadequate Water Inadequate Children and Sanitation Housing out-of-school 1995 Census 1998 Survey 2001 Survey 2005 Survey 2005 Census Source: Census and LSMS data 1.24 Using just the household survey data, overcrowding has dropped from 50 percent in 1998 to 33 percent, people with inadequate access to water from 26 to 23 percent, households with inadequate housing from 21 to 12 percent, and households with children out of school from 13 to 9 percent. Some of these items reflect better public services (water, schools), but housing quality clearly reflects higher levels of income/consumption. Even improved access to water and schooling requires private contributions to cover costs. It would be hard to believe that significant improvements in housing quality could have occurred without a significant increase in disposable income which has been used to improve the quality and size of dwellings (including better roofs, digging wells for water, improved flooring). Indeed, there is evidence that people define poverty more in terms of housing than income, since housing status is more apparent (see Box 1.3). 1.25 However, poverty is not defined only by material well being, as measured by income and assets, but also in terms of access to services and opportunities. The qualitative survey done for this report shows evidence of economic progress, but a strong perception of stagnancy due to low quality services and lack of access of opportunities. People often point out that opportunities exist for the rich but not for the poor. In addition, poverty is measured by the poor themselves in a more relativistic way; comparing current conditions to past conditions, and in contrast to their neighbors. People see themselves often as poor even in communities where there are no poor according to the quantitative poverty line, while even in communities with 100 percent poverty, people define both poor and non-poor. Poverty is multi-dimensional, and includes such aspects as security, human rights, discrimination and violence. Nicaragua still suffers from chronic problems of violence, some of which are a legacy of the Sandinista-Contra war (see Box 1.4). 19Note that the figure shows values calculated from both censuses and surveys, and due to differences in the wording of questions, the values are not fully comparable between the two data sources. In what follows in the text, only the household survey data is used, in order to focus on the changes since 1998. 12 While clearly much progress has been made in these areas, including the institution of a more democratic political process and greater security, more still needs to be done. Box 1.3: Defining Poverty: Results from a Qualitative Survey Poverty indicators used in conventional poverty work are not always able to reflect on the complexity of community dynamics and settings. In a rural community in the municipality of Quilali most households are considered poor or extremely poor using quantitative measures of consumption. During a wealth ranking exercise people categorize members of the community as poor, very poor, moderate and rich. Contrary to other more wealthy communities in the sample where having a car, a profession or a stable job matter, in this community having food daily makes a household not poor, and owning arable land makes a person fall somewhere between moderate and rich1. The main indicator however is the house; owning a home versus renting or squatting and as well as the type of house are indicators used in this community as a measure for economic welfare. A household with a bigger and nicer dwelling is considered not poor, regardless of their consumption ability. In a rural community in Waspam, people noted that the abundance of fish and other food resources enable even the poorest people to eat; one person said "food is not the problem in the community, it is the lack of housing and good land that make people vulnerable". Source: Del Carpio "Voices of Nicaragua". Background Paper to Poverty Assessment Box 1.4: On-going Security Concerns and War Memories Negatively Affect Nicaraguans Security concerns are an important part of the lives of the poor, and range from petty theft to gang violence and natural resource conflicts. In a rural community in the Pacific region, the community is dominated by one big family; members of this family threaten outsiders from coming into the community while terrorizing the locals via threats (including gun use and poisoning of drinking waters). One man said, "They stand on the corners and night, drunk and on drugs. I am very afraid at night because I have been robbed by them before. There are two gangs in the community, but we are lucky because they attack outsiders more than insiders". The police avoid coming into the community to deal with crime reported because of the strength of the gang. Service providers, such as water and electricity, refuse to come into the community to install new services. Remnants from the war still permeate the memories of people. The large scale displacements during the war re-shaped the social dynamics of many communities and interrupted the strengthening of existing social networks; people in a rural community in RAAS agreed that some of the leadership and organizational voids that exist today evidence the effects of the war on the people. In one community in RAAN community members consider that the divisions that currently exist in the community are a direct result from the war. The ex-combatants have designated themselves as leaders however only part of the community supports them and the other part supports the elected leaders. One person interviewed stated that her fear of being killed is still very present because her son deserted during the war. Another woman who fought being displaced stated that "in the time of war the Sandinistas wanted us to leave the community, but we did not leave because we felt that if we were going to die it was better to die here; my son however was taken when he was 12 by the military service but he was so small that they left him on the road and he escaped. When he was 16 the contras captured him and I never knew anything about him again". Source: Del Carpio "Voices of Nicaragua". Background Paper to Poverty Assessment 13 B. EMPLOYMENT AND LABOR INCOME 1.26 The poor, in particular, have few assets, and their ability to earn income depends on the sale of their labor income in the labor market, or their ability to produce as self-employed farmers or artisans. Trends in employment and labor income will have an important bearing on welfare and poverty. What has happened to labor income, and does it substantiate the idea that welfare has improved for the poor? 1.27 During the past five years, Nicaragua started seeing an important change in the population structure, with working age population (those between 15 and 64 years of age), increasing its share of total population. Working age population grew at an average rate of 2.7 percent per year, compared to a 1.7 percent population growth, during the period 2001-05. This means that each working adult now has to support a lower number of dependants. However, it also means that a large fraction of the population will have to find jobs. Between 2001 and 2005 the economy had an inflow of around 350,000 new workers. Furthermore, the cohort ages 10 to 15, which will have completed the transition into working age within the next 5 years, will potentially imply an additional 590,000 workers in the labor market20. Thus the opportunities and challenges offered by this population transition will continue to be present in the next decade. Figure 1.15: Remittances as a share of household consumption 16 15 12 % 8 7 4 0 Poorest II III IV V Consumption quintiles Source: LSMS 2005 1.28 One outlet for the growing labor force continues to be out-migration. It is estimated that about 20-30,000 Nicaraguans migrate every year, and 10 percent of the Nicaraguan population now resides abroad, chiefly in Costa Rica and the United States. Official remittances have increased 90 percent during the last ten years reaching $600 million in 2005 (or an amount equal to 40 percent of total exports and 12 percent of GDP). Most migrants do not come from poor families, but rather are those with more education, and 68 percent of remittances go to families in the upper two deciles. Nevertheless, the impact of remittances on reducing poverty is significant. Remittances constitute 15 percent of the income of the lowest decile, versus 8 percent for the upper two deciles (see Figure 1.15). Thus, they have been a significant factor in raising the 20This increase is net of those aged 60 to 64 who will be exiting the labor market. 14 welfare of the poor. Without remittances, the overall poverty rate would have been 4 percentage points higher, as would the extreme poverty rate (see Table 1.2).21 Table 1.2: Poverty Rates with and without Remittances (percent) Consumption Total without Difference Standar consumption remmittances (a-b) d Error (a) (b) Poverty rate National 46.0 49.9 -3.9 1.4 Urban 28.9 34.3 -5.4 1.8 Rural 67.7 69.6 -1.9 1.5 Extreme Poverty National 14.8 19.3 -4.5 0.8 Urban 5.4 10.9 -5.5 0.8 Rural 26.6 29.8 -3.2 1.4 Source: LSMS 2005, World Bank estimates 1.29 Within Nicaragua, the growing labor force was absorbed disproportionately by the manufacturing and agricultural sectors. Almost all sectors experienced positive employment growth during 2001-05. Average annual total employment growth was 4 percent, which exceeded the growth in the labor force (3 percent). The growing labor force was largely absorbed by the agricultural, manufacturing and commerce sectors. These sectors account for around 67 percent of total employment, and they accounted for 84 percent of total employment growth (see Table 1.3). Agriculture alone accounted for 40 percent of employment growth, with a growth rate of employment of 4.8 percent per annum. Table 1.3: Evolution of employment by sectors 2001-2005 Average annual Share of total Change in the share Sector employment employment of total labor force growth (%) generation (%) (percentage points) Agriculture 4.80 39.5 1.11 Mining and Utilities -3.25 -1.0 -0.32 Manufacturing 8.99 29.8 2.52 Construction -0.04 -0.1 -0.76 Commerce 2.65 15.2 -1.09 Transport 2.35 2.3 -0.23 Financial Services 7.18 5.2 0.36 Government Services 5.39 4.2 0.17 Community Services 1.13 4.8 -1.77 Total employment 3.90 100.0 0.02 Labor force 2.98 Source: LSMS 2001 and 2005 1.30 Over 56 percent of the poor were employed in agriculture in 2005, and this share seems to have increased from 2001 to 2005 (see Table 1.4)22. Employment by the poor employed in 21For further discussion of remittances and their impact, see background paper Herrera and Murrugarra (2007) 15 manufacturing also increased significantly, from 8.8 percent to 11 percent. The rising share of employment in agriculture is significant, since it runs counter to the normal development model in which labor with low marginal productivity in rural areas is gradually assimilated into higher productivity jobs in urban areas, with resulting higher productivity for those remaining in agriculture, and expansion in farm size. Why is the reverse happening in Nicaragua? Table 1.4: Employment by sector and poverty level, shares of total employment (percent) Poor Non Poor Total Sector 2001 2005 2001 2005 2001 2005 Agriculture 53.57 55.66 16.98 17.25 31.71 32.82 Mining and Utilities 0.95 0.76 1.54 1.13 1.30 0.98 Manufacturing 8.85 11.04 14.10 16.89 11.99 14.51 Construction 5.09 3.83 5.39 4.98 5.27 4.51 Commerce 12.99 11.85 29.53 28.56 22.87 21.79 Transport 1.86 1.90 5.33 4.93 3.93 3.70 Financial Services 1.15 1.03 3.74 4.44 2.70 3.05 Gvt. Services 1.24 1.40 4.14 4.34 2.97 3.15 Community Services 14.30 12.54 19.25 17.49 17.26 15.48 Total 100.00 100.00 100.00 100.00 100.00 100.00 Source: LSMS 2001 and 2005 1.31 The explanation seems to be that the amount of labor that has to be absorbed increased 2001-2005, during a period of limited growth, given the increase in the numbers aged 15-64, and an increase in the labor force participation rate. The result was declining labor productivity in both agriculture and manufacturing (see Table 1.5). Output per worker declined by 9 percent in agriculture, 16 percent in manufacturing and 2 percent overall. Table 1.5: Employment shares and productivity, by sectors of economic activity Employment/population of Output per worker (1994 $C) working age Sector Percentage Absolute 2001 2005 2001 2005 change Change Agriculture 10,973 9,988 -9.0 19.21 20.60 1.39 Manufacturing 25,032 21,097 -15.7 7.26 9.11 1.85 Mining and utilities 43,097 55,364 28.5 0.79 0.62 -0.17 Construction 14,701 15,393 4.7 3.19 2.83 -0.36 Commerce 12,505 13,005 4.0 13.86 13.68 -0.18 Transport 28,418 31,084 9.34 2.38 2.32 -0.06 Government 37,223 32,239 -13.4 1.80 1.98 0.17 Other 14,308 15,643 9.3 12.09 11.64 -0.45 Average/Total 15,757 15,477 -1.8 60.59 62.78 2.19 Source: LSMS 2001 and 2005 22The Household survey for 2001 shows a rural share of the population that is inconsistent with the census. According to the household survey (LSMS 2001), the share of rural population increased between 2001 and 2005. The census shows the opposite. Apparently the survey of 2001 is underestimating the rural population. If this is the case, the increase in the share of employed in agriculture might be due exclusively to under-representation of rural households in the survey of 2001. 16 1.32 Given lower productivity, one would expect to see lower wages in these sectors as well. Indeed manufacturing wages did decline slightly during the period (-2 percent), however agricultural wages increased by 17 percent (Table 1.6). Given the importance of agriculture for the poor, it is important to explain how labor productivity fell while wages rose in agriculture. Table 1.6: Wages by sector of economic activity Median wage (2001 $C) Sector Real 2001 2005 growth (%) Agriculture 6,840 8,018 17.2 Mining and Utilities 20,000 23,495 17.5 Manufacturing 12,600 12,364 -1.9 Construction 10,080 10,000 -0.8 Commerce 13,329 13,364 0.3 Transport 18,900 18,327 -3.0 Financial Services 18,175 21,238 16.9 Government Services 23,665 25,833 9.2 Community Services 12,179 14,118 15.9 Source: LSMS 2001 and 2005 1.33 The explanation of this seems to lie with the terms of trade, which substantially improved in agriculture over the period. Since productivity is measure in constant price output per worker, changes in agricultural output prices which increase real earnings in agriculture are not captured. Improved terms of trade allow or induce farmers to hire more workers since declining marginal physical products for additional workers are offset by higher marginal revenue products. Terms of trade for agricultural products are shown in Figure 1.16 below (= producer prices/CPI). Relative prices for coffee rose almost 100 percent between 2001 and 2005 (after a sharp drop in 2002), while prices for corn (maize), beans, and meat are 30-40 percent higher. Figure 1.16: Terms of Trade for Major Agricultural Products Producer Prices/CPI (Base Year 2001) 2.5 2 coffee rice 1.5 beans beef 1 corn 0.5 milk 0 2001 2002 2003 2004 2005 Year Source: BCN 17 1.34 But what does this imply for the future? If a significant portion of the employment and income growth of the poor is due to a (temporary) rise in the agricultural terms of trade, what will happen if these terms of trade trends reverse? The answer is likely a new movement of labor out of agriculture, and downward pressure on wages in all sectors, but particularly those affecting the poor with low levels of education. Thus, while the situation may have improved 2001-2005 by more than what would be indicated in the household surveys, it seems urgent that the government adopt a strategy to accelerate poverty reduction. C. WILL GROWTH REDUCE POVERTY IN NICARAGUA? 1.35 The fastest way to reduce poverty is to accelerate growth. In general, studies show that there is usually a clear and close relationship between growth and poverty reduction.23 However, individual countries do have variations in performance. Does Nicaragua's slow poverty reduction trend arise from slow growth or from a weak relationship between growth and poverty reduction? Figure 1.17: Latin America: Growth and Poverty 1993- 2005 oitar Latin America: Growth and Poverty, 1993-2005 1/ (annual average percent change) 2/ 2 PGY BOL headcount yt 1 COL pover ECU NIC 0 ARG 2001-2005 3/ URY -1 0 1 2 3 CRI CHL PAN -1 SLV NIC 1993-2001 BRA MEX HND per capita real $ GDP -2 Source: World Development Indicators 1/ Excluding Peru, Dominican Republic and Guatemala which are outliers. 2/ Nicaragua data for 2001-05 from WDI and the authorities' poverty surveys. 3/ For headcount ratio, the value measured is the annual average change in the "level" of the headcount ratio. 1.36 Nicaragua, similar to other countries with a per capita GDP growth of roughly one percent from 2001 to 2005, experienced no change in poverty during this recent period (see Figure 1.17). Only higher levels of growth, such as Nicaragua had over the longer period of 1993 to 2001, have resulted in decreasing poverty. The observed relationship between poverty reduction and growth for many countries confirms that unfortunately growth can occur with no declines in poverty, but in contrast, countries have not experienced a drop in poverty rates where economic growth is nil or close to zero. We can quantify the simple relationship between growth and poverty using a poverty-growth elasticity. This is calculated by examining changes between two points in time. It is simply the annual percentage change in the poverty rate divided by the annual growth rate of GDP per capita. Note that in general we expect such elasticities to be negative, as an increase in GDP per capita is typically associated with a decrease in poverty rates. 23Dollar and Kraay (2002) 18 Table 1.7: Poverty Headcount 1.37 Elasticities calculated for both general and Elasticities with Respect to Growth: extreme headcount poverty over various periods 1998-2005 are shown in Table 1.7. The most important figure is the elasticity measured over 1993-2005, General Extreme the longest period for which poverty data is poverty poverty available. Over this period, the general poverty Period elasticity elasticity elasticity was -0.4 and the extreme poverty elasticity was -1.1. Given 2005 poverty headcount Short Term of 46.2 percent, the general poverty elasticity of - 1998-2001 -0.5 -1.5 0.4 implies that for each one percentage point of 2001-2005 0.2 -0.3 growth of GDP per capita, overall poverty would decline by 0.18 percentage point. Likewise, given Long Term the 2005 extreme poverty level of 14.9 percent, 1993-2001 -0.5 -1.3 the extreme poverty elasticity of -1.1 indicates that 1998-2005 -0.2 -1.0 for each point of growth of GDP per capita, 1993-2005 -0.4 -1.1 extreme poverty would drop by 0.16 percentage point. Even though poverty showed little change Source: Own analysis of LSMS 1993, 1998, over the most recent short period (2001-2005) 2001, 2005. these long-term elasticities indicate that Nicaragua Table 1.8: Poverty Elasticities for has the potential to substantially reduce poverty Countries in Latin America and the over the long term if it could maintain high rates Caribbean of growth. In fact, Nicaragua will need GDP growth averaging 5.5 percent per year between Moderate Extreme 2005 and 2015 to reach its extreme poverty MDG poverty poverty at 9.7 percent from the current 14.9 percent. Argentina -1.0 -2.1 Bolivia -0.5 - 1.38 How does the effectiveness of growth in Brazil -1.7 -2.0 reducing poverty in Nicaragua compare with the Chile -1.3 -1.9 experience of other countries in the region? Colombia -0.4 -1.7 Estimates of the poverty-growth elasticities for all Costa Rica -1.1 -1.5 countries in the region are shown in Table 1.8 for Ecuador 0.6 -1.6 multiple years of poverty estimates. Note that Honduras -1.4 -1.7 these estimates employ all available poverty data Jamaica -1.2 - from household survey24. Nicaragua is below Mexico -0.6 -1.0 average for the region; for moderate poverty the Nicaragua -0.4 -1.2 regional average is -0.9, compared to -0.4 for Panama -0.1 -1.4 Nicaragua. For extreme poverty, Nicaragua's is - Peru 1.0 0.7 1.1, compared to a regional -1.5. However, these Paraguay -2.5 0.3 elasticities are based on the household surveys El Salvador -2.3 -3.1 which may be understating the growth of Uruguay -2.4 -3.6 consumption and the decline in poverty. Venezuela -0.9 -1.5 Nevertheless, Nicaragua needs to do better both in Average -0.9 -1.5 raising overall growth, and increasing the poverty Source: Own analysis based on SEDLAC impact of that growth. database poverty figures and World Development Indicator GDP per capita numbers. 1.39 How can Nicaragua increase the impact of 24In the case of some countries, poverty estimates from only two different years are available. Consequently the length of the "long-term" varies by country. 19 growth on the poor? To understand how to reduce poverty, one most first look at the causes of poverty. Through regression analysis, one can examine the correlates of economic welfare, that is, the relationships between per capita consumption and other variables: geographic location, education and demographics of the household head, employment status and sector of household head, household composition, and access to infrastructure. These correlates hint at causation, but do not prove that there is a link. 1.40 Table 1.9 displays results from this analysis. The results show that as a whole, consumption levels of other regions and Managua have moved towards convergence. In other words, the gaps between other regions and Managua have declined. Most strikingly, controlling for other variables, consumption levels in the Rural Atlantic region, which were 30 percent those of Managua in 1998, were equal to those of the capital in 2005. 1.41 Overall, the relationship between consumption and the main explanatory variables has remained remarkably constant over time. In all three years, female-headed households were no poorer than male-headed households, while those with younger household heads (under age 35) were 9-13 percent poorer. Education levels are strongly and consistently associated with higher household consumption. Completion of primary and secondary education for the household head is associated with consumption gains of 17 and 36 percent, respectively, over a household with a head who has not completed primary. 1.42 Household access to services is consistently associated with higher consumption. Households with piped water, electricity, and paved roads are significantly better off. Note that these may not reflect the effects of access to services but rather the fact that better off households are more likely to be able to afford utilities and to be located closer to paved roads. However, the link between consumption levels and paved roads has actually weakened over time. Households with paved roads were on average 22 percent wealthier in 1998 and only 11 percent wealthier in 2005. This probably is due to the massive expansion of paved roads that took place after 2001, which expanded paved roads into areas that are not as well off. 1.43 The results for household composition show that larger households are less well off in general, particularly those that have more children and babies. This is unsurprising, because young children consume household resources but are not productive themselves. However, even households with more seniors and adults--who are both consumers and producers--have lower consumption levels on a per capita basis. 1.44 This analysis stresses the key role of education in raising productivity. Yet Nicaragua has one of the lowest education levels in Latin and Central America. It ranks only bellow Guatemala, both in terms of education level of its urban and rural population (see Table 1.10). The average years of schooling of the urban population is 6.9, compared to a regional average of 9.0; in rural areas the gap is between 3.1 and 4.9. 1.45 A qualitative survey undertaken for this report interviewed poor people in various localities to identify problems and priorities. It noted severe problems in the education system, including overcrowding and poor facilities and teachers, and the need for young people to work, particularly in rural areas. Schooling seems to be particularly important for generating remittances. While all income groups benefit from remittances, the majority go to families in the upper deciles, rather than the poor. The reason for this is that the people who migrate tend to be those with the most education. In general, Nicaraguans with primary education go to Costa Rica; those with a secondary education go to the United States where returns to migration are much higher. Hence even if education leads to migration, it will raise family income. Thus, it would 20 seem that a successful poverty reduction strategy will have to combine both growth that produces good employment opportunities and accelerating the progress in educational achievement. Table 1.9: Correlates of Consumption in Nicaragua: 1998-200525 1998 2001 2005 Region Urban Pacific -0.28 -0.19 -0.20 Rural Pacific -0.27 -0.11 -0.15 Urban Central -0.22 -0.16 -0.15 Rural Central -0.33 -0.23 -0.22 Urban Atlantic -0.03 0.03 0.07 Rural Atlantic -0.30 -0.04 -0.03 Household head Female -0.03 -0.03 -0.01 Under age 35 -0.13 -0.13 -0.09 Primary education 0.14 0.14 0.17 Secondary education 0.37 0.37 0.36 More than sec. education 0.86 0.82 0.87 Not in labor force 0.07 0.09 0.10 Household head sector Agriculture 0.09 0.08 0.06 Mining 0.08 -0.04 -0.08 Manufacturing 0.02 0.04 0.03 Gas, Elec, Water 0.08 0.11 0.10 Construction 0.04 0.01 0.00 Commerce 0.17 0.18 0.18 Transport 0.30 0.27 0.17 Financial Services 0.22 0.24 0.14 Community Services 0.04 0.02 0.00 Household services Piped Water 0.17 0.18 0.19 Electricity 0.22 0.23 0.21 Paved Road 0.22 0.19 0.11 Household composition # babies (under 5) -0.17 -0.15 -0.16 # children (5-14) -0.14 -0.14 -0.14 # adults -0.05 -0.06 -0.07 # seniors -0.10 -0.04 -0.06 Constant 9.34 9.10 9.10 Number of observations 3827 4165 6856 R-squared 0.56 0.57 0.55 Source: Own analysis of LSMS 2005 25 Notes: Results shown are coefficient estimates from regressions with log per capita consumption as the dependent variable. Observations are at the household level, and household weights were used for the analysis. Estimates significant at the 5 percent level are shown in bold (robust standard errors were calculated taking into account the two- stage sampling for the surveys.) Omitted dummy categories correspond to a household in the Rural Central region with an unemployed head with no education. 21 Table 1.10: Average Level of Education of Population 25 to 64 Country Year Urban Rural Bolivia 2004 8.9 4.9 Brazil 2005 7.8 3.8 Colombia 2005 9.7 ... Costa Rica 2005 9.6 6.8 Dominican Rep. 2005 9.1 6.2 Ecuador 2005 10.4 5.6 El Salvador 2004 8.6 3.8 Guatemala 2004 6.5 2.4 Honduras 2003 7.5 3.5 México a/ 2005 9.6 6.0 Nicaragua 2001 6.9 3.1 Panama 2005 11.1 7.0 Peru 2003 10.6 5.3 Uruguay 2005 9.9 ... Venezuela (Nacional total) 2005 8.9 ... Regional Average 9.0 4.9 Source: Nicaragua own estimations based on 2005 survey. Other data: CEPAL D. PRIORITIES AS IDENTIFIED BY THE POOR 1.46 The level of poverty, and means to reduce it, can often be best seen through the eyes of the poor, themselves. Their priorities for development reflect their needs, and the areas in which they feel they are "poor". The qualitative analysis referred to earlier used a semi-experimental game26conducted in 15 communities27. The participants for this instrument are two distinct groups, the first a group of 4-5 leaders in the community and the second, a group of 4-5 ordinary people (constituency) living in the community. Participants are given a hypothetical amount of money totaling C$1,350,000 (approximately US$8,000) in two stages, in a structured manner, and asked to assign the funds to anything they believe would contribute to the development of the community (results are summarized in Table 1.11). Leaders and people agree on the top priority: Potable Water 1.47 This analysis took into account the project requests, as well as the discussion between participants, of 15 out of all 18 studied in the qualitative work. Drinking water alone was requested 19 times out of 198 total requests; people requested a water program (which means from a cured well to a pump) in every region except Atlantic rural. This can be interpreted as an indicator that the inadequacy of water sources is a general problem with a strong likelihood of being true beyond the communities visited. The other water related project (aguas negra or sewages, latrines, septic tanks) directly related to hygiene and indirectly linked to the availability of clean drinking water was also among the top 10 priorities where leaders and common people coincided (although not mentioned in Managua). 26The instrument is considered semi-experimental game because it is intended to be exact everywhere and hypothetical money is distributed to identify patterns of behavior across a group. 27See Castro, Del Carpio, Premand and Vakis (2007) for more details on the exact methods applied and the background work done. 22 Table 1.11: Priority Programs as Reported by Leaders and People LEADERS PEOPLE BOTH MAJOR THEMES % % % Water project (drinking and septic) 13.9 14.1 14.0 Construction and repair of street/roads 11.7 13.0 12.5 Productive opportunities 12.9 12.0 12.4 Health center/personnel/goods 11.0 10.0 10.5 House building or improvements (poor or single moms) 6.9 8.3 7.6 School (pre-school, primary and secondary) 7.9 5.0 6.5 Electricity/solar power/street electricity 5.6 4.1 5.1 Vocational school/training 5.8 4.1 5.0 Recreational park/sports for youth 4.9 4.1 4.6 Church 23.0 1.0 2.0 Other 15.8 24.3 19.9 Source: Data derived from the outcomes obtained through Semi-Experimental exercise Note: Various Categories are aggregated into one for ease of presentation The construction of roads and repair of existing roads is also listed as a top priority by leaders and people in general 1.48 Roads, whether adoquinado (road brick construction) or repair, are mentioned by the leaders in all communities visited as priorities for improving well-being. This theme includes roads inside the community (streets) or roads leading to the urban area; other communication programs mentioned as lacking and affecting progress are bridges. Roads and bridges are key for maintaining access to schools and health centers, particularly in the rainy season when students often have to drop out of school because of flooded roads. The emphasis on roads and water comes despite significant progress and expenditures in these areas in the recent past. Having limited productive opportunities is a resonant theme nationwide 1.49 The limited availability of productive tools, skills and resources leads both leaders and people to believe that programs such as a locally managed credit fund, agricultural inputs, livestock (cows, chickens and pigs), the creation of a local market and a distributing center are part of the answer to development in their communities. In table 1.11 it can be observed that both leaders and common people (13 percent and 12 percent respectively) place productive opportunities among the highest categories of programs they perceive as important. The 24 percent allocated to the other category under the people column represents various poverty themes in the social dimension; for example food for the poor, help for the disabled, help for street children, single mothers, old folks home and assistance in financing holiday celebrations. Leaders tend to assign resources toward infrastructure and productive projects such as those mentioned in table 1.11, as well as the purchase of land for cultivation. Health and education, infrastructure and services, are at the top of the list for leaders and for people 1.50 Leaders and people mentioned that the lack of a pre-school, inadequate size primary, a local secondary school and a health center inhibited the development capacities and limited their progress. Both, the services (paying for doctors and nurses and buying books and hiring more 23 teachers) and infrastructure appear to be equally important; and are priorities for both groups. Scholarships for secondary students and vocational training for carpentry, computers, sewing and other skills were also mentioned as projects with strong potential given the demands for their skills in the market. In terms of health, the chronically ill are identified as a vulnerable group in need of assistance; the short supply of free medicines for this segment of the population is a common concern among leaders and people in the Atlantic and Central regions. In general, education seems to be a lower priority than one would expect. This may reflect a bias against general education, which has long-term benefits to the welfare of the children of the poor, and a bias in favor of programs that directly raise productivity now, such as technical training. It may also reflect the fact that focus groups tended not to include youth, who were at work or at school. Including youth might tip the priorities to a greater emphasis on educatin (see Box 1.5). But it is consistent with survey results indicating the majority of the population thinks the quality of the present education system is adequate (see Chapter II). Box 1.5: Youth Priorities: Jobs, education, recreational facilities and family The findings related to the youth derive from youth aspirations focus groups, for both males and females. In all communities, four priority areas are mentioned: access to job opportunities, ability to continue education, access to sports related infrastructure and having children and a spouse. Males tend to focus on jobs, sports activities (soccer and baseball) and vocational education. Women focus more on regular education with some mention of vocational training, having a husband and children, and having entertainment activities related to church as well as a gathering place to hang-out with other women their age. Most of the young people interviewed believe that education is the solution to escaping poverty; one young lady in the Atlantic urban said "I want to study more to have more, it's possible if I study, I know I can be better off". Another important finding that is widely shared among both genders is that they want to have a better job than their parents because their life and their parents' lives are too hard and they want a better life for their children. One woman in RAAN said "I don't want to wash clothe and iron for a living like my mother, life is too tough that way". Source: "Voices of Nicaragua" May 2007 E. POLICY RECOMMENDATIONS 1.51 Poverty reduction has been slow in Nicaragua, but substantial progress has been made by those in extreme poverty. In addition, there is some reason to believe that the household survey data are understating the level of progress, which is more apparent in other indicators. Still, the decline in extreme poverty and the extreme poverty gap from 1993 to 2005 indicates improvements in the levels of well-being of the very poor. Progress in poverty reduction in Nicaragua can be explained by three fundamental mechanisms: · First, a reduction of the dependency ratios among the poor, which means that a larger share of family members is working; in manufacturing, mainly maquila, agriculture and, to a lesser extent, commerce. · Second, a considerable increase in migration of people from a different profile than in the past, occurring precisely after 2001 and captured by the 2005 LSMS. These new migrants have Costa Rica as their main destination, are among the poor with less education, and their remittances tend to favor the poor bringing an average of U$65 per month of additional income, which is about the wage of a rural worker in Nicaragua. 24 · Third, an improvement in the terms of trade for agriculture with substantial gains for the self-employed and better producer prices for coffee, meat, maize and beans, which are produced by small farmers. 1.52 While progress in poverty reduction in Nicaragua has been made in recent years, prospects for future improvements are rather fragile. Growth in the population of working age, and increasing participation rates, make it more urgent that rapid economic growth provides employment opportunities in the future for a growing labor force. Out-migration will have only a limited effect in reducing this labor force pressure. While recent favorable changes in the terms of trade for agriculture have provided opportunities for expanded employment in this sector, this effect could be reversed in the future, further adding to pressure on employment and wages. Therefore, critical areas for future focus for the Government include: · Finding ways to accelerate growth, and to spread the effects of growth more equitably among the population; · Improving basic infrastructure, particularly water supply and rural roads; · Focusing on programs that directly raise productivity ­ credit, irrigation, technical training, etc., and · Further improving basic health and education services in order to improve the productivity of the labor force. 25 CHAPTER II. OPPORTUNITIES FOR HUMAN DEVELOPMENT 2.1 Human development issues related to education, health, nutrition, access to clean drinking water and sanitation are fundamental indicators for assessing the depth of poverty. Without access to these basic services the vicious circle of poverty persists from one generation to the next. 2.2 This chapter examines the progress Nicaragua has made in achieving the Millennium Development Goals (MDGs) on key issues related to extreme poverty, health indicators (such as infant and maternal poverty), and access the clean drinking water and sanitation. Despite some progress, the country is likely to meet less than half its goals set for 2015 if policies had not been modified and serious gaps exits in maternal and infant health and nutrition indicators. Following the assessment of the MDGs, this chapter provides a detailed evaluation of the progress, challenges, and key policy options for improvement in the areas of education, health, nutrition and water and sanitation. Key findings of this chapter: · Expanding the access to and quality of primary education to meet the MDG of universal primary education and reducing illiteracy by half by 2015. The education system in Nicaragua faces significant challenges needing systemic efforts and requiring important investments in key sub-sectors, such as preschool and secondary education. Investments need to focus on increasing access and permanence in schools, and improving the quality of education (reducing drop-out rates, repetition and improving the quality of teaching). · Eliminating illiteracy among the youth is urgent to take advantage of new jobs. Programs such as primary completion and improved technical skills will be key to respond to the demands of the labor market. Greater investment in secondary is also needed to ensure the youth has opportunities to join the labor market effectively. · Investments in education infrastructure should be considered with care in order to maximize the use of existing idle schools. Investments should also be devoted to textbooks, supplies, and qualified teachers. Scholarships targeted to the poorest could offset some non-tuition expenses (such as CCTs). · Increasing access to and quality of healthcare services, especially in rural and remote poor areas. This would include enhancing the integrated healthcare model and accelerating improvement to maternal and child health services, as well as improving the quality of INSS services. Inequality of public healthcare services in Nicaragua is such that even services which are free-of-charge, like immunizations and reproductive health, tend to favor the better-off rather than poor households. · Addressing inefficiencies in current health spending can markedly improve health outcomes of the poor, including: moving away from historical budgeting of public health resource allocations toward a needs based system; targeting resources on primary and preventative care; using results based budgeting; improving the mix of human resources (doctors and nurses) to reduce costs and improve quality of services. · In water and sanitation, greater resources will need to be devoted to expanding coverage to rural and remote areas. Achieving this MDGs is a top priority. Lack of clean drinking water, sanitation, and health practices is a large contributor to poor health outcomes. In rural areas, municipalities should be given a larger role in water and sanitation service provision jointly with local participation to ensure service levels can be managed and afforded in the long-run. In urban areas, a cash injection for improving water service quality in the short run will be needed to prevent a virtual collapse of the provision in 26 some areas. Moreover, a profound structural reform of the urban service provider ENACAL will be required in parallel to prevent investments becoming a de facto consumption subsidy without the consequent improvement to the long-term stability of the service. · In terms of reducing malnutrition, programs and interventions would be more effective if an integrated approach is used to address more than one of the immediate and underlying problematic factors. It is critical that this multi-sectoral approach focus on prevention and targets the age where most of the losses occur, starting in-utero and continuing though the child's second birthday. A. PROGRESS AND PROSPECTS IN ATTAINING MDGS Progress toward meeting PRS long-term Goals and MDGs 2.3 In December 2005, the Nicaraguan government presented a PRS-II, called the National Development Plan (NDP).28 The new government that took office in January 2007 has confirmed its commitment to the broad principles expressed in the NDP, presented a progress report in October 2008, and is in the process of revising the NDP. The Nicaraguan PRS-II includes goals, indicators and targets in the areas of Poverty, Macroeconomic Performance, Economic Infrastructure, Regulatory Framework, Property Rights, Access to Financial Services, Investment Promotion, Food Security, Sustainable Environmental Development, Education, Health, Social Protection, and Water and Sanitation. The goals and targets included in the NDP and linked to MDGs are detailed in Box 2.1 below. Box 2.1: The Nicaraguan PRS Long-term Goals, Targets, and MDGs PRS goals (MDGs) Targets Goal 1. Reduce extreme poverty Target ­ Halve, between 1995 and 2015, the proportion of people whose income is less than the extreme poverty line. Extreme poverty target is 9.7% by 2015. Goal 2. Increase access to primary Target ­ Ensure that, by 2015, all boys and girls alike will education be able to complete a full course of primary schooling. Net primary enrollment is 100% by 2015. Goal 3. Reduce infant and under- Target ­ Reduce by two-thirds, between 1994 and 2015, the five mortality infant mortality rate and child mortality rate. Under-five mortality is 24 and infant mortality 20 by 2015. Goal 4. Reduce chronic malnutrition Target ­ Reduce chronic malnutrition to 7% by 2015. Goal 5. Reduce maternal mortality Target ­ Reduce by three-quarters, between 1994 and 2015, rate the maternal mortality ratio. Maternal mortality is 22 by 2015. Goal 6. Increase access to Target ­ Increase access to reproductive health services of reproductive healthcare services appropriate age by 2015. Goal 7. Increase access to water and Target ­ Increase to 90% national water coverage by 2015. sanitation Target ­ Increase to 95% national access to sanitation by 2015. Goal 8. Reduce Illiteracy Rate Target ­ Decrease illiteracy rate29 to 10 % by 2015. Source: GON (November 2005). PRS-II. 28See GON (November 2005). PRS-II: Plan Nacional de Desarrollo (PND). World Bank (2006). PRS and JSAN. Report No. 34717-NI. 29Illiteracy rate is reported for people ten years and over. 27 2.4 Progress in MDGs and PRS goals in Nicaragua has been generally satisfactory, but there are concerns for sustained future performance in relation to several goals. About half of PRS goals were on track in 2005 comparing actual versus targets (table 2.1). PRS targets for 2005 were very modest vis-à-vis MDGs for 2015, and in consequence several have been met (figure 2.1). PRS targets that showed satisfactory performance are: extreme poverty, net primary enrollment, and infant and child mortality. PRS targets that are currently off track and need additional efforts to sustain future improvements are: maternal mortality, access to reproductive healthcare services, chronic malnutrition, access to drinking water and sanitation, and illiteracy. Table 2.1: Nicaragua: Progress toward Meeting PRS Goals and MDGs Data Actual Data PRS-II On Target PRSP goals (MDGs) Source 1993 1998 2001 2005 Target 2005 Track? 2015 Extreme Poverty (%) LSMS 19.4 17.3 15.1 14.9 16 Yes 10 Net Primary Enrollment (%) LSMS 75.6 79.6 83 84.1 83.4 Yes 100 Infant Mortality DHS ... 40 31 ... 32 Yes 20 Under-five Mortality DHS ... 50 40 ... 37 Yes 24 Chronic Malnutrition (%) LSMS 23.7 19.7 17.8 17 16 No 7 Maternal Mortality MINSA 98 106 115 95.7b 93 No 22 Access to Reproductive Health MINSA ... 21 a 24.5 12.9 24.8 No 100 Access to Drinking Water (%) LSMS 68 71.7 70.3 71.5 75.4 No 90 Access to Sanitation (%)d LSMS 44.6 50.3 51.7 55.9 88 c No 95 Illiteracy (%) LSMS 21.5 18.8 18.7 18.4 16 c No 10 Source: DHS, ENACAL, LSMS, MECD, MINSA, GON PRS-II (December 2005). (a) actual data for 1999, (b) actual data for 2006, (c) target is for 2004, (d) actual data for sanitation excludes untreated latrines. Box 2.2: Monitoring PRS indicators and MDGs The process of monitoring the Poverty Reduction Strategy has several advantages: 1) it makes it possible to track progress in achieving PRS goals; 2) it reveals causes of success or failure, allowing effective management of the strategy and identification of needed improvements; 3) it permits mobilization and the generation of consensus for public support of the target; 4) it offers opportunity for greater involvement of civil society in the process; and 5) it acts as a means for improving accountability in the use of resources and increasing transparency.30 General Concepts · Goals ­ the objectives a country or a society want to achieve · Indicators ­ the variables used to measure progress toward the goals · Targets ­ the quantified level of indicators set by a country to be achieved in a timeframe Types of Indicators Indicators can be classified in two groups, intermediate indicators and final indicators. The first set can be subclassified into input and output indicators, and the latter into outcome and impact indicators. · Intermediate Indicators o Input Indicators ­ financial and physical indicators of resources used o Output Indicators ­ the intermediate goods and services generated · Final Indicators o Outcome Indicators ­ access to and use of goods and services and beneficiaries satisfaction o Impact Indicators ­ impact on well-being (improvement in living standards) Source: Pain (2002). 30Pain (2002) 28 Figure 2.1: Performance of selected PRS indicators in 2005 100 Actual Target 80 60 40 20 0 e mert ytr yra tne n n ng Ex oveP mi mllor cinor tioi lanr te ytilat veit ret tio ycar utr nkiir Wa Pr ln Ma Mor oduc lthae D litelI En Ch Ma pre H itanaS R Note: Performance of PRS goals vis-a-vis quantitative targets for 2005. Prospects for attaining PRS long-term Goals and MDGs by 2015 2.5 Forecasts of recent trends in PRS indicators suggest that more than half of the MDG goals for 2015 are unlikely or very unlikely to be achieved, if policies had not been modified. PRS long-term goals and MDGs that are likely to be achieved include reductions in extreme poverty, and infant and child mortality (table 2.2 and box 2.3). It is unlikely that the targets for universal primary enrollment, declines in chronic malnutrition, access to water and illiteracy will be reached. It is very unlikely that reductions in maternal mortality, access to reproductive healthcare services and sanitation will be achieved. The fact that goals in universal primary education, illiteracy, and chronic malnutrition and access to water will not be met is particularly worrisome because of their long-term implications for the well-being of large segments of the population and for building human capital and ability to take advantage of income generation opportunities. Table 2.2: Nicaragua: Prospects for Attaining Long-Term PRS Goals and MDGs PRS-I a PRS-II b Target Target Target 2015 Actual Forecast PRSP goals (MDGs) Base Base PRSP-II PRS-II will be 2005 2015 c 1993 2001 2010 2015 achieved? Extreme Poverty (%) 19.4 15.1 14.9 11.5 11.0 9.7 Possible Net Primary Enrollment (%) ... 82.6 84.1 90.5 87.0 100 Unlikely Infant Mortality (per 1,000 live births) 58 31 ... 27 24.1 20 Possible Under-Five Mortality (per 1,000 live births) 72 40 ... 33 31.2 24 Possible Chronic Malnutrition (%) 19.9 17.8 17 12.8 11.7 7 Unlikely Maternal Mortality (per 100,000 live births) 160 88.6 95.7 d 63 80.3 22 Very unlikely Access to Reproductive Health Services ... 16.1 12.9 29 21.3 100 e Very unlikely Access to Water (%) ... 75.8 71.5 83.5 76.4 90 Unlikely Access to Sanitation (%) ... 87.1 55.9 f 90 60.0 95 g Very unlikely Illiteracy Rate (%) 19 18.7 18.4 15.6 15.3 10 Unlikely Source: PRS-I, LSMS 2005, PRS-I 1st and 2nd Progress Reports, PRSP-II, and own estimates. (a) MDGs base year is 1990, Nicaragua's PRS-I explains data was not always available, then closest year was used, for most cases 1993 or 1994, except malnutrition and illiteracy 1998; (b) PRS-II base year is 2001 for poverty, infant and child mortality, malnutrition and illiteracy, or 2004; (c) Estimated on the basis of SimSIP elasticities for Nicaragua and LAC, methodology cited in World Bank Technical Paper No.467; (d) 2006; (e) Target for 2010 is 29 from a 16.1 in 2004; (f) Actual 2005 excludes untreated latrines; (g) National target. 29 Box 2.3: Performance Evaluation Criteria for Attaining MDGs Results are presented in four performance evaluation criteria: likely, possible, unlikely, and very unlikely. Definitions vary for each target. Percentages are obtained by dividing the forecasted value in 2015 by the base year (1990 or 1993/94 for Nicaragua) and multiplying by 100, except for net primary enrollment, as the objective is to reach universal coverage. Thus, a result around 0 percent means the level of the indicator in 2015 is different from 1990, while a result around 100 percent indicates the value in 2015 is close to 1990. Target Likely Possible Unlikely Very unlikely Reduce extreme poverty by 50 % 0 ­ 50 % 50 ­ 60 % 60 ­ 80 % > 80 % Reduce under 5 malnutrition by 50 % Reduce illiteracy by 50%* Universal primary education 95 ­ 100 % 90 ­ 95 % 80 ­ 90 % < 80 % Access to drinking water* Access to sanitation * Access to reproductive healthcare services* Reduce infant mortality by 2/3 0 ­ 33 % 33 ­ 50 % 50 ­ 75 % > 75 % Reduce under 5 mortality by 2/3 Reduce maternal mortality* Reduce chronic malnutrition* Source: Hicks and Wodon (2002) * Added to original table. Box 2.4: Analyzing the Prospects for Attaining Long-Term PRS Goals and MDGs in 2015 Determining if Nicaragua's PRS goals and MDGs would be achieved by 2015 implied estimating forecasts using a combination of approaches and data sources, such as: data from SimSIP (Simulations for Social Indicators and Poverty) goals; updated country-specific data applied to SimSIP goals regressions and recalculations using the Stata statistical package; the POVCAL statistical package to estimate responsiveness of poverty to growth and its predicted values; and SimSIP goals estimated elasticities to growth. · POVCAL ­ A tool to obtain the elasticity of poverty to growth. POVCAL assists with routine poverty assessment work by using sound and accurate methods for calculating poverty and inequality measures. It requires any of the various types of grouped income distribution data typically available, such as income shares by deciles of households ranked by per capita income. Data requirements are low; essentially what is needed is access to grouped distributional data and the poverty line. The program estimates the Lorenz curve, Gini index, headcount index, poverty gap index, Foster-Greer-Thorbecke index, and the elasticities of these poverty measures with respect to the mean of the distribution. It does all this for two alternative specifications of the Lorenz curve: the General Quadratic (Villasenor and Arnold) and the Beta model (Kakwani).31 · SimSIP Goals ­ Assessing the Realism of Development Targets. SimSIP (Simulations for Social Indicators and Poverty) is a set of user-friendly Excel-based simulators that facilitate the analysis of issues related to social indicators and poverty. Many of the indicators correspond to the targets and areas of focus put forward in the MDGs. The simulations/targets for future levels can be based on either historical trends or model-based elasticities. For historical trends, four different ways of fitting a historical trend line across the available data at the country level are considered for each indicator and each country. The best fit is selected. The second alternative is to rely on an econometric model yielding elasticities of the indicators to economic growth, population growth, urbanization, and time. These elasticities have been estimated with two different econometric models using worldwide panel data sets, and they are allowed to vary with a country's level of economic development and urbanization. 31Chen, Datt, and Ravallion (1992) 30 2.6 Continued progress in Nicaragua's MDGs and PRSP goals is closely linked to the recovery of growth,32 particularly to achieve the target for poverty reduction in 2015. For education, key bottlenecks are related to improvements in internal efficiency of primary education. To this effect, the Education for All Initiative implemented in Nicaragua could have sufficient impact to make it possible to achieve the MDG target of universal primary education. Maternal mortality is associated with births at home and low access to reproductive healthcare services, which in turn increases birth spacing and impacts high fertility. Infant mortality, child mortality and chronic malnutrition raise concerns about future prospects, given minimal progress in diarrhea and acute respiratory diseases, which are also linked to low access to safe water and sanitation services. Access to water has been stagnant; with only one-in-four households having piped water inside their homes. Water becomes contaminated mainly through unsafe practices in storing drinking water, access of domestic animals to the family's drinking water, and lack of chlorination and families' failure to boil water. Access to sanitation seems high; however, however more than half of latrines are untreated, which is equivalent to one-third of all sanitation services in the country. Illiteracy rates in Nicaragua, as in other countries, have proven to be difficult to improve in the medium term; internal efficiency of education and young adult literacy programs will be key. B. OPPORTUNITIES IN EDUCATION 2.7 Education is a critical aspect of the need to increase productivity mentioned in chapter one. At the macro level, lack of qualified human capital decreases national competitiveness and limits the development of science and innovations that improve productivity. At the micro level, it is still a powerful determinant of the possibilities of people of moving out of poverty and to be less vulnerable against shocks. In this section we quantify returns to investments on education and we analyze inequities in school access by socioeconomic group, area of residence, ethnicity, and gender. We discuss and quantify the main constraints households face to send their children to school and examine inequalities in education quality: quality-outcomes by socio-economic group (such as repetition, attainment, and test scores). A brief set of conclusions and policy recommendations follows. This section dwells on analyzing differences in educational outcomes and opportunities across different dimensions, like socioeconomic background, region and gender. A complementary analysis, that emphasizes on recent evolution, may be found in a companion report, the Public Expenditure Review. Does education pay in Nicaragua? 2.8 How educated is the labor force in Nicaragua? Does education pay in Nicaragua? The answer to the first question is that level of education of the adult population is low and even among the younger generations educational standards fall well below those of most Latin American countries. The answer to the second question is that education pays, both at the macro level in terms of its effect on growth and productivity ,and at the micro level, allowing people to reduce their chances of being poor and of differentiating themselves in the socioeconomic scale. 32PRS-II projected GDP growth rates set medium-term targets above 4 percent, as follows: 2007 (4.3 percent), 2008 (4.6 percent), 2009 (4.8 percent), and 2010 (5 percent). After 2010, the long-term GDP real growth rate is projected at 5 percent. 31 2.9 In fact, Nicaragua is one of Figure 2.2: Mean Years of Education in the least educated countries in the Nicaragua vs LAC (1999-2004) region. There is an almost linear relationship between the educational 12 level of a country's adult population )dlo CHL ARG s 10 URY and its level of development. Figure PAN year VEN CRI 2.2 shows that the poorest Latin DOM 8 MEX 65 ECU PER COL PRY LAC American countries (Nicaragua, BOL 25-( SLV BRA Bolivia and Honduras) are at the noi 6 NIC same time those countries displaying HND 4 GTM the lowest education levels among their adult population (5.6, 7.2 and catudEfo s 2 5.4 years of education), whereas areY 0 Argentina and Chile display the 2,000 4,000 6,000 8,000 10,000 12,000 highest education rates along with GDP per capita (average 99-04 in 2000 US$ constant PPP) the highest per capita incomes in the Latin American region. Source: International Education Statistics (2007) 2.10 Even if Nicaraguan education levels are very low, and consequently the average level of productivity is low, education influences productivity levels of each individuals, has a value in the labor market, and consequently allows people to differentiate themselves. In fact, Nicaragua, a worker earns 10 percent higher earnings for each additional year of schooling received. Using data for the period1998-2005 we found that returns to education have been fairly stable and similar in magnitude across strata and gender groups at approximately 9 to 10 percent per extra year of education. Returns to education, however, are not homogeneous across schooling levels, Returns to higher levels of education are generally higher. However, there is evidence that during this period, returns to primary and secondary education where increasing, while the opposite was observed in the case of tertiary education This phenomenon may reflect a greater demand for semi-qualified labor, which could be attributed to an increasing demand for labor in the "maquilas". Table 2.3: Returns to education by gender Figure 2.3: Rates of return by Educational and area of residence Level 1998 2001 2005 Private Returns National 11.4 11.2 8.0 20% Male 9.5 9.5 8.4 16% Female 11.1 12.2 10.6 12% Urban 11.1 10.8 8.8 8% Rural 8.3 7.7 9.7 Source: Angel-Urdinola and Laguna (2007). 4% Estimates from on mincerian equation corrected for 0% self selection. 1998 2001 2005 Primaria Secundaria Terciaria Source: Angel-Urdinola and Laguna (2007). 32 2.11 Moreover, education outcomes in Table 2.4 ­ Education and Poverty Nicaragua are closely linked to poverty % increase in Population outcomes. In fact, lack of education expected Share (%) constitutes one of the main determinants Consumption of poverty in Nicaragua. As shown in vs. households Table 2.4, households having a head with having a head tertiary/technical education consume on with no average 55 to 82 percent more than education otherwise similar households having a Head with no education - 30.8 head with no education. But having a Head attained Primary 16.5% 41.7 head with technical or tertiary education Head attained Secondary 32.2% 17.8 Head attained Technical 54.7% 2.9 is a privilege of less than 10 percent of all Head attained Tertiary 81.7% 6.8 the households in the population. Living in poverty is almost certain for individuals with less than complete secondary; wages are below the poverty line for individuals with complete primary or incomplete secondary (see Figure 2.4), and this holds even with 1, 5 or 10 years of experience. An extra year of experience produces high returns on wages only for individuals who have attained at least 11 years of education (or about complete secondary). Figure 2.4: Wages above the poverty line require at least 11 years of education Primary Secondary Tertiary 35.0 30.0 dobasro 25.0 C ni 20.0 etar 15.0 age w yl 10.0 our H 5.0 0.0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Years of schooling 1 year 5 years 10 years (Exp) Poverty Line 2.12 Despite the low level of education, large inequities in to education persist even among younger cohorts. In extremely poor households in Nicaragua, one out of four young people between the ages of 15 and 24 years is illiterate. Literacy rates among young people have raised an average of 8 points during the 1993-2005 period, particularly among extremely poor sectors (see Table 2.5). Nevertheless, it is alarming that while 99 percent of young people from the richest quintile can read and write, only 78 percent from the poorest quintile can do so. Inequities in Access: Enrollments 2.13 International comparisons indicate that both primary and secondary gross enrollment rates are low in Nicaragua . In the case of secondary, these low rates are consistent with the still low level of GDP per capita of the country. However, in the case of primary, enrollment rates are even 33 below what could be expected for countries with the same level of development of Nicaragua. (see Figure 2.5) Table 2.5: Youth from the poorest households and rural areas have the lowest literacy rates. 1993 1998 2001 2005 All 82.3 85.6 86.4 90.4 Extreme Poor 65.5 65.0 65.6 77.1 Moderately Poor 88.9 89.4 89.8 87.0 Non-poor 93.8 93.7 94.3 95.8 Urban areas 94.3 94.2 93.9 95.8 Extreme Poor 81.6 81.2 74.6 85.6 Moderately Poor 95.2 96.1 94.8 92.9 Non-poor 96.3 97.9 96.0 97.6 Rural areas 70.5 75.4 75.7 83.0 Extreme Poor 60.4 63.9 63.3 74.5 Moderately Poor 75.7 81.7 80.2 82.4 Non-poor 84.5 86.2 88.9 90.6 Socio-economic Quintiles Poorest quintile 66.2 68.0 67.2 78.3 Q2 77.1 79.5 81.5 87.3 Q3 88.3 90.5 88.0 92.1 Q4 93.0 90.4 94.7 94.9 Richest quintile 96.8 97.1 98.1 99.0 Source: World Bank using 1993, 1998, 2001 and 2005 LSMS data Figure 2.5: Gross enrollment rates in Primary [Nicaragua vs. LAC, period 1995-2004] 100 140 BRA yr URY yra BRA ARG mirP 130 ondaceS 85 PER CHL in seta ni BOL MEX 120 PER s 70 COL LAC PAN Rtne tea ECU ARG R VEN PRY CRI BOL nt ECU PRY DOM 110 LACCOL MEX 55 NIC mllornE HND URY SLV PAN mel NIC SLV CRI DOM ol 40 ssor 100 GTM CHL nrE s GTM G osr G 90 25 2,000 4,000 6,000 8,000 10,000 12,000 2,000 4,000 6,000 8,000 10,000 12,000 GDP per capita (average 95-04 in 2000 US$ constant PPP) GDP per capita (average 95-04 in 2000 US$ constant PPP) Source: International Education Statistics (2007) 2.14 Differences in socioeconomic background have a large impact on enrollments for children of all ages. Differences in age specific enrollment rates across the income spectrum are small for those in primary, but still larger than what is observed elsewhere in LAC. But in preschool, secondary, and tertiary education children from richer households are much more likely to be enrolled as compared to poorer ones. Enrollment rates drop rapidly after age 12 (which is the age at which children should complete primary school)33, especially among the poor (Figure 2.6). As such the gap in enrollment between rich and poor is extremely large in the early tertiary education, and at age 17 enrollment rates for males in richest quintile are 4 times larger than for 33 By the age of 13, some 44% of boys in the poorest quintile of this age group are working and by age 17 this proportion reaches 85%. 34 males in the poorest quintiles. Interestingly, among the poor, enrollment rates for girls are higher than those for boys at almost every age group. Across regions, differences between the richest region , Managua, and the poorest, the Atlantic, is of about 20 points (see background paper , Vol.2). Figure 2.6: Gross Enrollment Rates By Figure 2.7: Net Presschool , Primary and Quintile and different dimensions Quintile and Secondary Enrollment rates Gender Secondary Net Enrrollment Rates 100 Primary Net Enrrollment Rates Girls, Poorest Quintile 100 Preschool Net Enrrollment Rates 90 Boys, Poorest Quintile Girls, Richest Quintile 80 74.2 80 Boys, Richest Quintile 64.2 64.3 57.2 60 52.2 70 50.4 45.7 39.9 edllo 60 40 35.6 30.6 28.5 27.5 Enr 50 20 17.4 cent 40 0 Per 30 20 10 Preschool Primary Secondary Tertiary 0 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Source: World Bank using the 2005 Nicaragua EMNV. The curves have been smoothed by eliminating some unexplained enrollment spikes in secondary and tertiary education. 2.15 Poor children, especially indigenous and those living in households engaged in agriculture display much lower preschool and secondary net enrollment rates than average. As illustrated in Figure 2.7, differences in preschool and secondary net enrollment rates ­ contrary to what happens in primary ­show great variation across several dimensions. Half of children in the richest quintile go to preschool, whereas only 1 out of every 4 children from the 20 percent of poorest households attend that education level. Differences are also large between agriculture and non agriculture households. Rates are higher, however, for children from indigenous households. As for secondary , differences across socioeconomic groups are even sharper. Enrollments rates are also lower for boys and for children in agricultural families. Table 2.6: Enrollment rates in the Atlantic Region fall behind nationally, especially for preschool and secondary school. % Children 4 to 6 Preschool Net Primary Net Secondary Net enrolled in Enrollment Rates Enrollment Rates Enrollment Rates CICO/CDI in % in % in % By Strata Rural 3.6 32.9 84.0 28.1 Urban 2.5 42.7 84.3 61.1 By Region Managua 3.4 48.1 82.9 66.2 Pacific 0.6 40.2 86.1 51.0 Central 4.6 34.7 84.9 35.9 Atlantic 3.2 28.7 80.8 27.0 Source: World Bank using the 2005 Nicaragua EMNV. 2.16 Children in rural areas and those living in the Central and Atlantic regions display lower than average net enrollment rates in secondary education. Differences in enrollment across regions in Nicaragua, especially for secondary education are extremely high. As presented in 35 Table 2.6, net secondary enrollment in rural areas is half of that in urban areas (28.1 vs. 61.1. percent)34. The difference in net enrollment rates between Managua and the Atlantic region is striking (27 vs. 66.2 percent for primary and 28.7 vs. 48.1 percent for secondary). On the contrary, primary net enrollment rates are rather flat across strata and across regions35. 2.17 Further analysis to explore Figure 2.8: The education of the household the differences observed in the head and secondary enrollment case of secondary education and National Urban Rural post- secondary education, show in 40% that job opportunities and parental g 23] 33.7% ot 35% education are key determinants36. inebfo 12 30% 27.7% 27.3% Individuals between 12 and 23 y en years who have a job are 21 to 24 drlihc[ 25% 20.0% 19.7% 20.8% percent less likely to attend ilitbaborp 20% 18.0% 17.0% 15.7% secondary or post-secondary eht hoolcs 15% in y 8.9% 10.0% education. The level of education 10% 5.9% of the household head is a strong esaercnI ondarces 5% determinant of school enrollment % 0% after age 12. As displayed in Head received degree Head received degree Head received degree Head received degree, primary or adult educ. secondary technical higher education Figure 2.8, children living in a household having a head who Source: World Bank using the 2005 Nicaragua EMNV. attained post secondary are 20 to [Reference group: children living in households with a head with 34 percent more likely to be incomplete primary or no education] enrolled as compared to children living in households having a head with incomplete primary or no education37. Figure 2.9: Still one -in-five poor children between ages 7 and 12 do not attend school Percent 7-12 yrs old Not Attending School Percent 13-18 yrs old Not Attending School 50 80 40 60 30 20 40 10 20 0 0 1993 1998 2001 2005 1993 1998 2001 2005 All Extreme Poor Poor Non-poor All Extreme Poor Poor Non-poor Source: World Bank using the 2005 Nicaragua EMNV. 2.18 Recent progress have favored mostly the poor. Between 1998 to 2005, net enrollments increased, with marked changes among the poorest quintiles in primary education and changes 34According to MECD sources, 40% of secondary schools are located in rural areas. 35Laguna and Gutiérrez (2006) indicate that there are significant differences in primary school coverage at the departmental level, because while the RAAN region has a Net Enrollment Rate (NER) of 80.7, the department of Granada has a NER over 100. 36The following results summarize regression results for the determinants of secondary and post-secondary enrollment in Nicaragua for children between 12 and 23 years or age (see Education Background Paper). 37In this respect, findings of the Impact Assessment Program on Basic Education for Youths and Adults in Nicaragua, carried out by Handa et al. (2006), reveal that the training received through this program has helped participants to have a more effective participation in their children's education, acquiring greater awareness and interest about their children's access to school. 36 across the board in secondary Consistent with this evolution, the percentage of children from household in extreme poverty -the poorest quintile- not attending school has diminished by 25.5 points among the 7 to 12 age group, and by 16.6 percentage points for those between ages 13 and 18. Despite the success to diminish the access gap among the poorest quintiles of income distribution, still twenty percent of 7 to 12 year olds in extreme poor households did not attend school by 2005. Smaller improvements are observed among poor 13 to 18 year olds. (see Figure 2.9) An analysis of current patterns in educational attainment 2.19 A precise measure of the current patterns of accumulation of human capital is the attainment of the cohort that notionally must have finished its formal education. Among 23 to 29 year olds, schooling attainment is low for Latin American standards and very heterogeneous within the country. Young individuals who are poor and especially those living in households engaged in agriculture attain less than 5 years of education on average. As illustrated in Figure 7, poor young individuals have attained less than 5 years of education on average, (i. e. are on average primary -school dropouts). Individuals living in agriculture producing households on average attain only 4.7 years of education). Non-poor individuals in this age group, as well as those in the upper quintiles, attain on average 9 to 11 years of education, which is lower than the necessary to complete secondary school, but this doubles the attainment of those in the poorest quintile. Figure 2.10: On average, young individuals between 23 and 29 years old in Nicaragua have attained only primary school 13 12 11.3 Secondary 11 no 10 9.2 d] 8.4 8.7 ati ol 9 8 7.4 7.4 educ sraey 6.8 7 tede 92 5.3 Primary 6 to 4.6 mploc 32t 5 4.7 3.6 4 of or s oh 3 areY [c 2 1 rooP ro t es ilet Q2 Q3 Q4 Po n oroP inu tsehc ilet inu on- .cirgA d d ehol .cir ehol Q Ri Q N genous genous n No dinI dinI Ag No hous hous Source: World Bank using the 2005 Nicaragua EMNV 2.20 This low performance is related to the very low capacity of the educational system to retain students. Among the richest, almost all individuals have enrolled in school. However, after 6 years of education attained, drop-out rates accelerate among both boys and girls (averaging 10 percent per year). Among the poorest, still about 25 percent of the youth have never been enrolled in school, a tremendously high rate for Latin American standards. Among those who have had some contact with the educational system, drop out rates are very large. The Figure illustrates that while roughly only 1 out of every 100 girls (or boys) attain 11 years of education in the bottom quintile, 38 (30) out of every 100 girls (boys) do so in the highest quintile. (see Figure 2.11) When this analysis is done comparing geographic regions, it is observed that at 37 every education level, attainment is much lower in the Atlantic and Central regions than in Managua and in the Pacific regions. Figure 2.11: Only two-in-ten boys in the poorest quintile attains 6 years of education and only one attains 11 100.0 PRIMARY SECONDARY TERTIARY PRIMARY SECONDARY TERTIARY 100.00 90.0 Girls - 80.0 Richest Quintile Managua 80.00 Pacifico 70.0 Central 60.0 Atlantico tn 60.00 Boys - Richest Quintile rcent 50.0 Pe Perce 40.0 40.00 Girls - 30.0 Poorest Quintile Boys - 20.0 Poorest Quintile 20.00 10.0 0.0 0.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Years Attained Years Attained Source: World Bank using the 2005 Nicaragua EMNV. (Sample consist of 6 to 29 years old) 2.21 Despite progress, simple projections show that among current young children, probably among 20 percent will not finish primary and 45 percent will not finish secondary. Figures 2.12 shows representative cohorts that allows to show the improvement observed in the system during the last decades. 70 percent of children between 15 and 19 years old have managed to finish primary school, much higher figure than previous generations. However, only 32 percent of young people between 20 and 24 years old have completed secondary education. If this trend were to continue, we could estimate that almost 81 percent of the population currently between 0 and 4 years of age is expected to finish primary education and only 55 percent secondary education. Despite the progress, these projections reveal that in Nicaragua, access to schooling is still a serious development challenge, even at the primary level, maybe except for the case of Managua, the only region where primary completion is high. Figure 2.12: Primary and secondary completion rates by five-year age groups.38 Primary Secondary 60 100 55.3 90 80.8 50 80 70.0 70 40 t 60 30 cen 50 tnecr 31.7 erP 40 Pe 20 30 20 10 10 0 0 + 9 4 + 9 4 64 59 54 49 44 39 34 29 24 19 14 5- 0- 64 59 54 49 44 39 34 29 24 19 14 5- 0- and 60- 55- 50- 45- 40- 35- 30- 25- 20- 15- 10- and 60- 55- 50- 45- 40- 35- 30- 25- 20- 15- 10- 65 65 Age group Age groups Source: World Bank using the 2005 Nicaragua EMNV. 38In issues related to education, grouping by age helps to observe positive changes over time. 38 2.22 Moreover, that young cohort will not necessarily have homogenous access to preschool education. In Nicaragua only 4 out every 10 children have the opportunity to attain preschool education before entering first grade. This share is below Latin American given Nicaragua's level of development, and lower than that in other countries with similar levels of income such as Ecuador and Bolivia. 2.23 The last discussion reveals that many of the currently enrolled children and also the current cohorts of youth that have already passed the years of primary and secondary schooling, and are joining the labor force- and will be part of the labor force for the next five decades or so, have accumulated so far very little human capital, which is particularly grave in a situation where global competition require increasing levels of sophistication of the labor force, even in those cases where countries comparative advantage is its abundance of unskilled labor. This implies that despite the recognized larger social returns to invest in basic education, adult education and technical training will continue to be a challenge and a need for Nicaragua. What are the constraints to access to schooling? 2.24 Supply side issues and lack of financial resources are reasons behind enrollment problems in primary education. There is variation in the reasons why children are not enrolled in school across regions in Nicaragua (Table 2.7). In particular, lack of access to school facilities constitute an important reason explaining why children are not enrolled in primary school in rural areas (and especially in the Atlantic and Central regions) while financial problems are the main reason in urban areas. Family problems are more recurrent in urban areas and particularly in Managua. In should be noted that when comparing 2005 to 2002 data, the importance of the distance to school has diminish greatly, possibly due to the important investment in expanding the number public school, particularly in rural areas. Table 2.7: Reasons why children ages 7 to 12 are not enrolled (%). Rural Urban Managua Pacific Central Atlantic No interest 8.4 15.3 5.6 17.9 11.3 7.1 Had to work 4.7 0.8 0.0 1.9 4.5 4.4 No place/no class/no 6.8 2.2 0.0 2.2 6.9 7.3 teacher School is too far 15.8 0.0 0.0 0.0 9.6 23.6 Family problems 6.0 16.3 31.7 8.0 6.5 4.6 Lack of money 38.9 47.0 40.2 52.6 39.0 38.2 Other 19.4 18.4 22.5 17.6 22.1 14.8 Source: World Bank using the 2005 Nicaragua EMNV. 2.25 Work, lack of money and lack of interest constitute the main reasons why individuals are not enrolled in secondary or post-secondary school. The need to work and lack of money are the main factors behind low secondary enrollment; but a considerable 16 to 20 percent claim that they are not interested to be at school. In this case however, the factors that affect enrollment decision vary significantly between boys and girls. Family problems, child care and pregnancy constitute important reasons why females are not enrolled in secondary or post-secondary school. Figure 2.13 show that family related constraints ­ pregnancy, child care and domestic work ­ constitute the main reason why about 34 of every 100 girls are not in school. Lack of financial resources is a constraint, mainly among the poor. For them, the largest share of out of pocket expenditures are transportation cost. Uniforms and supplies are also an important part of their 39 educational expense, but it unlikely that there are binding constraints as is transportation. For that rich the main expenditure are tuitions. 2.26 For young men, on the contrary, lack of interest and work-related constraints constitute the main two issues keeping them away from school. In fact, while 42 out of every 100 young men claim not to be at school because of work, only 13 out of 100 young ladies claim so. About 23 percent of all young men who are not at school claim that it is due to lack of interest. The same rate is at 16 percent for young ladies. Figure 2.13: Factors that keep individuals away from secondary and post- secondary school differ significantly by gender. 50 Females Males 42.3 40 28.0 30 tnecr 25.6 22.9 19.0 Pe 20 16.3 10.5 12.8 10 6.3 3.5 3.7 5.3 0.1 0.4 1.5 2.1 0 y citse ily s fo too em kro dlihc kr maF e/no /other w oney gnance mo obl ac r dehsin tseretni ckaL to D wo % pr es pl fa Fi o m % ad % /prerac % o N hoolcs/s % udits N H % % aslc % Exploring Differences in Quality of Instruction 2.27 Late enrollment, high dropouts, and high repetition rates all together are behind the low completion rates. The Nicaraguan schools system starts with 3 years of tuition-free preschool instruction for children between the ages of 3 and 6. Preschool education is not mandatory and children are not allowed to repeat years at this level. Parents are free to put their children in private preschools, generally paying tuitions out-of-pocket. In 2005 only 15.7 percent of all children enrolled in preschool did so in a private institution. The Primary education cycle, targeted to children between 7 and 12 years old, is free and mandatory. The primary cycle lasts 6 years and has four modalities: i) regular primary, ii) multigrado primary (children from different levels attend the same class and are taught by the same teacher), iii) primary for adults, and iv) bilingual intercultural education program (Programa de Educación Bilingüe Intercultural, PEBI). Secondary education serves primarily the population between 13 and 17 years old that attained primary education. Secondary education lasts 5 years, is not mandatory, and has four modalities: i) daytime-secondary, ii) nighttime-secondary, and iii) distance secondary education (classes are conducted on Saturdays or Sundays), and iv) secondary education for adults. The education system has a total of 10,721 schools; 85 percent of which are public and 15 percent private with and without a voucher. About 79 percent of all school infrastructure is located in rural areas (92 percent of which is owned by the government). In year 2005, the system served about 1,685,844 students in all modalities of basic, primary, and secondary education. Primary education accounts for 56.1 percent of all students; secondary for 24.6 percent, preschool for 12.7 percent, adult education for 5.5 percent, and all remaining modalities for 1.2 percent . 40 2.28 More than 70 percent of the primary enrollment is in public school, and 20 percent in autonomous schools. Only a very small fraction is in private schools. In Managua, however, the relative importance of autonomous schools and private schools is much larger, reaching 40 and 14 percent respectively. There is also a much larger fraction of children in private schools among the richest quintiles, reaching 30 percent. As opposed to what happens in other school systems in Latin America, public schools, do cater also the people from the richest quintiles. Table 2.8: Type of primary school by region and strata % % % % % % Public, not Autonomous Community Private Private Multigrado autonomous school/center education with without facility voucher voucher Rural 84.0 12.4 2.7 0.6 0.3 60.8 Urban 57.0 25.5 0.4 4.7 12.4 5.1 Managua 44.1 35.7 0.3 4.3 15.6 9.0 Pacific 70.7 20.0 0.3 2.5 6.6 21.9 Central 82.1 12.3 1.9 1.7 2.1 51.8 Atlantic 79.0 11.2 4.5 2.3 3.1 46.2 Poorest Quintile 83.0 14.3 2.5 0.0 0.2 54.6 Richest Quintile 30.8 24.9 0.4 11.5 32.5 12.6 Indigenous 80.8 9.6 3.3 3.1 3.2 28.9 Ag. Prod.* 62.1 24.4 0.7 3.9 8.8 14.2 Total 72.0 19.1 1.8 2.2 4.9 35.8 Source: World Bank using the 2005 Nicaragua EMNV. 2.29 In the case secondary the structure of enrollment by type of school is relatively similar, with a larger share of autonomous schools. In most regions, enrollment in these schools reaches almost 50 percent. Only in the case of the indigenous, autonomous schools have a low share of enrollments. The overall share of private schools is about 21 percent. Surprisingly the share of indigenous in private schools is relatively larger, and as expected, the rich are more likely to attend a private school. Private enrollment in urban areas is larger, while public enrollment is smaller. Table 2.9: Type of Secondary school by socio-economic group % % % % Public, not Autonomous Private, with Private, no autonomous school/center voucher voucher Rural 40.24 48.94 7.27 3.54 Urban 26.70 46.16 9.46 17.68 Managua 22.25 52.82 6.94 17.98 Pacific 33.90 45.73 6.84 13.52 Central 33.38 47.22 12.11 7.29 Atlantic 40.18 35.08 10.94 13.80 Poorest Quintile 42.34 49.85 6.85 0.97 Richest Quintile 16.34 38.13 14.55 30.98 Non-Indigenous 30.34 48.28 8.47 12.92 Indigenous 43.99 24.69 14.07 17.26 Non Agricultural producer household 27.71 46.27 9.29 16.73 Agricultural producer household 38.90 48.91 7.51 4.69 Total 31.05 47.05 8.76 13.14 Source: World Bank using the 2005 Nicaragua EMNV. 41 2.30 Autonomous schools in Nicaragua show an important increase in enrollment. As part of the process of reform to improve efficiency and effectiveness of service delivery in Nicaragua, the so called autonomous schools were introduced in the in the education sector in 1993. Greater participation and decision-making among parents and teachers was regarded as central to this end. The main difference between autonomous and non-autonomous schools is that the former sets a participative management structure whereby parents, teachers, students (only at the secondary level), and school directors participate in decision making on general management and budget allocation. Autonomous schools divide responsibilities among different actors, mainly the MECD, the municipal delegate of the MECD, and School councils (consejos directivos). It is important to note that the data on autonomous schools obtained from household surveys, differ form official data. According to MECD, the number of public autonomous schools has doubled during the last 6 years, together with enrollments. As such, by 2006, 70 percent of public schools were autonomous, covering 83 percent of students in the pubic system. The discrepancy, might be related that while it is very clear to parents when a chills is a private versus public school, within the latter, in many cases they are not aware of the status of the school. Much better statistics will be need to have a clearer picture of the type of student these schools are catering. Table 2.10: Basic Statistics Autonomous schools 2001 2002 2003 2004 2005 2006 Number of public "autonomous" 2,952 2,978 3,033 4,064 4,108 5,211 schools Number of students registered in 697,297 748,293 755,425 903,739 926,876 1,012,663 autonomous schools % of public "autonomous" 50 49 47 62 61 69 schools % of students registered in 68 69 68 79 79 83 autonomous schools Internal Quality Indicators 2.31 Late enrollment (also known as "over-age") in first grade is common among children in the poorest quintiles, and especially in rural areas. Children in Nicaragua are supposed to enter the first year of primary education at age 7. First-grade enrollment in Nicaragua (i.e. the share of all children who are 7 years old and enrolled in first grade) is rather low at 20 to 30 percent (the goal is 100 percent). Low first-grade enrollment rates are particularly high among the poor, reaching 56 percent and 47 percent in the two poorest quintiles (vs. 8 percent in the richest quintile), and in the rural areas of the Central and Atlantic region, where it is close to 60 percent (versus 20 percent in Managua). 2.32 Children from the poorest households in rural areas, and especially those living in household engaged in agriculture, display higher than average repetition rates in primary school. Repetition rates for primary education in Nicaragua are on average 12 percent. This level is above the Latin American average, but is what is expected given the countries level of development. Nevertheless, when comparing these results to other countries in the region with equivalent income levels, such as like Ecuador, Honduras, and Bolivia, repetition rates in Nicaragua are in the high-side. Repetition rates in primary are lower for indigenous children vs. non indigenous ones (9 vs. 12 percent) and higher for children living in households engaged in agriculture vs. those living in households not engaged in agriculture (13 vs. 11 percent). The lowest repetition rates are observed in non subsidized private schools. Repetition rates, however, are on the rise. According to MECD official statistics, repetition rates almost doubled between 42 2000 and 2005. In 2005 the MECD estimated that the annual cost of repetition for primary and secondary education was at approximately US$12.0 and US$1.2 million per year respectively. Although some policymakers have pointed out that the rise in grade repetition was due to the elimination of automatic promotion, Castro (2005) indicates that this policy had no effect because of the poor communication strategy used initially, which was meant to empower key actors for the implementation of such policy (the teachers). Figure 2.14: Six out of every 10 children living in households engaged in agriculture attend a "multigrado" primary school. 70.0 50.00 % Multigrado % Private 60.51 45.00 60.0 y yra 54.57 ar 40.00 mi imr 50.0 P- 35.00 44.80 odar 30.00 Pr-loo 40.0 37.73 36.35 sch 25.00 e ltigu 29.77 28.88 30.0 M atvi 20.00 intnecre Pr 21.19 20.0 17.70 15.00 nit 14.20 12.64 10.00 cen P 10.0 Per 5.00 0.0 0.00 ld n Poor Poor Q2 Q3 Q4 ous us hold igeno useho No est Quintile t Quintile Indigen Ind ho house Poor Riches Non- ucer Ag. prod producer Ag. Non Source: World Bank using the 2005 Nicaragua EMNV. 2.33 Children living in poorer households are more likely to be enrolled in multigrado schools. The ministry of education in Nicaragua defines multigrado schools as those having fewer teachers and classrooms than the number of grades offered. Generally, multigrado schools have high student-teacher ratios, which obligate teachers to spend less time teaching and interacting with students. As a consequence, multigrado schools are likely to offer a somewhat lower quality of learning than normal schools do (as lower student/teacher ratios are often associated with better quality).39 2.34 Figure 2.14 shows that about 6 of every 10 children in rural areas are enrolled in a multigrado schools and that there is a much higher concentration of this type of schools in the Atlantic and Central regions as compared to Managua and the Pacific. Poor children and especially those living in a household engaged in agriculture, are more likely to be taking classes in multigrado schools. On the contrary, children living in richer households are more likely to be enrolled in private primary schools, often associated with better quality of education. Figure 2.15 indicates, for example, that private schools display lower average repetition rates than public schools (3 vs. 13 percent). As expected, children living in households in the upper quintiles and those residing in Managua are more likely to have access to private primary education. 39Results on test-scores from the 2002 education quality survey conducted by the Ministry of Education do not indicate that Multigrado schools display lower scores than non-multigrado schools. However, results in test scores in Nicaragua did not display much variation as a whole (more on this on section 2.B bellow). 43 Figure 2.15: Private primary schools without subsidies and secondary non-autonomous school have lower repetition rates 16 14.8 13.0 12.7 11.9 12 tnecr 8 6.9 6.8 Pe 5.2 4.6 4 3.0 0 Primaria Secundaria Community School Autonomos School Non-autonomous Public Subsidized Private Non-Subsidized Private Source:World Bank using the 2005 Nicaragua EMNV. Figure 2.16: Pupil/Teacher Ratio Primary and Secondary 40 40 yr y ar NIC NIC DOM mi onda GTM DOM 30 CHL Pr CHL otia 30 Sec PRY LAC MEX BOL LAC R PER COL otia COL BOL 20 BRA ECU PAN BRA CRI R CRI er PER er PAN URYMEX ARG 20 URY ECUGTM eachT/lip ARG PRY each 10 Pu 10 il/TpuP 0 2,000 4,000 6,000 8,000 10,000 12,000 2,000 4,000 6,000 8,000 10,000 12,000 GDPper capita (average 99-04 in 2000 US$ constant PPP) GDP per capita (average 99-04 in 2000 US$ constant PPP) Source: International Education Statistics (2007) 2.35 In another indicator of quality, Nicaragua is the Latin American country with the highest pupil-teacher ratio in the region, both in primary and secondary schools (see Figure 2.16). Compared to regional standards, a Nicaraguan primary (secondary) teacher attends, on average 35 (32) students. This is higher than the corresponding regional average of 27 (21) students per teacher. Lower student teacher ratios are generally associated with better quality of education, however Hanushek (1995) finds that the impact of this variable in quality might be low under some circumstances. Given Nicaragua's scarce resources, and despite the fact that the pupil - teacher ratio is one of the highest in the region, more than expanding the number of teachers, a more urgent challenge for Nicaragua is to invest in training of its current teachers 2.36 The pupil/teacher ratio is clearly lower in primary and secondary for private schools, particualarly those that do not receive voucher (Table 2.11). Urban/rural, nor regional differences 44 are marked. Contrary to what could be expected, the rations are higher for autonomous schools than for non autonomous. The overall student/teacher ratio has been recently falling at private institutions, reaching 24.7 and 23.1 in primary and secondary. But among public institutions into account, the student-teacher has increased, reaching 36.3 in primary and 39.7 in secondary. Table 2.11 - Ratio Pupil/Teacher by Region and Area Primary Secondary Private Private No Private No Private Autono- with- Autono- with- Auto- with Total Auto- with Total mous out mous out nomos subsidy nomos subsidy subsidy subsidy National 36.9 34.5 30.2 19.2 33.6 43.3 30.8 27.5 21.4 33.8 Rural 35.8 34.4 33.3 20.7 34.8 37.1 27.1 24.9 22.1 32.1 Urban 38.7 34.7 28.5 19.0 32.0 45.9 33.9 28.1 21.2 34.4 Zone Managua 42.9 36.5 29.6 19.1 32.2 47.8 30.4 27.7 19.4 32.9 Pacific 35.3 37.3 24.5 16.5 29.6 37.6 27.6 30.3 21.6 32.4 Central 35.5 33.6 28.5 19.5 33.9 40.7 33.1 24.4 22.8 34.4 Atlantic 37.6 35.6 33.1 22.9 35.5 31.7 29.0 22.4 22.3 26.8 Source: Angel-Urdinola and Laguna (2007) 2.37 Nicaragua's teacher work force is less qualified than expected given the country's level of development. As illustrated in Figures 2.17, Nicaragua has the lowest share of trained teachers in the Latin American region, especially in secondary education. Data suggest that 25 of every 100 of teachers in primary are not properly trained to teach, whereas the same proportion reaches more than 50 percent in secondary. The problem of untrained teachers (`empiricos') is a drag on the quality of the service provided. In the case of primary there as been some recent improvements, and the percentage of untrained teachers declined from 26.3 percent in 2004 to 24.1 percent in 2005, but at the secondary level the share of untrained teachers increased sharply from 37.3 percent in 2002 to 51.3 percent in 2004 ( Laguna, 2005). Moreover, there are sharp differences within the system that operate against the poor , the rural and the Costa Atlantica. The percentage of "empiricos" is larger in rural areas. For example, in 2004, 32.5 percent of the primary teachers in rural areas were `empiricos'. It should be noted that the "empiricos" in Nicaragua are those teachers who are not certified for the educational level she is teaching. In that regard, both a low educated teacher as well as an engineer might be considered "empirico". In that regard, the amount and complexity of training needed to solve the issue varies tremendously. In some cases it is an issue of basic pedagogical training that is needed; in other cases, the amount of pedagogical and content training that is needed might be substantial. Laguna (2005) estimates that in about 30 percent of the cases, only basic pedagogical training is needed, while in the rest, more complex medium and long term training processes are required. 45 Figure 2.17: Percentage of Primary and Secondary Teachers Trained (1999-2004) 100 GTM 100 GTM s (% er s CRI er 90 BOL acheT,no LAC acheT,no PAN DOM 80 CRI d) ECU d) LAC 80 ECU neia neia DOM aticu Tr aticu Tr NIC PAN Ed %( 60 y Ed 70 y ardn BOL ar NIC mi 40 Pr 60 Seco 2,000 4,000 6,000 8,000 10,000 12,000 2,000 4,000 6,000 8,000 10,000 12,000 GDPper capita (average 99-04 in 2000 US$ constant PPP) GDPper capita (average 99-04 in 2000 US$ constant PPP) Source: International Education Statistic (2007) 2.38 Low teacher salaries are one factor behind the high staff rotation and the persistence of `empiricos' in spite of the education ministry's efforts to step up training and reduce their prevalence. The economic incentives to be trained and certified are very small. The earnings differences between an "empirico" and a certified teacher, in secondary, for example is only US$ 15. Other factors that may be hampering quality of teaching are (i) the postponement of reforms to improve teacher training, (ii) a lack of coordination between the universities that train secondary teachers and the Ministry of Education, (iii) difficulties in applying a policy of assigning the best teachers to the first 3 grades, which are the most crucial years,40 and (iv) the absence of professional development programs for teachers, including pedagogical advisory systems (PER, 2007). The "empirismo" increased from 16 percent in 1997 to 34 percent in 2004. The MECD has started in 2006 a certification program to start reducing the incidence of this program. Figure2.18: A very small proportion of students in 6th grade are found to be proficient Resultados por Nivel de Rendimiento Académico - Pruebas 2002 5.1 1.1 100% 7.7 13.9 10.8 80% 21.1 25.2 24.4 60% 88.1 40% 71.2 69.7 61.7 20% 0% Español Matemáticas Español Matemáticas 3er grado 6to grado Básico Intermedio Proficiente 40It is very revealing that in 2004, 24.6 percent of all first grade teachers were `empiricos', while only 15.4 percent of all sixth grade teachers had this status; Laguna (2005). 46 2.39 Despite the shortcomings, perceptions about the quality of education is not negative. About 20 to 25 percent of all parents with children in primary school consider that their education is either regular or bad. Figure 2.18 displays perceptions on quality of education gathered from households with children enrolled in primary education. Households in the poorest quintiles are less likely to rate their children's education as excellent as compared to households in the highest quintiles. Indigenous households and those engaged in agriculture are less likely to rate their children's education as excellent and more likely to rate it as regular or bad. However, despite the variance along the socioeconomic scale. In no case more than a fourth of the populations thinks that education is of low quality. This might be part of the problem in Nicaragua, as low expectations and low standards­in part motivated by the low educational levels of the adult population, might reduce the possibility of demanding higher quality of the service and greater effectiveness of the service providers. Quality and Test Scores41 2.40 Less than 14 percent of all students in 3rd and 6th grade are found to be proficient in their curriculum. Using results from the education proficiency quality survey conducted by the MECD in year 2002, it is found that between 60 and 90 percent of all students in 3rd and 6th grade have only a basic (or below than expected) knowledge about their curriculum (mathematics and spanish). Only a minority (10 to 25 percent) of the student population was found to have normal or proficient knowledge on their curriculums. Test scores indicate that proficiency rates were generally higher in Managua and in the Central region with the exception of mathematics among 6th graders (which was roughly similar across regions). 2.41 The lowest levels academic achievement as measured by curriculum proficiency are found in rural areas, in multigrado schools, among girls, among grade repeaters, and among those students who speak a language other than Spanish. Table 2.12 indicates the learning gaps demonstrated in academic performance tests; it should be noted that the lowest percentages of students with levels of knowledge below the minimum level set by the MECD are found among students attending private subsidized schools, and also attending schools in urban areas of the Managua and Central regions, and among students whose parents have attended university or graduate school. 2.42 Results of standardized tests in Spanish and applied mathematics during 2002 were used to analyze internal and external factors associated with academic performance of students in the 3rd and 6th grades in Nicaragua. Arcia, Porta and Laguna (2004) report that main findings show that the most important factors associated with improvements in academic performance are: the principal's pedagogic leadership, teacher motivation, high education levels among teachers, safe school facilities, as well as student and family motivation and parental education. In contrast, aspects such as grade repetition, child labor, school absenteeism and speaking a language other than Spanish have a negative impact on the academic performance of Nicaraguan children. With respect to school administration, it appears that private subsidized schools have shown the best results, regardless of the good student effect (self selection), and the student's socio-economic background. Public autonomous schools fare slightly better than public non autonomous schools in 3rd grade. 41We are especially grateful to the MECD's Division on the Evaluation of Policies, Programs and Projects for their valuable collaboration. 47 Table 2.12: Students with knowledge levels lower than Minimum Level (%) 3rd level (grado) 6th level Spanish Mathematics Spanish Mathematics National 71.2 61.7 69.7 88.1 Geographic area Urban 66.4 62.2 64.3 86.4 Rural 75.5 61.2 77.4 90.6 Region Managua 66.9 63.6 63.8 87.1 Managua Urban 62.7 59.0 60.5 85.4 Managua Rural 79.5 77.4 74.8 93.1 Pacific 72.3 69.2 71.5 89.6 Pacific Urban 70.9 67.6 68.4 88.8 Pacific Rural 73.5 70.5 75.2 90.5 Central 71.1 53.3 70.7 86.4 Central Urban 63.8 58.6 61.8 83.4 Central Rural 75.4 50.2 79.3 89.4 Atlantic 77.9 61.6 81.1 91.8 Atlantic Urban 77.7 69.7 75.7 92.7 Atlantic Rural 77.8 58.7 86.1 91.3 Type of school Public non-autonomous 77.6 64.6 74.0 89.7 Private with subsidy 57.7 55.3 53.3 75.5 Private with subsidy 59.6 55.1 50.4 84.5 Public autonomous 71.7 62.0 74.0 90.1 Mode (Modalidad) Regular 69.6 63.7 67.0 87.7 Multigrado 76.1 55.5 84.3 90.5 Shift (Turno) Morning 71.2 60.5 74.6 87.7 Afternoon 71.4 65.0 65.3 88.6 Student's gender (sexo) Male 73.4 60.3 68.8 87.0 Female 69.0 63.1 71.3 90.2 Speaks another language than Spanish Another language 79.0 67.2 74.8 88.3 Spanish 70.7 61.4 69.4 88.1 Repeater (Repitente) Repeater 78.5 70.0 76.6 91.3 Non Repeater 69.7 60.0 69.3 88.0 Over-age Over-age 73.4 59.8 79.0 91.9 Normal 69.1 63.6 62.0 85.1 Parent's education level No studies (sin estudios) 71.6 60.3 68.9 88.5 Adults education 74.7 61.0 77.9 89.6 Primary 74.0 62.7 74.2 89.7 Secondary 68.1 63.8 66.5 87.5 University 51.1 49.7 53.2 80.9 Postgraduate 50.0 37.5 54.8 70.0 Source: MECD (2004) 48 The challenges in education 2.43 Nicaragua still falls behind in Latin America in primary and secondary education service delivery (both in relation to access and quality). And the average educational level in Nicaragua is among the lowest in the region. Education outcomes in Nicaragua have significant links with poverty and investing in education is very profitable for individuals. Indeed, estimates indicate that a Nicaraguan is expected to earn 10 percent higher wages for each additional year of schooling attained. However, despite all the advantages that education has to offer, 72 percent of the population does not attain complete secondary education and consequently earns wages below the poverty line. 2.44 Nicaragua's education system faces significant challenges needing systemic efforts and requiring important investments in key sub-sectors, such as preschool and secondary education. Investments need to focus on increasing access and permanence in schools, and improving the quality of education (reducing drop-out rates, repetition and improving the quality of teaching). A more comprehensive approach from pre-school to primary and to secondary is needed to build a sustainable education system in the medium and long run. 2.45 There are substantial inequities in access and quality of preschool, secondary and post secondary education between richer and poorer households, between urban and rural areas, and between regions. Smaller difference in the case of primary. Late enrollment, high dropouts, and high repetition rates altogether are preventing children, and especially those from poor families of completing primary and secondary education. Young individuals who are poor, indigenous, and who live in households engaged in agriculture attain less than 5 years of education on average. Still 20 percent of poor children do not enroll in school at all. It is critical to implement geographically focused policies, such as allocating and attracting more and better teachers, and providing training to the existing ones in rural areas and in poorer regions. 2.46 Investments in education infrastructure should be considered with care in order to maximize the use of existing idle schools. Investments should also be devoted to textbooks, supplies, and qualified teachers. Scholarships targeted to the poorest could offset some non- tuition expenses (such as CCTs).. Primary school fees, levies, and contributions should be minimized and preferably fully abolished. 2.47 Eliminating illiteracy among the youth is urgent to take advantage of new jobs. Programs such as primary completion and improved technical skills will be key to respond to the demands of the labor market. Greater investment in secondary is also needed to ensure the youth has opportunities to join the labor market effectively. 2.48 Despite progress, simple projections show that among current young children, probably among 20 percent will not finish primary and 45 percent will not finish secondary. Many of the currently enrolled children and also the current cohorts of youth that have already passed the years of primary and secondary schooling, and are joining the labor force- and will be part of the labor force for the next five decades or so, have accumulated so far very little human capital. So despite the recognized larger social returns to invest in basic education, adult education and technical training will continue to be a challenge and a need for Nicaragua. If there is no investment in the coming decade to improve the quality of education and increase access to schools, then half the population will be destined to remain in poverty. 49 Box 2.5: Key factors identified by beneficiaries deterring children from attending school The Voices of Nicaragua work revealed that unequal access and low quality of education are problems thar need to be addressed to encourage parents to send their children to school, particularly girls and youg children. People generally agreed that the poor in rural areas are the most disadvantaged. Families in poverty tend to send their children to school less, keeping them at home to work. Distance and rain affect people living far away from schools. Parents tend to avoid sending their daughters to school in rural communities in the Atlantic because it is risky for girls to travel far away to schools. In the Center, people say that young children are unable to enter school at the appropriate age because they are too young to walk the required distance. In addition, associated costs make basic education inaccesible to the poorest. In various communities, children do not attend school because parents cannot afford the costs of getting them ready for school. In a community in the Pacific, parents report that they had to spend C$1,000 Cordobas in shoes, uniforms, notebooks, etc. Moreover, single female-headed and/or socially excluded households are the most affected in lacking education opportunities. According to interviewed people, these children drop out of school most often. Social exclusion may also lead a family to avoid sending children to school. In a community in the Pacific, parents were not interested in educating their children and decided not to send them to school because they were labelled as "the outcasts." Nevertheless, demand for schooling is frequently said to exceed the supply of classrooms, teachers and educational materials. In many communities, people say there are far too many children beyond what the school infrastructure can accommodate and teachers are often multi-grade or even teach the whole primary. The mismatch of supply and demand is a problem because it lowers quality. In a semi-urban community in Managua, a leader stated that the instituto or secondary school is insufficient and it is overcrowded because it is a feeder school for 13 other nearby communities. In another area of Managua, there are 55 students per teacher in 6th grade; well above the national average. In a community in the Pacific, parents reported that primary school teachers lacked the appropriate teaching credentials. A school in the Atlantic rural had no teachers and children were unable to attend classes despite the infrastructure being in place. Youth contributing to Family Income 2005 (percentage of 15-18 year olds) 80 Panel Qualitative 60 40 20 0 Altantic Atlantic Central Central Managua Pacific Rural Pacific Rural Urban Rural Urban Urban The qualitative study also revealed that work is a key factor deterring children from participating in school. Abandoning school was reported to be high, up to 20 percent in one community during the harvest season. The combination of work and school negatively affect attendance as well as performance for secondary students. Parents regularly assign work-related tasks to their children when they arrive from school. Almost 40 percent of young adults 15 to 18 years of age, contribute income to family income, as shown from panel data and the 18 qualitative communities sampled (see Figure). The combination of school and work is reported to lessen achievement among teens, particularly in rural areas. Source: Del Carpio (2007) Voices of Nicaragua. Background paper to Nicaragua Poverty Report 50 2.49 Both supply side limitations that hamper access to school as well as affordability constraint access to school. While lack of access to facilities and financial constraints constitute important reasons why poor children do no attend primary school (especially in the Central and Atlantic regions), lack of interest and family problems have risen in importance as factors explaining school non-attendance among urban children. work, lack of money, and lack interest are the main reasons for boys not to be enrolled in secondary/post-secondary school; family problems, child care, and pregnancy are the main reasons for girls not to be enrolled. For the two lowest quintiles is not the fact that school is not free, but rather out of pocket expenses related to sending children to school, mainly transportation, that may be precluding attendance. 2.50 Regarding education quality, Nicaragua is the Latin American country with the highest pupil-teacher ratio in the region and both in primary and secondary schools, and its teacher work force is one of the least qualified in the region. Improving the quality of teaching is a priority for generating better results in education. Therefore, the emphasis in teacher training, training and in improving incentives is critical to both improve the quality of teaching and for keeping the best teachers within the educational system. Improving access and quality of early education programs should be a key priority to lower primary repetition rates and to improve education quality. The government should strengthen the first three grades of the primary education cycle by (i) harmonizing the curriculum in these three grades to emphasize reading, writing, and mathematic logic and comprehension, (ii) assigning the most experienced teachers to the first three grades, and (iv) ensuring an adequate supply of classroom and learning materials. 2.51 Across the system, differences in quality of inputs seem to generally favor private vis-à-vis public schools; within the public system the difference are not clear cut. Quality deficiencies are also reflected in the fact that less than 14 percent of all students in 3rd and 6th grade are found to be proficient in their curriculum. Again in this case private schools fare better than public, although within public school, autonomous ones seem to have an advantage. The inequities in the system are reflected in lower performance among rural students, and those living in poorer regions. The positive effect of the family environment and the importance of parental education in student curriculum proficiency point to a system where inequities might grow larger if access an quality of education do not improve dramatically among the poor. C. OPPORTUNITIES IN PREVENTIVE HEALTH 2.52 Among health-related MDGs the most worrisome are maternal mortality, which is very unlikely to be met by 2015, and improvements in child malnutrition, which is unlikely to be met. Infant and child mortality have better possibilities to be achieved by 2015. Health status in Nicaragua show gradual but steady improvements over the last decade as depicted by improvements in life expectancy; infant and child mortality, immunization rates, and child malnutrition. However and despite these achievements, there are still large inequities in access and quality of health services across socio-economic groups and regions. The public sector is geared towards curative health, which is inconsistent with the massive need for preventive health. Per capita allocation of public resources is concentrated in richer regions such as Managua and the Pacific. The public health sector maintains a large stock of doctors, hospitals, and clinics to provide low-cost consultations, while the cost of other non-consultation items, such as medicines and lab tests are essentially paid out-of-pocket. The poor in rural areas (especially in the Center and Atlantic), the indigenous, and those engaged in agriculture have less access to health care than average and face deficient quality. Access to risk mitigation mechanisms is extremely low, such as insurance and social security, causing families to spend a significant share of the income in out-of-pocket health expenditures, particularly for medicines and other non-consultation items 51 such as lab tests. Access and affordability constraints, such as large distances, lack of medicines, high cost, discrimination and other demand-side factors (such as self-prescription) constitute the main limitations pressing the poor to seek informal care when ill or to not seek care at all. During the Voices study an informant in an indigenous community in RAAN stated that as a poor person she is discriminated against by health providers, "the service in the health center is not equally administered to all people, they help the people with higher economic opportunities first and then the poor ones, they leaves us for last, she said, and they deny us the best medicines." Box 2.6: The Costs of Domestic Violence42 Domestic violence in Nicaragua should be seen as a public health problem with significant associated economic costs for the family as well as society at large. The growing number of cases of domestic violence being reported every day in hospital emergency rooms makes these collection of incidents an issue for public health, placing even more pressure on the weak health care system. The economic costs of domestic violence have an impact on the family, as well as on the society at large; among the apparent consequences are: labor absences, loss of opportunities for better jobs, and school absenteeism together with low academic performance among children living in households where domestic violence takes place. In recent years, there has been an increase in violence and demands of violations of women's personal integrity. The Police Division on Women and Children ("Comisarías") serviced 10 thousand more people in 2006 than in 2005; 40 thousand versus 30 thousand, respectively. Of these, one-third filed formal complaints; 82 percent for domestic violence and 17 percent for sex crimes. Ineffective penal procedures related to domestic and sexual violence prevail, weakening the use of punishment and prevention as justice tools against these incidents. Despite progress made in promulgating women's laws, Nicaraguan women still have limited access to justice and face significant constraints. The justice system is one of the weakest of institutions in Nicaragua because the Judicial Branch of state is directly influenced by powerful political, economic and religious sectors.43 This situation is reflected in: a failure to incorporate the mandates of international treaties into Nicaraguan legislation;44 discriminatory elements contained in several laws and the lack of mechanisms by the National Assembly to incorporate a gender perspective into legislative actions; high cost of legal procedures in relation to women's monetary incomes; lack of coverage and limited presence of legal-administrative institutions in rural areas; arbitrary interpretations of the text of the laws; delays in justice for cases of violence against women; and, the population's general lack of knowledge about human rights, especially women. 2.53 In 2004 the Ministry of Health (MOH) established a ten-year national health plan to promote decentralization of health service delivery. This plan has been supported by different donors and financing has been modified to a sector wide approach with a increasing level of donor alignment, harmonization, and strategic support to key interventions. Concurrently, new legislation has empowered local health providers with decision-making authority, especially for 42Box prepared by Ivonne Siu for this 2007 Nicaragua Poverty Assessment. 43CENIDH. Informe sobre Derechos Humanos en Nicaragua. 2004 -2005. 44Ramos, Alba Luz (2006) "Comprehensive Protection for Women in the Face of Gender Violence: A Legal Approach." 52 resource management and allocation. The Prospects are positive under the MOH's new plan, which key five-year goal is to improve access to health care services among the poor and most vulnerable sectors of the population, especially in the areas of maternal and child health care. Health Status 2.54 Health status in Nicaragua has shown gradual but steady improvements over the past ten years, similarly to other Central American countries. In the past three decades, life expectancy at birth has increased by more than ten years in Nicaragua. This improvement in life expectancy is similar to that achieved in its neighboring countries. In addition, fertility rates (proxied by the average number of children women had during their life-cycle) declined by almost 50 percent in the past two decades in Nicaragua; fertility rates dropped noticeably from 6 in 1985 to 3.1 in 2004. In all these countries, the desired total fertility rate is lower than the observed fertility rate, which indicates that women are not meeting their reproductive needs. This is confirmed by the difference between the desired and the actual number of children. Women in Nicaragua reproductive preferences indicate that roughly one-in-three children born is not planned; a rate which is high in contrast to other Latin American countries. Maternal Health 2.55 Nicaragua has the highest share of young women (15 to 19 years old) with children in Latin America (Figure 2.19). Teen pregnancy is closely linked to social issues, among others child poverty and educational levels. Needless to say, teen mothers are less likely to complete primary or secondary education, critical to qualify for better employment opportunities. Figure 2.19: Nicaragua has the highest share of young women between 15 to 19 years old with at least one child in Latin America 120 NIC p) po 110 GTM 0 ,001( 100 91- HND 90 15 VEN DOMBRA nee PAN ECU SLV 80 BOL tw COL CRI be egA 70 URY MEX PRY tea 60 CHL ARG R ytilitreF PER 50 40 7.5 8.0 8.5 9.0 9.5 Log GDP per capita Source: Authors using WHO, PAHO Core Health Data System 2007 2.56 Maternal mortality rates in Nicaragua are among the highest for Latin American countries. The maternal mortality ratio (per 100,000 live births) in Nicaragua was at 230 in year 2000. Nevertheless, given its level of development (Figure 2.20), Nicaragua is not exceptionally high in contrast to Bolivia. Noteworthy however, and according to the Ministry of Health, of total maternal deaths in 2004, 11 percent were deaths not related to delivery, with almost three-in-four 53 of these due to the mother's suicide, mainly among adolescents. Both physical and sexual violence against young mothers is having serious consequences for the physical and mental health of both mothers and children in Nicaragua and thereby has become a major public health issue in Nicaragua. A recent study in the city of Leon in Nicaragua indicates that physical and sexual aggression against mothers (either before or during pregnancy) increases substantially the risk mortality of their children all the way to age five.45 Figure2.20: Maternal mortality rates are among the highest in Nicaragua (per 100,000 live births) 450 htrib BOL PER 400 evilrep 350 000 300 BRA 0, 250 GTM 10 NIC ytilatro 200 PRY PAN 150 DOM M ECU COL alnret HND 100 VEN MEX ARG Ma 50 CHL URY 0 7.5 8.0 8.5 9.0 9.5 Log GDPper capita Source: Authors using WHO Core Health Indicators 2007 2.57 Advances in maternal health policy Nicaragua needs to be put in practice to improve outcomes. The updated National Health Policy (2004 to 2015) pays special attention to the promotion of healthy mothers and children. However, interventions need effective cross-sectoral coordination between different initiatives, such as social programs for families and communities, education-for-all, access to basic health care and reproductive health services, skilled attendance during childbirth, improved neonatal and child health care, and substantial reductions in domestic violence. As such, the country has developed laws in relation to childhood and adolescence health promotion, breast-feeding, delivery and pre-post natal care, as well as other regulations preventing nontraditional professionals to participate in delivery care and protecting relations between parents and children. 2.58 Deliveries attended by trained personnel in Nicaragua are among the lowest in Latin America, and there are large disparities across socio-economic groups and regions. Almost all deliveries in the richest quintile are attended by a trained doctor, about half of poor women in the poorest quintile are attended by midwives). Similarly, almost all births in Managua are attended by a doctor, while it is less than half in the rural Atlantic region (Figure 2.21). 45Asling-Monemi, Pena, Ellsberg and Persson, 2003. 54 Figure 2.21: Births attended by trained personnel by quintile and region 100 100 12 6 18 80 80 35 tnecr 60 60 40 91 95 pe 40 74 83 56 20 20 0 Rural Rural 0 Rural Pacific Rural Central Managua Atlantic Poorest Q2 Q3 Q4 Richest Doctors 90.5 76.1 60.3 33 Midwife 9.5 17.8 30 52.1 Doctors Nurses Midwife Source: LSMS 2005 Child Health 2.59 Under-five mortality rates have also fallen steeply, similar to other Central American countries. Nevertheless, and despite this progress in the couple of decades, child mortality under age one is 31 per 1000 births, half of them are neonatal or die within the first 28 days of life (Figure 2.22). The vast majority of child deaths could be prevented by a combination of access to good care, nutrition, and medical treatment. Estimates indicate that infant and child mortality in Nicaragua have declined since the 1980s mainly due to important progress in post-neonatal mortality (death between the 28th day of life and the 1st birthday), while neonatal mortality has declined only slightly in the same period. 2.60 Immunization coverage is generally high (close to 90 percent coverage), however it has dropped since 2004. Childhood immunization tends to offset at least some of the detrimental effects of poverty and low education. Hence, promoting immunization coverage is an indispensable strategic component of poverty reduction for Nicaragua. Immunization rates of polio, measles, diphtheria, pertussis and tetanus, and tuberculosis dropped from an average of 90 percent in the late 1990s to an average of about 85 percent in 2004. Figure 2.22: Trends in under-five mortality show stubbornly high neo-natal deaths before the 28th day of life 80 70 15 60 18 0 00 14 1, 50 r 12 15 16 13 11 pe 40 8 25 11 38 hstae 22 9 30 18 16 20 18 6 17 15 22 D 15 20 12 26 10 23 23 22 17 19 19 19 20 13 17 16 0 39 89 20 2 8 1 95 98 02 09 59 00 88- 93- 97- 90- 93- 97- 86- 91- 96- -978 -939 -069 S S S T T T I I I N N N E E E G G G N N N H H H Neonatal Postneonatal Child Source: Stupp et al. 2005 55 Morbidity 2.61 Overall, respiratory illnesses are the most frequent disease in Nicaragua followed by chronic illnesses and diarrhea (Figure 2.23). More than half of all individuals that fell ill during the month prior to the survey report suffering from respiratory illnesses. Diarrhea accounts for seven percent, and chronic and other multiple illness are about one-third. While respiratory diseases are relatively more common among individuals in the poorest quintiles, chronic illnesses are more common among individuals in the richest quintile. Not surprisingly, indigenous people and individuals living in agricultural households are more vulnerable to suffer from diarrhea and other multiple illnesses. Figure 2.23: Morbidity in Nicaragua 2005 4% 19% 12% 58% 7% respiratory diarrhea chronic illness other/multiple skin/accident/violence Source: LSMS 2005 2.62 Respiratory infections and diarrhea are the primary causes of infant and child morbidity and mortality are in Nicaragua, especially in rural areas. Prevalence rates are highest among children aged 12 to 23 months, which has a severe impact on infant malnutrition. Children in the Atlantic are the most prone to diarrhea, reporting one-in-three in the past month. However, less than half of all mothers with a child suffering diarrhea consulted a medical professional. Not surprisingly, urban mothers were more likely to seek consultation than rural mothers. 2.63 Anemia is rampant in Nicaragua, affecting one-in-three children between 12 and 59 months old. Iron-deficiency in children is associated with impaired cognitive performance, motor development, coordination, language development and scholastic achievement. Anemia increases morbidity from infectious diseases because it adversely affects several immune mechanisms. Among factors causing anemia, nutritional deficiency, due to lack of dietary iron, is a major cause. If anemia remains undiagnosed, it can lead to infertility in women of childbearing age and premature delivery among pregnant women. The prevalence of anemia is higher in rural areas than in urban areas. Surprisingly, anemia prevalence in Nicaragua does not vary substantially among income quintiles. Both age of the child and mother's education level seems to be negatively correlated with the percentage of children with anemia; as the age of the child and mother's education increase, the prevalence of anemia decreases.46 2.64 Nicaragua has the lowest rate HIV prevalence in Central America of the estimated 200 thousand people infected, at 0.2 percent of the population, in contrast to 0.6 percent in El Salvador and Costa Rica, 1 percent in Guatemala, and 1.5 and 1.6 percent in Panama and Honduras, respectively. In an effort to prioritize promotion and prevention of the disease, Nicaragua has implemented campaigns to promote the use of condoms, to avoid early sexual 46World Bank (2006b: p33) 56 relations, and to identify the symptoms of AIDS in both urban and rural areas. In spite of these efforts, there are still important challenges to face, such as information dissemination and knowledge about this infectious disease, especially among women, and within the rural and indigenous population. Nevertheless, similarly to what occurs in the Caribbean and South America, the HIV prevalence in Nicaragua is mostly concentrated in the urban areas and transmission is primarily due to heterosexual contact. Healthcare Utilization 2.65 The Nicaraguan Ministry of Heath (MOH) provides health care through a network of about 1,000 facilities, including 33 hospitals, 177 health centers, and 872 health posts. The MOH administers the system through 18 departmental offices (SILAIS). The Nicaraguan Social Security Institute (INSS) is the second most important health care provider, with almost one-in- five persons 20 to 39 years old going to INSS for consultation. INSS purchases a defined package of services from 48 health provider organizations called Empresas Medicas Previsionales (EMPS) (see PAHO, 2002). Among MOH facilities, health centers are the most visited with 43 percent of the population, followed by private clinics (16 percent), public and private hospitals (13 percent), INSS (11 percent), health posts (9 percent), and other facilities (8 percent). 2.66 Healthcare utilization vary substantially across socio-economic groups; among the richest quintile is almost 60 percent while among the poorest quintile is about 39 percent (Table 2.13). Utilization rates are higher among women than among men (52 and 47 percent, respectively). Not surprisingly utilization rates are higher among infants under one year of age and elders (at 81 and 56 percent, respectively) and lower among the youth (at 33 to 42 percent, respectively for 13 to 19 and 20 to 29 years old). Table 2.13: Poor households tend to use health centers (percent of those being ill last month) Health Health Public or INSS Private Other post center private clinic hospital Socioeconomic group Non Poor 4.3 33.7 15.7 14.7 23.9 7.7 Poor 15.7 55.5 10.2 4.0 5.5 9.1 Poorest Quintile 19.8 56.2 8.3 0.7 3.5 11.5 Q2 14.0 55.0 10.9 6.6 6.3 7.2 Q3 7.5 50.5 14.6 7.8 12.2 7.4 Q4 5.4 34.1 16.1 16.5 20.3 7.7 Richest Quintile 1.9 24.0 15.6 16.5 34.0 8.1 Vulnerable group Indigenous 27.6 26.8 18.9 6.0 11.6 9.1 Agric. household 16.9 47.1 10.5 1.8 13.7 9.9 Strata Rural 16.8 47.9 10.3 3.0 12.3 9.7 Urban 3.1 38.1 15.9 15.9 20.0 7.2 Managua 3.6 29.8 14.8 23.8 20.3 7.7 Pacific 2.9 47.9 13.7 9.8 17.4 8.2 Central 10.4 51.3 12.2 3.4 15.6 7.0 Atlantic 27.8 31.9 13.8 2.7 11.6 12.3 Source: LSMS 2005 57 2.67 Health centers and health posts are used most frequently by the poor in Nicaragua; about 55 and 20 percent, respectively, by the poorest quintile (Table 2.13). Health posts are more commonly used in rural areas, and in the Center and the Atlantic, and they are not well equipped even to provide basic services. Private clinics, usually associated with better quality of service delivery, and INSS are used more by patients in urban areas and, therefore, in Managua and the Pacific. 2.68 Insurance and socio-economic status are the most important factors associated with healthcare utilization in Nicaragua, followed by level of education and with the region being less important.47 Individuals with health insurance are 56 percent more likely to get medical treatment when ill, individuals whose incomes are in the fifth, fourth, third, and second quintiles, have a 32, 23, 20 and 11 percent, respectively, higher probability to receive treatment with respect to individuals in the poorest quintile. Education is also an important associated factor, individuals living in households with a head/spouse who has secondary and completed primary, are 9 and 6 percent, respectively, more likely to receive medical treatment when ill. Individuals in the Pacific and Center region display a 5 and 3 percent, respectively, higher probability to receive medical consultations in contrast to those living in the Atlantic. Table 2.14: Poor individuals in rural areas are the least likely to receive care from doctors, even in emergency cases, when ill Ordinary Ordinary Emergency Emergency consultation consultation by consultation by consultation by doctors nurses doctors by nurses Socioeconomic group Poor 77.7 14.9 90.0 7.5 Non Poor 91.7 3.8 97.9 1.7 Poorest Quintile 67.9 22.1 88.5 5.9 Q3 82.9 11.6 88.6 11.4 Richest Quintile 87.7 6.8 92.5 7.2 Vulnerable group Indigenous 67.1 24.5 82.4 10.0 Agric. household 74.9 16.8 89.7 6.9 Strata Urban 93.4 2.7 97.9 2.0 Rural 76.2 15.7 91.3 5.9 Managua 95.1 1.0 97.6 2.4 Pacific 92.0 3.4 97.1 1.8 Central 81.0 13.6 95.1 3.7 Atlantic 69.0 19.2 85.5 9.5 Source: LSMS 2005 Preventive Healthcare 2.69 Less than one-in-every-twenty individuals older than 35 years old sought preventive health care in Nicaragua (see Figure 2.24). As expected, urban households and those in the highest quintile use more preventive care services. In Nicaragua, many diseases can be prevented, 47Regression results (probit model) using the 2005 LSMS quantify main associated factors to healthcare utilization conditional on a set of individual and households characteristics. See NI PA Health Background Paper for full regression results. 58 yet the current healthcare system is geared towards curative services,48 and in addition, access to basic water services has not grown over the last decade with coverage even decreasing slightly among poor and extremely poor in recent years (see next section on water). Given that many conditions are preventable in Nicaragua, this is a challenge faced by the country's healthcare system, and supports the need for every healthcare interaction to include prevention support. Providing systematic information to the population at large reduces health risks, and reinforces healthy behaviors. Morever, this can dramatically reduce the long-term burden and healthcare demands of chronic conditions. 2.70 Preventive care utilization is most influenced by region of residence and education of the spouse, which is markedly different from healthcare utilization (see paragraph 2.24), followed by socioeconomic status and education of the head of household.49 Individuals in the Pacific, Managua, and the Center regions, respectively, are 36, 30 and 12 percent more likely to use preventive medical care in contrast to those in the Atlantic region. Education of the spouse is a key factor associated with seeking preventive care, individuals in households with a spouse with tertiary, secondary and completed primary, have a 23, 16, and 12 percent, respectively, higher probability in contrast to individuals having a spouse with no education. Socioeconomic status is also relevant for preventive care, individuals whose incomes are in the fifth, fourth and third quintiles, have a 19, 16 and 17 percent, respectively, higher probability to use preventive than individuals in the poorest quintile. Education of the head of household is somewhat less important associated factor, individuals living in homes with a head of household who has secondary are 8 more likely to seek preventive care (only 2 percent more likely for just completing primary education). Finally, estimates indicate that the female population is 6.2 percent more likely to seek preventive medical care than male individuals. Figure 2.24: Preventive care for the highest quintile is three times higher than the poorest 7 6 5 t 4 rcene 3 P 2 1 0 t oor oor es tile Q2 Q3 Q4 tile us us P P oor inu tsehc inu -n n larutl on P Q Ri Q No noeg noeg No cu N ndiI ndiI rig larutlucir A Ag Source: Authors using the 2005 Nicaragua EMNV. 48 According to WHO, current healthcare systems worldwide are based on responding to acute problems. Testing, diagnosing, relieving symptoms, and expecting a cure are hallmarks of contemporary healthcare. While these instruments are appropriate for acute and episodic health problems, a notable inability to improve health status occurs when applying this model of care to developing countries with a morbidity pattern mostly related to preventable diseases. 49See NI PA Health Background Paper for full regression results (probit model). 59 Social Security 2.71 Access to health insurance in Nicaragua is low by international standards, especially in rural areas, and compared to El Salvador and Guatemala. Being covered by health insurance reduces the probability that individuals spend more that they can afford when facing health shocks and enhances higher service utilization. The social security system in Nicaragua is the primary source of health insurance in the country. 2.72 The majority of individuals with access to health insurance live in non-poor urban households. While 24 and 13 percent of the population in Managua and the Pacific have health insurance, respectively, coverage is only 4 percent in the Center and the Atlantic (Figure 2.25), only 3.4 percent in rural areas and as little as 2.5 percent for the poorest quintile. The current low coverage and inequitable situation of health insurance characterizes the social security system as an inadequate financial protection provider for health shocks for the Nicaraguan population. The major factors preventing the expansion of social security coverage in Nicaragua are: (i) lack of institutional presence in rural areas where vulnerable populations such as seasonal workers or agricultural producers and indigenous people live; (ii) lack of knowledge of social security benefits among low income workers, as well as a negative image of the social security that is associated with high costs but little expected benefits; and (iii) lack of political will to improve the system and expand the coverage, in particular to deal with the informal labor force. Figure 2.25: Access to health insurance is concentrated among the urban non-poor in Managua and the Pacific 30 nt)ecrep( 24.6 22.3 e 20 17.1 16.3 16.8 ncarusni 15.6 12.5 10.1 10.9 by 10 7.1 6.8 der 5.2 3.4 3.8 4.2 3.7 2.5 ovec 0 oroP ro Q2 Q3 Q4 ret Po intileu intileu nous nous on N QtserooP Qtsehci ndigeI ndigeI larutlucir alrutl lar nab gua cfiic ntic Ru Ur naa Pa Cen lat cuirg A M Ag A on- R N Non Source: LSMS 2005 Healthcare Constraints 2.73 Low quality of health facilities (including lack of medication) concomitant to self- medication and high cost are the main reasons why Nicaraguans not seek medical care when ill (Figure 2.26). Overall, two-thirds of Nicaraguans do not seek healthcare when ill, and of them, regrettably, one-fourth do not consult because of low quality (including no medicine) and distance (facility is too far), almost one-half due to self-medication, and, interestingly, less than one-tenth do not use healthcare because of cost. Among the poorest, self-medication is still high but lower than average (one-third), but poor quality is much higher (almost one-half), and high cost is only about one-tenth. 60 Figure 2.26: Reasons for not seeking healchare when ill by quintile 80 9.4 6.6 7.8 60 15.3 9.6 4.9 8.3 7.1 2.6 4.6 6.4 ntecr 7.7 8.0 9.6 7.1 0.9 40 10.6 2.1 15.6 5.5 pe 47.7 20 35.3 37.5 40.6 29.6 0 Poorest Q2 Q3 Q4 Richest Quintile Quintile self-medication distance poor quality no medicine expensive Source: LSMS 2005 2.74 Health private expenditures are significantly higher in Nicaragua, accounting for 18 percent of overall non-food consumption or about 7 percent of total income, compared with other Central American countries.50 Non-poor households spend more of their income on health than the poor as a share of total income (10 percent for the highest in contrast to 4 percent for the lowest quintile), the share of non-food consumption allocated on health is relatively similar (19 percent for the highest in comparison to 16 percent for the lowest quintile). 2.75 Medicines are the most important health expense for all households, but particularly for the poor; 14 percent of non-food consumption is allocated to this purpose for the poorest quintile in contrast to 8 percent for the richest. Overall average monthly per capita expenses in health indicate that medicines are 55 percent of the total (the highest among all other expenses), almost 20 percent are consultations and medical tests, while hospitalization expenses and insurance are only significant for the non-poor. Although medicines are on average the main expense on health, poor households spend relatively much more, 80 percent for the poorest quintile in contrast to 40 percent for the highest quintile (Figure 2.27). Consultations account for a small share of overall health expenses for all income groups (between 3 and 7 percent); which is not surprising given that medical consultations are heavily subsidized in Nicaragua. Evidently, users from non-poor households spend more on better quality services, such as insurance, tests, and hospitalization. Insurance expenses are only significant, about 17 percent, for households in the highest quintile. 50Expenses on health are lower in Guatemala, Honduras and El Salvador, in comparison with Nicaragua, which has the highest share of non-food consumption of all. World Bank (2006a) 61 Figure 2.27: Expenditures on medicines are the most significant fraction of household health spending among the poor 100% Other 90% 5.0 6.4 11.9 80% Insurance 12.7 70% Hospital 60% s 11.3 Tests 50% 81.3 79.5 71.5 40% 59.3 30% 41.4 Medication 20% 10% 5.1 6.5 9.0 6.8 Consultation 0% 3.4 n Poorest Q2 Q3 Q4 Richest quintile quintile Source: LSMS 2005 Health Policy Recommendations 2.76 Given concerns about reaching the MDGs for health by 2015, the delivery of the Integrated Health Care Model (Modelo de Atencion de Salud, MAIS) should make every effort to accelerate the pace of maternal and child healthcare, including nutrition, under an integrated approach. Inequity in public healthcare services in Nicaragua is such, that even services which are free-of-charge, like immunizations and reproductive health, tend to favor the better-off rather than poor households. Access, utilization and financing of essential healthcare services has been explicitly expressed as a priority of the new administration and it needs to be incorporated into the PRS. Most health expenses are covered by people themselves, and even the poor, who are typically seen as the target of publicly financed actions, often opt to pay a substantial proportion of health consultations, diagnostic services and medicines. Out-of-pocket healthcare expenditures represent up to 16 percent of non-food expenditures for the poorest quintile. Ninety percent of Nicaraguans are completely uninsured, but particularly poor families are vulnerable to health shocks that either keep them or take them into poverty. INSS has to play a key role in improving healthcare equity given that it receives a public subsidy for social insurance arrangements which tends to benefit mostly the non-poor. Thus, the PRS needs to increase access to healthcare services, especially in rural and remote poor areas. 2.77 Nicaragua's healthcare system faces major challenges to improve the health status of the population: (i) inefficiencies in allocation and use of public resources, (ii) low level of financial protection for health shocks, (iii) high out-of-pocket health expenses, particularly for self- medication among the poor, (iv) constraints in quality, access and, thus, low utilization of healthcare services, (v) unregulated private sector, and (vi) limited capacity of MINSA to perform its stewardship role to ensure pro-poor strategies and an efficient health system. Efforts to face these challenges should be made within and targeted framework, mostly because the poor and indigenous populations obtain very little benefits. Current health disparities in Nicaragua will grow wider unless action is taken to address the needs of the most disadvantaged and vulnerable sectors of the population. Access, utilization, and financing essential health services should be expressed explicitly as a policy objective of the national Poverty Reduction Strategy. 2.78 Specifically, an integrated healthcare model can use the following mechanisms: 62 · Promote child, and maternal healthcare preventive services, with focus in earlier (first trimester) and more frequent prenatal visits (at least five), as well as broader coverage of postpartum care for women. Neonatal and maternal mortality are linked in Nicaragua to the same effective measures, and thus, the delivery of an integrated healthcare service package with a multi-sectoral approach will be doubly beneficial. · Expand access for professionally assisted births, because the share of women delivering under professional supervision is still low for poor and rural women (especially in the Atlantic region). This will require demand-side and supply-side interventions. Nicaragua's strategy of establishing Casas Maternas has shown promising results as an effective mechanism for reducing maternal and neonatal mortality. · Avoid discontinuities in immunization coverage in CA4, particularly last doses of DPT and measles vaccine. · Integrate key interventions into basic packages that are managed and financed by the Ministry of Health (MOH). At present, most key health interventions have been partially supported by donors outside the MOH, e.g. family planning services. It is essential that Nicaragua integrates these key interventions within the MOH budget to ensure sustainability. 2.79 Addressing inefficiencies in current health spending can markedly improve health outcomes of the poor, including: (a) Moving away from historical budgeting of public health resource allocation towards a healthcare needs based system, and focus on attending vulnerable populations while reducing concentration of resources to Managua and wealthier regions, (b) Targeting public healthcare resources need to primary care, prevention, and health promotion interventions, (c) Using a results-based budgeting to strengthen improvements in quality and a reversal in the allocation process which has favored metropolitan areas and hospital care, (d) Moving away from historical patterns of deployment of human resources, which has meant few health workers for poor rural areas; alternatives are deployment of healthcare workers based on assessing each region's healthcare risks, which is already used for social workers, and also redistribution of health personnel through a centralized agency using healthcare needs criteria, has produced promising results in other countries in the region, (e) Reducing human resource imbalances by decreasing over-reliance on physicians and resolving scarcity of nurses and auxiliary personnel, especially focused on primary healthcare; this will entail revising the current medical education system, which emphasizes physician curative training and places less value on preventive healthcare and nursing, and generating incentives for nurses to enter the profession by improving educational stipends and performance incentives. 2.80 Addressing all these issues will require coordinated actions on both the demand and supply side. Measures are required to increase quality and supply, especially in poor and underserved rural areas. Alternative models of services delivery in order to improve access for the most vulnerable populations could be publicly financed and regulated by the public sector. These modalities can include different options with different comparative advantages such as: purchasing subcontracting to non-governmental organizations, strengthening MOH healthcare centers, deploying MOH mobile teams, improving drug management, and implementing decentralized community management models. Nicaragua urgently needs to design its own strategy to reinforce supply and improve access to healthcare and nutritional services in the poorest and remote areas based on successful local experiences. Experiences of PROCOSAM, Casas Maternas, and NGO's contracting in family planning and reproductive health services are valuable. Demand side strategies could also be implemented to help achieving the objectives of the National Health Plan. For instance, conditional cash transfers (CCTs) could be implemented 63 to overcome some financial and cultural barriers that prevent full access to services as part of the extension service coverage strategy. Existing CCTs could be used as a complementary tool to target public subsidies towards the most vulnerable populations and as an opportunity to improve simultaneously access to nutrition and primary health services. This intervention also requires an appropriate exit strategy and an effective health and nutrition counseling component which promotes long-term healthy behaviors. D. OPPORTUNITIES IN WATER AND SANITATION 2.81 Water and sanitation access rates are among the lowest for Latin American countries (Figure 2.28). The analysis of prospects for MDGs finds that it is unlikely that Nicaragua will reach the 2015 target for water, unless existing investment levels and patterns are altered and management practices improved. The target for sanitation is very unlikely to be achieved by 2015, because, as it will be explained in this section, most past progress has been made in latrines with little follow up, so more than half of them remain untreated, while almost no advances have been made in terms of connections to the public sewage system. Access to safe drinking water and basic sanitation is a key basic service with direct implications for human and economic development. Figure 2.28: Access to water and sanitation in Latin America 105 105 oni URY at 95 100 URY CRICHL ARG ECU popul CRI MEX GTM COL access) 85 of 95 GTM DOM CHLARG acilitiesf ECU n PRY MEX (% COL DOM with e 75 BRA n PAN access) 90 PANBRA tatioi HND VEN sourcre ht san latio 65 SLVPER wi HND PRY 85 BOL opup wat SLV VEN 55 PER edvorp of 80 mI (% BOL NIC NIC 45 Improved 75 35 7.50 8.00 8.50 9.00 9.50 7.50 8.00 8.50 9.00 9.50 10.00 Log GDP per capita 2004 Log GDP per capita 2004 2.82 In Nicaragua, access to basic water and sanitation services is closely associated to poverty,51 moreover, inequity in access to safe drinking water is as unequal as consumption. Given that the poor are mostly excluded from these basic public services, they tend to make their own inadequate arrangements or pay excessively high prices to water vendors for meager water supplies. By not having access to water, poverty is further aggravated and productivity constrained. Important productive sectors in Nicaragua, such as tourism and agriculture, not only depend heavily on water and sanitation services but also on a healthy environment. Nowadays, poor sanitation infrastructure and the lack of waste-water treatment is a serious threat to Nicaragua's ecosystems. Water 2.83 Access to basic water services in Nicaragua has been flat over the last decade. Access to water shows improvement between the seventies and nineties, but progress came to a halt over 51 Jarman, J. (1997) 64 the last decade.52 Water coverage in Nicaragua is around 80 percent in 2005, declining slightly from 81 percent in 1995 and about 70 percent in 1971 (Figure 2.29a). Major increases were achieved between the seventies and nineties, while latter, investments merely kept up with population growth; but were insufficient to expand coverage nationwide. Morevoer, recent investments in water tended to be allocated to improved water service but not coverage. Whereas the overall water coverage remained unchanged, access through piped systems (pipes inside or outside the house, but within the yard) has seen an expansion in both rural and urban areas over the last thirty years (Figure 2.29b). Water through piped systems reached about 61 percent of the population in 2005, from 56 percent in 1995 and close to 40 percent in 1971. Figure 2.29: Access to water and safe drinking water (through piped system) Water Safe drinking water 100% 94.3% 100% 93.1% 91.3% 90% 90% 86.2% 81.4% 83.8% 80.3% 80% 80% 72.7% 69.9% 70% 70% 64.9%63.4% 60.7% 60% 60% 1971 55.5% 1971 50% 49.2% 1995 50% 1995 2005 40% 2005 40% 38.7% 30% 30% 26.9% 20% 20% 18.4% 10% 10% 5.9% 0% 0% Urban Rural Total Urban Rural Total (a) (b) Source: Population Census 1971, 1995, 2005 2.84 Substantial disparities in water coverage persist between the poor and non-poor in Nicaragua, moreover, water coverage decreased slightly among the poor and extremely poor in recent years. Among the extremely poor, only two-thirds have access to water, while the poor have 71 percent, in contrast to 92 percent of the non-poor (Figure 2.30a). This decline may be attributed to insufficient capital investments in new water systems in order to keep up with the relatively high population growth among the poor. The distributional impact of public spending indicates that the top two quintiles benefited most from capital investments in water.53 Inequities in access to safe drinking water, show that in 2005 88 percent of families top quintile had water, but only 28 percent in the poorest quintile (Figure 2.30b). 52Access to water includes: i) pipes inside the house, ii) pipes outside (in the yard), iii) public standpipe, iv) private well, and iv) public well. The category "private well" includes improved and unprotected self-dug family wells. According to the Joint Monitoring Program (JMP) of the United Nations (www.wssinfo.org), unprotected wells are not considered a safe drinking water source and hence do not count towards the MDGs. In this analysis, access to safe drinking water includes only: i) pipes inside the house, and ii) pipes outside (in the yard), but not "public standpipe" nor "another house/neighbor/company." The national water authority, CONAPAS, publishes official coverage using the assumption that half of "private wells" may be counted as a safe drinking water source; these figures for 2005 are 76.7 percent nationwide, 95.5 percent urban, and 52.8 percent rural (www.conapas.com.ni). 53See Chapter 4 based on the Background paper by Gasparini et al. (2007) 65 Figure 2.30: Access to water and safe drinking water (through piped systems) by poverty group Water Safe drinking water 100% 100% 91.7% 90% 89.9%90.2% 90% 80% 80% 70% 1998 73.7% 73.7% 2001 60% 70.8% 2005 70% 50% 64.5% 63.5% 61.7% 40% 2005 60% 30% 1998 50% 20% Extreme Poor Poor Non-poor Poorest II III IV Richest (a) (b) Source: LSMS 1998, 2001, 2005 2.85 Disparities in water coverage not only prevail between the poor and non-poor, but also across regions and between urban and rural areas within regions (Table 2.15). While in Managua 95 percent of all households enjoyed access to water in 2005, close to 90 percent did so in the Pacific region, but 74 percent in the Center, and only 56 percent in the Atlantic. Similarly to the figures at the national level, rural areas are generally poorly endowed with access to safe drinking water. The lack of access to a safe water source is particularly marked in rural areas in the Center and the Atlantic, with only 61 and 42 percent, respectively. This together with the slow progress in the last decade, highlight the lack of interest and expense of expanding coverage in areas with currently low water coverage. Whether implicitly or explicitly, water authorities, donors, and NGOs alike seem to have chosen better and more accessible locations to build or finance water systems. Given current geographical coverage, marginal costs of expanding coverage to less accessible areas would likely increase. 2.86 The Voices of Nicaragua work highlights how limited access to water negatively affects the quality of life. Most communities visited mentioned having an inadequate water source. Water in rural areas is most frequently available from holes in the ground or vertientes, but these are often dried up or contain contaminated water. Even urban families are not better-off because although they report having a water pipe going into their house, the pump in their communities works only occasionally. People spend a substantial portion of their day gathering water and in some cases children miss school to fulfill this basic requirement. In the Center, a leader of a community said that "water is an essential service for the quality of life; the community has always relied on water holes to drink, we have to walk 10 to 30 minutes depending on which source we choose but most of them are undrinkable." 66 Table 2.15: Access to water across regions in Nicaragua in 2005 (in % of total households). a b Managua Pacific Center Atlantic c Main water source: Total Urban Rural Total Urban Rural Total Urban Rural Total 1. Pipes inside the house 65.2 65.8 16.5 45.7 59.9 8.2 29.5 30.0 5.9 14.2 2. Pipes outside 25.7 23.9 21.5 22.9 25.6 15.7 19.8 10.8 5.7 7.5 3. Public source 0.8 0.6 3.5 1.8 3.1 8.7 6.4 5.1 1.9 3.0 4. Public or private well 3.5 4.6 37.8 18.1 3.4 28.5 18.1 37.9 28.4 31.6 5. Spring 0.3 0.1 2.8 1.2 0.5 24.2 14.4 1.4 35.3 23.7 6. River/stream/lake 0.4 0.0 2.5 1.0 0.5 8.7 5.3 0.9 19.0 12.8 7. Truck/oxcart 0.7 0.2 1.8 0.8 0.7 0.2 0.4 0.3 0.0 0.1 8. From another house 2.8 4.3 12.5 7.7 5.7 5.1 5.4 12.7 3.3 6.5 9. Other 0.5 0.4 1.2 0.7 0.7 0.7 0.7 0.8 0.5 0.6 Access to water 95.2 94.9 79.3 88.5 91.9 61.1 73.8 83.8 41.9 56.2 Source: LSMS 2005. (a) Includes the departments of Chinandega, León, Managua, Masaya, Granada, Carazo, Rivas; (b) Includes the departments of Nueva Segovia, Jinotega, Madriz, Estelí, Matagalpa, Boaco, Chontales; (c) Includes the departments of Río San Juan, R.A.A.S, R.A.A.N. Water Quality 2.87 Water service quality (continuity of water supply) has been deteriorating appreciably in recent years. Only about two-thirds of Managua's population have constant water supply, slightly more in the Pacific and the Center, and only 50 percent in the Atlantic (Table 2.16). In Managua, which accounts for a quarter of Nicaragua's population, but also in smaller cities such as Juigalpa or Jinotepe, extended water shortages are now common, especially but not only during the dry season. Water quality is not significantly better among the non-poor and while these neighborhoods are not spared by water supply cuts, the poor are disproportionally affected. The non-poor commonly have water tanks to bridge over water cuts, while the poor are forced to make their own inadequate arrangements. Estimated price per cubic meter for water delivered in barrels indicate that this source can be up to five times as high as the official water tariff (LSMS, 2005). The average barrel price is C$11.2 Cordobas (approximately U$0.66, containing 0.155 cubic meters), whereas the official water tariff oscillated between C$2.1 and C$6.5 Corbobas per cubic meter depending on the residence area and the total consumption. The precarious water situation in the urban areas is to a large extent the result of the deteriorating state of the water and sanitation public company, ENACAL. Table 2.16: Continuity of Water Supply Water Supply Regions Income Quintiles Managua Pacific Central Atlantic I II III IV V Permanent (% Of 67.1 77.5 74.1 49.4 68.2 74.9 69.3 70.0 72.2 Househ.) Partial (%) 33.0 22.5 25.9 50.6 31.8 25.1 30.7 30.0 27.8 Days / Week 6.0 5.2 4.3 5.0 4.9 4.9 5.4 5.4 5.5 Hours / Day 9.2 11.0 10.6 8.6 10.7 10.2 9.9 9.6 9.8 Source: LSMS 2005 67 Sanitation 2.88 Although progress has been made in access to basic sanitation infrastructure, similarly to water, a slowdown has occurred over the last decade, and little has been achieved in terms of new connections to the public sewage system. Most small towns remain without sewage systems and waste water treatment. In 2005, about 85 percent of all households had access to basic sanitation infrastructure (Figure 2.31a), but the use of latrines in rural areas is widespread shown by the difference between basic sanitation and connection to sewage. Many latrine projects have been implemented in the past decade by cooperation agencies, NGOs and municipalities alike, but little follow up is made to ensure they continue to be treated, so more than half the latrines are untreated. Figure 2.31: Access to basic sanitation infrastructure and connected to public sewage system Basic sanitation Connected to public sewage 100% 100% 94.3%95.7% 90.7% 90% 90% 84.8% 80% 77.6% 80% 69.5% 70% 70% 60% 60% 55.6% 53.5% 1971 1971 50% 1995 50% 1995 40% 2005 40% 2005 33.1% 31.0%29.9% 30% 30% 20% 19.4% 17.6% 20% 15.3%17.2% 10% 10% 0% 0.2%0.6% 0.0% 0% Urban Rural Total Urban Rural Total (a) (b) Source: Population Census 1971, 1995, 2005 2.89 In terms of connections to the public sewage system, almost no progress has been made (Figure 2.31b). Sewage systems almost exclusively exist in urban areas. Both capital investments and operation spending in sanitation tend to be non-poor, because richer households are more likely to have a connection to a sewage system. In Nicaragua, 80 percent of the benefits generated through public spending in sanitation are captured by the two top quintiles.54 According to the Nicaraguan Water and Sanitation Sector Analysis,55 only 29 urban locations including Managua count with public sewage systems, and in 20 of them waste-water gets treatment.56 In an estimated 160 localities with between 2,000 and 50,000 inhabitants, the waste- water from households and local industry enters rivers and lakes untreated or infiltrates directly into the soil, with far-reaching consequences to Nicaragua's ecosystems and groundwaters. Water Constraints 2.90 ENACAL's steady detererioration over recent years is a mix of mismanagement and structural factors such as low labor productivity, low micro metering rates, leakages and hence high percentage of unaccounted-for water losses, as well as water tariffs far below production 54Ibidem. 55GON with WHO support (2004). Análisis Sectorial de Agua Potable y Saneamiento de Nicaragua. 56In Managua, a waste water treatment plant is currently built with funds from the German KfW. 68 cost level due to a politically motivated tariff freeze since 2001.57 In several larger cities including Managua however, the water supply problems are also due to rapid population growth. New urbanizations and settlements were connected to the existing system without the necessary increases in water production, due to a lack of resources. On the income side, the unaccounted-for water losses surpassed the 50 percent threshold in 2006.58 As a result, ENACAL has been in deficit and a loss making public enterprise, finding itself today at the verge of illiquidity.8 Maintenance costs were reduced by skipping ordinary maintenance tasks, detrimental to the infrastructure's lifespan. The tariff freeze was initially meant to help the poorest, yet today the poor and extremely poor suffer the most from the company's inability to provide a minimum service level. The increasing unrest and the poverty dimension of the problem have pushed the problem up in the political agenda. The new administration has called water its top priority after energy. In the long run, ENACAL's is in need of structural and tariff reforms, including explicit policies to subsidize water services for the poor. In any scenario, a significant cash injection will be required for visible improvements in service quality in the very short-run. Box 2.7: Water and Sanitation Sector Institutional Framework The water and sanitation public sector comprises of three major state institutions:59 i) the national urban water utility (ENACAL), which operates water and sanitation systems in urban areas;60 ii) the water regulator (INAA), which is responsible for the regulation, including surveillance of service quality and tariff adjustments; and iii) the Social Investment Fund (FISE), which is in charge of the promotion of water and sanitation systems in rural areas. NGOs play an important role mainly in rural areas.61 The National Water and Sanitation Commission (CONAPAS) is the sector's policy body. Its board comprises members from seven state institutions.62 This sectoral architecture, however, in particular the status of CONAPAS and FISE, remains on unstable grounds as it is based on presidential decrees rather than on a solid legal basis, which hampers the long-term sustainability of the entire sector. Moreover, the sector's efficiency and effectiveness also suffers from insufficient institutional capacities and continuous discretionary political interference on regulatory and operational matters. In particular INAA, the regulatory authority responsible for tariff setting, is often the object of political interference. CONAPAS has initiated a sector information system that gathers information from the existing information systems of some of its member institutions. Despite this recent initiative, the quality (and quantity) of the sector information remains modest as it is a constrained by the process of policy decision making. Notwithstanding its weak legal legitimacy, CONAPAS has recently taken a strong leadership in sector policy setting and sector governance. 57Water tariffs have been freezed in nominal Cordoba terms in 2003 by the national water regulator (INAA). The tariffs are estimated now to be between 30 to 72 percent below production cost levels, due to the steady decline of the tariff's purchasing power in real terms and also due to a dramatic increase in the company's energy bill. 58ENACAL, 2007. Statement made and figures and presented by Ruth Herrera Selma at the National Water Day, Las Piedrecitas, Managua, March 22, 2007. 59RASNIC (Water and Sanitation Network of Nicaragua or Red de Agua y Saneamiento de Nicaragua, RASNIC) is the sector's think tank, joined by state institutions, cooperation agencies and NGOs alike. 60In Matagalpa and Jinotega water and sanitation services are provided by AMAT and EMAJIN, two local state-run service providers. 61A WSP study to be published in early 2007 examines the role and importance of NGOs in the water and sanitation sector ("Contribución y capacidades de las ONGs y otros actores de la sociedad civil, en el sector agua y saneamiento de Nicaragua") 62Including the Presidential Secretariat (SETEC), the Health Ministry (MINSA), the Ministry of Natural Resources and the Environment (MARENA), the Institute for Terrestrial Studies (INETER), as well as members of ENACAL, INAA, and FISE 69 2.91 In rural areas, water systems often lack long-term sustainability. Insufficient water quality is a widespread problem. In addition, a lot of systems are vulnerable to natural disasters. Under the former government, Nicaragua's social investment fund (FISE) was assigned the responsibility of the promotion of water and sanitation in rural areas. In the new decentralization framework, FISE has collaborated with municipalities for its social investments in water and sanitation infrastructure in rural areas. However, although the new municipal law, in contradiction to the sector laws, does assign some responsibilities to the municipalities, their involvement has been limited so far. FISE has focused mainly on infrastructure investments rather than on sustainability of the systems. The operation and maintenance is delegated to communal water committees (CAP),63 after they receive some ad hoc training in operating the system during the construction period. After that, the CAPs do not receive support on a more continuous basis. Widespread problems with water quality due to bacterial contamination and an unacceptably high rate of water system failures are largely the result of the lack of technical assistance and monitoring in rural areas.64 The institutional incapacity to deliver a minimum level of attendance in rural areas, which includes FISE and the municipalities, is particularly relevant for the poor as the problems are aggravated for the more marginal and poorer communities. Rural infrastructure, especially in water and sanitation, remains highly vulnerable to natural disasters such as floods, hurricanes and earthquakes. Risk mitigation measures are seldom taken into account whenconstructing new water systems. Figure 2.32: Access to water and prevalence of Acute Diarrhea Diseases in 15 departments of Nicaragua65 100 90 80 70 % ni e 60 rag 50 veocreta 40 30 w 20 10 0 0 200 400 600 800 1000 1200 Acute Diarrhea Diseases per 10'000 habitants 2.92 Acute diarrhea diseases (ADD) are largely caused by the consumption of unsafe drinking water and poor hygiene practices, such as not washing hands.66 Although the prevalence of ADD does not exclusively depend on access to safe drinking water, but the relationship is strong and if accompanied by improvements in hygiene practices, access to water can deploy a significant and positive impact on health outcomes. In Nicaragua, data from fifteen departments for 2001, 2003 63Comité de Agua Potable (CAP) 64GON with WHO support (2004: 222) 65Acute Diarrhea Disease figures from 2001, 2003, 2005 in 15 departments regressed with census water coverage figures. Sources: National Epidemiological Surveillance System (Sistema Nicaragüense de Vigilancia Epidemiológica Nacional SISNIVEN), National Census 2005. 66Curtis and Cairncross (2003) 70 and 2005 show a clear negative correlation between water coverage and the prevalence of ADD, thus the lower the water coverage the higher ADD prevalence (Figure 2.32). Moreover, departments with the highest prevalence of ADD are also the ones with the highest share of poor and extremely poor. Improvement of hygiene practices in Nicaragua have received little attention in the past and hence relatively little sector funding has been allocated to the promotion of better hygiene practices. An integrated approach to health, water, sanitation and hygiene would be required in future to attain MDGs. 2.93 Poor hygiene practices remain a serious problem mainly among the poor in peri-urban and rural areas. Together with the poor water quality, inadequate practices contribute to the poor sector related health outcomes. Water-borne infectious diseases are a main determinant for health-related MDGs, such as infant and child mortality, and malnutrition. Diarrhea is amongst the three top causes of child mortality worldwide.67 In Nicaragua, although infant and child mortality have steadily declined in recent decades, rates are relatively high as compared to other countries in the region. Water Policy Recommendations 2.94 The relatively poor overall performance of the water and sanitation sector is predominantly due to: a) political and institutional shortcomings of the sector, and b) insufficient public budgetary resources.68 The sector's relative inefficiency and ineffectiveness is largely related to slow increases in coverage which is concomitant to its current lack of sustainability. A serious commitment at the political level is inevitable if the sector performance is to be improved significantly. In October 2005, CONAPAS elaborated and approved a coherent sector strategy in line with the National Development Plan. The sector strategy also gave rise to the sector round table as a coordination forum between government and the donor community.69 In October 2006, the government and the donors agreed on a roadmap to complete a Sector Wide Approach (SWAP). In addition, a Code of Conduct on alignment and harmonization was signed. The general roadmap of the SWAP outlines several work lines that intend to address the mayor legal, institutional, and coordination challenges the sector is confronted with. The principal objective of the SWAP is to make the sector more coherent, effective and efficient. So far the Ortega government has not decided whether it will continue with this strategy nor about the future sectoral architecture. 2.95 The Voices of Nicaragua work highlights how limited access to water negatively affects the quality of life. Most communities visited mentioned having an inadequate water source. Water in rural areas is most frequently available from holes in the ground or vertientes, but these are often dried up or contain contaminated water. Even urban families are not better-off because although they report having a water pipe going into their house, the pump in their communities works only occasionally. People spend a substantial portion of their day gathering water and in some cases children miss school to fulfill this basic requirement. In the Center, a leader of a community said that "water is an essential service for the quality of life; the community has always relied on water holes to drink, we have to walk 10 to 30 minutes depending on which source we choose but most of them are undrinkable." 67WHO (2000: 164) 68Further analysis of Public Spending is contained in the Nicaragua 2006 Public Expenditure Review. 69Including IDB, WSP-World Bank, SDC, UNICEF, PHO, CIDA, EU, JICA, Netherlands/SNV, and the German Cooperation KFW which currently heads the forum. 71 · Rural areas: Achieving the MDGs in water and sanitation is the sector's top priority, and it is particularly a challenge in rural areas. Taking into account increasing marginal costs, substantial social infrastructure investments will be required in rural areas, where the vast majority of the poor lives without access to water and sanitation, especially in the Atlantic and Central/Northern region. Poor and extremely poor population groups would benefit the most from such investments. Appropriate co-financing and local participation policies will be necessary to ensure adequate technology and service levels that can be managed and afforded by the community in the long run. Infrastructure investments need to be accompanied with effective decentralization and capacity building strategies to strengthen local capacities, in particular at the municipal level, in order to provide technical and organizational assistance to CAPs and communities. The municipalities should be given a more determinate role in water and sanitation service provision. · Urban areas (Managua and larger cities): One of the most urgent tasks in urban areas is to secure water provision and restore clients' confidence. A cash injection for service quality improvements in the short run will likely be inevitable to prevent a virtual collapse of the water provision in some areas. However, a profound structural reform of the urban service provider ENACAL needs to be initiated in parallel to prevent that investments turn into de facto consumption subsidies. Once visible service improvements have been achieved, a plan for a gradual adjustment of tariffs has to be elaborated, including a targeting scheme for water services to poor. Any tariff adjustment needs to maintain a pro-poor orientation for poor urban dwellers. Eventual loans and grants to ENACAL should be linked to measurable outcomes in service improvements, key management and technical efficiency figures. An output based modality for grants and subsidies delivery is imperative. Additional funds will be required for expanding the urban sewage system in particular in peri urban areas and waste water treatment infrastructure in larger cities. · Urban areas (small towns): Small towns need special attention because of their specific context and problem setting. The regulative and normative framework should be adjusted to allow for more autonomy and local public and private participation among water and sanitation service providers in small towns, including public-private-partnerships and micro enterprises. They also need specific investment plans appropriate to their size. The unsolved waste water pollution problem in these localities demands for laying more emphasis on public sewage systems and waste water treatment solutions in these localities. · Sanitation and hygiene: In order for water coverage to impact on health-related MDGs, sanitation and hygiene promotion deserves considerably more attention than it has received in the past. A more integrated approach is imperative. Sector resources should not only be allocated to sanitation infrastructure (hardware) but also to the promotion of better hygiene behavior (software) as hygiene practices, such as making sure all latrines are treated. Hygiene habits are as much a determinant of health outcomes as access to water and sanitation infrastructure. These habits may be improved through a set of different approaches such as health education in schools, media campaigns, house to house visits, etc. · Sector sustainability: Sustainability remains a key challenge and is highly relevant to poverty in the long run. Both the sector as a whole and the water and sanitation infrastructure in rural and urban areas widely lack the desirable sustainability in aspects related to governance, management, organization (including participation), long term financial stability, environment, technology, and risk prevention. Although sustainability is the outcome of many different factors, the following must be named as the most urgent and most important ones. Major adjustments to the legal framework will be required not only for the sector institutions to become more efficient and effective but also to lay a more robust basis for the current sectoral architecture, in particular to strengthen the role of the sector's 72 governing body (CONAPAS or other). The sector as a whole depends on a more sustainable financial basis, provided for with sufficient fiscal resources in order to become more independent from fluctuating donor funds, especially for investments in rural areas. Apart from previously mentioned profound structural reforms, the three major sector institutions, ENACAL, INAA, and FISE, need significant capacity building in several of the aspects mentioned. In rural areas, FISE (or another institution) requires to be strengthened in its activities to promote sustainability and reduce the vulnerability of water and sanitation systems. Water quality must be guaranteed permanently and countrywide through a mechanism that not only monitors the quality but provides the means and methods. · Sector information: The sector information system needs to be strengthened. Adequate policy making, sector management and monitoring of sector advances are seriously hampered by the current lack of reliably and actualized information. The sector information system may need a special legal and institutional basis in order to ensure its financial and operational sustainability. · Sector coordination: An effective coordination mechanism between the donor community and the government will be inevitable. The process should be led by the sector's policy body (CONAPAS or other). A certain consensus on sector policies and outcomes will have to be established to facilitate sector coordination. Although the previous roadmap may be changed under the new government, a SWAP approach should be aspired in order to increase the efficiency and efficacy of the sector resources. The roadmap needs further elaboration on the strategies to achieve the MDGs. E. OPPORTUNITIES IN REDUCING MALNUTRITION 70 2.96 Malnutrition is associated with several causes occurring at child/family, community and macro level. The direct causes of malnutrition are numerous, including not only food security at the household level, but also inadequate maternal and child caring practices, often due to inadequate or inappropriate knowledge/education, as well as the broader health status and incidence of diseases related to water/sanitation and access to adequate healthcare services. Table 2.17: Stunting national, urban, rural Figure 2.33: Stunting national, urban, rural and by poverty, 1998, 2001 and 2005 and by poverty, 1998, 2001 and 2005 1998 2001 2005 Change 50 98-05 40 National 27.4 22.5 21.5 -5.9 Gender 30 Male 28.7 24.1 22.0 -6.7 Female 26.0 20.8 20.9 -5.1 20 Area Urban 22.8 16.6 16.5 -6.3 10 Rural 31.8 28.9 27.0 -4.8 0 Poverty lar e Extreme Poor 46.4 43.8 37.2 -9.2 lan nab oorP poor Ur Ru mert ro Poor 36.2 31.5 27.4 -8.8 tioa Po N Ex on- Non-poor 14.8 10.7 14.6 -0.2 1998 2001 2005 N Source: Picado et. al. (2007) 70See Picado et. al. (2007) for more details. 73 2.97 All three factors work synergistically, as illustrated by the prevalence of malnutrition in many food-secure households. Indeed, children might not receive an appropriate food intake either because there is insufficient food or because of inadequate caring practices, which can fail to translate food into good child growth and development, leading to in-balances in terms of macro- and micro-nutrients or impairing the child's ability to take full advantage of her food intake. In addition, a malnourished child is more susceptible to illness, and illness in turn increases nutrient loss and suppresses appetite. Malnutrition in early childhood can also lead to developmental problems that have long-lasting effects into adulthood. Children lacking access to adequate water/sanitation and healthcare services tend to be ill for longer periods and eat poorly, triggering a spiraling cycle of malnutrition and deterioration of health status. Addressing malnutrition requires coordinated improvements on all three fronts to break the vicious cycle. 2.98 An indicator of children chronic nutrition status is stunting, measured by the ratio of height for age. A high ratio indicates a delay in growth, revealing long-term, chronic, malnutrition. Although the prevalence of stunting in Nicaragua for children under 5 years old declined from 27.4 to 21.5 percent from 1998 to 2005, malnutrition continues to be high in Nicaragua with more than one-in- five children suffering from growth retardation. The prevalence of stunting is much higher in the rural areas than urban areas, where more than one child in four suffers from chronic malnutrition. Regionally, the highest levels of stunting are found in the Central region,71 with a prevalence of 19.1 percent in the urban areas of the Central region and 32.2 percent in its rural areas. The Atlantic region follows closely behind, with a total prevalence of stunting of 24.5 percent. The prevalence in the urban areas of Managua are also found to be unexpectedly high, with an incidence of 17.5 percent, i.e. more than one child in six. Table 2.18: Stunting national and by regions, 1998, 2001 and 2005 1998 2001 2005 Change 98-05 National 27.4 22.5 21.5 -5.9 Managua 14.9 9.7 16.9 +2.0 Urban 16.4 10.1 17.5 1.1 Rural 6.7 4.8 9.5 2.9 Pacific 27.7 17.7 16.5 -11.2 Urban 25.3 16.6 15.1 -10.2 Rural 30.1 18.8 18.3 -11.8 Central 35.1 33.3 27.7 -7.4 Urban 29.7 26.0 19.1 -10.6 Rural 37.2 37.5 32.3 -4.8 Atlantic 28.5 25.1 24.5 -4.0 Urban 25.5 18.1 10.2 -15.4 Rural 31.0 29.9 29.3 -1.7 Source: Picado et. al. (2007) 2.99 Stunting is strongly associated with poverty. Stunting is 2.5 times higher for children living in extreme poverty than for children living in non-poor households, 37.2 versus 14.6 percent, respectively (Table 2.17 and Figure 2.33). In the Central Region, home to many of the poorest and most remote municipalities, stunting prevalence was over 45 percent among extremely poor families, the highest level in the country. The Atlantic rural areas rank second, with 36.9 percent prevalence of stunting among children of extremely poor households. It is 71The Central region of Nicaragua includes the departments of Madriz, Estelí, Nueva Segovia, Matagalpa, Jinotega, Boaco and Chontales 74 important to note that, despite this correlation prevalence of malnutrition is still unacceptably high among non-poor households, where, on average, 14.6 percent of children show delays in growth. 2.100 When looking at the patterns of change over time, most of the reduction in malnutrition observed between 1998 and 2005 actually took place between 1998 and 2001 (the prevalence decreased from 27.4 percent in 1998 to 22.5 percent in 2001, to 21.5 percent in 2005). Between 2001 and 2005, the prevalence of stunting was only reduced by one percentage point (Table 2.18). Within this overall pattern, only the Central region shows larger declines in the latter period (2001-2005) than in the earlier period (1998-2001). Between 2001 and 2005, the Central region observed a decline in both urban and rural stunting, by 6.9 and 5.3 percentage points respectively. In the earlier period, between 1998 and 2001, stunting had declined in all regions, except in the Central rural region, which suffered the most damage from Hurricane Mitch and the shock resulting from coffee price changes. 2.101 The prevalence of growth retardation increases with the age of the child, as the effects of malnutrition accumulate. In Nicaragua, prevalence starts around 9 percent at birth72, which indicates that the process begins early, during the pregnancy, with intra-uterine growth retardation. Prevalence of growth delays then increase dramatically during the first two years of life, doubling between 0-5 and 6-11 months, and continuing this increase until it flattens at rates between 20 and 25 percent (Figure 2.34). The first two years of life, as well as the pregnancy period, hence appear as the key period during which the delays are accumulated. In that period, malnutrition results in physical and mental development delays which can never be recovered later in life. Hence, the future capacity of around 20 percent of Nicaragua's children will be limited by malnutrition during early childhood. Figure 2.34: Stunting by age groups, 1998, 2001 and 2005 35 30 25 20 15 10 5 0 -5 -10 0 - 5 6 - 11 11 - 23 24 - 35 36 - 47 48 - 59 1998 2001 2005 Change 98-05 Source: Picado et. al. (2007) 2.102 Programs and interventions which aim at addressing the issue of malnutrition tend to be more effective in the short-term if they use integrated approaches to address more than one of the immediate and underlying factors associated with malnutrition. In addition, it is critical that this multi-sectoral approach focus on prevention and target the age where most of the losses occur, starting in-utero and continuing through the child's 2nd birthday. The coordinated approach to malnutrition needs to focus on several direct causes including lack of food at the household level, 72http://MINSA.gob.ni 75 inadequate maternal and child caring practices, and limited water/sanitation and inadequate healthcare services73. 2.103 At present, there are two nutrition programs with documented success in reducing malnutrition. One is the Ministry of Health's National Micronutrient Program with two components: supplementation (vitamin A and iron) and fortification (salt with iodine; sugar with vitamin A and flour with iron and folic acid). The second program is the Red de Protección Social (RPS), a conditional cash transfer program implemented from 2000-06. The RPS was targeted to some of the poorest municipalities of the country. The impact evaluation of the first two years of the program (2000-02) showed a decline in stunting among children 0-59 mo. of 5 percentage points. Additionally, The Programa Comunitario de Salud y Nutrición (PROCOSAN) is MINSA's community-based growth promotion program (CBGP). PROCOSAN is a preventive health and nutrition program that actively engages families of children under two and their communities in maintaining the adequate growth of young children. F or sick children under five years old, the program extends its treatment and referral services. PROCOSAN is a program with a high potential to be effective. 2.104 Nicaragua has the knowledge and experience to reduce malnutrition in the short term, but the government must treat in practice the reduction of malnutrition as a true priority. Programmatic priorities are: 1) an adequate combination of highly effective programs (such as PROCOSAN, RPS and other MINSA interventions), and 2) institutional strengthening to increase capacity required to bring programs to scale. In all prioritized municipalities with a high poverty, universal coverage must be achieved and maintained for the vulnerable population. Stunting can be reduced through specific actions. However, Nicaragua will never develop to its full potential with a largely stunted population; therefore, stunting must be reduced in the short-term. Malnutrition Policy Recommendations 2.105 The best approach to reduce stunting is to prevent stunting from occurring. Programs should focus on mothers and children under two years old to prevent stunting. This is the so- called "window of opportunity" to intervene. Interventions targeted to children in other age groups, may have other benefits, but they will not reduce stunting. 2.106 Targeting the poor is critical, and Central rural and Atlantic rural regions should continue to be prioritized for prevention of malnutrition and the goal should be to reach universal coverage of vulnerable populations. In other regions of the country, municipalities with highest levels of poverty should be prioritized. Interventions need to be sustained among poor populations as long as overall conditions are improved (i.e. poverty is reduced). 2.107 Long term solutions to malnutrition include the improvement of maternal education, improving incomes among the poor, improved water and sanitation. These interventions are necessary and complementary and should not be sacrificed for short term approaches. Both are necessary and there should be a balance. Interventions that increase school enrollment and retention of young girls is a long term step in helping to reduce malnutrition. 2.108 Increased coverage of nutrition programs should go hand in hand with increased coverage of the basic integrated health care package, including family planning services. Breastfeeding is one of the most important interventions to prevent stunting during the first two 73UNICEF (1998) 76 years of life. More investment is needed to promote exclusive breastfeeding for six months and continue breastfeeding up to two years as an effective way to reduce stunting. 2.109 Current programs need to be reviewed in light of their effectiveness to reduce malnutrition. Budget allocations should be based on effectiveness criteria and goals for the reduction of malnutrition. Goals should be set to increase coverage of programs to gradually close the gap among the vulnerable population and levels of coverage should be sustained. 2.110 The maternal basic health care package should be revised and updated especially with regards to nutrition and other services needed to prevent intra-uterine growth retardation. 77 CHAPTER III. OPPORTUNITIES FOR INCOME GENERATION 3.1 Opportunities for income generation are associated to several critical factors, among the most important are: access to roads, electricity, telecommunications, credit, titling, and networks and organizations. These factors play a crucial role in providing an environment with opportunities for households to generate income and also for individuals, entrepreneurs and business to contribute to the growth and productivity of the larger economy. As such, an understanding of inequity in their provision is important for designing effective policies to encourage sustainable development. 3.2 This chapter analyzes inequality of opportunities for income generation by addressing the following questions: (i) what are the existing inequities in access to productive services and infrastructure nationally, between income groups, across rural and urban areas, and across geographical regions? (ii) what are the existing inequities in intangible assets such as access to networks and titling? (iii) how are income generation outcomes, measured by productivity, related to inequality of opportunities in Nicaragua? (i.e. inequalities in access to productive services, capital, labor, and intangible assets). 3.3 This chapter puts especial emphasis in inequities and determinants of agricultural production. The rational behind this choice is that agricultural production is a direct function of access and quality of productive assets (or so called factor of production); namely capital, labor, and land. Indeed, as will be explained in detail bellow, access to factors of production in Nicaragua (especially to capital and land) displays large inequities across regions and large concentration among the urban non-poor. Furthermore, agricultural productivity is key engine of growth in the agriculture sector. Previous studies for Nicaragua74 indicate that poverty reduction in Nicaragua is highly responsive to growth in agriculture. This occurs because the agricultural sector represents about one fifth of Nicaragua' total output and one third of Nicaragua's total employment.75 There are several channels through which agricultural productivity (and growth in the agricultural sector) can affect poverty: higher agricultural productivity can translate into higher income for producers, more employment, production of cheaper food, and higher tax revenue from agricultural activity, among others.76 A. PRODUCTIVE SERVICES AND INFRASTRUCTURE 3.4 This section analyses access to and the quality of income-generating infrastructure services concentrating on roads, electricity, telecommunications and credit using the 2005 LSMS. The analysis highlights differences within regions and socio economic strata as well as disadvantages in access and quality of infrastructure among vulnerable groups such as poor, indigenous, and agricultural-producer households. The section also compares infrastructure-related indicators in Nicaragua to indicators in other countries in Latin America. 3.5 Economies with better and broader access to roads, electricity, transportation, credit, and telecommunications are associated with higher growth rates and lower income inequality and poverty (de la Fuente and Estache, 2004). 77 The mechanisms through which infrastructure 74World Bank (2002), Krueger (2000), Nadim (2002) 75Gutierrez and Ranzanni (2007) 76 Haggblade et al (1989), Haggblade et al (1991), Hazell and Ramasany (1991) and Delgado et al (1994) among others. 77 Fuente and Estache (2004) find that 53 percent of all studies in the sample support a positive impact of infrastructure investment on productivity or growth. The authors also find a positive impact of investments in infrastructure on growth. The elasticities estimated for Latin America region in the 1990s suggest that a 10 percent increase in 78 impacts on "development" are found both in households and in enterprises (see Prud'homme, 2004). For households, infrastructure-related services improve welfare by improving quality of life. A significant share of the poor in developing countries, and especially those in rural areas, lack good and reliable infrastructure services. As a consequence of low supply, they generally pay high prices for low-quality services. From the perspective of enterprises access to infrastructure- related services results in lower costs for key inputs thereby allowing them to produce at lower prices and increase their competitiveness. 3.6 There has been improvement between 2001 and 2005 in the household infrastructure and quality of life of Nicaraguan households in recent years Results in Table 3.1 indicate that for instance, the share of households with access to piped water, fixed telephone, cellular telephone, and trash collection services increased by 5 percent, 40 percent, 696 percent, and 26 percent respectively in this period. Other housing related variables related to the quality of dwellings, such as the share of dwellings with access to an inside toilet, a good-quality floor, and a good- quality walls grew by 29 percent, 6 percent, and 2 percent respectively. Table 3.1: Descriptive Statistics on Household Infrastructure Share of households having 1998 2001 2005 % change access to: % % % 2001-2005 Infrastructure Variables Paved road 22.3 42.2 52.2 23.7 Electricity 68.7 72.2 73.8 2.2 Fixed telephone line 9.7 10.1 14.2 40.6 Cell phone n.a. 2.9 23.1 696.6 Piped water 60.8 61.5 64.6 5.0 Trash collection services 31.1 33.7 42.5 26.1 Housing Variables Toilet in dwelling 22.5 22.9 29.4 28.7 Good quality walls* 55.3 60.7 61.7 1.6 Good quality floors** 51.5 56.6 60.0 6.0 House with kitchen 62.0 65.6 71.9 9.6 room Own house *** 77.8 76.9 76.4 -0.7 Source: World Bank using the 2005 Nicaragua EMNV. * Walls made from cement, stone, or concrete. ** Floors made of concrete, tile, stone, or brick. *** With or without a title. Roads 3.7 Compared to international standards, the share of paved roads as a percentage of total roads is low in Nicaragua, even given its level of development. Regression analysis using regional data for 2004 suggests that given its GDP per-capita, Nicaragua should have 20 percent of all its roads paved (this is the case in countries like El Salvador, Honduras, and Ecuador). However, this share was only at 10 percent (the second lowest share in the region, slightly surpassing that of Bolivia). The mechanisms through which investment in transportation generates higher growth and lower poverty are numerous and to a certain extent rest upon the kind of transportation investment being made. For example, Gannon and Liu (1997) argue that investments in transport reduce the cost of assembling intermediate inputs for production. This in turn, reduces production costs and thereby infrastructure stocks increase output (GNP) by 1.4 to 1.6 percent (for every percentage point increase in per capita income the authors find that the share of people living in poverty by 0.5 of a percentage point). 79 prices. A fall in prices promotes regional and international trade, making it possible for agriculture to commercialize, for industry to specialize, and for production and employment to expand by exploiting economies of scale. Rural roads also contribute to poverty reduction through improved access to education and health, and expansion of markets for agricultural products. Using data describing the improvement in rural roads in El Salvador over the 1999­ 2001 period Yepes (2004) found that the impact on poverty of these improvements are remarkable. In cantons where roads improved poverty fell by 5 percent more than in cantons were roads did not improve. Estache and Fay (1995) find that improved access to roads and sanitation has been a key determinant of reduction of inequality and poverty for the poorest regions both in Argentina and Brazil 3.8 Though there have been significant improvements in recent years there remains inequity in the provision of quality roads between urban and rural localities and different regions.Access to good roads in Nicaragua is limited in rural areas, particularly in the Atlantic and Central regions compared to access in Managua and other urban centers. As presented in Table 3.2, about half of all households in Nicaragua have access to a paved road from their residence. In Managua and in the Pacific region, 60 to 80 percent of all households have access to a paved road. In the Central and Atlantic regions this proportion is considerably lower at 40 and 10 percent respectively. In the Atlantic and Central regions, about 70 and 60 percent of all households access their dwellings by using unpaved roads and trochas, which are usually poorly maintained informal roads difficult to access by regular vehicles. Furthermore, in the Atlantic region, about 18.5 percent of all households claim that the main way to access their dwelling is by river or sea. The Central and Atlantic regions clearly fall behind in terms of access to quality roads and connectivity with the rest of the country, this is likely to be hindering commerce, tourism, and flows of investments between them and other regions. . Table 3.2: In rural areas, only 26 out of every 100 households have access to a paved road. Main way % % % % to access Paved road Unpaved road Trocha River, Sea, Lake or dwelling Other Total 52.19 31.29 12.56 3.96 Area Urban 75.99 21.49 0.89 1.63 Rural 18.97 44.97 28.86 7.21 Region Managua 78.62 20.31 1.06 0.00 Pacific 60.42 27.40 8.96 3.23 Central 39.58 37.62 20.66 2.14 Atlantic 9.94 47.17 24.39 18.50 Source: World Bank using the 2005 Nicaragua EMNV. 3.9 Vulnerable groups such as poor households, indigenous households, and households engaged in agriculture have limited access to paved roads in Nicaragua. While 64 out every 100 non-poor households have access to a paved road from their dwelling, only 32 out of every 100 poor households do so. Access to paved roads is particularly low among households in the lowest quintiles, among indigenous households, and among households engaged in agricultural production (18 to 21 percent). 80 Figure 3.1: Indigenous households and households engaged in agricultural production are the ones with the lowest access rates to paved roads. 80.00 74.2 Principal Access road is paved 69.2 70.00 64.0 60.1 60.00 53.6 ds 50.00 47.6 ehol 40.00 35.4 32.2 hous %30.00 23.7 21.0 20.00 17.5 10.00 0.00 or ous poor Q2 Q3 Q4 Po intile Non- t Qu t Quintileindigen genous Indi Pooes Riches ic. Producerric. Producer Non- Nonagr Ag Source: World Bank using the 2005 Nicaragua EMNV. 3.10 Lack of access to roads hinders access to markets and better economic opportunities, especially among households engaged in agriculture. Lack of good roads makes it difficult for households engaged in agriculture to commercialize their farm production, which leaves them in the hands of intermediaries who often buy their produce at lower than market prices (due to high transportation costs). Table 3.3 displays the type of buyer of agricultural produce according to the region of residency. Note that the share of sales purchased by direct consumers by region is related to their connectivity in terms of roads. In particular, while 28 percent of all producers in Managua sell their agricultural output directly to the consumers, the same proportion is at 5 percent for farmers in the Central and Atlantic regions. Indeed, the majority of the producers in less accessible regions rely on local or outside merchants to purchase their agricultural produce. While the average distance between farmers and the closest "commercial road" is at 0.53 Km in Managua, it reaches 18 and 136 km in the central and Atlantic regions. Table 3.3: Farmers living in less accessible regions rely on merchants to purchase their agricultural production Main Buyer of agricultural Managua Pacific Central Atlantic Total produce % Direct consumer 28.09 14.30 5.22 5.53 7.68 % Local merchant 28.76 27.15 31.08 40.28 32.36 % Outside merchant 43.15 56.85 61.21 53.41 58.17 % other 0.00 1.70 2.49 0.77 1.80 Total 100.0 100.0 100.0 100.0 100.00 Source: World Bank using the 2005 Nicaragua EMNV. Sample: households engaged in agriculture who sale their production for profit. 81 3.11 Although households in Nicaragua still have limited access to paved roads, significant progress has been achieved on this front since 1998. As illustrated in Figure 3.2, household access to paved roads from their homes has improved significantly since 1998, especially among the poor. In 1998 only about 8 of every 100 households in the bottom quintile had access to a paved road from their dwelling of residency, by 2005 this share had increased to 24 percent. Similar progress was achieved at all quintiles. Data suggests that about 25 percent of all households benefited from a roads-program in the year prior to the EMNV 2005. Of this share 33 percent were indigenous households. Programs such as these should be continued. Figure 3.2: Access to paved roads has roughly doubled since 1998 for households in all socio-economic groups. 80 Main access to dwelling is paved road 70 2005 2001 1998 60 ds 50 ehol 40 hous %30 20 10 0 Poorest II III IV Richest Source: World Bank using the 1998, 2001, and 2005 Nicaragua EMNV. Box 3.1: IDA Involvement on Roads in Nicaragua Long-term IDA involvement has helped increase the share of the road network that is in working condition by almost 20% between 1999 and 2006 (from17% to 20% of all roads).78 IDA- financed projects restored over 3,000 km of secondary roads destroyed by Hurricane Mitch, rehabilitated the Pan American highway between Managua and San Benito ­ bringing back on line a key trade link with the rest of Central America ­ and more recently, improved 240 km of rural roads, linking the poor to markets, health centers and schools. Throughout, it has employed a contingent of local micro-enterprises in road maintenance ventures ­ giving very poor people stable, productive work ­ and built analytical, fiduciary, and maintenance capacity at ministerial and local levels. IDA's support helped leverage additional funds for the establishment and operation of a national Road Maintenance Fund in 2005, which will help ensure long-term viability of road investments. Source: Nicaragua IDA impact country story. World Bank (2007) 78IDA technical assistance and funds from Danida up-graded the systems and capacity in the Ministry to monitor road quality, as such post-1998 data is much more reliable. 82 Energy 3.12 Access to electricity is restricted in Nicaragua among the poor, and especially among indigenous households and among those engaged in agriculture. Lower access to electricity hinders welfare, especially for households working in agriculture and who deal with perishable products, such as milk and milk derivatives. Lack of access to electricity also lowers the capacity of households to run small businesses and may negatively influence their children's education. Table 3.4 shows that poor households, especially in rural areas and in the Atlantic region, are less likely to have access to electricity at home than non-poor and urban households. Vulnerable groups such as indigenous households and households engaged in agriculture display electricity access rates below 50 percent. Kerosene constitutes, after electricity, the second main source of lighting in Nicaragua. Between 40 and 43 percent of all households in rural areas (and mainly in the Central and Atlantic regions) use kerosene as the main source of lighting. In the Pacific region and in Managua, non electricity sources of light are used less. Candles and other very inefficient sources of light such as firewood are still being used by 26 of every 100 households in the Atlantic region. Table 3.4: Statistics on main source of lighting by socio-economic group Main source of light at home Electricity Kerosene-Gas Candles and other Socio-economic group Poorest quintile 33.89 48.77 17.35 Quintile 3 74.46 17.18 8.36 Richest quintile 93.91 3.79 2.30 Vulnerable group Indigenous 46.53 18.74 34.72 Agricultural Producer 38.13 47.47 14.40 Source: World Bank using the 2005 Nicaragua EMNV. 3.13 Differences in access to electricity are large across regions. Data suggest that access to networks among households in urban areas (96 percent) is significantly larger than that in rural areas (about 43 percent). While in Managua almost all households have access to electricity at home, in the Central and Atlantic regions only 57 and 34 percent of all households have access to electricity respectively (see Angel-Urdinola et. al., 2007). As Figure 3.3 illustrates, access to electricity in urban areas surpasses regional standards given Nicaragua's level of development. However, this is not the case in rural areas where access to electricity is below regional standards. 3.14 Access to electricity for households in the lowest two income quintiles, albeit low, has increased by 32 and 15 percent respectively since 1998. Figure 3.4 displays household access rates to electricity at home by quintile for years 1998, 2001, and 2005. Results indicate, as mentioned before, that access rates among richer household are much higher than among poorer ones. Nevertheless, improvements in access over time have been greater for the poor, and especially among households in bottom quintiles. Between years 1998 and 2005 access rates increased from 26 to 34 percent among households in the first quintile and from 50 to 58 percent among households in the second quintile. Improvements for those in upper quintiles, on the contrary, were modest, especially among households in the third and fifth quintiles. Other evidence shows that about 16.5 percent of all households benefited from a "utilities" program usually associated to the expansion networks in the year prior to EMNV 2005, and that beneficiaries were concentrated among vulnerable groups. 21 percent of all households in rural areas, 22.4 percent in the poorest quintiles, 23.4 percent among agricultural producers and 20 percent among indigenous households. 83 Figure 3.3: Access to electricity in Nicaragua in urban areas is above regional standards given its level of development; however it is below regional standards for rural areas. 100 CRI, 2004 MEX, 2003 s)aeralaru CHL, 2003 ECU, 2003 COL, 2004 80 BRA, 2004 DOM, 2004 R( GTM, 2003 % 60 SLV, 2004 ni yticirtcelE 40 HND, 2003 NI, 2005 BOL, 2004 ot PER, 2003 ss 20 cecA 0 7.6 7.8 8.0 8.2 8.4 8.6 8.8 9.0 9.2 9.4 Log (Per capita GDP 2004) 100 CRI, 2004 BRA, 2004 s)aera CHL, 2003 ECU, 2003 MEX, 2003 98 nabr NI, 2005 U( 96 HND, 2003 GTM, 2003 DOM, 2004 % ni yticirtcelE 94 PER, 2003 92 ot BOL, 2004 SLV, 2004 COL, 2004 ss 90 cceA 88 7.6 7.8 8.0 8.2 8.4 8.6 8.8 9.0 9.2 9.4 Log (Per capita GDP2004) Source: WDI dataset. Figure 3.4: There has been significant progress in household access to electricity between years 1998 and 2005, especially among the poor. 100.0 2005 2001 1998 90.0 80.0 70.0 entc 60.0 er P 50.0 40.0 30.0 20.0 Poorest II III IV Richest Source: World Bank using the 1998, 2001, and 2005 Nicaragua EMNV. 3.15 Relative to household income, household electricity consumption is more expensive for households living in the Atlantic Region. Energy consumption is also more expensive relative to 84 income level in urban areas, among non-poor households, and among households living in the Atlantic and Managua regions. In particular, while energy consumption per month accounts for 2.7 percent of monthly income for households in the Central region, it accounts for 4.4 percent of monthly income for households in the Atlantic region (that is, 63 percent increase; perhaps due to low economies of scale and high marginal costs of expanding networks in this region). In the LAC context, electricity consumption among households in Nicaragua is normal relative to their income. On average, households in Latin America use between 3 and 5 percent of their monthly income to pay for electricity services (Komives et. al, 2006). In Nicaragua this share is at 2.4 and 3.5 percent for rural and urban areas respectively. Control of electricity prices in Nicaragua will be an increasingly difficult task if international oil prices remain high given that the country has the highest rate of electricity production from oil sources in the region (at 75 percent vs. 30 to 40 percent in other Central American countries). Keeping oil prices down in recent years has only been achieved by rationing energy supply, which in turn has deteriorated the quality of service. Box 3.2: Property titles are required to access electricity services Having a house is important but having property rights to a house or land can also influence economic well-being, objectively and subjectively. People throughout the qualitative field work shared various opinions about not having formal title to their property; some felt threatened by the possibility of their property being taken away and even cried during the interview while others felt secure and showed no concern about not having a formal title. In one example in urban Bluefields, where the data shows that all panel households and 82% of households in the municipality have access to electricity, the community leader stated that "there is a whole sector of the community where poor people living around the bay could not access electricity because the electric company required property titles to install the service and none of them had titles". This problem is common place throughout other parts of the country; in a rural community in Managua a group of low quality houses in a sector of the community were all connected illegally to the public electric source through makeshift wires. The houses were all located in a property owned by a large cement company and could not formalize their ownership which meant that the electric company could not provide the service to them, even if they wanted to pay for it. In terms of credit, having a title is very beneficial, one person in an urban community of the central region said that "he knows what it implies to have title to a property, it means having access to loans something that could be a great help for those who have titles and a great hindrance for those who don't". Figures 3 and 4 show that overall rates of access to electricity have improved over the last 8 years for all panel households but the bottom 40 percent of the population improved at lower rates; in other words expansion favored the wealthier households. Source: Del Carpio (2007) Voices of Nicaragua. Background paper to Nicaragua Poverty Report 3.16 Between 15 and 20 percent of all households with access to electricity do not pay for the service. Table 5 provides some statistics on payments from households with access to electricity. Electricity theft is common in Nicaragua, especially among the poor. In particular, results suggest that 20 to 25 out of every 100 users of electricity in the poorest quintile do not pay for the service (i.e. they are connected to the network illegally). High rates of electricity theft constitute a burden to energy suppliers. High rates of energy theft and high oil prices force suppliers to cut the service periodically in order to save costs. Furthermore, results indicate that electricity consumption for richer households is more likely to be metered than that of poor households (83 percent in the richest quintile vs. 51 percent in the poorest quintile). Lack of metering usually forces utility companies to guess household consumption based on average patterns of the population and not based on actual consumption which tends to lead to lower revenues for the company. 85 Table 3.5: Electricity theft is common in Nicaragua, especially among the poor. If the household has access to electricity at home % Pays, with meter % Pays, no meter % Does not pay Socio-economic group Poorest quintile 51.70 22.64 25.67 Quintile 2 66.20 13.74 20.06 Quintile 3 66.89 14.63 18.49 Quintile 4 76.41 8.73 14.87 Richest quintile 83.51 7.76 8.72 Vulnerable group Non indigenous 74.08 10.94 14.98 Indigenous 74.27 17.64 8.09 Non-Ag. Producer 75.60 10.23 14.18 Agricultural Producer 66.68 15.52 17.79 Source: World Bank using the 2005 Nicaragua EMNV. Telecommunications 3.17 Cellular phones have superseded mainlines in Nicaragua and are providing a good alternative to communities without access to mainlines. Nicaragua has the lowest number of telephone mainlines per 1,000 people in Central America (see Angel-Urdinola et. al., 2007). Moreover, not much progress in expanding telephone mainlines has been achieved in recent years as compared to that achieved by some of Nicaragua's CAFTA competitors such as Guatemala, Costa Rica, and El Salvador (Figure 3.5). This is in contrast to the growth of mobile telephone usage. Telecommunications services and the ease of communication are important to individuals, households and firms. The benefits of access to telecommunications networks are vast and varied. For example, cellular phones are used by small agricultural producers to establish market prices for their produce. Telephone lines enable job seekers to communicate with employers and vice versa, this facilitates a better allocation of resources. Investing on telecommunications is important for economic growth. Calderón and Servén (2004) indicate that a higher stock of telecommunications (proxied by number of main telephone lines per 1,000 workers) and better communications infrastructure (measured by waiting time for telephone main lines , in years) is associated with higher economic growth and lower income inequality. Telecommunication services allow households to communicate with family networks which can be essential for receiving informal loans for productive investments, information about employment and general well being. Table 3.6: Telecommunications through cellular technology has become the leading way to access to phone services in Nicaragua. % with Fixed telephone % with Cell phone % withBoth Urban 12.3 23.5 11.9 Rural 0.3 5.8 0.1 Managua 15.2 24.3 15.6 Pacific 5.5 19.8 5.5 Central 4.5 8.9 3.3 Atlantic 2.1 8.8 1.6 Source: World Bank using the 2005 Nicaragua EMNV Figure 3.5: Among all potential members of the CAFTA, Nicaragua is the country with the lowest telephone mainlines per 1,000 people. 86 350 )elpoep 300 Costa Rica 250 1,000 erp( 200 esnil El Salvador 150 ina Rep. Dominicana m enohpeleT 100 Guatemala 50 Honduras Nicaragua 0 2000 2001 2002 2003 2004 Source: WDI dataset. 3.18 There are large gaps in access to telecommunications between poor and non-poor households. Households in the richer quintiles have access rates to fixed and cellular phone that oscillate between 10 and 30 percent while access rates among households in the bottom quintiles oscillate between 2 and 15 percent. Access to cellular telephones is larger than access to fixed telephones at all socio-economic quintiles. Indeed, access to cellular telephones is significantly larger than that to fixed telephones for groups living in more isolated areas, such as indigenous households (19 vs. 3 percent) and households engaged in agriculture (6 vs. 1 percent). Cellular phones are also more accessible to households in the poorest quintiles. While household access rates to fixed phones among households in the first and second quintiles are lower than 1 percent, access rates to cellular phones are at 1 and 6 percent respectively. 3.19 Less than 1 out of every 100 households in rural areas has access to a fixed telephone at home. Results from the 2005 EMNV indicate that access rates to a fixed telephone are very low in rural areas and in the Central and Atlantic regions (averaging 2 to 4 percent). Access rates to fixed phone in urban areas and in Managua oscillate between 12 and 15 percent. Interestingly, household access to cellular phones is larger than that to fixed phones at every region and strata and especially in rural areas (6 vs. 1 percent) and in the Atlantic region (9 vs. 2 percent). This suggests that cellular technology has become the main mechanism to access telecommunications services in the more isolated regions. Credit Services 3.20 In Nicaragua, approximately a quarter of the population received a loan during 2004, however a little less than one third of these loans were administered by informal lenders. Informal lenders are often associated with higher interest rates and hence may reduce the income generation that these investments could provide. There is ample evidence that good financial intermediary development is positively associated with higher economic growth and lower inequality (Levine, Loayza, and Beck, 2000). The mechanism through which financial development may reduce poverty through higher growth is by improving the allocation of capital. Poor households who are led to become entrepreneurs due to involuntary unemployment have no collateral, credit history, or connections. These capital market imperfections may prevent the 87 allocation of capital to poor entrepreneurs with high-return projects. By promoting financial development and access to credit markets for these projects the government and could encourage the reduction of poverty and inequality. 79 Box 3.3: IDA Involvement on Telecommunications in Nicaragua With IDA's support, national coverage of fixed and mobile phones increased sevenfold from 194,000 in 1999 to more than 1.3 million in 2005, and mobile coverage in provincial capitals increased from 50 percent in 1999 to 100 percent in 2003. Prior to 2000, insufficient competition left Nicaragua with one of the lowest telephone connection rates in Latin America. IDA investment lending helped privatize the state monopoly, and created a regulatory agency. IDA's budget operations supported passage of competition laws needed to level the playing field, and facilitated the creation of a Telecom Investment Fund to extend services in rural areas. By putting this fund to work, an IDA financed project helped half a million citizens living in 365 small towns benefit from public payphone access. Now, some of Nicaragua's poorest can connect to doctors and relatives and obtain market data on their crops, putting them one step closer to modernity and economic opportunity. Source: Nicaragua IDA impact country story. World Bank (2007) 3.21 With the exception of indigenous households, about 25 of every 100 households at all socio-economic groups in Nicaragua received a loan in the 12 months prior to the EMNCV 2005 survey.80 A little more than half of these loans were issued by informal creditors (such family, friends, NGOs, merchants, or informal credit lines). In addition, estimates indicate that while interest rates charged by informal lenders can be as high as 12 percent per month, interest rates charged by formal lenders such as private banks, cooperatives, and other financial institutions fluctuate around 4 percent per month (Figure 3.6). 3.22 Loans among the poor account for a large share of their yearly per-capita income this is particularly the case for agricultural households (Table 3.7). Loans to the poor (averaging 670 Cordobas per-capita per year) account for 11 percent of their yearly per-capita income. The same share is at 12 percent for the non-poor. Loans among agricultural households account for up to 20 percent of yearly per-capita income. Regression analysis suggests that more educated households (i.e. those having a head with tertiary education) are 11 percent more likely to have obtained a credit from a formal lender (banks, cooperatives, and micro-finance institutions) than households having a head with no education. Households in urban areas are 7 percent more likely to access formal credit while households in the Atlantic region are 25 percent more likely to borrow from informal sources (such as merchants, informal lenders, and friends). Surprisingly, having a land/house property title does not influence the probability that households access to formal credit, this is discussed below. (Angel-Urdinola et al., 2007). 79For simplicity, in order to estimate some credit statistics (such as type of provider and use of the loan) at the household level, we restricted our sample to the largest credit received in cases where households received more than one loan. Estimates indicate that 9.7 percent of all household who had access to a credit received more than two loans. 80The 2005 EMNV includes a module on credit. Unfortunately, the survey collects information on credit only if a household received a loan in the past 12 months. Therefore, the survey does not allow gathering information on households who applied for credit and did no get it, which is a better proxi for access to the service. Nevertheless, detailed data are gathered on the source of financing, amounts, interest rates, etc. 88 Figure 3.6: About 60 percent of all household loans are issued by financial institutions (24 percent) and informal credit lines (31 percent). 35.00 14 31.1 erd 30.00 12 viorpti 25.00 23.5 ed 10 retniest cr ot 20.00 8 gnidr 16.3 ylhtno 15.00 6 m e ag acco 10.00 8.5 4 s ver A anol 5.2 5.00 4.0 4.0 2 % 2.4 2.4 2.5 0.2 0.00 0 s s ct ors ts e bank FOR ion JECT Private AG ighb dit lin Other M institut editcard andprodu telender chan RO er cre gram M al nce Cr it O/P vernmentor pro na NG ivesandne form Fi savingsandcredconve al bank/priva In ntion ,relat iends Fr Go of Coop Non Source: World Bank using the 2005 Nicaragua EMNV Table 3.7: Descriptive statistics on loan amounts received by households Average loan amount Average household Loans as % of given to households income income - Cordobas per - Cordobas per capita per year - capita per year - (1) (2) (1)/(2) Socio economic group Non poor 2,821.32 21,734.10 12.98 Poor 670.28 6,356.42 10.54 Poorest quintile 423.81 4,696.24 9.02 Quintile 3 1,187.53 9,263.26 12.82 Richest quintile 4,473.42 34,163.53 13.09 Vulnerable group Indigenous 988.16 19,083.80 5.18 Agricultural Producer 2,545.02 12,980.34 19.61 Source: World Bank using the 2005 Nicaragua EMNV 3.23 About one third of the acquired loans are used for investment purposes. Estimates using the 2005 EMNV suggest that about 70 percent of all loans received by households are used for general household consumption (purchasing cars, houses, and other non-investment items) and 30 for business related investments. Households engaged in agriculture are more likely to use loans for investment-related purposes than the average household (40 percent vs. 30 percent). Indigenous households display the highest rate of loans used for household consumption at 76 percent. B. INEQUITIES IN INTANGIBLE ASSETS 3.24 This section analyses differences in access and quality of income-generating "intangible" assets by socio-economic group in Nicaragua using the 2005 EMCV concentrating on 89 participation in associations and titling which is linked to access to credit, as discussed above. There is evidence (Escobar, 1995 and Scott, 1998) suggesting that service delivery and competitiveness tend to be low in countries where institutions remain weak. Participation in associations, formal ownership, and access to credit strengthens community driven development (CDD), which in turn contributes to strengthen governance, improve the targeting of social programs, enhance local capacity building, and promote the inclusion of the poor (Mansura and Rao, 2004). Networks and Organizations 3.25 Access to networks and associations has become a mechanism for Nicaraguan households to promote social participation, empowerment, and better to access markets and services. In particular, participation in associations is important to access markets and inputs (e.g. producer associations); to protect individuals against other institutions (e.g. unions and consumer associations); to gain political power (community committees); and to access goods, programs, or services (e.g. religious associations and government programs). In this section we consider that a household participates in a productive association if at least one of its members participates in a credit union, a professional association, or a local committee. Community-based associations such as the Self employed Women's Association in India, the Orangi slum association in Pakistan, and the Iringa Nutrition association in Tanzania, among others (Mansura and Rao, 2004) are international examples of highly successful associations that have contributed to increase the welfare of their participants and their communities through service delivery and community programs. 3.26 Regression analysis (see Angel-Urdinola et al, 2007) indicates that having a head who participates in a productive association (credit union, professional association, or local committee) increases the probability that a household receives a loan by 9 percent. Specifically, having a head who is a member of credit union (professional association) increases the probability of getting a loan by 20 to 21 (13 to 19) percent. Controlling for other observables, poorer households are 2 to 5 percent less likely to obtain a credit than non-poor households. Households with secondary and post-secondary education are 6 to 25 percent more likely to obtain a credit as compared to households having a head with no education. 3.27 Participation in productive organizations in Nicaragua increases the probability that households benefit from social programs by 15 to 16 percent. Angel-Urdinola et al, 2007 find that controlling for other socio economic characteristics (education of the head, region, socio economic group, and strata among others) households with a head who participates in a productive association are 15 to 14 percent more likely to benefit from social programs. Households having a head in an association who attained intermediate education (secondary and technical) are 11 to 15 percent more likely to benefit from social programs as compared to households having a head with no education. Households in the Atlantic region are 15 percent less likely to benefit from social programs than households in Managua and urban households are 18 percent more likely to benefit from social programs that rural ones. 3.28 Nationally about 4.4 percent of all Nicaraguan households participate in local committees, 2 percent in professional associations, 2 percent in credit unions, 8 percent in religious associations, and about 6 percent in other type organizations such as women organizations, clubs, etc (Table 3.8). Participation in productive associations (such as local committees and professional associations) is higher in rural areas (particularly in the central region) among agricultural producers, and among households in the bottom 3 income quintiles. Participation in 90 credit unions, on the contrary, is higher in Managua, in urban areas, and among households in the upper consumption quintiles. Households headed by a male head are more likely to participate in productive associations than households headed by a female head. Participation in religious associations is higher than average in Managua, among indigenous households, and among households engaged in agriculture. Table 3.8: Household participation in Associations in Nicaragua Household Participation Local Professional Credit Unions Religious Other in % Committees Associations Associations organizations % % % % % Total 4.47 2.30 1.76 7.57 6.35 Area Rural 6.91 3.07 1.19 6.98 7.71 Urban 2.72 1.75 2.16 8.00 5.38 Region Managua 2.80 1.83 2.95 11.07 8.25 Pacific 4.21 1.85 1.38 4.43 4.20 Central 5.90 3.33 1.48 7.04 6.81 Atlantic 4.89 1.75 0.88 9.09 6.32 Poverty Non poor 4.68 2.29 0.13 5.71 4.80 Poor 5.35 1.77 1.58 8.29 7.02 Employment Sector of head Non-Agricultural Producer 2.94 1.26 1.90 7.48 5.31 Agricultural Producer 7.58 4.43 1.47 7.76 8.47 Ethnicity of head Non-Indigenous 4.38 2.32 1.83 7.30 6.32 Indigenous 6.42 1.92 0.22 13.66 7.04 Gender of head Male Head 4.89 2.56 1.88 7.75 6.55 Female Head 3.55 1.74 1.48 7.18 5.92 Source: World Bank using the 2005 Nicaragua EMNV 3.29 More educated households as well as households having self-employed heads have a higher probability of belonging to productive associations. Households having a head who attained primary, secondary, and tertiary education are 4, 7, and 16 percent more likely to participate in a productive association than households having a head with no education. Households having a self employed head as well as those having a head working in agriculture are 2 to 4 percent more likely to participate in productive associations than households having a head working as wage earners or in non-agriculture-related activities. Households living in the central region are associated with a 4 percent higher probability of participating in productive associations (vs. those residing in Managua) while urban households are 5 percent less likely to participate in productive associations as compared to rural ones. 91 Box 3.4: Association of Organic Coffee Growers of Matagalpa Producer associations in Nicaragua are protected under the Municipality Law (Law 45) and the Social Participation Law (Law 475). The IPADE (Instituto para el Desarrollo y la Democracia) and USAID are institutions promoting development of successful programs to strengthen associations of producers in Nicaragua. One example is the "Association of Organic Coffee Growers" in the municipality of Molino Norte in the State of Matagalpa. Seeking help from USAID, the association achieved to train a group of coffee growers in how to produce and commercialize organic coffee. Nowadays organic coffee is worth 3 times as much as regular coffee in the international market and producers have been able to enjoy from higher revenues as they have been trained to access and benefit from this market. Today, about 419 hectares in the state of Matagalpa are used for the production of organic coffee. Small and medium producers have not only achieved to get a better price for their coffee production, but also to cut production costs. "Now, everybody want to produce organic coffee", claims Mr. Reyes; the president of the Association of Organic Coffee Growers. The organic coffee project is part of a US$157 USAID broader initiative to promote sustainable development in Nicaragua. Coffee producer Arturo Jaén, owner of "La Ponderosa farm" learned to produce its own fertilizer out of chicken dung and coffee/corn residuals. Mr. Jaén spends US$ 0.53 cents to produce a "quintal" of this fertilizer as compared to US$12 he would have to spend to purchase commercial fertilizer. Besides contributing to improve productivity and the welfare of producers, the association has achieved to promote production techniques that are environmentally friendly and that have helped to reduce erosion and exposure of workers to toxins that may be harmful for their health. Source: USAID (http://nicaragua.usaid.gov/historia_40.html) Titling 3.30 The collateral value of landholdings is generally assumed to increase with ownership rights, thereby improving credit access among landholders. The large percentage of untitled property in much of the developing world is a frequently cited contributing factor (Holden, 1997) for low access to credit. Land is considered as advantageous collateral because it cannot be removed and does not easily devalue. However, many land owner borrowers face credit barriers for lack of formally documented ownership rights (Field and Torero, 2006). Consistent with this notion, government land-titling programs are thought to be important to promote access to credit among the poor. Indeed, wide scale land-titling has become a popular policy prescription for reducing credit constraints in developing countries (Binswanger et al.,1999). Nevertheless, property titles are not necessarily sufficient to transform modest landholdings into viable collateral for commercial loans. Use of titles to securitize loans may fail in impoverished settings because transaction costs involved ­ such as those associated with collateral processing, foreclosure and resale ­ are sizable compared with the average loan sought. Such costs are even higher when political or legal factors impede repossession of property (Deininger and Freder, 1993). 3.31 More than one third of all homeowners do not have a property title in Nicaragua. Titling can be important intangible asset because it allows you access to credit and thus open the doors to productive investments. Furthermore, titling can have other benefits such as allowing owners to rent out their land for a profit. The 2005 EMNV, reports that though 77 percent of all households 92 in Nicaragua claim to own the house they live in, only 66 percent possess a property titles on their property. Absence of property titles is more common in rural areas and in the Central and Managua regions, where informal home ownership reaches 34 to 46 percent. Furthermore, even in urban areas and among households in the richest quintiles, informal house ownership is as high as 30 percent. Informal ownership is the highest among indigenous households (at 59 percent) and among households working in agriculture (about 43 percent). Despite these high rates, less than 1 percent of households overall are benefiting from titling programs in Nicaragua (EMNV 2005). Titling programs are more common in urban areas and especially Managua where about 2.5 percent of all households claim to have benefited from a titling program within a year prior to the survey. Table 3.9: Descriptive statistics on house titling by socio-economic group % of households who % who own without % who own with owe a house documentation documentation Total 76.5 34.0 66.0 Rural 77.4 44.4 55.6 Urban 75.8 26.5 73.5 Region Managua 75.4 34.0 66.0 Pacific 73.0 33.1 66.9 Central 78.3 29.8 70.2 Atlantic 82.5 46.3 53.7 Poverty Non poor 75.8 27.6 72.4 Poor 77.6 44.7 55.3 Employment Sector of head Non-Agricultural Producer 72.7 29.3 70.7 Agricultural Producer 84.3 42.4 57.6 Ethnicity of head Non indigenous 76.0 32.8 67.2 Indigenous 86.4 58.5 41.5 Source: World Bank using the 2005 Nicaragua EMNV 3.32 Lack of titling is also common among agricultural producers who claim to own land. 21 percent of all agricultural producers do not possess a title on their land. This fact is more frequent in the Atlantic region where about 32 percent of all producers who claim to own their land do not have any official documentation. Interestingly, only 10 percent of all landowners who do not have a title on their land fear that they may have problems with their land in the future or that they may be expropriated from it, although this holds true for all socio-economic groups. There is also anecdotal evidence suggesting that households lack incentives to register their property as without a title they avoid paying property taxes and using it as credit collateral. Most landowners claim to have obtained their land by either purchasing it or by inheriting it (Table 3.10). About 11 percent of poor households in rural and 21 percent of households in urban areas claim to have obtained their land during the agricultural reform and about 6 percent of all landowners claim to live in a land they invaded. Not surprisingly, landowners who claim to live in invaded lands are generally poor ones. 93 Table 3.10: About 20 percent of the urban poor claim to have obtained their land during the "reforma agraria" Purchased Inherited Agric. Reform Invaded Given as gift Total Rural Areas Non-poor 50.9 36.8 7.2 1.9 3.1 100.0 poor 41.1 38.5 10.8 5.9 3.8 100.0 Urban Areas Non-poor 56.7 37.0 4.6 0.0 1.7 100.0 poor 33.8 25.4 20.5 6.5 13.7 100.0 Source: World Bank using the 2005 Nicaragua EMNV 3.33 Generally, having a land title is associated with better outcomes in relation to access to credit and productivity as well as with a higher probability of households renting their land for profit. In situations where land tenure insecurity is pervasive, as in Nicaragua, systematic efforts of land regularization can have positive effects on land values as well as equity. Receipt of a registered title raises land values by 30 percent and greatly increases the propensity to invest. Greater demand for regularization of land rights, especially from the poor, suggests that titling can have a positive distributional effect. Having a land title is a necessary but not sufficient condition to transform modest landholdings into viable collateral for commercial loans. Titles are as important as a well developed market for land and property in general for financial institutions to forsee associated gains above the costs involved in collateral processing, such as foreclosure and resale of land properties, and to be able to legally repossess without political impediments. In addition to efficient land markets and credit systems, titled land needs to be complemented by training, technical assistance and improved market access for increases in productivity and profits to take place. Table 3.11: Share of landowners who rented their land for profit during the 12 months prior to the survey Type of Title Landowner did not Landowner rented land Total rent land during last during last 12 months 12 months Conventional title 69.9 30.1 100 Title from agriculture reform 43.6 56.4 100 Purchase letter 60.5 39.5 100 Other document 54.0 46.0 100 No document 75.8 24.2 100 Total 67.7 32.3 100 Source: World Bank using the 2005 Nicaragua EMNV C. AGRICULTURAL PRODUCTIVITY 3.34 Poverty rates in Nicaragua for households engaged in agricultural production lie above the national average (70 percent). Other indicators, such as low education levels further suggest this is part of the population with important needs. On average, the segment of the population dedicated to for-profit agricultural production is poorer and less educated than average. The majority of agricultural producers lives in rural areas and in the poorest regions (see Angel- Urdinola et al. 2007). A large share of the poor population (66 and 46 percent in the first and second quintiles) is engaged in agricultural production. Moreover, income from agriculture accounts for more than two thirds of the overall income among the poor. A significant share of all agricultural income ­ 73 to 92 percent ­ comes from revenues from agricultural production (the 94 remaining comes from wages and services). This section studies the distribution of production factors (capital, labor, and land), agricultural inputs, and intangible assets among agricultural producers in Nicaragua. Agricultural productivity is important for economic growth and there are several channels through which productivity and growth in the agricultural sector can affect poverty. For example, higher agricultural productivity can translate into higher income for producers, more employment, production of cheaper food, and higher tax revenue from agricultural activity. Furthermore various studies have found that the multiplier effects of improvement in agricultural productivity, especially in areas with good infrastructure well developed urban-rural communications and access are high.81 3.35 Agricultural producers are defined for the purposes of this study as those households who work the land (irrespective of individual or outside ownership) and who were also able to attach a monetary value to the produce of their agricultural activities. Our analysis uses a sample of households with a UPA (Unidad Primaria Agricola) in order to include agricultural producers who do not own land.82 Land owners who do not work the land or who rent their land out, as well as landowners engaged in "pecuary" activities (i.e. livestock, eggs production, milk production, leather production, etc.), were excluded from the analysis.83 3.36 Our estimates show that gaps in agricultural productivity are large in Nicargua, especially between different producer sizes and regions. Large Agricultural Producers display productivity levels that are more than six times larger than among small producers. Not surprisingly, urban producers, who often enjoy better access to infrastructure, technology, and credit; are more productive than rural producers, even poor urban producers are on average more productive that non-poor rural producers. There are also large regional inequities in productivity. The Atlantic region, being the poorest region, displays the lowest levels of agricultural productivity while the Central and Pacific regions display productivity levels that are higher than the national average. Small-rural producers in the Atlantic region are likely to be one of the most vulnerable groups in Nicaragua: they display higher levels of poverty, low levels of education, low productivity, and limited access to infrastructure, equipment, and qualified labor. Figure 3.7 displays differences 84 in productivity (yields per hectare in local currency) across regions, producer size, and socio- economic condition. 81 Haggblade et al (1989), Haggblade et al (1991), Hazell and Ramasany (1991) and Delgado et al (1994) among others. 82To facilitate the analysis, we restricted our sample to only one UPA per household (the one with the largest yields. Only 3 percent of all household (113 observations) declared to owe more than one UPA in the year previous to the survey. 83According to survey estimates, about 31 percent of all households in the sample fulfill this description. 84 Rural productivity is usually computed product-by-product in tons (or kilograms) per hectare. Due to data limitations (small sample sizes and lack of information about land size cultivated by product) doing product-by-product analysis is not feasible using the 2005 EMNV data. Analysis in this chapter relies on information on the monetary value in local currently of the output produced from all crops by producer households (which we define as yields) divided by the land used for the production of all crops (in hectares). The main limitation of this "aggregate" analysis the impossibility to isolate differences in yields that are due to the type of crop produced (such as harvest time, water needs, seasonal demand, market prices, etc...). 95 Figure 3.7: Economies of scale are important in Nicaragua: Large agricultural producers are 6 times more productive than small ones. 10000 9000 8000 rtc 7000 Hrep 6000 5000 sdle 4000 3000 Yi 2000 1000 0 ers tal or n Non-Poor r uc To lPoor Poo Prod oducers s a al er Atlantic ana gu Pacific Centr n-Po M No Small Pr Urban dium rge Produc Rura ral Ru La Urba Me Source: World Bank using the 2005 Nicaragua EMNV. Small Producer, yields of less 2000 CO/year; medium Producer; yields between 2000 and 30,000 CO/year; large Producer yields above 30,000 CO/year 3.37 There exists inequality in productivity among the more productive producers. Inequality in productivity is highest among large producers, among non-poor producers, and among producers in Managua and in the Atlantic region (Angel-Urdinola at al., 2007). As such, large producers as well as non-poor producers should not, necessarily, be considered as homogeneous groups. It is interesting that the Atlantic region is not only the least agriculturally productive region on average but also the one with the highest inequality in agricultural productivity. Factors of production 3.38 Inequality in productivity is generally explained by inequities in quantity and quality of Capital, Labor, and Land (the main factors of production in agricultural production) available to producers. Among producers, there are exist large inequities in access to Land and Capital. While the 2005 EMNV provides good information on the quantity of the factors of production used by producers, information on quality is limited. Therefore, results presented here are likely to be conservative ones as inequities in factors of production are likely to be even higher once quality analysis is introduced. To proxy factors of production we used the following variables: for Labor, we used the number of workers (including family members) working the land in the UPA; for Capital, we used the monetary subjective value in local currency of the agricultural equipment used by the producer (including production animals, tractors, harvest and seeding equipment, water pumps and sprinklers, vehicles, fumigating equipment, and electric plants). Capital and Labor were normalized by the amount of land used for production in hectares (i.e. capital per hectare and labor per hectare). Figure 3.8 plots the Lorenz curves for all factors of production in Nicaragua (for all producers). Results indicate that capital and land are less equally distributed 96 among producers than labor and other agricultural inputs (such as seeds, fertilizers, etc; see next section).85 Figure 3.8: Inequality in access to Capital and Land is much higher than inequality in access to Labor and Agricultural Supplies. I n e q u itie s in C a p it a l - L a b o r - L an d - E x p e n d itu re in I n p u ts a n d C o n s u m p t io n in N ic a ra g u a 1 1 .8 .8 e .6 rvu C evruC .6 zn reoL zner Lo .4 .4 .2 .2 0 0 0 . 2 .4 .6 . 8 1 0 . 2 . 4 .6 .8 1 C a p ita l p er he c ta r e L a b o r p er he c ta r e L an d E x p e n di t u re i n I n p u t s p e r h e ct a re C o n su m p t io n p e r ca p i ta E qu a li ty C o n su m p t io n p e r ca p i t a E q u a l i t y Source: World Bank using the 2005 Nicaragua EMNV. 3.39 While poor and small producers use more labor and less capital and land for production, large and non-poor producers do otherwise. Table 3.12 presents some descriptive statistics on access to factors of production in Nicaragua by socio-economic group, strata, production size, and region. Results in Table 3.18 indicate that the size of the UPA is generally larger among non-poor producers, especially in urban areas. In urban areas non-poor producers have on average 7 times as much land as poor producers, in rural areas non-poor producers only have twice as much. There are also regional differences: the average size of the UPA is higher in the Managua and Atlantic regions (52 and 37 hectares) than in the Pacific and Central regions (19 and 13 hectares). In terms of producer size, unsurprisingly large producers have land plots that are approximately 3 to 4 times larger than those of small and medium-size producers. Capital per hectare, the second key productive factor, is significantly higher among urban non-poor producers: 3 times more than any other group. However, when analyzed by region and producer size differences in capital are less striking than the differences found in UPA. This suggests that the capital stock is highly concentrated among urban non-poor producers. These characteristics of the Nicaraguan agricultural sector concur with accepted economic theory which argues that because labor is relatively cheaper for small and poor producers ( they are able to rely mostly on family and unpaid labor) as compared to land and capital which they have limited access to small and poor producers will employ more labor (generally unskilled) in order to conduct activities that other producers undertake using equipment (such land irrigation, seeding, and harvesting).86 85We construct an index for agricultural supplies using factor analysis (i.e. principal component techniques) based on whether or not producers use fertilizers, seeds, improved seeds, and plaguicidas) 86This theory is based on a Cobb-Douglas production function. 97 Table 3.12: Descriptive Statistics on factors of production and output for agricultural producers in Nicaragua Yields in Land Size in Capital in Labor in Workers Cordobas per hectares Cordobas per per hectare hectare hectare Strata Urban Poor 5753 7.07 1625.56 1.80 Urban Non-Poor 6493 67.27 3461.79 1.62 Rural Poor 4584 17.09 729.05 1.44 Rural Non-Poor 4910 33.45 1167.95 1.28 Region Managua 4226 52.52 1590.40 2.28 Pacific 5484 12.91 1486.49 1.87 Central 5564 18.90 1063.20 1.55 Atlantic 2867 37.66 491.32 0.70 Producer Size Small Producers 1418 14.31 627.53 2.43 Medium Producers 4592 17.77 1074.01 1.43 Large Producers 9428 56.70 1112.04 0.64 Total 4833 23.90 1035.26 1.43 Source: World Bank using the 2005 Nicaragua EMNV. Small Producer, yields of less 2000 CO/year; medium Producer; yields between 2000 and 30,000 CO/year; large Producer yields above 30,000 CO/year Agricultural Inputs 3.40 The use of agricultural inputs is important to boost agricultural productivity and to mitigate the risk of a bad harvest. Agricultural inputs such as certified seeds, fertilizers, and plaguicidas enhance the quality, growth, and development of crops (see Box 3.5.). Usage of inputs in Nicaragua is generally low: only 11 percent of all producers use certified seeds, 6 percent use organic fertilizers, 37 percent use chemical fertilizers, and 67 percent use "plaguicidas". Large and non-poor producers as well as producers in the Pacific region use more inputs that poor, small, and rural producers. Producers in the Atlantic region largely fall behind in their usage of inputs for production as compared to the average producer. Box 3.5. Relationship between fertilizers, pesticides and agricultural productivity The relevance of pesticides and fertilizers to agricultural productivity has become a stylized fact in developing economies. Fertilizers are one of the most enhancing productivity agricultural inputs in the agricultural economy. Authors such as Hayami et al (1970), Headly (1968) and Carrasco and Moffit (1992) have found that fertilizers have an economically and statistically significant influence on agricultural productivity. When studying a cross section of countries in the 1960s Hayami (1970) estimated that the use of fertilizers increased productivity between 10 and 17 percent. Headley (1968) studies the impact of pesticides on productivity and finds that the marginal value of pesticides exceeds their marginal cost by a considerable amount. Carrasco and Moffitt (1992) using alternative functional specifications ,found that even though the magnitude of the impact of pesticides on productivity may be smaller to the that found by Headley (1968), the impact is still positive and significant. Antle (1983) also finds fertilizers to be an essential element to disentangle the productivity determinants when studying the links between infrastructure and agricultural productivity. 98 Table 3.13: The share of agricultural producers using certified seeds and fertilizers is generally low, especially among poor and small producers. % producers % producers % producers % producers % producers using Non using using organic using using certified Certified Fertilizers chemical Plaguicidas Seeds Seeds Fertilizers Area Urban Poor 25.51 8.01 2.46 45.04 63.70 Urban Non-Poor 18.95 14.05 12.23 52.75 71.66 Rural Poor 19.76 9.23 5.74 29.47 62.59 Rural Non-Poor 23.39 12.40 5.84 46.89 74.41 Region Managua 10.37 17.63 11.32 29.46 64.14 Pacific 20.02 12.53 12.77 61.42 61.95 Central 26.15 11.64 4.46 39.32 73.38 Atlantic 12.88 4.37 1.56 8.47 57.96 Producer Size Small 19.30 7.04 6.51 22.17 43.78 Medium 21.47 8.56 5.71 35.83 68.00 Large 20.20 29.03 8.02 63.04 81.79 Total 21.12 10.46 6.02 37.16 66.89 Source: World Bank using the 2005 Nicaragua EMNV. Small Producer, yields of less 2000 CO/year; medium Producer; yields between 2000 and 30,000 CO/year; large Producer yields above 30,000 CO/year Determinants of productivity 3.41 In this section we estimate the determinants of agricultural productivity, using household surveys. A previous study of the determinants of agricultural output in Nicaragua (Larson, 2004) found that agricultural producers in Nicaragua face decreasing returns to scale, with durable capital equipment being an important part of agricultural families' income determinants. In contrast, the study also finds that having access to technical assistance, product diversification, and social capital (i.e. participation in farmer's organizations) were not statistically significant determinants of productivity. 87 It is important to note that the results presented here (and also those of Larson, 2004) should be interpreted with care. Household survey data is not optimal for the estimation of the determinants of agricultural productivity. More detailed sector data with larger sample sizes and collecting more detailed information, such as agricultural census, are preferable for this type of analysis and especially for analyzing the impact of "capital" and "inputs" on productivity. Nevertheless, results presented here provide important information on general covariates that influence the average producer's productivity; such as the use of fertilizers, geographical location, and producer size, among others. 3.42 This section relies on regression analysis using a specification where the natural logarithm of output (in yields per hectare) is regressed against proxies for Capital, Labor, and other characteristics of producer households that may influence their levels of productivity (such as access to infrastructure, use of fertilizers, region, level of education of the head, etc.). Our model 87Larson et al (2007) find that while among wealthier households differences in productivity cannot be accounted for by differences in livelihood strategies, this is not the case for the poor ones. In the case of the poor households, they find that non-farm activities are more profitable than self-employment, but various labor market constrains prevent them to chose freely. 99 is based on a Cobb-Douglas production function (see Box 3.6 below); log-log and log-linear regression models are used. Box 3.6: Estimating a Cobb-Douglas production function The Cobb-Douglas production function is the most commonly estimated function in the economics literature. It has the following algebraic form: Q = ALK H Where Q is output, A, , and are constants, L is labor, K is capital, and H is land. The function is said to be homogenous of degree + + , since multiplication of L, K and H by some constant will raise output by a proportion k+ + . If the three exponents sum to unity, the Cobb-Douglas function is said to be homogeneous of degree one, exhibiting constant returns to scale. Findings on Impact 3.43 Returns to labor are high, especially for poor producers. Estimates (see Angel-Urdinola et al., 2007) suggest that for every extra worker per hectare, yields per hectare increase between 50 and 70 percent. Returns to poor producers are higher than among non-poor producers, this is not surprising as the marginal utility of having an additional unit of labor (worker) decreases the more workers you have. Non-poor producers will tend to have a higher number of workers to start with. 3.44 Estimates suggest that for every 1000 cordobas invested in capital per hectare (about US$60 per hectare); productivity is expected to increase by 7 to 10 percent. This result does not necessarily mean that returns to capital are lower than returns to labor. Current investments in Capital are very low, average capital stock among producers is about US$22 per hectare. Taking into account that the average UPA size is 16 hectares, an investment of US$60 would then only account for about US$960 per UPA per year. With this magnitude of investment, producers would not able to buy the necessary equipment (such as tractors or irrigation systems) to really boost their production. However if investments were to increase ten times (averaging US$ 600 per hectare or US$9600 per UPA per year; which would allow producers to buy a tractor, for example) productivity would increase by almost 100 percent. 88 This indicates that a critical mass of investment needs to be reached before capital investments show higher productivity returns. 3.45 Use of Fertilizers is an important determinant of agricultural productivity. Estimates also indicate that using fertilizers increases productivity levels by 22 to 34 percent nationally. The use of fertilizers increases productivity by more (23 to 50 percent) among small and poor producers. 3.46 The characteristics of agricultural households, such as the gender of the head, participation in productive organizations, socio-economic levels, and land property titles appear not to have an affect on productivity. 88Note also that the returns to capital presented here are likely to be underestimated because the measure of capital stock is probably undervalued by the informer reporting a subjective value of a limited stock of equipment; that is, the LSMS is not the most adequate instrument to estimate the value of the capital stock. Returns to capital found here are similar to those found in Ecuador using 2003 data (see World Bank 2004) 100 3.47 Having access to a paved road increases average yields per hectare by 17 to 20 percent. This can, as discussed above, occur because producers with access to better roads generally have more access to markets and are able to sell their produce at higher prices. Medium sized coffee and bean producers are associated with 60 to 80 percent higher productivity than other (non-bean, non-banana) producers. Consistent with the descriptive analysis presented above, estimates indicate that medium and large agricultural producers are 2 and 3 times more productive than small producers. Furthermore richer and larger producers in the Pacific and Central region, the main agricultural regions in the country, are associated with 20 to 50 percent higher levels of productivity. Policy Recommendations 3.48 There has been significant progress in terms of access to basic infrastructure and productive services in the country since 1998 however, levels of infrastructure development in Nicaragua are still low relative to the LAC region. Economies with better and broader access to roads, electricity, transportation, credit, and telecommunications area associated with higher growth rates and lower income inequality and poverty. The share of households with access to piped water, fixed telephone, cellular telephone, and trash collection services increased substantially between 1998 and 2005 in Nicaragua. Other housing related variables related to the household's dwellings, such as the share of dwellings with access to toilet inside, good-quality floor, and good-quality walls also displayed a significant improvement both in rural and urban areas. There is clear indication that the quality of life in terms of infrastructure has improved for many people. Nonetheless further investments and policy efforts are recommended. 3.49 Further investments in roads are likely to improve welfare among the poor: this chapter has found that better roads are associated with higher yields per hectare among agricultural producers and better access to markets. Roads reduce the cost of assembling intermediate inputs for production which in turn, reduces production costs and thereby prices. A lack of good roads and high transportation costs makes it difficult for households engaged in agriculture to commercialize their farm production, which leaves them in the hands of intermediaries who often buy their produce at lower than market prices. Though significant progress has been made, indigenous households and households engaged in agricultural production remain the groups with the lowest access rates to paved roads in the country. Efforts should be continued to expand quality road networks to these groups. 3.50 There is an urgent need for investments in expanding electricity networks in rural areas, in the Atlantic region, and among vulnerable segments of the population. Low access to electricity hinders welfare, especially for households working in agriculture and who deal with perishable products, such as milk and milk derivatives. Lack of access to electricity also lowers the capacity of households to run small businesses and may negatively influence their children's education. The expansion of electricity networks will be difficult to achieve if electricity prices remain stable and as long as the country continues to be highly dependent on oil as the main source of energy. The government should make efforts through the utility service companies to diversify energy sources away from oil based energy. Furthermore, it should invest in monitoring electricity theft. Between 15 and 20 percent of all households with access to electricity do not pay for the service. High rates of energy theft and high oil prices currently force suppliers to cut the service periodically in order to save costs. This situation impedes productivity growth as firms are sometimes unable to function and lowers the quality of life for households. 101 3.51 The government should consider strategies to continue to improve formal micro-credit programs. Access to credit is important so that households can invest in assets, such as education or agricultural machinery. Results in this chapter indicate that loans among the poor account for a large share of their yearly per-capita income. For instance, among agricultural producer households, loans account for up to 20 percent of per-capita income and are mainly used to operate and expand their business. The majority of all loans received by households are issued by informal sources of credit, such as merchants or family/friends. Loans from informal providers which are often more accessible to the poor are associated with much higher interest rates than loans from formal providers. 3.52 Access to networks and associations has become a mechanism for Nicaraguan households to promote social participation, empowerment, and better to access markets and services. It is estimated that participation in productive organizations such as credit unions, professional associations, or local committees increases the probability that households benefit from social programs by 15 to 16 percent. Furthermore estimates indicate that having a head who participates in a productive organization increases the probability that a household receives a loan by 9 percent. Given these positive impacts investments and programs focused on strengthening and promoting the establishment and participation in these types of associations should be considered by the government. 3.53 It is necessary for the government to invest more in titling programs and to educate the population on the importance of having property titles. Though it is suggested in the evidence that having a land title is not necessarily associated with better credit/productivity outcomes among landowners at the moment, as the country develops and increasing its insertion in the global market, this will become increasingly relevant. About one third of all homeowners in Nicaragua do not possess a property titles on their property. A lack of titling is more common in rural areas and in the Central and Managua regions. It is also common among agricultural producers, data suggests that 21 percent of all agricultural producers do not possess a title on their land. A combined strategy of legislative reform (such as regulating the use of "formal" collaterals for the credit and the land rental markets) and education campaigns should de designed to provide incentives to titling. Expanding title programs, without having the proper culture and incentives for formal ownership, may not necessarily be an effective policy. 3.54 It is important that programs be designed to encourage the greater use of agricultural inputs, these initiatives could include education, subsidization of and greater accessibility to these inputs such as quality fertilizer and seeds. In Nicaragua agricultural production is still very rudimentary for the majority of producers: less than one third of all producers used certified seeds, organic fertilizers, chemical fertilizers, and/or "plaguicidas". These iniciatives as well as policy recommendations provided above, such as greater access to roads etc are important to reduce the large gaps in agricultural productivity which exist in Nicaragua, especially between producers of different sizes and different regions. Currently access to land and capital is concentrated among a few large urban non-poor producers; this concentration does not promote sustainable shared growth. Greater agricultural productivity is important for economic growth as it represents about one fifth of Nicaragua' total output and one third of Nicaragua's total employment (see Gutierrez and Ranzanni, 2007). 102 CHAPTER IV. THE DISTRIBUTION OF PUBLIC SOCIAL SPENDING IN NICARAGUA 4.1 The Nicaraguan Government, with assistance from international organizations and foreign donors, finances the public provision of a wide range of social programs aimed at improving living standards and human development of the poor. Indeed public social spending in Nicaragua accounts for 43 percent of the central government's total expenditures in 2005 (52 percent excluding service on the public debt). This chapter evaluates whether this spending on social programs actually reaches the poor, and which programs are, or are not, effective. To this end, analyzing coverage and incidence of social spending is crucial. Assessing coverage allows us to determine the proportion of the poor that enjoys a given service or takes part in a public program. This helps identify groups that lack a specific service or only scarcely participate in a given public program, and as a consequence can better guide the targeting of services. Evaluating incidence allows us to determine the percentage of each public program's spending that benefits different socioeconomic groups. This is useful to determine if a program's resources are favoring the poor, and thus, whether it can improve the pro-poor allocation of public spending. 4.2 This chapter is structured in three sections. The first section characterizes spending for social programs in Nicaragua--both those that correspond to overall Public Social Spending (PSS) and those programs that are specifically part of the Poverty Reduction Strategy (PRS)-- and analyzes the distribution of public spending in both categories. The second section examines the distributional incidence of social spending in the sectors of education, health, housing, water and sanitation, social assistance and rural development. Finally, the chapter concludes with policy recommendations for targeting public spending on the poor. Key findings of this chapter include: · Substantial scope exists for better targeting of programs for the poor. Almost 47 percent of overall public reduction spending (PRS) benefits people who are not considered poor. Programs that are the most targeted to the poor include primary education programs, several food programs, and rural development programs. Spending on university education is one of the least targeted to the poor.89 Only 34 percent of Nicaraguan children from the poorest families receive preschool education, compared to 79 percent of wealthiest families. Qualitative surveys suggest that the poor perceive little benefit from preschool education, which suggests a public campaign to explain the benefits and/or better access to facilities may increase coverage to the poor. · Basic infrastructure spending is not particularly pro-poor, but this is due to the overall low level of infrastructure development. A significant proportion of moderate consumption groups have no access to clean drinking water, sanitation, or road infrastructure. Consequently, the current pattern of spending on basic infrastructure does not have a pro- poor character. · Rural development projects tend to be pro-poor because they are geographically targeted to areas where much of the poor population lives. · There is still a wide gap in achieving universal primary education in Nicaragua, unlike other countries in the region. Actions to address demand (subsidizing access to education 89University spending is part of PSS spending but not PRS spending; 87 percent favors the non-poor. 103 and making the population aware of the importance of schooling) and supply (improving access to the quality of schools) are needed to reach the goal of full school enrollment in Nicaragua. A. PUBLIC SPENDING IN NICARAGUA: BASIC FACTS 4.3 According to information from the Ministry of the Finance and Public Credit (MHCP), the central government of Nicaragua earmarked 43 percent of central government's total expenditures for Public Social Spending (PSS) in 2005 (equivalent to C$ 9.107 billion Córdobas or U$ 544 million, which represent 52 percent excluding service on the public debt). Nicaragua's social spending represents 11.1 percent of its GDP,90 and is used to finance services in the areas of education, health care, water, housing and social assistance. In addition to these resources, others are implemented by institutions that are not included in the central government's consolidated budget (i.e., the Nicaraguan Social Security Institute, or INSS). The definition of PSS used by the government is consistent with the one used in other countries, and includes different types of social spending that are not necessarily directly linked to the objective of poverty reduction. 4.4 PSS expenditures by functional category are shown in Table and Figure 4.1. Education expenditures are the highest representing 42.4 percent of PSS spending and receiving C$ 3.858 billion Córdobas (U$ 231 million), health expenditures account for 31 percent and receives C$ 2.821 billion Córdobas (US$169 million). Housing accounts for 16.5 percent, social assistance 9.1 percent, and spending on sports and culture represent 1.1 percent of PSS expenditures. According to MHCP classifications, housing not only covers home construction, but also spending on water and sanitation services and investments in infrastructure in general. This housing category also includes central government transfers to the municipalities, which are partly used for activities other than housing. Table 4.1: Public Social Spending (PSS) and Figure 4.1 Public Social Spending (PSS) and PRS spending by Sector/Area in Nicaragua, PRS spending by Sector/Area in Nicaragua, 2005 2005 Sports PSS expenditures PSS Housing and Function C$ (millions) % Social Culture Assist 16.5 1.1 9.1 Total 9,107 100.0 Education 3,858 42.4 Health 2,821 31.0 Social Assistance 824 9.1 Educ Health Housing 1,502 16.5 42.4 31.0 Sports and Culture 102 1.1 PRS expenditures Social PRS Function C$ (millions) % Housing Assist 14.1 5.8 Sports Total 9,816 100.0 and Culture Education 2,702 27.5 0.0 Health 2,235 22.8 Social Assistance 568 5.8 Health Educ Housing 1,381 14.1 22.8 27.5 Sports and Culture 1 0.0 Economic Services 2,929 29.8 Source: Author's calculations based on MHCP data 90This proportion is similar to the current one in neighboring Honduras. 104 Box 4.1. Benefit-incidence Analysis Methodology This methodology is based on the assumption that the benefit of public service provision to household --in monetary terms-- coincides with the public sector average cost per household of providing this service. This assumption is quite restrictive, since it ignores inefficiency, corruption, and the possibility that the value to the program user differs from the cost of the service. Additionally, this methodology ignores changes in the behavior of households as a result of public policy changes.91 If the benefits that each individual receives from specific public programs diminish as the household per capita consumption level goes up, the program is said to be "pro-poor." If, however, these benefits increase with higher consumption levels, then the program is classified as "pro-non-poor." Also, a program is classified as "progressive" if the benefit it generates-- measured as a proportion of consumption--drops as the household's level of consumption rises. Thus, it is possible for spending to be pro-non-poor (i.e. the individual benefit derived from spending increases as household consumption levels rise) and at the same time progressive (i.e. the benefit as a proportion of consumption drops as the level of consumption goes up). This distinction takes on great relevance in the case of Nicaragua where, as we will analyze later, a considerable group of programs have a "pro-non-poor but progressive" incidence. All spending incidence analyses consist of three essential stages: a) defining the individual well-being variable, b) identifying the beneficiaries of social programs, and c) assigning benefits. The two key instruments needed for a distributional study of social spending are available in Nicaragua: a detailed breakdown of social spending by activity, and a household survey providing information about participation in public programs. In both cases, available information is up to date, which is not common in most countries. The survey used is the Living Standards Measurement Survey (LSMS), conducted in 2005 throughout the entire Nicaraguan territory. This survey contains the responses of 36,642 individuals (6,898 households), representing the country's population, covering an ample range of questions intended to characterize the socioeconomic and demographic situation of Nicaragua. Both the information on public spending and the household survey correspond to the year 2005, insuring that the results of this work fully reflect the current situation in Nicaragua. Source: Public Spending Incidence Analysis Background paper. 4.5 The GON has defined a set of programs aimed at implementing the Poverty Reduction Strategy (PRS), excluding PSS programs whose relationship to the direct reduction of poverty is not clear enough (i.e., institutional strengthening programs or spending on universities),92 and, at the same time, including programs, that are not a part of PSS, and that are geared towards the sustained reduction of poverty (i.e., rural development). Additionally, PRS expenditures exceed social spending, as they include economic services. In 2005, PRS expenditures were C$11,414.45 Córdobas (U$ 683.5 million).93 PRS spending includes two major components, 91If a poor person receives a new governmental monetary support of $100, the incidence study recognizes the $100 increase in the person's standard of living, but ignores, for example, the possibility that a private donor might reduce his/her donation to the poor person when learning of the increased government support. The available information, in this case and in most studies, impedes a more sophisticated analysis. 92 After several revisions in 2004, the concept of PRS spending that is analyzed in this study was defined in the PND 2005. 93GON (June 2007). 2006 Poverty Spending Report. 105 social spending and economic services as well as some spending on defense and central-level administration; these latter expenses cannot be allocated to specific beneficiaries, and thus they are excluded from the incidence analysis (see para. 4.6 below and Box 1). PRS spending on social and economic services alone represents 91.6 percent of total PRS expenditures and they were C$ 9.816 billion Córdobas (U$ 587 million), representing 11.9 percent of the GDP (Table and Figure 4.1). The largest item is Economic Services, accounting for C$ 2.929 billion Córdobas (U$ 175 million), or 29.8 percent of total PSS expenditures (Table 4.1). The amount allocated to education, which excludes spending on universities, constitutes the largest social component of PRS expenditures, representing 27.5 percent of PRS expenditures, and totaling C$ 2.702 billion Córdobas (U$ 162 million). PRS resources are also allocated to health (22.8 percent), housing (14.1 percent) and social services (5.8 percent). 4.6 Responding to the objectives of an incidence study, the different classifications of social spending and PRS expenditures used in this document differ slightly from those used by the MHCP. To analyze the distributional incidence of expenditures, the grouping of public programs into functions must respond to the availability and grouping of information in the household survey; a criterion that is naturally not applied in the MHCP's classifications (Box 1 explains the methodology used for this analysis). The structure of PSS and PRS expenditures used in this chapter is summarized in Table 4.2. Table 4.2: Public Social Spending (PSS) and Figure 4.2: Public Social Spending (PSS) PRS spending by Sector/Area for Incidence and PRS spending by Sector/Area for Analysis Nicaragua, 2005 Incidence Analysis Nicaragua, 2005 PSS Social Assist. PSS expenditure Housing Education 15.9 Function C$ (millions) % 3.7 46.1 Total 8012 100.0 Education 3696 46.1 Health Health 2750 34.3 34.3 Housing 294 3.7 Social assist. 1272 15.9 PRS Social Housing PRS expenditures Assist. 3.9 Function C$ (millions) % 16.0 Total 7576 100.0 Education 2540 33.5 Health 2165 28.6 Health Housing 294 3.9 28.6 Education Social assist. 1211 16.0 33.5 Rural development 1365 18.0 Source: Author's calculations based on MHCP data B. DISTRIBUTION OF SPENDING 4.7 Per capita household consumption is used throughout this report to define the level of individual well-being. The population is broken down into fifths ­or quintiles­ using this 106 measure of well-being, and is grouped according to levels of poverty. Whereas the average person from the first quintile (the poorest) consumes an average of C$ 262 Córdobas per month (U$ 15.66), a person from the wealthiest quintile consumes an average of 8 times that amount (C$ 1,980 or U$ 118.36). Those pertaining to the poorest quintile of the population consume 6.3 percent of the total consumption, while the richest quintile consumes 46.8 percent. According to the poverty line, 14.9 percent of Nicaraguans live in extreme poverty, 31.3 percent in non- extreme poverty, and the remaining 53.8 percent are non-poor. Extreme poverty has dropped progressively in Nicaragua, from 19.4 percent in 1993 to the current 14.9 percent in 2005. Overall poverty dropped 5 percentage points between 1993 and 2001, and has remained without significant changes between 2001 and 2005. There is a strong association between area of residence (urban-rural) and levels of poverty. 4.8 In Nicaragua, aggregate public expenditures on social services benefit the different strata of Nicaragua's population about equally, indicating that public social spending (PSS) is not pro-poor (Figure 4.3). Although aggregate expenditures are not pro-poor --they are distributed relatively equally across the population-- benefits are a relatively large share of their household consumption for those in the lower quintiles. Consequently, overall public social spending (PSS) is not pro-poor but progressive in Nicaragua. This progressiveness in the impact of PSS spending implies lower inequality (a drop of 6 perecentage points in the Gini coefficient of per capita consumption). In other words, measured inequality falls after social spending (and assuming proportional taxation); a Gini prior to PSS of 40.1 falls close to 34 after PSS. Eighty-three percent of this redistributional impact comes from expenditures in education and health. Compared with the non-poor, the poor receive a higher implicit subsidy for health and social assistance, and a lower subsidy for education and housing. Figure 4.3 PSS and PRS Spending Participation by Quintiles PSS PRS 30 30 20 l 20 tal ta tofo tofo 10 10 % % 0 0 1 2 3 4 5 1 2 3 4 5 Per capita consumption quintiles Per capita consumption quintiles Source: Author's calculations based on 2005 LSMS 4.9 Expenditures related to the Poverty Reduction Strategy (PRS) are substantially better targeted than PSS; while more than 55 percent of overall PSS spending benefits people who are not considered poor, this share is 47 percent for PRS spending. PRS spending is clearly progressive. The redistributional impact of PRS spending implies a 7.3 point drop in the Gini coefficient of per capita consumption; thirty-seven percent of this impact comes from education programs, followed by health programs (26.8 percent), rural development (19.1 percent) and social assistance (13.5 percent). Nevertheless, the classification of programs by sectors hides some important differences, for instance within the area of education, expenditures on primary education are pro-poor, expenditures on secondary education have a pro-non-poor bias. 107 4.10 An assessment of how well targeted are a large set of public programs is done by analyzing the program's degree of targeting. For each program a concentration index, that measures if spending favors the poor, was calculated.94 Programs were classified into three groups according to their degree of targeting; "pro-poor" if the poor receive more of the program's benefits than the non-poor and a larger share of these benefits than their share of the population, `pro-non-poor but progressive' if the non-poor receive more than the poor, but still the poor receive a larger share of the program's benefits compared to their share the country's total consumption, and "pro-non-poor and regressive" if the non-poor receive more than the poor, and the share of the of the benefits that the poor receive is less than their share of the country's total consumption. Figure 4.4 illustrates the degree of targeting of a wide range of social programs being implemented in Nicaragua and the absolute amounts in millions of Córdobas allocated to them in public expenditures. The programs most focused on the poor (among the programs analyzed) are the adult education and public primary education programs, several food programs (WFP and PINE), and some FISE components. Rural development programs also have a high degree of targeting, since they are geographically located in areas with high levels of poverty. Within the group of programs considered, at least half have a pro-rich bias. Of these, only the higher education programs and subsidies to private education are regressive. Figure 4.4 Public Spending Progressivity by Program Concentration index Public spending (C$ millions) -40 -20 0 20 40 60 Adult Education WFP FISE ­ Social Protection Public Primary MAGFOR- Rural Develop PINE IDR-Rural Develop Pro-poor FISE - Education FISE - Health Preschool Healthcare MTI ­ Rural Develop FISE ­ Water and Sanitation PAININ Health Prevention Housing Programs Secondary Pro-non-poor progressive FISE ­ Community works Technical Education Subsidized Secondary Property Deeds Subsidized Primary Pro-non-poor regressive Public Universities Subsidized Higher Ed 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Source: Author's calculations based on 2005 LSMS 4.11 The redistributional impact of a program not only depends upon the degree to which it is targeted, but also on its budgetary relevance. In this regard, the programs with the greatest 94A program's degree of targeting is often computed on the basis of concentration indices. These are calculated in a similar way as the Gini index for the distribution of consumption, and range between -100 and 100. Negative values indicate pro-poor spending; the higher the value of the index in absolute terms (the higher the negative number), the greater the degree of targeting. The concentration index is the ratio of the area between the line of perfect equality and the distribution curve of program benefits (A), divided b the sum of this area A and the area under the distribution curve (B), then the concentration index is A/(A+B). 108 equalizing redistributional impact of all social programs are public primary education and public healthcare (Figure 4.3). Public primary education, in particular, is pro-poor and important in budgetary terms. Public healthcare is also pro-poor, although not as well targeted as primary education, but it is also important in budgetary terms. The rural development programs of IDR, transport programs of MTI and rural development programs of MAGFOR follow in relevance as far as their redistributional impact. At the other extreme, the public university program is the major "dis-equalizing" public program in terms of its redistributional impact favoring the non- poor and being regressive. Fiscal incidence and simulations 4.12 A complete study of social spending requires a distributional analysis of the sources of financing for spending ­taxes and other resources, and of possible inefficiency in the management of such funds. Although both aspects are beyond the scope of this study, some simple simulations were conducted to measure their potential impact on the results. This section contains some very simple simulations of the potential redistributional impact of specific policy changes. Policy decisions should result from considering a large variety of economic, social and ethical issues, and from a realistic appraisal of a series of limitations and/or constraints. 4.13 The Nicaraguan tax system is likely to be relatively neutral. State financing for public spending is supported by three types of taxes: sales or value added , excise, and income and other assets. Sales taxes are usually considered regressive. However, this regressivity is significantly attenuated by using consumption as a proxy for individual welfare (instead of income), and when we also consider a series of tax deductions on essential consumer goods. In addition, property taxes and especially taxes on income and assets add progressivity to the system. Regarding the effect of alternative tax structures, two alternative scenarios related to proportional taxation were considered: one of slightly progressive taxes and the other of slightly regressive taxation. Although the magnitudes would vary, PSS would be the same in both scenarios. In the more pessimistic scenario of regressive taxation, PSS would still imply a drop in inequality with the Gini falling more than 4.5 percentage points. 4.14 Regarding potential inefficiencies in the management of public funds, a possible problem is that some funds may never actually get used by the programs they are assigned to. These funds, not used for their originally allocated purpose, represent a leak in public benefits. Because of limited information, little is known about how many of these "leaks" are associated with corruption. In this respect, two situations are simulated. In the first, the distribution of leakage is similar to the distribution of consumption, while in the second we assume that the beneficiaries of leaks are only found in the top quintile. According to the first hypothesis, assuming inefficiencies of 10 percent and proportional taxation, after PSS spending the Gini would drop by 5.4 percentage points, rather than 6.1 percentage points without leakage. The most extreme case would be 50 percent leakage that only benefits the top quintile. If this were the case, the redistributional impact of PSS spending would be almost null. Ultimately, this would mean that an enormous effort is being made by society to finance social spending, without any redistributional impact. 4.15 Scenarios involving simulations with better targeted spending in education, health, and social assistance, assume that spending is entirely targeted to the poorest three quintiles, thereby limiting spending allocations to only the most disadvantaged 60 percent of the population. Perfect targeting of education spending to the poorest three quintiles of the population would imply a one percentage point drop in the Gini coefficient. In the case of health, the reduction would be 1.8 percentage points. The impact of better targeting of PSS social assistance programs 109 would be somewhat less (0.9 percentage points), although it should be significant in quantitative terms per beneficiary given that these are theoretically targeted programs (unlike education or health, which are generally universal). Perfect targeting of PSS spending would have a considerable redistributional impact (a 3.7 percentage point reduction in the Gini in the case of PSS and 3.5 percentage points in the case of PRS spending). C. SECTORAL DISTRIBUTION OF SPENDING Education 4.16 Education is the largest item in the Nicaraguan public budget. As mentioned above, nearly C$ 3.7 billion Córdobas (U$ 221 million) were spent in 2005 on education, which represent 46 percent of total public social spending and approximately one-third of spending to support the Poverty Reduction Strategy (ignoring PRS spending on economic services). Table 4.3 and Figure 4.5 presents different areas of spending on education corresponding to PSS and PRS spending. The Nicaraguan educational system is structured into four main levels: (i) preschool education, for children under 6 years, (ii) obligatory primary education with a duration of 6 years, for children 7 to 12 years of age, (iii) intermediate and secondary education, with 5 years duration and (iv) higher education, which mainly consists of universities. This basic structure is complemented by technical education, adult education and special education programs. Table 4.3: Education Public social Figure 4.5 Education Public social expenditure and PRS spending (Millions of expenditure and PRS spending (Millions of Córdobas) Córdobas) PSS Spending on PSS Spending on Education Millions C$ % 1.0% Education 28.4% Total 3,696 100.0 38.4% Preschool education 36 1.0 Primary education 1,421 38.4 Secondary education 250 6.8 20.0% Adults 109 2.9 Preschool3.6% 8.5% Special programs 25 0.7 Primary Intermediate and technical MECD central activities 153 4.2 Adults and special MECD projects 564 15.3 MECD activities and projects MECD teachers training 23 0.6 Universities Technical education 65 1.8 Universities 1,051 28.4 PRS Spending on Education PRS Spending on 0.9% 1.4% Millions C$ % 24.8% Education Total 2,540 100.0 Preschool education 36 1.4 Primary education 1,421 55.9 4.6% 55.9% Secondary education 250 9.9 12.4% Adults 92 3.6 Preschool Special programs 25 1.0 Primary MECD activities and Intermediate and technical 629 24.8 Adults and special shared projects MECD central activities MECD teachers training 23 0.9 MECD teacher training Technical education 65 2.5 Source: Author's calculations based on MHCP data 110 Figure 4.6 Education concentration curves Preschool Primary 1 1 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0.2 0.4 0.6 0.8 1 0 0 0.2 0.4 0.6 0.8 1 Primary pública Consumption consumo Private w/subv priv. subs. adultos Adults Preschool Preescolar consumo Consumption Secondary Higher education 1 1 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0 0.2 0.4 0.6 0.8 1 0 0.2 0.4 0.6 0.8 1 Public Univ univ. púb. consumo Consumption Public pública Consumption consumo Priv w/subv priv. subs. Public Tech ter. púb univ. priv. Private Univ Source: Author's calculations based on 2005 LSMS 4.17 The most important item in education spending in budgetary terms is public primary education (38.4 percent of PSS in education and 55.9 percent of PRS spending in education).95 The adult education program, with a budget of C$ 109 million Córdobas (U$ 6.52 million), also generally provides primary level education. Basic spending for secondary education is around C$ 250 million Córdobas (U$ 15 million). Technical education financed by INATEC and INTECNA (1.8 percent of the PSS in education). Public spending at the preschool level has even less budgetary relevance (1 percent of the PSS in education and 1.4 percent of PRS spending in education). In contrast, public expenditures on universities account for an enormous portion of social spending: almost 30 percent of the PSS in education is devoted to higher level education. In fact, a constitutional article requires that 6 percent of the general budget's total income be assigned to the universities.96 These expenditures are not considered a priority for the Poverty Reduction Strategy, so they are not included when computing PRS spending. The educational 95The spending amounts for primary and preschool education include non-general expenditures made by the MECD, and spending assigned to this level by MIFAMILIA. 96Article 125 of the Nicaraguan Constitution and Article 55 of Law No. 89 (Law on the Autonomy of Higher Education Institutions). 111 budget is completed with a group of quantitatively less important programs and a group of expenditures that finance central level activities and programs of the Ministry of Education, Culture and Sports (MECD). 4.18 The progressiveness or regressiveness of education spending by level can be shown graphically as a concentration curve and contrasted with the cumulative distribution of consumption, which is the Lorenz curve. Figure 4.6 shows the concentration curves for different education programs and the Lorenz. The progressivity of spending is "pro-poor" if the poor receive more of the program's benefits than the non-poor and more than their share of the population; graphically this line appears above the diagonal since the 45o line indicates that each percentile in the distribution is receiving the same share, or in other words, each quintile (which represents 20 percent of the population) would receive 20 percent of spending. "Pro-non-poor but progressive" is if the non-poor receive more than the poor, but still the poor receive a share larger than their share of consumption; graphically this line appears below the diagonal but above the Lorenz. "Pro-non-poor and regressive" is if the non-poor receive more than the poor, and the poor receive a share lower than their share of consumption; graphically this line appears below the diagonal and below the Lorenz. In particular, education spending by levels as a proportion of per capita household consumption, shows that primary and preschool education spending are clearly progressive and pro-poor, secondary education spending is progressive and non-pro-poor, and spending on university education is regressive and non-pro-poor. Figure 4.7: Education Concentration Indices 60 50 40 30 20 10 0 -10 -20 -30 -40 st yra S te .de yra s d E dul A mi RPl loo ch SSPl iade calin mr mi itiesre Pr tao T esrP tao mr che T tenI T tenI. Pr.vi ivn gheri U ivrP Pr H.virP Source: Author's calculations based on 2005 LSMS 4.19 The results of the benefit-incidence analysis for education show that PSS spending on education is slightly pro-non-poor, though progressive. On the other hand, PRS expenditures on education, are pro-poor and progressive. The Figure 4.7 illustrates the concentration and progressivity indices for all of the education programs analyzed. The education program best targeted to the poor is adult education, followed by the public primary education program. At the other extreme, subsidies to private education and the public university program have the greatest pro-non-poor character. The program with the greatest redistributional impact is primary 112 education. It has much greater impact than any other education program, given its budgetary weight and its marked pro-poor bias. 4.20 There are significant similarities in the degree of concentration of public expenditures on education in Nicaragua and Honduras. However, given variations in the definitions of PRS spending adopted in Nicaragua and Honduras, PRS expenditures in Nicaragua end up being somewhat more pro-poor than those of its neighbor. Preschool education 4.21 Preschool attendance is 38 percent among children 4 to 6 years of age, and it increases to 53 percent among 5 year olds. Attendance at this level rises with the family's per capita consumption level. Whereas 79 percent of the children from the wealthiest quintile in the distribution of per capita consumption attend preschool, only 34 percent of the children from the poorest quintile do so. The lowest rates of preschool attendance are found in the Atlantic region, which has the highest poverty levels and highest percentage of rural population. 4.22 Nicaragua still has a long way to go in expanding preschool education coverage. Interestingly, the two main reasons why parents do not send their children to preschool are the perception that it is not necessary ("they're too young"), and the lack of access to preschool programs. Direct government intervention could easily have an impact on these impediments, either through campaigns aimed at increasing awareness about the importance of preschool education, and/or through setting up more preschool centers. Primary education 4.23 Among education expenditures, spending on primary education is the most important in budgetary terms, and is also one of the most important components of all public expenditure of Nicaragua. In 2005, the government allocated C$ 1.421 billion Córdobas (U$ 85 million) to basic primary education. Also in this year, 89 percent of the children between 7 and 11 years of age attended primary school.97 School attendance rates rise significantly with higher levels of household consumption. On average, whereas 94 percent of non-poor children between 7 and 11 years of age attend primary school, that proportion falls to 84 percent for the poor. 4.24 Among children who do not attend primary school, the main reason cited in the LSMS to justify their non-attendance is economic difficulties, particularly in the case of poor families. Two other explanations given for non-attendance include long distances from schools and lack of interest. Both the state and civil society have a fundamental role to play in alleviating the impact of these difficulties. It seems that actions not only on the side of demand (subsidizing access to education and making the population aware of the importance of schooling) but also on the side of supply (facilitating geographic access to schools) are needed in order to meet the goal of universal school enrollment in Nicaragua. 97The analysis is limited to the 7-11 year age range, since many 12 year old children are enrolled in the intermediate/secondary level of education. In 2006, the Ministry of Education established 6 years as the official age for entry into primary school. 113 Table 4.4 Primary education main characteristics (% of students) % in % in private % in % in multi- % Time % public with subsidy autonomous grade receiving to repeating schools schools classes food school Total 91.4 30.1 18.8 34.2 68.0 11.1 14.9 Quintiles Poorest 99.8 0.0 13.4 54.8 77.7 13.7 18.4 2 99.2 86.2 12.7 39.9 79.2 12.1 15.1 3 95.9 34.8 25.2 30.8 71.1 10.8 13.8 4 85.7 31.1 23.4 16.6 57.3 8.8 12.9 5 57.1 26.8 23.5 12.2 34.9 7.1 12.1 Extreme poor 99.8 0.0 13.5 58.9 76.4 14.2 18.6 Poor 99.1 47.1 14.5 45.4 78.2 13.0 16.3 Non-poor 81.8 29.0 24.1 20.2 55.4 8.6 13.2 Rural 99.1 65.7 12.4 60.7 82.1 12.5 18.8 Urban 82.9 28.0 25.8 5.1 52.6 9.5 10.6 Managua 80.0 23.0 36.1 8.9 46.6 11.5 11.3 Pacific 90.9 27.9 19.9 21.9 77.6 10.5 12.9 Central 96.2 45.8 12.4 51.6 70.3 11.4 18.1 Atlantic 94.7 42.5 11.2 46.2 71.1 11.0 15.6 Source: Author's calculations based on 2005 LSMS 4.25 It is interesting to note that compared with their counterparts in the wealthier quintiles, poorer children have fewer absences from school per month, receive more school assistance in the form of food supplements and school supplies, and account for a higher percentage of participation in public schools. However, poorer children also present significantly higher rates of grade repetition and spend more time getting to school (Table 4.4). 4.26 Public spending for primary education is significantly pro-poor and progressive, fundamentally because of the higher concentration of children from the poorest strata of the population in public schools, and to a lesser extent due to the more intensive use of public schools (as opposed to private schools) by the poorest students. While the program is moderately pro- poor for the national aggregate, the results vary by region: public primary education has a stronger pro-poor character in the Central and Atlantic regions, and a greater incidence among the middle strata in the Managua and Pacific regions. Compared with Honduras, the benefits of social expenditure on basic primary education are somewhat better targeted in Nicaragua; 50.8 in contrast to 53 percent favor the poorest and 2nd poorest quintiles, respectively.98 An analysis over time, indicates that the public primary education program in Nicaragua has become more pro- poor during the period between 1993 and 2005; public resources favoring the poorest and 2nd poorest quintiles increased from 47 to 53 percent, respectively. 4.27 Additionally, the Nicaraguan government supports an adult education program that mostly corresponds to the primary level. The incidence analysis indicates a highly pro-poor incidence impact. The results are diametrically the opposite in the case of state subsidies to private primary 98Gasparini et al, 2005, which used the same methodology as the present study. 114 education. Such subsidies are not used by any families from the poorest quintile, since their children either do not attend private schools, or do not attend school at all. 4.28 While several Latin American countries are nearing the goal of universal primary school enrollment, Nicaragua still lags behind in this sense. Unlike other countries in the region, progress toward closing the gaps with respect to universal primary education enrollment is still needed in Nicaragua. Since the gap is substantially more severe among the poorer strata of the country, a successful policy would require not only an increase in the economy's aggregate productive capacities, but a shift toward more equal opportunities and more equal incomes. Secondary education 4.29 In contrast to the primary school level, the attendance gaps between poor youth and other youth are substantial at the secondary level. Whereas 51 percent of non-poor youth between 16 and 18 years of age attend secondary schools, only 15 percent of the extremely poor young people from this age group attend a secondary school. The gap in education, which slightly favors indigenous children at the primary level, is reversed at the secondary level. While the national attendance rate for young people between 13 and 15 years of age is 46 percent, this rate drops to 32 percent for indigenous youth. 4.30 Incidence results indicate that the poorer strata do not benefit from spending on secondary education because they have low rates of attendance at that level. Regional differences in the degree of targeting of state subsidies to secondary education are determined by the concentration of the poor in the Central and Atlantic regions. A comparison with Honduras indicates greater targeting of expenditures in Nicaragua, which results from higher attendance rates among the poorer population and from the somewhat more intensive use of the public secondary school system. 4.31 A breakdown of changes in the incidence of the public secondary school program between 1993 and 2005 shows that the secondary education program has become more pro-poor, fundamentally due to increased access to secondary education by poor youth. While less than 4 percent of the youth from the poorest quintile attended a secondary school in 1993, that percentage rose to 17.4 percent in 2005. Though still low, this implies a very high proportional increase with respect to 1993. 4.32 Nicaragua has many technical education courses, financed mostly by INATEC and INTECNA. Technical education includes intermediate and tertiary level programs in different specialties, trades and skill improvement. Almost 70 percent of the beneficiaries of technical education are from the 4th and 5th quintiles reflecting a pro-non-poor distribution. University education 4.33 Higher education receives an important portion of Nicaragua's educational budget, while practically no extremely poor youth attend university. University education is essentially unaccessible to young people from the poorest quintiles; direct, indirect and opportunity costs are prohibitive. Surprisingly only 33 percent of those attending universities use public universities. Expenditures on university education are clearly pro-non-poor and regressive. Similarly, subsidies to private university education have a pro-non-poor bias. The reasons for the pro-non- poor distribution of university education are clear in the case of Nicaragua; 79.6 percent of enrollments come from the 4th and 5th top quintiles, while there are no university students from 115 the poorest quintile. Moreover, unlike other countries, there is an additional effect that comes from the lower relative use of state universities by students with fewer resources. Aggregate expenditures on university education in Nicaragua are somewhat better targeted than in Honduras; 81 vis-à-vis 93.7 percent of public university education resources favor the 4th and 5th quintiles together, respectively. 4.34 The pro-non-poor character of higher education, common in all incidence studies in Latin America, does imply that public spending in this sector needs to be revised. The decision to provide a public service responds to a multiplicity of reasons; distributional equity is only one of them. This analysis suggests that a redistributional logic would argue in favor of rethinking or redefining the allocations made to the education sector. Nonetheless, there are other valid reasons for assigning such an important portion of the budget to a service that almost only benefits the strata with better living conditions. HEALTH 99 4.35 The health of a country's population is one of the main pillars of a strategy aimed at achieving permanent reductions in poverty and stable avenues of development. In Nicaragua, the health sector is comprised of the Ministry of Health (MINSA), the Nicaraguan Institute of Social Security (INSS), and the private sector, with few operational links between them. Public healthcare services are administered by MINSA, which offers medical services through a network of facilities consisting of health posts, health centers and hospitals. In 2005, MINSA's services included 1,025 health centers and health posts, and 34 hospitals. The INSS also offers medical services through social security facilities. Health care services are provided by 60 hospitals and clinics administered by the private sector, NGOs and other institutions. 4.36 During 2005, the Nicaraguan public sector spent C$2.75 billion Córdobas (U$ 164 million) in PSS expenditures on healthcare programs, where C$2.165 billion Córdobas (U$ 129 million) were included in PRS spending. The largest share of healthcare resources, 63.4 percent are allocated to public curative services, and a much smaller share to health prevention activities, 9.3 percent. The rest of the resources are allocated to central administrative activities and other expenditures (27.2 percent). 4.37 The public healthcare system offers various services to the population. The 2005 LSMS allows us to identify the services delivered to children due to diarrhea, the medical consultations received by the general population due to illness, and the checkups made in relation to recent childbirth. Unfortunately, available budgetary information does not disaggregate the amount of resources allocated to each of these activities. Diarrhea is one of the main health problems for children under 6 years of age in Nicaragua, and it is closely associated to the low quality of drinking water. This illness alone affects one out of every four Nicaraguan children under 6 years of age; with the incidence being as high as one in every three children in the Atlantic. Consequently, the use of medical services related to diarrheic diseases are pro-poor due to the fact that there is a high concentration of children in the poor quintiles, and because there is more intensive use of the public health facilities by the poor. The regressivity across quintiles is considerably more significant in relation to the use of public healthcare services in the case of 99 Nicaragua's Health System is made up of the Ministry of Health (MINSA), the Nicaraguan Social Security Institute (INSS), the private sector, medical services provided by the Ministry of the Interior and the Army, and institutions which train human resources for the sector (General Health Law, Art. 7). 116 other illnesses for the general population. Whereas 32.1 percent of individuals from the poorest quintile visits a doctor when they are ill, this proportion rises to 52.5 percent for the top quintile. 4.38 There are also important differences in the use of healthcare services in the country's different regions, partly associated to each region's income level; wealthier individuals and thus, wealthier regions tend to report more illness and have higher rates of utilization of healthcare services. In consequence, in Managua there is a greater concentration of people reporting being ill due to the fact that a larger share of the capitals' population comes from high income quintiles. Thus, the healthcare sector slightly pro-poor overall character is not found in all regions. Figure 4.8 Healthcare spending (Participation by quintiles) 30.0 Health - PSS Health - PRS latotfo 20.0 % 10.0 0.0 1 2 3 4 5 Per capita consumption quintiles Source: Author's calculations based on 2005 LSMS 4.39 Two other important services provided by the public healthcare system are prenatal checkups during pregnancy, and childbirth care. It is worth noting that the proportion of women who receive prenatal checkups increases with the level of consumption. Thus, while 84.9 percent of the women from the poorest quintile receive some prenatal care, this proportion rises until reaching 98.7 percent for women from the wealthiest quintile. Also, there are striking disparities in the percentages of childbirths attended by healthcare personnel. While only 59.4 percent if women from the poorest quintile receive such care, this percentage rises to 97 percent for women from the wealthiest quintile. Nevertheless, both programs are pro-non-poor but progressive, given that the distribution of healthcare services favors the non-poor but still the poor receive a larger share of services than their share of consumption. 4.40 The incidence analysis of aggregate expenditures on health (PSS and PRS) indicates that this spending is slightly pro-poor. The poorest quintile in Nicaragua benefits from 20.5 percent of total PSS spending on healthcare, and from 20.7 percent of total PRS spending on healthcare. In both cases these proportions remain relatively stable until reaching the wealthiest quintile, when they drop significantly (Figure 4.8). 4.41 Noteworthy, the public program with the greatest redistributional impact is healthcare, mainly because of the size of the budgetary allocation and because of the higher concentration of pregnancies and children under 6 years of age among the poor. In consequence, for health spending to be more pro-poor a larger share of resources would need to be allocated to maternal 117 and child healthcare and preventive health programs; both of which would also support the attainment of the MDGs. Compared with the results in Honduras, we observe that healthcare services are more pro-poor in Nicaragua than in Honduras. The redistributional impact of PSS spending is higher in Nicaragua compared to Honduras, and PRS expenditures have a similar distributive impact; 23.4 vis-à-vis 36.8 percent of public healtchare resources favor the 4th and 5th quintiles together, respectively.. HOUSING AND LOCAL PUBLIC SERVICES 4.42 The government of Nicaragua provides financing for the construction of homes and the legalization of property deeds. In addition, this section examines the incidence of some urban services related to housing: public lighting, garbage collection and street construction. Some 4.5 percent of Nicaraguan households benefited from new investments in public lighting, 12.5 percent from the building and improving streets, 0.9 percent from the legalization of property deeds and 1.1 percent from the construction of new homes. Households from the higher quintiles seem to have benefited more than the two lower quintiles from public construction and street improvement. This same pattern is observed for the legalization of property deeds and garbage collection services. 4.43 Results of the incidence analysis indicate that all public services analyzed and housing programs have a pro-non-poor bias but are still progressive expenditures (except garbage collection, which is regressive). WATER AND SANITATION 4.44 Water network coverage in Nicaragua is somewhat low in comparison to the average in Latin America (see SEDLAC, 2007). In particular, access to this service is less extensive than in Honduras. Whereas only 66.5 percent of households in Nicaragua enjoy running water on the land where their house stands, this percentage reaches 80.1 percent in Honduras. Also, there are greater differences between quintiles in Nicaragua. While only 26.8 percent of the households from the poorest quintile have access to water services, that rate rises to 88.8 percent for the wealthiest quintile (which is still a relatively low value in contrast to other Latin American countries). 4.45 Sanitation services also have low coverage in Nicaragua. Overall, only 21.4 percent of households have a toilet connected to the sewage network. The most common sanitary services are untreated latrines (33.4 percent), followed by latrines with treatment (26.4 percent). In addition, approximately 10.7 percent of households have no type of sanitary service whatsoever. The extremely poor have practically no access to the sewage network (1 percent of this population's dwellings are connected to the network). Moreover, approximately one out of every four homes does not possess any kind of sanitary service and 44.1 percent only possess untreated latrines. 4.46 The incidence of public funds for the water and sanitation sector is not lineal. This is the result of the interaction of several factors, including the fact that spending on maintenance mainly benefits the wealthiest quintile and, additionally, that the fourth quintile benefits the most from new sector investments (on average). Public expenditures on maintenance of the sanitation network are strongly concentrated among the wealthiest quintile. New investments in this network also show a substantial pro-non-poor bias, though somewhat less so. For water, although expenditures on the maintenance of the network also have a pro-non-poor bias, it is much less 118 concentrated than in the case of sanitation. Investments for expanding water sector infrastructure indicate a balanced distribution among quintiles. In addition, the burden of financing for water weighs more heavily on the richer groups than the benefits of spending. Finally, overall the water and sanitation sectoral incidence of public spending has a pro-non-poor character, though the bias is not as marked as for household consumption, indicating that it is pro-non-poor but progressive. 4.47 We find that sanitation works (both maintenance and investment) are not only pro-non- poor but are also regressive. If they were financed with proportional taxes, this would tend to increase the inequality of the distribution of consumption. However, a larger part of expenditures are financed by fees paid by the service users. SOCIAL ASSISTANCE 100 4.48 In 2005, C$ 1.272 billion Córdobas (U$ 76 million) were earmarked for PSS spending in social assistance, whereas PRS spending in this item totaled C$ 1.211 billion Córdobas (U$ 72 million).101 More than 90 percent of both types of expenditures correspond to the Emergency Social Investment Fund (FISE) and food programs. Among the main food programs are the Comprehensive Care Program for Nicaraguan Children (PAININ), the Comprehensive School Nutrition Program (PINE), and other food assistance programs for areas affected by natural disasters. 4.49 The group of social assistance programs analyzed by the benefit incidence represent over 80 percent of total PSS and PRS expenditures on this function. However, there are numerous programs with small budgets that are not analyzed. Some of these programs are, for example, the Program to Promote Responsible Paternity and Maternity (C$ 6.7 million or U$ 400 thousand), the Program to Support Poor Rural Families (C$ 2 million or U$ 120 thousand) allocated to specific target populations. The distribution of benefits in the remaining programs is similar to the aggregate of programs for which specific functions were assigned. Figure 4.9 Household onsumption and public social assistance spending (group participation by poverty level) 90 75 l 60 tota 45 of 30 % 15 0 Consumption Soc Assist PSS Soc Assist PRS Extreme poor Moderate poor Non-poor Source: Author's calculations based on 2005 LSMS 100Box 2 provides a brief analysis of the Nicaraguan Social Security system. 101The differences between PSS and PRS expenditures are due to the fact that approximately C$ 60 million (U$ 3.6 million) from the Ministry of the Family budget were not included in the latter. Since more detailed information is not available about excluded programs, this amount was distributed among the Ministry of the Family's different programs of the Ministry of the Family. In the case of FISE, PSS and PRS expenditures are similar. 119 Box 4.2: Social Security in Nicaragua Nicaragua's social security system is not highly developed. According to the data in the 2005 LSMS, only 13.5 percent of the population over 60 years of age report receiving benefits from the pension system. The elderly living in urban areas benefit much more from this protection (19.9 percent) than those living in rural areas (3.4 percent), probably due to the differing degrees of informality of economic activities in each area. The pension system's coverage increases with higher levels of consumption. Whereas almost 20 percent of persons over 60 years from the top quintile enjoy coverage, that percentage falls to 3.6 percent in the poorest quintile. When broken down by levels of poverty, coverage of non-poor retirees is double that of the coverage of the poor (16.7 versus 8.3 percent, respectively). However, no important discrepancies in pension coverage based on ethnic origin were found. Lastly, there are notable differences in existing levels of coverage between regions, derived from differences in the degree of development and the main kinds of productive activities available in each region. At one extreme, 22.7 percent of the population older than 60 years of age residing in Managua receives pension coverage, while only 4.6 percent of the population of the same age group from the Atlantic region receives a retirement pension. Unlike most social expenditures that are financed by general taxes, financing of the social security system is linked to individual contributions, and is administered by an autonomous entity: the Nicaraguan Social Security Institute (INSS). Higher contributions made during one's employable life leads to more generous pensions. For this reason, a complete analysis of the impact of the social security system must evaluate the distributional incidence of its financing source. This box offers only one side of the expenditure-income equation of Nicaragua's social security system. Forty percent of the retirement benefits pertain to the highest quintile, whereas only 4 percent are allocated to the poorest quintile. The impact, in proportion to consumption, is highest for the 3rd quintile (3.3 percent of total consumption) and lowest in the poorest quintile (1.3 percent). The concentration index for expenditures on pensions (37.1) reinforces the evidence that they are pro-non-poor expenditures. However, it is important to stress once again that the final incidence of the social security system depends on the distributional impact of the financing mechanism. Source: Public Spending Incidence Analysis Background paper. 4.50 The poor receive less than 50 percent of social assistance expenditures (Figure 4.9). This is an interesting finding, given the fact that these programs are specifically designed to respond to the neediest population groups. Thus, the incidence analysis finds substantial leakage of resources that benefit more affluent quintiles. The uniform incidence impact is due mainly to the fact that the relative targeting of food programs to the poorest quintiles is overcome by the slightly overall pro-non-poor bias of FISE investments (of greater budgetary importance, such as, FISE social protection, FISE education and FISE health). In poor countries like Nicaragua, a significant proportion of the individuals who belong to intermediate consumption quintiles (or even to the wealthiest quintile) lack some kind of basic infrastructure such as potable water service or road infrastructure. This is one of the reasons why FISE investments benefit all quintiles of the consumption distribution. Nevertheless, when the subsidy is expressed as a percentage of consumption, the differences are more marked between poor and non-poor. 4.51 The best targeted social assistance programs are the food transfer programs financed by the WFP, and the FISE social protection module. In third place we find the PINE, but with a considerably lower degree of concentration. On the other hand, the FISE's community works and 120 services module is clearly more concentrated on the wealthier. Assuming proportional financing, all of these programs tend to improve the distribution of income. Analyzing the distributional impact of each program, FISE's water and sanitation, and education components have the greatest equalizing impact. The moderate targeting of these programs (especially the potable water and sanitation projects), is compensated by their budgetary relevance, turning them into the programs with the greatest redistributional impact. They are followed in order of importance by the PAININ and the WFP. Although the WFP program is the best targeted program, it has a very limited budget which limits its redistributional impact. A similar analysis can explain why the FISE's social protection component occupies last place in its distributional ranking. RURAL DEVELOPMENT AND ROAD INFRASTRUCTURE 4.52 In 2005, 44 percent of Nicaragua's entire population resided in rural areas. In that same year, poverty indices in these areas greatly surpass those of urban areas: 67.9 percent of the rural population is poor, as opposed to 29.1 percnet in urban areas, and 26.9 percent of the extreme poor live in rural versus 5.4 percent in urban areas. In that year, spending for rural development activities is a total of C$ 1.477 billion Córdobas (U$ 88 million), with 92.4 percent corresponding to poverty-related expenditures. The interest of both the Nicaraguan government and international donors and organizations in developing rural programs is in part based on the greater relative poverty of these areas, with a particular focus on the population dedicated to farming activities. 4.53 Rural development programs are clearly progressive and pro-poor. Figure 4.10 illustrates the distribution of consumption and of spending on rural development among different quintiles. The poorest quintile receives 24.2 percent of benefits, while the richest quintile receives 11.7 percent. The markedly pro-poor character of these programs is entirely linked to the concentration of poor people in the country's rural areas. Although these programs are generally not focused on the poor population of a particular geographic area, they are implemented in zones where the majority of people are poor. This simple geographic targeting would seem sufficient for insuring the strong pro-poor character of these programas. Figure 4.10 Household consumption and public spending for rural development by quintiles 50.0 Consumption Rural development 40.0 latotfo 30.0 %20.0 10.0 0.0 1 2 3 4 5 Per capita consumption quintiles Source: Author's calculations based on 2005 LSMS 121 4.54 On the other hand, redistributional impact indices for rural development programs indicate that the rural productive reactivation programs, technical assistance programs and rural roads programs provide the greatest redistributional impact. This report also finds that the distribution of benefits from rural development programs is better targeted on the poor in Honduras than in Nicaragua. POLICY IMPLICATIONS: MAKING PUBLIC SPENDING PRO-POOR 4.55 Both Nicaraguan society and the international community are engaged in efforts to finance a broad range of public programs whose intention is improving the living standards of Nicaraguans, particularly the most impoverished. This section helps to evaluate the coverage of these programs, and their degree of targeting. In particular, micro data from the recent 2005 Living Standards Measurement Study (LSMS) was used to identify the direct beneficiaries of public programs pertaining to Public Social Spending (PSS), and of those programs linked to the Poverty Reduction Strategy (PRS). 4.56 Any given policy decision must consider a great variety of economic, social and ethical arguments, and a realistic evaluation of constraints and restrictions. This chapter provides estimates of the redistributional impact of certain measures--such as more progressive taxation, reduced inefficiency, increases in certain functions of social expenditures, and increased targeting of expenditures in education, healthcare and social assistance sectors--for current economic policy debates. 4.57 One of this study's main findings is the low degree of targeting of many social programs. In fact, aggregate PSS is pro-non-poor, and overall PRS spending has a relatively better level of targeting; while more than 55 percent of PSS-related expenditures benefit people who are not considered poor, this share is 47 percent for PRS-related expenditures. This is the consequence of the coexistence of programs that have very varied targeting. While the benefits of some programs are focused on the poorest, others, in contrast, benefit the non-poor to a greater extent. The programs most targeted on the poor (among those analyzed) are the adult and public primary education programs, several food programs (WFP and PINE), and some FISE components (FISE social, FISE education and FISE health). Rural development programs also have a high degree of targeting, since they are geographically located in areas with high levels of poverty. Within the group of programs considered, at least half have a pro-non-poor bias. Of these, however, only the higher education programs and subsidies to private education are regressive. 4.58 This study's findings indicates that there is sufficient margin for significantly increasing the degree to which social spending is targeted via reallocating budgets to better targeted programs to poorer beneficiaries or to extending the network of social programs--currently limited by the low coverage of numerous programs--to lower income sectors. The quality of public spending is partly determined by how well targeted and what level of coverage is captured by priority projects. Often, coverage of basic services en Nicaragua, which are constitutionally mandated to be universal, is limited precisely by budget fragmentation and rigidities due paradoxically to earmarking constitutionally mandated allocations. In addition, the quality of public spending is also linked to the project's effectiveness or its impact to change the target indicator, the degree of efficiency or how much the intervention costs vis-à-vis alternatives, the prioritization of projects or selection on the basis of their highest economic and social return, and the satisfaction of the beneficiaries demand expressed by civil participation. 122 4.59 The different sections of the chapter offer a detailed examination of the coverage and incidence of numerous public services. From this analysis emerge several priority areas where efforts should be focused. For example, Nicaragua still has a long way to go to expand preschool education coverage. Only 30 percent of poor Nicaraguan children receive education at an early age. The arguments mentioned by the parents for not sending their children to preschool (the belief that their children do not need preschool education, and the lack of nearby school) can be directly confronted by the government, through campaigns to make them aware of the relevance of preschool education and/or the establishment of more preschool facilities. 4.60 Unlike other countries in the region, where progress toward educational development is at a medium to to high level, efforts aimed at closing the gaps with respect to universal primary education enrollment are still needed in Nicaragua. Since these gaps are substantially more severe among the poor, a successful policy in this sense would require not only an increase in the economy's aggregate productive capacities, but a shift toward more equal opportunities and more equal incomes. Actions on both the side of the demand (subsidizing access to education and making the population aware of the importance of schooling) and on the side of the supply (facilitating geographic access to schools) are needed to reach the goal of full school enrollment in Nicaragua. 4.61 Low income youth in Nicaragua have limited access to secondary education (only 30 percent of 15 year olds who are poor attend) and access to a university education is almost non- existent (1 percent). Not only is this an inequitable situation, the low enrollments of youths who are poor in the intermediate/secondary and higher educational system is also inefficient from a human development perspective. Nicaragua is not taking advantage of valuable human capital by failing to enable to encourage a larger percentage of its low income youth to continue studying. 4.62 The study underlines the importance of public expenditures to compensate for some inequalities in health originating from socioeconomic conditions. Poor families almost exclusively receive the treatment for common childhood illnesses such as diarrhea, or adequate childbirth care from public health facilities. For example, the outstanding progress that has been made in relation to prenatal care is attributed to the state's provision of healthcare services in rural areas, which must be encouraged and reinforced. 4.63 In Nicaragua a significant proportion of individuals from the intermediate consumption quintiles (or even the most affluent quintiles) lack some kind of basic infrastructure, such as safe drinking water, sanitation or road infrastructure. For this reason, investments in infrastructure often do not have a pro-poor character. This makes sense when looking at Nicaragua's regional distribution of the poor. The Managua region is substantially less poor than the rest of the country, in particular in relation to the Central and Atlantic regions. Many social programs have an important impact on vast sectors of the population in Managua which, by Latin American standards, are considered poor. However, in the Nicaraguan context these sectors are not considered the neediest, so that the subsidies they receive are not evaluated as clearly pro-poor. 4.64 In spite of the fact that rural development programs are often not targeted on the poor population of a specific geographic area, they are mostly carried out in areas where the majority of the population is poor. This simple geographic targeting would seem to be sufficient to give rural development programs a strong pro-poor character. 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World Bank, Washington, DC. 127 ANNEXES Annex 1 ­ Summary of Statistical Tables Annex 2 ­ Statistical Appendix Annex 3 ­ Technical document about two aspects related to defining the Extreme Poverty Line based on the Nicaragua 2005 Living Standards Measurement Survey (LSMS) Annex 4 ­ Poverty Map of Nicaragua 128 ABLES T TATISTICAL S OF UMMARY S ­ 129 1 NNEX A Population A1.1 Table y nc nde .70 .01 .80 .90 .60 .70 .01 .90 .90 .60 .80 .01 .80 .90 .60 .60 .70 .70 .70 .80 .80 .01 pee Ratio D ityiltreF 2.2 3.2 2.6 2.8 1.8 1.8 2.6 2.3 2.4 1.6 2.7 3.4 2.9 3.1 2.1 1.8 1.8 2.4 1.9 2.8 2.1 3.4 taloT nda 5 r ne 2005 .70 .21 .90 .01 .50 .60 .21 .01 .01 .50 .70 .21 .80 .01 .50 .60 .60 .60 .60 .70 .70 .11 dr unde Chil nda 16 r ne 2.0 3.5 2.7 2.9 1.4 1.7 3.4 2.8 2.9 1.4 2.4 3.6 2.6 3.0 1.5 1.6 1.8 2.1 1.8 2.4 2.1 3.1 dr unde Chil fo.o H H in Nlat To elpoeP .25 .37 .16 .56 .44 .05 .67 .56 .76 .54 ..55 .37 .95 .36 .34 .94 .15 .25 .84 .55 .25 .16 ncy nde 0.8 1.2 0.7 1.0 0.7 0.7 1.3 0.7 1.0 0.6 0.9 1.2 0.8 1.0 0.7 0.6 0.8 0.9 0.8 0.9 1.0 1.0 pee Ratio D 130 ityiltreF .42 .73 .22 .23 .91 .12 .93 .02 .13 .81 .92 .63 .72 .23 .32 .91 .22 .72 .22 .92 .92 .73 taloT nda 5 r ne 2001 0.8 1.5 1.7 1.2 0.5 0.7 1.5 0.6 1.2 0.5 1.0 1.5 0.8 1.2 0.6 0.6 0.7 0.8 0.8 1.0 0.9 1.2 dr unde Chil dna 16 r ne .22 .04 .02 .33 .61 .02 .24 .91 .43 .61 .72 .93 .32 .33 .81 .81 .02 .52 .12 .72 .72 .33 dr unde Chil fo.o H H in Nlat To elpoeP 5.3 7.4 5.1 6.7 4.6 5.1 7.7 5.0 6.8 4.6 5.7 7.4 5.3 6.6 4.5 4.9 5.0 5.6 5.2 5.8 5.7 6.4 e e e puo au rooP rooP rooP rooP e emr )ll rooP e emr rooP e emr nabr na ral nabr laru Gr xt A( xt xt laru U R Urb Ru U R caragi emr Nl Eto oroP emr oroP emr oroP aug Ext N oorP n-o Eto ralt ralt N banr Ext N oorP n-o N (All)lar Eto Ext N oorP n-o na N cific cific citnal citnal Education Al U Ru Ma Pa Pa Cen Cen At At A1.2 Table ce an yra )ni 7 2 6 2 7 8 6 0 7 7 8 4 7 9 9 9 9 1 6 7 st m 8. 9. 8. 9. 7. 8. 8. (M 13. 21. 15. 17. 11. 10. 20. 23. 21. 19. 16. 21. 27. Di Pri ce ants yra )s m m 9.0 1.1 0.1 1.1 8.0 5.0 5.0 4.0 5.0 6.1 3.1 4.1 8.1 5.0 4.0 3.1 5.0 3.1 4.0 8.2 Di Pri (K na Yrs -looh ela 5 5 8 4 6 5 7 4 0 3 2 8 7 7 5 7 2 9 6 2 ngi m 5. 3. 4. 4. 6. 6. 4. 5. 7. 4. 3. 3. 5. 6. 6. 5. 6. 3. 5. 3. Me Sc Fe - s ean Yr oloh gni el 8.4 0.3 1.4 7.3 0.6 8.5 5.3 6.4 4.6 8.3 9.2 3.3 0.5 1.6 8.5 6.4 6.5 5.3 0.5 9.2 M Ma Sc Yrs -looh l ngi 5.1 3.2 4.4 4.0 6.3 6.1 4.1 5.0 6.7 4.0 3.0 3.5 5.3 6.4 6.2 5.1 5.9 3.7 5.3 3.0 Mean Tota Sc to gni- N dn % 13-18 35.8 55.3 43.4 47.2 24.2 26.7 49.5 39.8 20.3 45.9 56.8 51.1 33.7 25.5 29.1 38.7 26.6 49.7 21.4 52.0 ttea 2005 s -l tn yra 1 5 5 7 2 5 8 9 6 6 9 5 6 3 7 3 7 0 5 3 rol m Gros me En Pri 09.1 03.1 14.1 10.1 07.1 05.1 01.1 08.1 03.1 12.1 03.1 11.1 15.1 01.1 05.1 16.1 08.1 12.1 19.1 09.1 - Net llornE tn ary slr m me Gi 5.98 9.07 9.48 5.88 6.18 4.68 5.27 5.78 4.08 7.28 9.87 5.88 1.39 3.78 4.88 0.59 5.98 8.68 9.98 9.67 Pri -l tn yra sy 5 3 8 5 0 0 7 7 4 0 5 4 5 3 1 1 8 5 9 4 Net rol m me Bo 82. 71. 83. 79. 86. 84. 70. 81. 85. 81. 71. 78. 87. 82. 84. 86. 85. 80. 86. 76. En Pri to gni- 3 4 1 9 3 9 8 5 9 8 9 N d 12 % 7- 4.9 1.2 0.1 4.1 7.3 9.5 8.1 1.1 9.2 2.1 1.2 5.1 6.5 4. 7.5 1.7 4.6 2.1 0.7 0.2 ttena 6 ngi- - 4- e olo % ndetta pr sch 7.93 2.72 4.13 9.82 7.64 2.74 2.32 1.83 8.64 2.93 2.82 8.92 4.94 48.1 3.44 6.53 7.13 3.33 0.34 5.02 et )+ raetilIl s 4 1 7 2 8 4 3 5 4 0 0 5 4 9 7 3 4 6 1 or yr 18. 38. 23. 28. 10. 10. 31. 18. 7. 29. 40. 33. 20. 8.8 9. 21. 15. 31. 13. 37. (10 ce ants yra )ni m 5.9 9.7 (M 5.11 3.82 4.11 9.91 2.41 0.11 7.21 2.21 3.12 5.82 4.52 9.61 1.01 8.01 1.41 4.42 0.61 7.03 Di Pri 131 ce an yra )s sti mi m 0.9 1.5 0.8 1.3 0.7 0.6 1.0 0.8 0.5 1.5 1.6 1.5 1.4 0.5 0.4 1.1 0.8 1.6 0.5 2.2 D Pr (K - s ean Yr oloh lea ngi m 3.5 9.2 7.5 9.3 5.6 2.6 6.3 7.4 8.6 9.3 6.2 3.3 2.5 7.6 0.6 0.5 1.6 2.3 0.5 9.2 M Sc Fe - e Yrs oolh ngi 4.5 2.4 5.0 3.3 5.8 5.5 2.8 4.3 6.1 3.3 3.6 2.8 4.8 6.0 5.6 4.2 5.0 2.7 4.3 2.5 Mean Mal Sc - na s olo lat Yr ngi 9.4 6.2 4.5 6.3 1.6 9.5 2.3 5.4 5.6 6.3 4.2 0.3 0.5 4.6 8.5 6.4 5.5 0.3 6.4 7.2 Me To Sch to ngi- N 81 2 2 2 9 8 9 3 5 1 6 4 7 8 5 % ndetta 3.6 7.2 4.0 6.3 6.2 7.7 13- 37. 62. 32. 49. 25. 25. 53. 12. 18. 28. 22. 11. 25. 24. 2001 sso -ll tn yra ro Gr me mi En Pr 113.3 101.7 116.0 112.6 114.1 115.1 101.7 118.6 113.0 111.2 101.8 108.8 117.2 119.9 114.8 122.9 106.9 103.9 117.8 105.1 Net -llor tn yra slr m me Gi 2.68 1.27 6.78 9.77 5.88 5.38 2.17 4.48 5.98 9.57 2.87 7.07 5.68 5.98 4.28 0.59 5.48 1.77 4.08 8.77 En Pri te -ll tn yra sy 4 2 8 9 5 4 0 7 1 5 8 3 9 2 9 6 6 2 6 4 N ro me mi Bo 83. 73. 88. 78. 88. 87. 67. 84. 89. 78. 65. 75. 86. 90. 88. 90. 77. 72. 91. 68. En Pr to gni- N dn 12 % 7- 2.11 7.72 5.8 8.61 6.4 9.6 2.92 2.51 6.3 8.11 8.62 2.42 2.7 0.4 3.6 2.6 1.71 5.82 7.7 4.52 ttea ngi- - 8 1 5 3 9 4 9 6 6 9 2 9 7 0 7 2 5 7 2 4 4-6 e % ndetta looh pr sc 28. 22. 30. 24. 34. 32. 18. 26. 36. 24. 23. 22. 30. 33. 37. 29. 28. 24. 29. 16. et )+ ra s teilIl or 7 8 yr 18.7 41.3 15.2 29.4 10.8 10.9 35.5 19.4 7. 30.4 43.2 35.7 20.4 7. 10.1 20.5 17.5 37.5 15.6 37.7 10( puo r. . b.r .ru c.i t.x b.r Poor- n Poor- la Poor- U U Gr Nll rooP t. 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Nil tremxE aug w Cane,oob Not oorP on-P an N tremxE oorP on-P ntic ntic N ral tremxE oorP on-P N na cif cif dna;rt A Al Urb Ru Ma aciP aciP ntrae tla lat efaS Bam Di wartS adenIfI C Central A A 1 2 3 4 5 Table ANNEX 2 ­ STATISTICAL APPENDIX List of Tables PART A - POVERTY A01 Nicaragua 1998 ­ 2005 Contribution to Poverty A02 Nicaragua 1998 ­ 2005 Headcount Rates A03 Nicaragua 1998 ­ 2005 Poverty Gap & FGT P2 A04 Nicaragua 1998 ­ 2005 Extreme Poverty Gap & FGT P2 A05 Nicaragua 2005 ­ Poverty Populations by Areas and Regions A06 Nicaragua 2005 ­ Poverty Populations by Regions A07 Nicaragua 2005 ­ Poverty % (Regions) A08 Nicaragua 2005 ­ Poverty Population by Areas A09 Nicaragua 2005 ­ Poverty % (Areas) A10 Nicaragua 1998 ­ 2005 LSMS ­ Significant Head-Count Ratios A11 Nicaragua 1998 ­ 2005 LSMS ­ Significant Head-Count Ratios: Original-Final Urban A12 Nicaragua 1998 ­ 2005 LSMS ­ Confidence Intervals A13 National Consumption by Area and Region A14 Share of National Consumption by poverty lines A15 Share of National Consumption by Quintiles A16 Share of National Consumption by Area A17 Share of National Consumption by poverty lines A18 Share of National Consumption by Quintiles A19 Gini's Nicaragua 2001 ­ 2005 LSMS PART B ­ CONSUMPTION B01 Nicaragua 2005 ­ LSMS Consumption Patterns (Comprehensive) B02 Nicaragua 2005 ­ LSMS Annual Average Value of Consumption per Capita (Comprehensive) B03 Nicaragua 2005 ­ LSMS Annual Average Value of Consumption per Capita (Comprehensive) by Poverty Group and Area PART C ­ INCOME C01 Nicaragua 2005 ­ LSMS Income Patterns C02 Nicaragua 2005 ­ LSMS Income Patterns by group and area C03 Nicaragua 2005 ­ LSMS Average Income C04 Nicaragua 2005 ­ LSMS Average Income by groups and area PART D ­ DEMOGRAPHIC CHARACTERISTICS D01 Nicaragua 2005 - Demographic Characteristics PART E ­ EDUCATION E01 Nicaragua 2005 - Gross Enrollment Rates by Gender E02 Nicaragua 2005 - Net Enrollment Rates by Gender E03 Nicaragua 2005 - Reason for Not Attending School by Gender (7 - 12 year olds only) E04 Nicaragua 2005 - Reason for Not Attending School by Gender (13 - 18 year olds only) 134 E05 Nicaragua 2005 - Percent Not Attending School E06 Nicaragua 2005 - Pre-school attendance of children 3-6 years old E07 Nicaragua 2005 - Primary School Repetition Rates, percent with no books and mean number of days absent E08 Nicaragua 2005 - Secondary School Repetition Rates, percent with no books and mean number of days absent E09 Nicaragua 2005 - Percent Illiterate (10 years and older) and Average Years of Schooling (10-19 years old) E10 Nicaragua 2005 - Percent Literate (15-24 years and 15 years and older) and Ratio of Females to Males (literate and in school) PART F ­ HEALTH F01 Nicaragua 2005 - Fertility by Poverty, Quintile and Region (Women 15-49 years of age) F02 Nicaragua 2005: Percent of Children receiving DPT and Polio Immunization by Quintile, Poverty Status and Region (12-23 months of age) F03 Nicaragua 2005: DPT and Polio Immunization by Quintile, Poverty Status and Region (% of 12- 23 months of age with card) F04 Nicaragua 2005: DPT and Polio Immunization by Quintile, Poverty Status and Region (% of 12- 23 months of age) F05 Nicaragua 2005 - Incidence of Diarrhea and IRA (Children under 5 years of age) F06 Nicaragua 2005 - Incidence of IRA (Children under 6 years of age) F07 Nicaragua 2005 - Incidence of Diarrhea and Type of care of those reporting Diarrhea (Children under 6 years of age) F08 Nicaragua 2005 - Incidence of Diarrhea and Type of care of those reporting Diarrhea (Children under 5 years of age) F09 Nicaragua 2005 - Reason for Not Seeking care for those reporting Diarrhea last month (Children under 6 years of age) F10 Nicaragua 2005 - Reason for Not Seeking care for those reporting Diarrhea last month (Children under 5 years of age) F11 Nicaragua 2005 - Place of Consultation by Poverty group, Quintiles and Geographic Area (excludes children under 6 years of age reporting diarrhea) F12 Nicaragua 2005: Place of Consultation by Poverty group, Quintiles and Geographic Area (includes all ill excluding children under 6 years of age reporting diarrhea) F13 Nicaragua 2005: Place of Consultation by Poverty group, Quintiles and Geographic Area (includes all ill and children under 6 years of age reporting diarrhea) F14 Nicaragua 2005: Place of Consultation by Poverty group, Quintiles and Geographic Area (includes all ill and children under 6 years of age reporting diarrhea) F15 Nicaragua 2005: Of those consulting for Illness, time spent waiting for medical attention by facility F16 Nicaragua 2005: Of those consulting for Illness, cost of round trip transportation for last consultation by facility F17 Nicaragua 2005: Of those consulting for Illness, cost of last consultation by facility F18 Nicaragua 2005: Of those consulting for Illness, other health expenditures for last consultation by facility F19 Nicaragua 2005: Of those consulting for Illness, total cost of last consultation by facility F20 Nicaragua 2005: Reason for not seeking care of those ill last month F21 Nicaragua 2005: Maternal Health by poverty and region (Women 15-49 years old) F22 Nicaragua 2005: Prenatal care by poverty and region (Women 15-49 years old) F23 Nicaragua 1998-2005: First Pre-natal visit in the First Trimester by poverty and region (Women 15-49 years old) 135 PART G- MALNUTRITION G01 Nicaragua 2005 Prevalence of Malnutrition by Quintile, Region and Poverty Status, Using 2000 CDC standards (Children under 5 years of age) G02 Nicaragua 2005 - Prevalence of Malnutrition by Age Group, Using 2000 CDC standards (Children under 5 years of age) G03 Nicaragua 2005 - Percent of Children (0-59 months) Classified as Malnourished by Poverty and Region (Using 2000 CDC standards) G04 Nicaragua 2005 - Percent of Children (0-59 months) Classified as Malnourished by Poverty and Age (Using 2000 CDC standards) PART H ­ HOUSING AND BASIC SERVICES H01 Nicaragua 2005 - Access to Services/Housing by Poverty Group H02 Nicaragua 2005 - Access to Services/Housing by Poverty and Urban/Rural H03 Nicaragua 2005 - Access to Services/Housing by Quintile H04 Nicaragua 2005 - Access to Services/Housing by Region H05 Nicaragua 2005 - Households with Inadequate Walls, Floor, Ceiling, Housing and Overcrowding H06 Nicaragua 2005 - Households without basic services H07 Nicaragua 2005 - Households with access to Cable TV, Telephone and member of Farmer's association H08 Nicaragua 2005 - Type of Land Titling and Property Registration - Agricultural Households 136 Table A2 ­ A01 Nicaragua 1998-2005 Contribution to Poverty Contribution to poverty (headcount) Extreme Poverty All Poverty Change 1998- Change 1998- 1998 2001 2005 1998 2001 2005 2005 2005 All Nicaragua 100.0% 100.0% 100.0% - 100.0% 100.0% 100.0% - Urban 23.9% 24.0% 20.1% -3.8% 34.6% 30.1% 35.1% 0.5% Rural 76.1% 76.0% 79.9% 3.8% 65.4% 67.8% 64.9% -0.5% Managua 4.7% 4.0% 5.5% 0.8% 10.1% 11.0% 10.3% 0.2% Pacific Urban 9.5% 6.8% 5.4% -4.1% 13.9% 14.1% 13.2% -0.7% Pacific Rural 21.7% 15.5% 14.2% -7.5% 21.8% 17.8% 15.6% -6.2% Central Urban 7.4% 9.4% 8.6% 1.2% 8.7% 10.4% 10.1% 1.4% Central Rural 39.3% 47.7% 43.9% 4.6% 32.2% 30.6% 31.9% -0.3% Atlantic Urban 4.9% 4.8% 2.2% -2.7% 4.7% 5.2% 3.3% -1.4% Atlantic Rural 12.5% 11.7% 20.2% 7.7% 8.7% 11.0% 15.6% 6.9% Source: 2000, 2001 and 1998 LSMS data. Table A2 ­ A02Nicaragua 1998-2005 LSMS Headcount rates: Extreme Poverty All Poverty Change Change 1993 1998 2001 2005 1993 1998 2001 2005 1998-2005 1998-2005 All Nicaragua 19.4 17.3 15.1 14.9 -2.4 50.3 47.9 45.8 46.2 -1.7 Urban 7.3 7.6 6.2 5.4 -2.2 31.9 30.5 30.1 29.1 -1.4 Rural 36.3 28.9 27.4 26.9 -2.0 76.1 68.5 67.8 67.9 -0.6 Managua 5.1 3.1 2.5 3.4 0.3 29.9 18.5 20.2 19.5 1.0 Pacific Urban 6.4 9.8 5.9 4.8 -5.0 28.1 39.6 37.2 35.9 -3.7 Pacific Rural 31.6 24.1 16.3 17.0 -7.1 70.7 67.1 56.8 58.2 -8.9 Central Urban 15.3 12.2 11.1 10.5 -1.7 49.1 39.4 37.6 37.9 -1.5 Central Rural 47.6 32.7 38.4 32.9 0.2 84.7 74.0 75.1 74.4 0.4 Atlantic Urban 7.9 17.0 13.1 7.4 -9.6 35.5 44.4 43.0 34.8 -9.6 Atlantic Rural 30.3 41.4 26.9 31.2 -10.2 83.6 79.3 76.7 74.9 -4.4 Source: 2000, 2001 and 1998 LSMS data. Table A2 ­ A03 Nicaragua 1998 ­ 2005 Poverty Gap & FGT P2 Poverty gap Poverty severity (FGT P2) Change 1998- Change 1998- 1998 2001 2005 1998 2001 2005 2005 2005 All Nicaragua 18.30 17.00 16.27 -2.03 9.30 8.40 7.60 -1.70 Urban 9.90 9.14 8.04 -1.86 4.50 3.97 3.21 -1.29 Rural 28.30 27.97 26.67 -1.63 14.90 14.62 13.16 -1.74 Managua 5.10 5.31 4.84 -0.26 2.10 2.04 1.79 -0.31 Pacific Urban 12.60 10.69 9.13 -3.47 5.70 4.37 3.34 -2.36 Pacific Rural 26.00 20.17 19.95 -6.05 12.80 9.37 8.83 -3.97 Central Urban 14.30 13.12 12.69 -1.61 7.00 6.24 5.81 -1.19 Central Rural 30.90 34.80 31.16 0.26 16.60 19.41 15.97 -0.63 Atlantic Urban 17.50 14.28 10.36 -7.14 8.70 6.76 4.13 -4.57 Atlantic Rural 37.30 29.96 29.80 -7.50 21.50 15.34 14.97 -6.53 Source: 2000, 2001 and 1998 LSMS data. 137 Table A2 ­ A04 Nicaragua 1998 ­ 2005 Extreme Poverty Gap & FGT P2 Extreme poverty gap Extreme poverty severity (FGT P2) Change 1998- Change 1998- 1998 2001 2005 1998 2001 2005 2005 2005 All Nicaragua 4.80 4.13 3.40 -1.40 2.00 1.61 1.16 -0.84 Urban 1.90 1.50 1.03 -0.87 0.70 0.54 0.31 -0.39 Rural 8.30 7.82 6.38 -1.92 3.50 3.11 2.22 -1.28 Managua 0.60 0.49 0.46 -0.14 0.20 0.20 0.09 -0.11 Pacific Urban 2.30 1.24 0.81 -1.49 0.80 0.36 0.20 -0.60 Pacific Rural 6.00 3.84 3.03 -2.97 2.30 1.30 0.84 -1.46 Central Urban 3.50 3.03 2.58 -0.92 1.40 1.16 0.95 -0.45 Central Rural 9.80 11.58 8.30 -1.50 4.00 4.73 2.98 -1.02 Atlantic Urban 4.20 3.19 1.20 -3.00 1.40 1.09 0.28 -1.12 Atlantic Rural 13.60 7.92 7.84 -5.76 6.60 3.32 2.85 -3.75 Source: 2000, 2001 and 1998 LSMS data. Table A2 ­ A05 Nicaragua 2005 ­ Poverty Populations by Areas and Regions Extreme Poor All Poor Non-Poor Urban Rural Urban Rural Urban Rural Total Managua 29 13 203 42 939 77 1262 Pacific Urban 41 - 313 - 558 - 871 Pacific Rural - 108 - 371 - 266 636 Central Urban 66 - 239 - 392 - 632 Central Rural - 336 - 760 - 261 1021 Atlantic Urban 17 - 78 - 147 - 225 Atlantic Rural - 154 - 371 - 124 495 All Nicaragua 154 612 834 1543 2037 728 5142 Source: 2005 LSMS data. Table A2 ­ A06 Nicaragua 2005 ­ Poverty Populations by Regions Extreme Poor Poor Non-Poor National Managua 42 246 1016 1262 Pacific Urban 41 313 558 871 Pacific Rural 108 371 266 636 Central Urban 66 239 392 632 Central Rural 336 760 261 1021 Atlantic Urban 17 78 147 225 Atlantic Rural 154 371 124 495 All Nicaragua 766 2377 2765 5142 Source: 2005 LSMS data. 138 Table A2 ­ A07 Nicaragua 2005 ­ Poverty % (Regions) Extreme Poor Poor Non-Poor National Managua 5.5% 10.3% 36.8% 24.5% Pacific Urban 5.4% 13.2% 20.2% 16.9% Pacific Rural 14.2% 15.6% 9.6% 12.4% Central Urban 8.6% 10.1% 14.2% 12.3% Central Rural 43.9% 31.9% 9.4% 19.8% Atlantic Urban 2.2% 3.3% 5.3% 4.4% Atlantic Rural 20.2% 15.6% 4.5% 9.6% All Nicaragua 100.0% 100.0% 100.0% 100.0% Source: 2005 LSMS data. Table A2 ­ A08 Nicaragua 2005 ­ Poverty Population by Areas Extreme Poor All Poor Non-Poor All Population Urban 156 844 2062 2906 Rural 619 1562 737 2299 Total 775 2406 2799 5205 Source: 2005 LSMS data. Table A2 ­ A09 Nicaragua 2005 ­ Poverty % (Areas) Extreme Poor All Poor Non-Poor All Population Urban 20.1% 35.1% 73.7% 55.8% Rural 79.9% 64.9% 26.3% 44.2% Total 100.0% 100.0% 100.0% 100.0% Source: 2005 LSMS data. Table A2 ­ A10 Nicaragua 1998 ­ 2005 LSMS ­ Significant Head-Count Ratios Headcount Sample size Extreme Standard General Standard poverty line error poverty line error 1998 0.173 0.010 0.478 0.013 4,040 2001 0.151 0.010 0.458 0.016 4,191 2005 0.149 0.008 0.462 0.013 6,882 Difference 2005-1998 -2.5% -1.6% Standard error of diffference 0.014 0.020 t value -1.71 -0.79 Significance level 9% 43% Source: 2005, 2001 and 1998 LSMS data. Table A2 ­ A11 Nicaragua 1998 ­ 2005 LSMS ­ Significant Head-Count Ratios: Original-Final Urban Headcount Sample size Extreme Standard General Standard poverty line error poverty line error 1998 0.076 0.010 0.305 0.020 2,187 2001 0.062 0.009 0.301 0.020 2,352 2005 0.054 0.008 0.291 0.017 3,470 Difference 2005-1998 -2.3% -1.4% Standard error of diffference 0.013 0.028 t value -1.75 -0.50 Significance level 8% 61% Source: 2005, 2001 and 1998 LSMS data. 139 Table A2 ­ A12 Nicaragua 1998 ­ 2005 LSMS ­ Confidence Intervals p value Lower limit Point estimate Upper limit General 1998 43.5% 47.8% 52.2% General 2001 41.3% 45.8% 50.4% General 2005 1% 42.7% 46.2% 49.7% Extreme 1998 14.3% 17.3% 20.4% Extreme 2001 12.3% 15.1% 17.8% Extreme 2005 12.7% 14.9% 17.1% General 1998 44.5% 47.8% 51.2% General 2001 42.4% 45.8% 49.3% General 2005 5% 43.6% 46.2% 48.9% Extreme 1998 15.0% 17.3% 19.7% Extreme 2001 12.9% 15.1% 17.2% Extreme 2005 13.2% 14.9% 16.6% Source: 2005, 2001 and 1998 LSMS data. Table A2 ­ A13 National Consumption by Area and Region (2001 LSMS) Consumo (Millones de Porcentaje del Población Porcentaje de la Córdobas de 2001) Consumo (Miles) población Nacional 40,498 100.0 5,205 100.0 Urbano 30,208 74.6 3,036 58.3 Rural 10,290 25.4 2,169 41.7 Managua 16,028 39.6 1,292 24.8 Pacífico Urbano 7,369 18.2 904 17.4 Pacífico Rural 4,144 10.2 746 14.3 Central Urbano 5,318 13.1 663 12.7 Central Rural 4,020 9.9 972 18.7 Atlántico Urbano 2,176 5.4 286 5.5 Atlántico Rural 1,443 3.6 341 6.6 Source: 2005 and 2001 LSMS data. Table A2 ­ A14 Share of National Consumption by poverty lines (2001 LSMS) Consumo (Millones de Porcentaje del Población Porcentaje de la Córdobas de 2001) Consumo (Miles) población Nacional 40,498 100.0 5,205 100.0 Pobre extremo 1,530 3.8 783 15.1 Pobre no extremo 6,213 15.3 1,602 30.8 Pobre 7,743 19.1 2,385 45.8 No pobre 32,755 80.9 2,820 54.2 Table A2 ­ A15 Share of National Consumption by Quintiles (2001 LSMS) Consumo (Millones de Porcentaje del Población Porcentaje de la Córdobas de 2001) Consumo (Miles) población Nacional 40,498 100.0 5,205 100.0 Quintil 1 2,271 5.6 1,041 20.0 Quintil 2 3,982 9.8 1,040 20.0 Quintil 3 5,752 14.2 1,042 20.0 Quintil 4 8,543 21.1 1,040 20.0 Quintil 5 19,949 49.3 1,042 20.0 Fuente: EMNV 2001. Se calcula el consumo usando pesos muestrales ("peso3"). Participación se calcula usando consume percápita ya que esta tabla es para población no para familias. 140 Table A2 ­ A16 Share of National Consumption by Area (2005 LSMS) Consumo (Millones de Porcentaje del Población Porcentaje de la Córdobas de 2001) Consumo (Miles) población Nacional 51,907 100.0 5,142 100.0 Urbano 37,151 74.6 2,871 58.3 Rural 14,756 25.4 2,271 41.7 Managua 18,759 39.6 1,262 24.8 Pacífico Urbano 9,805 18.2 871 17.4 Pacífico Rural 4,823 10.2 636 14.3 Central Urbano 7,181 13.1 632 12.7 Central Rural 5,963 9.9 1,021 18.7 Atlántico Urbano 2,560 5.4 225 5.5 Atlántico Rural 2,818 3.6 495 6.6 Table A2 ­ A17 Share of National Consumption by poverty lines (2005 LSMS) Consumo (Millones de Porcentaje del Población Porcentaje de la Córdobas de 2001) Consumo (Miles) población Nacional 51,907 100.0 5,142 100.0 Pobre extremo 2,181 4.2 766 14.9 Pobre no extremo 8,479 16.3 1,612 31.3 Pobre 10,660 20.5 2,377 46.2 No pobre 41,248 79.5 2,765 53.8 Table A2 ­ A18 Share of National Consumption by Quintiles (2005 LSMS) Consumo (Millones de Porcentaje del Población Porcentaje de la Córdobas de 2001) Consumo (Miles) población Nacional 51,907 100.0 5,142 100.0 Quintil 1 3,219 6.2 1,028 20.0 Quintil 2 5,340 10.3 1,029 20.0 Quintil 3 7,619 14.7 1,030 20.0 Quintil 4 11,240 21.7 1,027 20.0 Quintil 5 24,490 47.2 1,029 20.0 Fuente: EMNV 2005. Se calcula el consumo usando pesos muestrales ("peso3"). Participación se calcula usando consume percápita ya que esta tabla es para población no para familias. Table A2 ­ A19 Gini's Nicaragua 2001 ­ 2005 LSMS Type Level Year Value Change 2001 43.1 National 2005 40.6 -2.53 2001 41.4 Consumption Urban 2005 38.1 -3.30 2001 34.7 Rural 2005 33.8 -0.82 2001 55.1 National 2005 50.9 -4.19 2001 54.3 Income Urban 2005 48.9 -5.41 2001 48.3 Rural 2005 45.8 -2.56 Source: 2005 and 2001 LSMS data. 141 Table A2 ­ B01 Nicaragua 2005: LSMS Consumption Patterns (Comprehensive) Area de residencia Region de residencia Grupo Nacional Pacífico Pacífico Central Central Atlántico Atlántico Urbano Rural Managua Urbano Rural Urbano Rural Urbano Rural Alimentos 52.47 46.40 60.14 44.66 47.94 58.08 48.29 61.45 49.26 61.42 Vivienda 12.40 14.25 10.07 15.56 13.09 10.22 13.03 10.01 12.40 10.07 Serv. vivienda (Agua, Electric, etc) 7.33 9.56 4.50 9.12 10.01 5.37 9.41 4.31 8.41 3.61 Educación 4.53 5.28 3.58 5.25 5.53 4.44 5.04 3.33 5.17 2.55 Salud 5.84 5.56 6.19 5.21 5.67 5.98 5.96 6.14 5.98 6.67 Personal y Otros 10.27 10.63 9.81 10.65 10.27 9.34 10.64 9.68 11.79 10.51 Equipamiento Hogar 2.37 3.17 1.35 3.32 3.02 1.96 3.26 1.13 2.36 0.74 Transporte 4.80 5.15 4.36 6.22 4.47 4.61 4.37 3.94 4.63 4.40 Transferencias 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.01 0.02 Pobreza Rural Urbano Grupo Pobre Pobres Pobres Pobre Pobres Pobres Pobre Pobres Pobres Nopobre Nopobre Nopobre extremo Moderados (todos) extremo Moderados (todos) extremo Moderados (todos) Alimentos 65.38 59.30 61.26 44.91 66.67 62.49 64.15 51.64 60.25 54.92 55.90 42.51 Vivienda 10.44 10.61 10.56 13.99 10.48 10.01 10.20 9.79 10.29 11.43 11.22 15.49 Serv.vivienda(Agua,Electric,etc) 5.84 6.53 6.31 8.20 5.00 4.11 4.46 4.59 9.16 9.84 9.72 9.49 Educación 2.92 3.80 3.52 5.40 2.79 3.43 3.18 4.42 3.45 4.29 4.14 5.75 Salud 4.28 5.22 4.91 6.63 4.31 5.45 5.00 8.70 4.14 4.89 4.75 5.89 PersonalyOtros 8.42 9.51 9.16 11.22 8.27 9.61 9.08 11.37 9.02 9.38 9.31 11.16 Equipamiento Hogar 0.86 1.36 1.20 3.37 0.74 0.95 0.87 2.37 1.37 1.91 1.81 3.73 Transporte 1.86 3.68 3.09 6.27 1.74 3.93 3.06 7.11 2.32 3.33 3.14 5.97 Transferencias 0.00 0.01 0.01 0.01 0.00 0.01 0.01 0.01 0.00 0.00 0.00 0.01 Quintil Grupo 1 2 3 4 5 Alimentos 65.06 59.07 53.27 48.24 36.69 Vivienda 10.20 10.55 11.62 12.27 17.37 Serv. vivienda (Agua, Electric, etc) 5.74 6.68 7.09 7.97 9.15 Educación 3.04 3.65 4.75 5.51 5.69 Salud 4.53 5.19 6.45 6.62 6.40 Personal y Otros 8.48 9.64 10.25 10.83 12.12 Equipamiento Hogar 0.85 1.42 2.01 2.90 4.66 Transporte 2.09 3.79 4.56 5.65 7.90 Transferencias 0.00 0.00 0.01 0.01 0.02 Values are the average of each household Others include: Ceremonies, dubs fees, lottery, domestic service, shoes, linens, cook ware, detergent, transport, communication, etc. 142 Table A2 ­ B02 Nicaragua 2005: LSMS Annual Average Value of Consumption Per Capita (Comprehensive) Serv. Equipamient Transferenc Personal y Total Alimentos Vivienda Educación Salud Transporte Vivienda o Hogar ias Otros C$ C$ C$ C$ C$ C$ C$ C$ C$ C$ Área de Residencia Urbano 12,940.06 5,085.06 2,213.59 1,246.89 730.18 750.74 549.22 876.58 1.63 1,486.18 Rural 6,497.46 3,554.74 721.68 298.51 251.15 464.08 133.70 380.00 2.03 691.56 Total 10,094.61 4,409.18 1,554.67 828.03 518.61 624.13 365.70 657.26 1.81 1,135.23 Region de residencia Managua 14,866.42 5,627.19 2,716.31 1,392.94 816.12 801.16 664.20 1,129.77 1.08 1,717.65 Pacifico Urbano 11,251.00 4,681.53 1,736.17 1,098.90 686.30 698.48 430.83 674.64 2.48 1,241.67 Pacifico Rural 7,578.07 3,893.47 1,059.42 426.79 352.98 495.45 204.77 413.91 5.53 725.76 Central Urbano 11,369.02 4,653.96 1,772.66 1,097.03 636.77 724.92 497.52 690.30 1.27 1,294.59 Central Rural 5,842.52 3,291.70 561.92 246.38 208.09 441.90 106.67 344.05 0.32 641.49 Atlantico Urbano 11,350.57 4,824.76 1,791.09 1,034.27 551.66 668.08 373.40 652.17 1.56 1,453.57 Atlantico Rural 5,696.64 3,289.61 571.17 188.69 152.16 434.42 59.20 340.79 1.55 659.03 Total 10,094.61 4,409.18 1,554.67 828.03 518.61 624.13 365.70 657.26 1.81 1,135.23 Pobreza Pobre extremo 2,849.30 1,855.46 295.22 164.43 88.00 123.41 25.26 56.20 0.02 241.30 Pobres Moderados 5,260.33 3,097.28 562.70 347.78 202.89 273.93 73.77 198.13 0.44 503.41 Pobre (todos) 4,483.93 2,697.39 476.57 288.74 165.89 225.46 58.15 152.43 0.30 419.00 No pobre 14,919.17 5,881.12 2,481.72 1,291.75 821.91 966.94 630.16 1,091.36 3.10 1,751.11 Total 10,094.61 4,409.18 1,554.67 828.03 518.61 624.13 365.70 657.26 1.81 1,135.23 Source: LSMS 2005 data Table A2 ­ B03 Nicaragua 2005: LSMS Annual Average Value of Consumption Per Capita (Comprehensive) by Poverty Group and Area Serv. Equipamient Transferenc Personal y Total Alimentos Vivienda Educación Salud Transporte Vivienda o Hogar ias Otros C$ C$ C$ C$ C$ C$ C$ C$ C$ C$ Urbano Pobre extremo 2,978.72 1,783.29 306.53 278.83 107.09 121.58 41.03 70.65 0.03 269.70 Pobres Moderados 5,461.65 2,989.63 625.29 537.14 237.78 262.41 106.06 187.90 0.09 515.34 Pobre (todos) 5,003.75 2,767.16 566.51 489.50 213.68 236.44 94.07 166.28 0.08 470.04 No pobre 16,190.94 6,034.52 2,888.27 1,557.14 941.74 961.40 735.65 1,167.53 2.27 1,902.42 Total 12,940.06 5,085.06 2,213.59 1,246.89 730.18 750.74 549.22 876.58 1.63 1,486.18 Rural Pobre extremo 2,816.74 1,873.62 292.37 135.66 83.20 123.87 21.30 52.56 0.02 234.15 Pobres Moderados 5,113.26 3,175.93 516.98 209.44 177.40 282.35 50.17 205.60 0.70 494.69 Pobre (todos) 4,202.88 2,659.67 427.94 180.19 140.05 219.53 38.73 144.94 0.43 391.41 No pobre 11,361.10 5,451.95 1,344.29 549.29 486.65 982.45 335.01 878.26 5.43 1,327.78 Total 6,497.46 3,554.74 721.68 298.51 251.15 464.08 133.70 380.00 2.03 691.56 Pobreza Pobre extremo 2,849.30 1,855.46 295.22 164.43 88.00 123.41 25.26 56.20 0.02 241.30 Pobres Moderados 5,260.33 3,097.28 562.70 347.78 202.89 273.93 73.77 198.13 0.44 503.41 Pobre (todos) 4,483.93 2,697.39 476.57 288.74 165.89 225.46 58.15 152.43 0.30 419.00 No pobre 14,919.17 5,881.12 2,481.72 1,291.75 821.91 966.94 630.16 1,091.36 3.10 1,751.11 Total 10,094.61 4,409.18 1,554.67 828.03 518.61 624.13 365.70 657.26 1.81 1,135.23 Source: LSMS 2005 data 143 Table A2 ­ C.1 Nicaragua 2005: LSMS Income Patterns ÁreadeResidencia Regiónderesidencia Pobreza Total Pacífico Pacífico Central Central Atlántico Atlántico Pobre Pobre Pobres Urbano Rural Managua Nopobre Urbano Rural Urbano Rural Urbano Rural extremo Moderado (todos) Trabajo Asalariadoagrícola 3.8% 19.5% 1.6% 4.0% 18.5% 7.6% 23.4% 8.5% 14.4% 27.4% 13.7% 18.1% 4.4% 10.7% AsalariadoNo agrícola 44.2% 15.9% 51.5% 42.7% 26.8% 36.3% 10.6% 31.5% 5.6% 16.0% 27.8% 24.0% 38.3% 31.7% Auto-empleono agrícola 23.0% 9.1% 18.1% 25.3% 14.1% 25.8% 6.8% 25.3% 7.5% 6.4% 13.0% 10.9% 21.9% 16.8% Auto-empleo agrícola 2.3% 32.2% 1.0% 2.0% 15.8% 4.9% 38.0% 6.3% 47.1% 28.4% 21.5% 23.7% 8.4% 15.5% Indeterminado 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Rentaimputada 13.7% 10.1% 16.5% 11.1% 10.6% 11.8% 9.0% 12.5% 11.4% 9.3% 10.2% 9.9% 14.0% 12.1% Trasferencia educación 1.5% 5.3% 0.7% 2.1% 4.7% 1.9% 5.3% 3.2% 6.9% 6.6% 4.6% 5.3% 1.4% 3.2% Obseq. Aliment. Recibidos 1.1% 2.5% 1.1% 1.0% 2.3% 1.4% 2.7% 1.9% 2.4% 2.2% 2.1% 2.1% 1.4% 1.7% Remesasrecibidas 7.3% 3.8% 5.8% 9.0% 5.4% 7.6% 3.2% 7.2% 2.5% 3.0% 4.8% 4.2% 7.1% 5.8% Caridadrecibida 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 0.1% 0.1% 0.1% 0.0% 0.1% Rentasdecapital 0.5% 0.2% 0.6% 0.4% 0.3% 0.4% 0.1% 0.8% 0.2% 0.1% 0.2% 0.1% 0.6% 0.4% Pensiones 2.2% 0.5% 2.4% 2.1% 1.2% 1.6% 0.2% 1.6% 0.2% 0.4% 1.4% 1.1% 1.7% 1.4% Otros 0.4% 0.8% 0.5% 0.3% 0.4% 0.5% 0.4% 1.2% 1.7% 0.3% 0.6% 0.5% 0.7% 0.6% Total anual ingreso per cápita 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Table A2 ­ C.2 Nicaragua 2005: LSMS Income Patterns by group and area Urbano Rural Pobreza Pobre Pobres Pobres Pobre Pobres Pobres Pobre Pobres Pobres No pobre No pobre No pobre extremo moderados (todos) extremo moderados (todos) extremo moderados (todos) Trabajo Asalariado agrícola 19.9% 6.0% 8.5% 1.8% 29.3% 19.3% 23.2% 11.5% 27.4% 13.7% 18.1% 4.4% Asalariado No agrícola 41.8% 46.4% 45.5% 43.7% 9.5% 14.2% 12.3% 23.4% 16.0% 27.8% 24.0% 38.3% Auto-empleo no agrícola 17.1% 20.7% 20.0% 24.2% 3.7% 7.5% 6.0% 15.6% 6.4% 13.0% 10.9% 21.9% Auto-empleo agrícola 3.5% 3.5% 3.5% 1.8% 34.6% 34.7% 34.7% 26.9% 28.4% 21.5% 23.7% 8.4% Indeterminado 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Renta imputada 8.0% 10.2% 9.8% 15.3% 9.6% 10.2% 9.9% 10.5% 9.3% 10.2% 9.9% 14.0% Trasferencia educación 4.2% 2.7% 3.0% 0.9% 7.2% 6.1% 6.5% 2.9% 6.6% 4.6% 5.3% 1.4% Obseq. Aliment. Recibidos 1.0% 1.2% 1.2% 1.1% 2.5% 2.7% 2.6% 2.3% 2.2% 2.1% 2.1% 1.4% Remesas recibidas 3.3% 6.5% 5.9% 7.8% 2.9% 3.5% 3.3% 5.0% 3.0% 4.8% 4.2% 7.1% Caridad recibida 0.0% 0.0% 0.0% 0.0% 0.1% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% Rentas de capital 0.1% 0.2% 0.2% 0.7% 0.1% 0.1% 0.1% 0.4% 0.1% 0.2% 0.1% 0.6% Pensiones 1.0% 2.4% 2.2% 2.2% 0.2% 0.7% 0.5% 0.3% 0.4% 1.4% 1.1% 1.7% Otros 0.1% 0.2% 0.2% 0.5% 0.4% 0.9% 0.7% 1.1% 0.3% 0.6% 0.5% 0.7% Total anual ingreso per cápita 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 144 Table A2 ­ C.3 Nicaragua 2005: LSMS Average Income Área de Residencia Región de residencia Total Pacífico Atlántico Urbano Rural Managua Pacífico Rural Central Urbano Central Rural Atlántico Rural Urbano Urbano Trabajo Asalariado agrícola 468.23 1,269.04 228.24 664.66 1,382.73 641.65 1,413.14 699.76 957.84 821.92 Asalariado No agrícola 6,897.92 1,507.99 8,697.08 6,183.22 2,509.66 4,837.21 934.75 4,460.62 513.79 4,517.39 Auto-empleo no agrícola 3,890.07 993.65 3,400.26 4,006.74 1,431.45 3,961.75 777.86 4,438.96 879.12 2,610.83 Auto-empleo agrícola 1,197.20 2,701.52 683.70 1,603.16 1,179.39 1,736.38 3,522.33 608.25 3,503.80 1,861.60 Indeterminado - - - - - - - - - - Renta imputada 2,092.27 667.87 2,597.59 1,615.03 975.52 1,649.50 510.12 1,718.73 541.35 1,463.17 Trasferencia educación 97.76 232.28 45.01 149.63 213.92 112.97 235.89 173.65 270.07 157.17 Obseq. Aliment. Recibidos 105.88 149.12 104.62 86.54 145.29 133.35 152.29 181.15 125.84 124.98 Remesas recibidas 1,127.50 308.95 990.37 1,276.31 430.32 1,099.66 276.16 1,073.12 171.01 765.98 Caridad recibida 3.58 5.39 8.52 0.09 0.55 0.86 10.34 0.09 0.47 4.38 Rentas de capital 172.38 62.83 206.86 95.11 138.05 127.87 18.74 432.27 17.16 124.00 Pensiones 379.55 80.28 504.61 325.76 243.86 223.60 20.21 136.57 7.19 247.37 Otros 113.25 79.33 115.78 69.57 12.34 271.03 24.99 215.49 91.88 98.27 Total anual ingreso per cápita (2005) 16,545.59 8,058.26 17,582.63 16,075.82 8,663.09 14,795.83 7,896.82 14,138.66 7,079.53 12,797.06 Total anual ingreso per cápita (Precios del 2001) 12,534.54 6,104.74 13,320.17 12,178.65 6,562.95 11,208.96 5,982.44 10,711.11 5,363.28 9,694.74 Total anual ingreso per cápita (Precios de 1998) 9,347.79 4,552.69 9,933.69 9,082.39 4,894.40 8,359.22 4,461.48 7,987.94 3,999.73 7,229.98 Table A2 ­ C.4 Nicaragua 2005: LSMS Average Income by groups and area Urbano Rural Pobreza Pobres Pobres Pobres Pobre extremo Pobres (todos) No pobre Pobre extremo Pobres (todos) No pobre Pobre extremo Pobres (todos) No pobre moderados moderados moderados Trabajo Asalariado agrícola 1,268.65 1,232.68 1,246.94 1,315.89 962.34 403.82 506.82 452.42 1,207.09 882.77 987.21 679.79 Asalariado No agrícola 421.79 1,025.66 786.28 3,037.74 2,375.96 3,561.60 3,342.94 8,354.11 814.54 2,096.22 1,683.49 6,954.23 Auto-empleo no agrícola 165.13 531.91 386.51 2,280.56 795.38 1,575.60 1,431.71 4,897.06 291.80 972.51 753.30 4,208.10 Auto-empleo agrícola 1,170.10 1,978.79 1,658.21 4,912.93 149.93 210.43 199.27 1,605.97 965.07 1,232.27 1,146.22 2,476.74 Indeterminado - - - - - - - - - - - - Renta imputada 270.17 480.49 397.12 1,241.77 299.32 606.30 549.69 2,724.15 276.03 533.60 450.66 2,333.82 Trasferencia educación 205.74 263.74 240.75 214.32 148.28 151.98 151.30 75.83 194.19 216.56 209.36 112.30 Obseq. Aliment. Recibidos 75.43 139.51 114.10 223.33 40.44 75.92 69.38 120.83 68.39 112.66 98.41 147.82 Remesas recibidas 121.56 243.97 195.44 549.55 166.62 451.32 398.81 1,425.99 130.62 331.50 266.81 1,195.21 Caridad recibida 3.16 6.67 5.28 5.63 0.10 0.46 0.39 4.89 2.55 4.05 3.57 5.08 Rentas de capital 4.39 6.59 5.72 183.89 5.29 12.24 10.96 238.51 4.57 8.98 7.56 224.13 Pensiones 10.15 45.09 31.24 184.23 51.07 172.24 149.89 473.62 18.38 98.77 72.88 397.42 Otros 12.71 36.21 26.89 190.47 2.20 20.41 17.05 152.66 10.60 29.54 23.44 162.61 Total anual ingreso per cápita (2005) 3,729.00 5,991.32 5,094.50 14,340.32 4,996.94 7,242.30 6,828.21 20,526.03 3,983.83 6,519.43 5,702.91 18,897.24 Total anual ingreso per cápita (Precios 2001) 2,825.00 4,538.88 3,859.47 10,863.88 3,785.56 5,486.59 5,172.89 15,550.02 3,018.05 4,938.96 4,320.39 14,316.09 Total anual ingreso per cápita (Precios 1998) 2,106.78 3,384.93 2,878.25 8,101.88 2,823.13 4,091.70 3,857.75 11,596.63 2,250.75 3,683.29 3,221.98 10,676.41 145 Table A2 ­ D.1 Nicaragua 2005 - Demographic Characteristics Total number Women adults Men adults Children Children Mean Age of Mean Age Demographic of people in (16 yrs and (16 yrs and (under 16 (5 yrs and Household of Head's Dependency Dependency Characteristics household above) above) yrs) under) Head Spouse Ratio1 Ratio2 All 5.2 1.7 1.5 2.0 0.7 48.7 41.1 0.7 0.7 Extreme Poor 7.3 1.8 1.9 3.5 1.2 48.7 41.9 1.0 1.0 Moderately Poor 6.1 1.7 1.7 2.7 0.9 48.8 41.0 0.8 0.8 Poor 6.5 1.8 1.8 2.9 1.0 48.8 41.3 0.9 0.9 Non-poor 4.4 1.6 1.4 1.4 0.5 48.6 41.0 0.6 0.6 Urban 5.0 1.8 1.5 1.7 0.6 49.2 41.7 0.6 0.7 Extreme Poor 7.6 2.1 2.1 3.4 1.2 52.8 47.1 0.9 1.0 Moderately Poor 6.5 2.0 1.8 2.8 1.0 50.5 42.9 0.8 0.9 Poor 6.7 2.0 1.8 2.9 1.0 50.9 43.7 0.8 0.9 Non-poor 4.5 1.7 1.4 1.4 0.5 48.8 41.1 0.6 0.6 Rural 5..5 1.5 1.6 2.4 0.7 47.9 40.5 0.7 0.8 Extreme Poor 7.3 1.8 1.9 3.6 1.2 47.7 40.8 1.0 1.0 Moderately Poor 5.9 1.5 1.7 2.6 0.8 47.7 40.0 0.8 0.8 Poor 6.3 1.6 1.8 3.0 1.0 47.7 40.2 0.9 0.9 Non-poor 4.3 1.3 1.5 1.5 0.5 48.2 40.9 0.6 0.6 Quintile Poorest 7.1 1.8 1.9 3.4 1.2 48.6 41.7 1.0 1.0 II 6.2 1.7 1.7 2.7 0.9 48.8 40.7 0.8 0.8 III 5.4 1.7 1.6 2.1 0.7 48.0 40.8 0.7 0.8 IV 4.8 1.7 1.4 1.7 0.6 48.9 40.0 0.6 0.7 Richest 3.7 1.5 1.2 0.9 0.3 48.9 42.3 0.4 0.5 Zone Managua - Urban 4.9 1.8 1.5 1.6 0.6 48.5 41.0 0.6 0.6 Managua - Rural 4.6 1.6 1.7 1.4 0.5 51.8 43.2 0.5 0.7 Managua - Total 4.9 1.8 1.5 1.6 0.6 48.8 41.3 0.6 0.6 Pacific - Urban 5.1 1.8 1.6 1.8 0.6 50.1 43.0 0.6 0.7 Pacific - Rural 5.2 1.6 1.6 2.1 0.6 49.2 41.8 0.7 0.7 Pacific - Total 5.2 1.7 1.6 1.9 0.6 49.7 42.5 0.6 0.7 Central - Urban 4.8 1.7 1.3 1.8 0.6 49.9 41.3 0.7 0.7 Central - Rural 5.5 1.5 1.7 2.4 0.7 47.5 40.3 0.7 0.8 Central - Total 5.2 1.6 1.5 2.1 0.7 48.5 40.7 0.7 0.8 Atlantic- Urban 5.2 1.7 1.4 2.1 0.7 47.4 40.9 0.7 0.8 Atlantic - Rural 6.1 1.4 1.6 3.1 1.1 45.7 38.5 1.0 1.0 Atlantic - Total 5.8 1.5 1.5 2.8 0.9 46.3 39.3 0.9 0.9 Source: 2005 LSMS data Note: Moderately poor include those that are poor but not extreme poor 1 Number of 0-12 years and greater than 64 years over all others 2 Number of 0-12 years and greater than 60 years over all others 146 Table A2 ­ E01 Nicaragua 2005 - Gross Enrollment Rates by Gender Primary2 Secondary3 Total Male Female Total Male Female All 109.1 107.8 110.5 67.8 61.0 74.6 Extreme Poor 103.5 96.8 110.4 25.7 22.1 29.6 Moderately Poor 114.5 113.7 115.3 47.7 41.0 54.3 Poor 110.7 107.9 113.6 40.5 34.6 33.3 Non-poor 107.2 107.6 106.7 97.3 90.6 103.7 Urban 105.5 105.2 105.9 92.0 84.7 98.7 Extreme Poor 101.8 93.8 110.5 45.7 38.2 51.7 Moderately Poor 110.7 109.0 112.6 63.5 56.8 69.5 Poor 108.9 106.1 112.2 59.9 53.2 65.8 Non-poor 103.6 104.6 102.6 108.4 100.2 116.2 Rural 112.6 110.4 114.9 41.8 37.6 46.5 Extreme Poor 103.9 97.5 110.4 20.5 18.7 22.6 Moderately Poor 116.9 117.0 116.9 37.1 31.4 43.2 Poor 111.5 108.8 114.2 30.6 26.3 35.5 Non-poor 115.6 114.4 117.2 69.8 67.6 71.9 Quintile Poorest 105.1 100.5 110.1 26.8 23.7 30.3 II 116.4 114.6 118.2 44.8 37.5 52.5 III 112.5 112.9 112.2 77.6 72.6 82.1 IV 105.9 104.6 107.4 99.7 90.9 108.5 Richest 102.8 107.0 98.0 109.8 107.2 112.0 Zone Managua - Urban 99.7 97.1 103.2 101.0 95.1 106.8 Managua - Rural 116.3 118.5 114.7 103.2 113.0 93.3 Managua - Total 101.3 98.6 104.6 101.2 96.6 105.7 Pacific- Urban 105.7 105.5 106.0 83.5 80.8 85.9 Pacific - Rural 116.3 114.7 118.2 59.7 49.9 69.0 Pacific - Total 110.6 109.8 111.5 72.5 66.5 78.1 Central - Urban 108.7 113.7 104.6 93.2 80.4 103.8 Central - Rural 112.0 108.9 115.1 34.2 31.1 38.1 Central - Total 110.9 110.3 111.5 55.3 46.6 64.7 Atlantic- Urban 119.5 121.2 117.9 84.4 68.9 99.3 Atlantic - Rural 109.3 107.4 111.4 24.0 24.6 23.4 Atlantic - Total 112.1 111.1 113.2 43.1 38.3 48.0 Indigenous No 108.1 106.6 109.6 68.4 61.8 75.0 Yes 126.1 125.5 126.8 57.8 46.4 67.9 Worked land last 12 months? No 106.9 105.1 108.8 85.6 77.0 93.7 Yes 112.3 111.6 113.0 43.0 40.6 45.7 Source: 2005 LSMS data 2 number in elementary school/ number of 7-12 yrs old 3 number in secondary school/ number of 13-17 yrs old 147 Table A2 ­ E02 Nicaragua 2005 - Net Enrollment Rates by Gender Primary2 Secondary3 Total Male Female Total Male Female All 84.1 82.5 85.9 45.1 39.9 50.4 Extreme Poor 75.1 71.3 79.0 16.7 12.5 21.4 Not Extreme Poor 86.5 83.8 89.4 32.7 26.7 38.8 Poor 82.6 79.5 85.8 27.5 21.9 33.3 Non-poor 86.1 86.0 86.1 64.2 60.1 68.1 Urban 84.3 84.0 84.6 61.1 56.4 65.3 Extreme Poor 72.8 70.7 75.2 27.4 14.6 37.6 Not Extreme Poor 86.1 84.3 88.3 44.4 39.1 49.2 Poor 83.5 81.7 85.7 41.0 34.5 46.8 Non-poor 84.7 85.4 84.0 71.3 67.2 75.2 Rural 84.0 81.0 87.2 28.1 23.6 33.0 Extreme Poor 75.6 71.5 79.8 13.9 12.0 16.2 Not Extreme Poor 86.7 83.4 90.1 24.9 19.1 31.2 Poor 82.1 78.4 85.8 20.6 16.2 25.6 Non-poor 89.2 87.5 91.3 46.7 43.1 50.3 Quintile Poorest 77.9 74.9 81.0 17.4 13.9 21.5 II 85.7 81.3 90.1 30.6 25.6 35.9 III 88.4 87.5 89.5 52.2 45.1 58.8 IV 86.4 87.2 85.5 64.3 61.4 67.2 Richest 83.6 84.2 82.8 74.2 71.6 76.4 Zone Managua - Urban 82.2 82.5 81.9 67.4 64.4 70.3 Managua - Rural 89.2 79.7 96.1 53.7 54.3 53.0 Managua - Total 82.9 82.3 83.7 66.2 63.5 68.8 Pacific- Urban 84.4 84.1 84.8 56.8 52.7 60.5 Pacific - Rural 88.1 86.1 90.5 44.2 32.6 55.1 Pacific - Total 86.1 85.0 87.4 51.0 43.4 58.0 Central - Urban 85.8 85.8 85.9 59.9 52.1 66.4 Central - Rural 84.5 80.5 88.6 22.6 20.4 25.4 Central - Total 84.9 82.1 87.6 35.9 30.3 42.0 Atlantic- Urban 88.4 86.9 89.9 55.0 49.1 60.6 Atlantic - Rural 78.0 76.4 79.6 14.1 14.6 13.6 Atlantic - Total 80.8 79.3 82.5 27.0 25.2 28.8 Indigenous No 83.8 81.9 85.9 45.7 40.3 51.0 Yes 89.4 90.6 88.0 35.6 29.7 40.9 Worked land last 12 months? No 84.7 83.5 86.0 57.2 51.3 62.7 Yes 83.4 80.9 86.0 28.5 25.3 32.1 Source: 2005 LSMS data 2 number in elementary school/ number of 7-12 yrs old 3 number in secondary school/ number of 13-17 yrs old 148 Table A2 ­ E03 Nicaragua 2005 - Reason for Not Attending School by Gender (7 - 12 year olds only) Extreme Poor Moderately Poor Poor Non-poor Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total Male Not interested 35.9 11.7 15.0 12.6 14.0 13.5 18.6 12.7 14.2 22.3 3.5 14.3 Domestic work/work 6.9 1.8 2.5 0.0 10.8 6.7 1.8 5.6 4.6 0.0 6.5 2.8 No vacancy/no class/no teacher 0.0 7.6 6.6 2.5 12.0 8.3 1.9 9.5 7.5 0.0 7.2 3.0 Distance 0.0 12.2 10.5 0.0 17.0 10.5 0.0 14.2 10.5 0.0 7.1 3.0 Insufficient Security 0.0 3.5 3.0 0.0 5.3 3.3 0.0 4.3 3.2 0.0 11.0 4.7 Family problems 5.9 7.4 7.2 0.7 4.6 3.1 2.1 6.2 5.1 24.0 4.7 15.8 Monetary problems 39.6 48.7 47.4 54.0 22.5 34.5 50.3 37.5 40.9 37.2 34.4 36.0 Other 11.7 7.1 7.8 30.1 13.8 20.0 25.3 10.0 14.0 16.5 25.6 20.4 Female Not interested 8.4 3.1 4.1 1.9 7.6 5.8 4.7 4.9 4.8 11.1 0.0 5.5 Domestic work/work 0.0 1.6 1.3 0.0 6.4 4.4 0.0 3.5 2.6 0.0 3.9 2.0 No vacancy/no class/no teacher 0.0 4.5 3.6 4.1 0.2 1.5 2.3 2.8 2.7 10.1 13.2 11.7 Distance 0.0 16.3 13.3 0.0 28.7 19.8 0.0 21.2 16.1 0.0 21.6 10.8 Insufficient Security 0.0 3.9 3.2 0.0 3.0 2.1 0.0 3.6 2.7 0.0 7.2 3.6 Family problems 20.9 6.4 9.1 31.0 8.5 15.5 26.6 7.2 11.9 38.7 17.9 28.3 Monetary problems 61.2 49.8 51.9 51.1 30.8 37.1 55.5 42.4 45.5 28.7 18.1 23.4 Other 9.5 14.4 13.5 11.9 14.7 13.9 10.9 14.5 13.6 11.4 18.1 14.7 Source: 2005 LSMS data Table A2 ­ E04 Nicaragua 2005 - Reason for Not Attending School by Gender (13 - 18 year olds only) Extreme Poor Moderately Poor Poor Non-poor Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total Male Not interested 23.3 19.8 27.8 28.7 34.2 22.7 26.5 31.0 30.6 34.8 26.9 30.9 Finished Studies 0.0 0.0 0.1 0.0 0.0 0.1 Domestic Work 0.8 0.8 0.8 Had to work 37.2 24.8 34.3 37.2 27.4 35.1 37.2 26.8 33.9 31.4 20.3 25.9 No place/no class/no teacher 1.4 1.8 3.4 1.2 2.6 2.2 2.7 0.1 1.4 School is too far 2.2 1.9 2.9 1.9 2.6 1.9 2.3 1.1 Family problems 1.0 0.2 1.1 1.3 0.9 0.9 1.2 0.7 1.2 1.9 3.0 2.5 Lack of money 29.7 55.0 29.3 22.9 33.8 34.0 25.7 38.5 26.6 20.5 39.0 29.6 Other 5.1 0.2 3.8 3.5 3.8 4.3 4.1 3.0 3.6 5.7 9.9 7.7 Female Not interested 27.7 31.7 24.8 23.9 22.2 28.3 25.4 23.6 23.2 15.6 16.7 16.2 Finished Studies 0.3 0.1 0.0 0.2 0.1 0.0 0.7 0.4 Domestic Work 14.1 6.5 9.5 9.9 5.2 12.9 11.5 5.4 7.9 10.6 5.9 8.1 Had to work 0.8 9.5 3.1 4.7 1.8 2.1 3.2 2.9 3.5 8.1 7.0 7.5 No place/no class/no teacher 5.5 17.9 5.0 6.7 0.0 7.4 6.2 2.6 3.9 3.4 0.2 1.7 School is too far 4.3 3.7 6.4 3.7 5.6 3.7 5.7 2.6 Child-care/pregnancy 9.7 7.8 12.7 14.3 14.2 9.4 12.5 13.3 14.2 13.4 20.6 17.2 Family problems 4.1 5.4 4.6 4.9 4.3 4.3 4.6 4.4 4.7 6.3 4.4 5.3 Lack of money 27.3 21.2 30.0 23.8 42.4 26.4 25.2 39.3 31.6 30.1 35.7 33.1 Other 6.2 0.0 6.6 5.3 10.0 5.3 5.7 8.5 7.2 6.8 8.9 7.9 Source: 2005 LSMS data 149 Table A2 ­ E05 Nicaragua 2005 - Percent Not Attending School Percent not attending school 7 - 12 yrs 13 - 18 yrs 7 - 18 yrs All 9.4 35.8 22.3 Extreme Poor 21.3 55.3 36.6 Moderately Poor 10.4 43.4 26.1 Poor 14.1 47.2 29.7 Non-poor 3.7 24.2 14.1 Urban 5.9 26.7 16.3 Extreme Poor 18.9 49.5 33.9 Moderately Poor 9.5 37.4 23.0 Poor 11.3 39.8 25.1 Non-poor 2.9 20.3 11.8 Rural 12.9 45.9 28.5 Extreme Poor 21.8 56.8 37.3 Moderately Poor 10.9 47.4 28.2 Poor 15.5 51.1 31.8 Non-poor 5.6 33.7 19.7 Quintile Poorest 19.1 55.0 35.0 II 11.7 44.6 27.9 III 5.0 31.7 17.7 IV 3.9 25.3 14.2 Richest 1.1 15.8 9.6 Zone Managua - Urban 5.4 25.9 15.6 Managua - Rural 0.0 21.6 10.5 Managua - Total 4.9 25.5 15.1 Pacific - Urban 5.7 29.1 17.7 Pacific - Rural 7.1 38.7 23.0 Pacific - Total 6.3 33.4 20.1 Central - Urban 6.4 26.6 16.7 Central - Rural 12.8 49.7 30.0 Central - Total 10.8 41.4 25.5 Atlantic- Urban 7.0 21.4 14.0 Atlantic - Rural 20.9 52.0 34.7 Atlantic - Total 17.1 42.5 28.6 Indigenous No 9.6 36.0 22.5 Yes 5.9 32.4 17.9 Worked land last 12 months? No 6.8 29.2 17.8 Yes 13.0 45.4 28.6 Source: 2005 LSMS data 150 Table A2 ­ E06 Nicaragua 2005 - Pre-school attendance of children 3-6 years old 0-3 years 4-6 years CICO/CDI Pre-school CICO/CDI Pre-school School All 3.3 3.5 3.1 37.9 18.5 Extreme Poor 2.9 1.3 1.6 22.7 13.9 Moderately Poor 3.5 2.7 3.9 34.1 15.4 Poor 3.3 2.2 3.0 29.8 14.8 Non-poor 3.2 5.1 3.1 47.6 22.9 Urban 3.0 4.1 2.5 42.7 21.5 Extreme Poor 3.4 0.0 2.9 22.3 14.9 Moderately Poor 2.6 4.2 3.0 34.7 15.8 Poor 2.8 3.5 3.0 31.8 15.6 Non-poor 3.2 4.5 2.2 48.6 24.7 Rural 3.5 2.8 3.6 32.9 15.4 Extreme Poor 2.7 1.6 1.3 22.8 13.6 Moderately Poor 4.3 1.3 4.4 33.6 15.1 Poor 3.6 1.4 3.0 28.9 14.5 Non-poor 3.3 6.9 5.4 44.9 18.0 Quintile Poorest 3.1 2.3 2.4 25.4 13.5 II 2.8 2.7 3.9 33.7 15.9 III 4.2 2.6 3.5 37.7 20.7 IV 4.1 4.1 2.3 50.2 22.3 Richest 2.0 7.7 3.3 53.9 24.3 Zone Managua - Urban 2.4 5.0 2.3 46.3 21.5 Managua - Rural 0.0 10.5 18.5 72.2 9.3 Managua - Total 2.1 5.5 3.4 48.1 20.7 Pacific - Urban 2.2 4.3 0.0 43.4 19.1 Pacific - Rural 2.5 3.9 1.3 36.5 24.3 Pacific - Total 2.3 4.1 0.6 40.2 21.5 Central - Urban 4.8 2.8 4.7 37.1 22.5 Central - Rural 4.8 1.4 4.5 33.3 13.4 Central - Total 4.8 1.9 4.6 34.7 16.8 Atlantic- Urban 4.7 2.4 4.7 40.3 26.1 Atlantic - Rural 3.0 2.9 2.8 25.0 11.0 Atlantic - Total 3.5 2.7 3.2 28.7 14.7 Indigenous No 3.3 3.4 3.1 37.2 18.2 Yes 3.4 5.1 2.5 48.8 21.5 Worked land last 12 months? No 2.8 4.2 2.2 42.1 20.4 Yes 4.1 2.2 4.4 31.1 15.5 Note: Using data from Section 4a Source: LSMS 2005 151 Table A2 ­ E07 Nicaragua 2005 - Primary School Repetition Rates, percent with no books and mean number of days absent Repetition (%) No books (%) Days absent All 11.7 4.8 4.3 Extreme Poor 14.7 6.3 4.0 Moderately Poor 13.0 4.4 4.1 Poor 13.6 5.0 4.0 Non-poor 9.3 4.5 4.6 Urban 10.4 3.5 4.4 Extreme Poor 15.0 3.7 3.4 Moderately Poor 14.0 3.1 4.0 Poor 14.1 3.2 3.9 Non-poor 8.1 3.8 4.6 Rural 12.9 5.9 4.3 Extreme Poor 14.6 6.9 4.1 Moderately Poor 12.5 5.2 4.1 Poor 13.3 5.9 4.1 Non-poor 11.8 5.9 4.5 Quintile Poorest 14.1 6.0 4.1 II 12.7 4.9 4.0 III 11.6 4.0 4.6 IV 9.6 3.9 4.6 Richest 7.7 4.8 4.0 Zone Managua - Urban 11.2 3.7 5.2 Managua - Rural 20.9 6.8 4.2 Managua 12.3 4.1 5.2 Pacific- Urban 9.7 2.6 3.7 Pacific - Rural 12.9 3.0 3.3 Pacific- Total 11.3 2.8 3.5 Central - Urban 11.1 4.0 3.3 Central - Rural 12.2 4.1 4.2 Central - Total 11.9 4.1 3.9 Atlantic- Urban 8.2 4.9 4.0 Atlantic - Rural 12.7 12.0 5.4 Atlantic - Total 11.4 10.0 5.1 Indigenous No 11.9 4.3 4.3 Yes 9.1 11.5 4.1 Worked land last 12 months? No 10.9 4.1 4.3 Yes 12.7 5.7 4.3 Source: LSMS 2005 152 Table A2 ­ E08 Nicaragua 2005 - Secondary School Repetition Rates, percent with no books and mean number of days absent Repetition (%) No books (%) Days absent All 6.0 24.1 3.4 Extreme Poor 5.2 22.2 4.2 Moderately Poor 6.2 20.7 2.7 Poor 6.0 21.0 3.0 Non-poor 6.0 25.6 3.5 Urban 6.6 23.1 3.7 Extreme Poor 8.7 18.5 6.4 Moderately Poor 8.1 16.5 3.3 Poor 8.2 16.8 3.8 Non-poor 6.2 24.8 3.7 Rural 4.7 22.2 4.2 Extreme Poor 3.1 24.3 2.5 Moderately Poor 4.1 25.4 2.1 Poor 3.8 25.1 2.2 Non-poor 5.6 28.3 2.6 Quintile Poorest 6.7 23.2 3.9 II 6.6 22.3 2.9 III 5.9 23.6 2.7 IV 6.4 25.0 4.0 Richest 5.2 25.2 3.3 Zone Managua - Urban 7.5 28.1 3.7 Managua - Rural 10.9 28.8 1.7 Managua 7.8 28.1 3.6 Pacific- Urban 6.5 19.7 3.4 Pacific - Rural 3.7 29.4 2.4 Pacific - Total 5.4 23.3 3.0 Central - Urban 5.4 18.8 4.0 Central - Rural 5.1 19.5 2.5 Central - Total 5.3 19.1 3.5 Atlantic- Urban 6.3 24.0 4.7 Atlantic - Rural 2.2 36.9 3.0 Atlantic - Total 4.8 28.9 3.8 Indigenous No 5.8 24.4 3.4 Yes 6.7 14.8 3.6 Worked land last 12 months? No 6.1 23.6 3.8 Yes 5.6 25.5 2.3 Source: LSMS 2005 153 Table A2 ­ E09 Nicaragua 2005 - Percent Illiterate (10 years and older) and Average Years of Schooling (10- 19 years old) Means years of schooling (10-19 years old) Illiterate (10 years and up) Total Male Female All 18.4 5.1 4.8 5.5 Extreme Poor 38.1 3.2 3.0 3.5 Moderately Poor 23.7 4.4 4.1 4.8 Poor 28.2 4.0 3.7 4.4 Non-poor 10.8 6.3 6.0 6.6 Urban 10.4 6.1 5.8 6.5 Extreme Poor 31.3 4.1 3.5 4.7 Moderately Poor 15.6 5.3 4.9 5.6 Poor 18.5 5.0 4.6 5.4 Non-poor 7.4 6.7 6.4 7.0 Rural 29.0 4.0 3.8 4.3 Extreme Poor 40.0 3.0 2.9 3.2 Moderately Poor 29.5 3.8 3.6 4.1 Poor 33.5 3.5 3.3 3.8 Non-poor 20.4 5.3 5.0 5.7 Quintile Poorest 36.3 3.3 3.1 3.5 II 23.2 4.4 4.1 4.8 III 16.8 5.5 5.1 5.9 IV 12.2 6.0 5.8 6.3 Richest 6.3 7.3 6.9 7.6 Zone Managua - Urban 7.6 6.5 6.2 6.8 Managua - Rural 9.9 5.7 5.7 5.7 Managua 8.8 6.4 6.1 6.7 Pacific- Urban 9.9 6.2 5.8 6.5 Pacific - Rural 21.7 5.1 4.6 5.7 Pacific- Total 14.8 5.7 5.2 6.2 Central - Urban 15.3 5.9 5.6 6.2 Central - Rural 31.4 3.7 3.5 3.9 Central - Total 25.1 4.5 4.2 4.8 Atlantic- Urban 13.6 5.3 5.0 5.6 Atlantic - Rural 37.1 3.0 2.9 3.2 Atlantic - Total 29.2 3.7 3.5 4.0 Indigenous No 18..4 5.2 4.8 5.5 Yes 17.4 4.4 4.0 3.8 Worked land last 12 months? No 12.2 5.9 5.5 6.3 Yes 29.3 4.0 4.7 4.3 Note: Literate is defined as those who can read and write Source: LSMS 2005 154 Table A2 ­ E10 Nicaragua 2005 - Percent Literate (15-24 years and 15 years and older) and Ratio of Females to Males (literate and in school) Literate (15 Ratio of Literate Ratio of Girls to Literate (15- years and Females to Males Boys in Primary and 24 years) older) (15-24 years) Secondary education All 90.4 79.8 95 104 Extreme Poor 77.1 87.4 80 111 Not Extreme Poor 87.0 72.7 92 103 Poor 83.9 68.1 88 106 Non-poor 95.8 88.1 101 103 Urban 95.8 88.6 103 106 Extreme Poor 85.6 65.5 103 121 Not Extreme Poor 92.9 82.4 99 101 Poor 91.5 79.3 100 104 Non-poor 97.6 91.9 104 107 Rural 83.0 67.1 84 102 Extreme Poor 74.5 55.2 73 109 Not Extreme Poor 82.4 65.4 85 105 Poor 79.3 61.6 80 106 Non-poor 90.6 76.9 92 93 Quintile Poorest 78.3 59.1 78 105 II 87.3 73.1 94 110 III 92.1 80.9 101 99 IV 94.9 86.4 101 105 Richest 99.0 93.2 100 102 Zone Managua - Urban 96.5 92.0 100 96 Managua - Rural 95.6 78.1 69 110 Managua 96.4 90.6 96 97 Pacific- Urban 96.6 89.2 97 102 Pacific - Rural 89.9 74.8 99 104 Pacific- Total 93.9 83.4 98 103 Central - Urban 93.9 82.8 117 128 Central - Rural 79.6 63.9 76 102 Central - Total 85.2 71.6 92 111 Atlantic- Urban 94.4 84.3 109 111 Atlantic - Rural 76.7 59.3 87 97 Atlantic - Total 82.8 68.0 95 102 Indigenous No 90.5 79.8 95 104 Yes 89.2 80.8 103 98 Worked land last 12 months? No 94.5 86.7 104 108 Yes 83.3 66.7 80 98 Note: Literate is defined as those who can read and write Source: LSMS 2005 155 Table A2 ­ F01 Nicaragua 2005 - Fertility by Poverty, Quintile and Region (Women 15-49 years of age) Total Fertility (Births per Woman) All 2.2 Extreme Poor 3.2 Not Extreme Poor 2.6 Poor 2.8 Non-poor 1.8 Urban 1.8 Extreme Poor 2.6 Not Extreme Poor 2.3 Poor 2.4 Non-poor 1.6 Rural 2.7 Extreme Poor 3.4 Not Extreme Poor 2.9 Poor 3.1 Non-poor 2.1 Quintile Poorest 3.2 II 2.6 III 2.2 IV 1.9 Richest 1.4 Zone Managua - Urban 1.8 Managua - Rural 1.8 Managua 1.8 Pacific - Urban 1.8 Pacific - Rural 2.4 Pacific - Total 2.1 Central - Urban 1.9 Central - Rural 2.8 Central - Total 2.4 Atlantic- Urban 2.1 Atlantic - Rural 3.4 Atlantic - Total 2.9 Source: 2005 LSMS data 156 Table A 2 ­ F02 Nicaragua 2005: Percent of Children receiving DPT and Polio Immunization by Quintile, Poverty Status and Region (12-23 months of age) Receive Pentavalente Receive Polio or DPT Vaccine Vaccine All 96.2 96.6 Extreme Poor 97.8 98.7 Moderately Poor 94.8 94.7 Poor 96.6 97.2 Non-poor 96.6 97.2 Urban 97.3 98.0 Extreme Poor 99.7 99.7 Moderately Poor 97.0 98.1 Poor 97.4 98.4 Non-poor 97.2 97.8 Rural 94.9 95.0 Extreme Poor 97.4 98.5 Moderately Poor 92.8 91.7 Poor 94.9 94.7 Non-poor 95.0 95.8 Quintile Poorest 95.6 96.2 II 96.9 96.8 III 95.1 96.6 IV 98.9 98.9 Richest 94.6 94.6 Zone Managua - Urban 97.6 97.6 Managua - Rural 100* 100* Managua - Total 97.9 97.9 Pacific - Urban 98.5 100.0 Pacific - Rural 94.0 92.3 Pacific - Total 96.4 96.3 Central - Urban 95.0 96.5 Central - Rural 97.0 97.0 Central - Total 96.1 96.8 Atlantic- Urban 97.7 97.7 Atlantic - Rural 92.6 94.4 Atlantic - Total 93.9 95.3 Source: 2005 LSMS data 157 Table A 2 ­ F03 Nicaragua 2005: DPT and Polio Immunization by Quintile, Poverty Status and Region (% of 12-23 months of age with card) Times Immunized Pentavalente/DPT Times Immunized Polio 0 1 2 3 0 1 2 3 All 1.6 5.7 17.5 75.2 1.0 4.6 14.3 80.1 Extreme Poor 6.7 12.6 15.2 65.5 2.3 19.0 10.6 68.1 Moderately Poor 2.4 5.5 16.5 75.6 2.4 1.4 10.2 86.0 Poor 3.7 7.7 16.1 72.5 2.4 6.8 10.3 80.5 Non-poor 0.0 4.2 18.6 77.2 0.0 2.9 17.2 79.9 Urban 0.0 4.6 23.1 72.3 0.0 3.1 18.3 78.6 Extreme Poor 0.0 0.0 15.1 84.9 0.0 0.0 15.1 84.9 Moderately Poor 0.0 4.7 18.7 76.6 0.0 0.0 5.7 94.3 Poor 0.0 3.9 18.0 78.1 0.0 0.0 7.3 92.7 Non-poor 0.0 5.0 25.6 69.4 0.0 4.7 23.8 71.5 Rural 3.4 6.9 11.3 78.4 2.2 6.2 9.8 81.9 Extreme Poor 8.6 16.3 15.3 59.8 3.0 24.5 9.3 63.2 Moderately Poor 4.8 6.3 14.3 74.6 4.8 2.7 14.6 77.9 Poor 6.3 10.4 14.7 68.6 4.1 11.5 12.5 71.9 Non-poor 0.0 3.0 7.3 89.7 0.0 0.0 6.6 93.4 Quintile Poorest 5.8 9.4 16.2 68.6 2.5 14.9 12.0 70.6 II 3.0 4.2 19.8 73.0 3.0 0.7 11.1 85.2 III 0.0 4.9 21.3 73.8 0.0 0.5 20.8 78.6 IV 0.0 10.7 16.6 72.7 0.0 10.2 16.6 73.2 Richest 0.0 0.4 10.5 89.1 0.0 0.0 6.8 93.2 Zone Managua - Urban 0.0 8.0 34.2 57.9 0.0 8.0 25.0 67.0 Managua - Rural 0.0 0.0 0.0 100.0 0.0 0.0 0.0 100.0 Managua - Total 0.0 7.5 31.9 60.6 0.0 7.5 23.4 69.1 Pacific - Urban 0.0 4.4 20.1 75.5 0.0 0.0 20.1 79.9 Pacific - Rural 0.0 0.0 10.4 89.6 0.0 0.0 10.4 89.6 Pacific - Total 0.0 2.3 15.6 82.1 0.0 0.0 15.6 84.4 Central - Urban 0.0 0.0 13.9 86.1 0.0 0.0 8.0 92.0 Central - Rural 0.0 13.6 12.0 74.4 0.0 8.7 7.7 83.6 Central - Total 0.0 7.1 12.9 80.0 0.0 4.5 7.9 87.6 Atlantic- Urban 0.0 1.9 9.4 88.7 0.0 0.6 8.8 90.6 Atlantic - Rural 8.0 8.2 12.3 71.5 5.1 9.4 11.2 74.3 Atlantic - Total 6.2 6.8 11.6 75.4 4.0 7.4 10.7 78.0 Source: 2005 LSMS data 158 Table A 2 ­ F04 Nicaragua 2005: DPT and Polio Immunization by Quintile, Poverty Status and Region (% of 12-23 months of age) Times Immunized Pentavalente/DPT Times Immunized Polio 0 1 2 3 0 1 2 3 All 3.8 2.6 9.2 84.3 3.4 2.3 9.1 85.2 Extreme Poor 2.2 6.4 11.6 79.8 1.3 7.7 10.6 80.3 Moderately Poor 5.2 2.3 7.9 84.6 5.3 0.8 8.0 85.9 Poor 4.2 3.7 9.2 82.9 3.9 3.1 8.9 84.0 Non-poor 3.4 1.5 9.3 85.8 2.8 1.5 9.2 86.5 Urban 2.7 1.3 9.3 86.7 2.0 1.2 8.5 88.3 Extreme Poor 0.3 0.0 13.9 85.8 0.3 0.0 13.9 85.8 Moderately Poor 3.0 1.3 7.8 87.9 1.9 0.0 5.9 92.2 Poor 2.6 1.1 8.8 87.5 1.6 0.0 7.2 91.2 Non-poor 2.8 1.4 9.6 86.2 2.2 1.9 9.2 86.7 Rural 5.1 4.2 9.1 81.6 5.0 3.6 9.7 81.7 Extreme Poor 2.6 7.8 11.1 78.5 1.5 9.4 10.0 79.1 Moderately Poor 7.2 3.1 8.0 81.7 8.3 1.4 9.9 80.3 Poor 5.1 5.2 9.4 80.3 5.3 5.0 9.9 79.8 Non-poor 5.0 1.7 8.5 84.8 4.2 0.3 9.2 86.3 Quintile Poorest 4.4 5.6 10.9 79.1 3.9 6.0 10.7 79.5 II 3.1 1.6 7.3 88.0 3.2 0.6 7.0 89.2 III 4.9 2.0 14.6 78.5 3.4 1.3 15.8 79.5 IV 1.1 2.8 6.8 89.3 1.1 2.6 6.8 89.5 Richest 5.4 0.1 4.2 90.3 5.4 0.0 2.3 92.3 Zone Managua - Urban 2.3 2.1 13.6 82.0 2.4 2.1 11.2 84.3 Managua - Rural 0.0 0.0 0.0 100.0 0.0 0.0 0.0 100.0 Managua - Total 2.1 1.9 12.3 83.7 2.1 1.9 10.1 85.9 Pacific - Urban 1.5 1.3 6.2 91.0 0.0 1.5 6.2 92.3 Pacific - Rural 6.0 0.0 4.6 89.4 7.7 0.0 4.6 87.7 Pacific - Total 3.6 0.7 5.5 90.2 3.6 0.8 5.5 90.1 Central - Urban 5.0 0.0 7.0 88.0 3.5 0.0 7.5 89.0 Central - Rural 3.0 3.0 8.1 85.9 3.0 2.0 8.1 86.9 Central - Total 3.9 1.7 7.6 86.8 3.2 1.1 7.9 87.8 Atlantic- Urban 2.3 1.0 5.2 91.5 2.3 0.2 5.4 92.1 Atlantic - Rural 7.5 9.9 15.6 67.0 5.6 9.2 17.6 67.6 Atlantic - Total 6.1 7.5 12.8 73.6 4.7 6.8 14.3 74.2 Source: 2005 LSMS data 159 Table A2 ­ F05 Nicaragua 2005 - Incidence of Diarrhea and IRA (Children under 5 years of age) Diarrhea last month IRA last month Consulted Consulted Incidence (%) someone (%) Incidence (%) someone (%) All 28.1 72.3 35.2 66.1 Extreme Poor 29.3 57.7 33.1 55.3 Moderately Poor 27.5 73.5 35.6 61.8 Poor 28.1 67.8 34.8 59.7 Non-poor 28.0 78.1 35.7 73.6 Urban 26.3 79.8 33.6 73.0 Extreme Poor 32.4 77.0 24.6 58.0 Moderately Poor 25.9 81.0 31.6 71.1 Poor 27.0 80.1 30.4 69.3 Non-poor 25.9 79.6 35.6 74.9 Rural 30.0 65.1 36.9 58.8 Extreme Poor 28.6 52.9 35.1 54.9 Moderately Poor 28.9 67.8 39.0 55.5 Poor 28.8 61.2 37.3 55.2 Non-poor 33.9 74.9 35.9 70.0 Quintile Poorest 29.1 59.4 33.4 55.6 II 26.7 75.7 37.3 64.2 III 29.7 71.4 37.0 65.0 IV 29.5 80.7 32.4 75.2 Richest 24.2 83.5 36.0 77.5 Zone Managua - Urban 28.2 79.8 33.4 73.0 Managua - Rural 24.1 100.0 26.4 100.0 Managua 27.8 81.0 32.9 74.6 Pacific - Urban 22.7 83.5 32.9 81.3 Pacific - Rural 30.7 72.1 40.6 58.6 Pacific - Total 26.1 77.7 36.1 70.6 Central - Urban 24.2 78.0 35.7 69.8 Central - Rural 25.9 64.4 37.6 64.9 Central - Total 25.3 69.1 36.9 66.6 Atlantic- Urban 35.7 74.8 32.4 52.4 Atlantic - Rural 36.3 58.0 34.3 45.2 Atlantic - Total 36.1 62.0 33.8 46.9 Source: 2005 LSMS data 160 Table A2 ­ F06 Nicaragua 2005 - Incidence of IRA (Children under 6 years of age) IRA last month Consulted Incidence (%) someone (%) All 34.9 65.0 Extreme Poor 34.0 51.4 Moderately Poor 35.6 61.4 Poor 35.0 58.1 Non-poor 34.8 73.5 Urban 33.9 72.6 Extreme Poor 24.0 54.0 Moderately Poor 32.7 71.1 Poor 31.1 68.6 Non-poor 35.5 74.7 Rural 36.1 57.0 Extreme Poor 36.4 51.0 Moderately Poor 37.9 54.7 Poor 37.3 53.2 Non-poor 32.8 69.7 Quintile Poorest 34.2 52.4 II 37.4 64.4 III 35.3 65.5 IV 33.0 72.7 Richest 34.4 79.1 Zone Managua - Urban 34.2 75.6 Managua - Rural 21.5 100.0 Managua 33.2 76.9 Pacific - Urban 31.5 76.6 Pacific - Rural 39.2 57.1 Pacific - Total 34.9 67.1 Central - Urban 36.5 70.8 Central - Rural 37.3 62.7 Central - Total 37.0 65.7 Atlantic- Urban 33.1 50.4 Atlantic - Rural 33.8 43.7 Atlantic - Total 33.6 45.3 Source: 2005 LSMS data 161 Table A2 ­ F07 Nicaragua 2005 - Incidence of Diarrhea and Type of care of those reporting Diarrhea (Children under 6 years of age) Of those reporting Diarrhea: Diarrhea last Type of Treatment (%) Consulted (%) Mean Consulted month (%) Home Saline/Oral Consultations Medicine None someone (%) Doctor Nurse Other remedy whey (number) All 25.6 12.4 50.3 35.1 2.2 70.8 85.0 12.9 2.1 1.4 Extreme Poor 26.5 19.5 51.1 25.6 3.8 56.8 70.8 25.5 3.7 1.3 Moderately Poor 25.1 13.9 46.5 37.8 1.8 72.9 84.0 14.3 1.7 1.4 Poor 25.6 15.9 48.2 33.4 2.5 67.0 79.9 17.7 2.4 1.3 Non-poor 25.6 8.0 53.0 37.3 1.7 75.6 90.5 7.7 1.8 1.5 Urban 24.0 7.7 50.0 40.7 1.6 78.0 95.9 3.7 0.4 1.5 Extreme Poor 27.5 17.9 42.2 39.7 0.2 72.8 93.7 6.3 0.0 1.3 Moderately Poor 24.1 7.2 49.3 42.0 1.5 80.8 94.7 5.3 0.0 1.5 Poor 24.8 9.4 47.8 41.5 1.3 79.1 94.5 5.5 0.0 1.4 Non-poor 23.6 6.6 51.4 40.2 1.8 77.3 96.8 2.6 0.6 1.5 Rural 27.3 17.0 50.6 29.7 2.7 63.9 72.1 23.8 4.1 1.3 Extreme Poor 26.3 19.9 53.4 22.0 4.7 52.9 63.0 32.0 5.0 1.2 Moderately Poor 25.8 18.9 44.4 34.7 2.0 67.0 74.4 22.3 3.3 1.3 Poor 26.0 19.4 48.3 29.1 3.2 60.7 70.0 26.0 4.0 1.3 Non-poor 31.1 11.1 56.2 31.1 1.6 72.1 76.3 19.2 4.5 1.3 Quintile Poorest 25.7 19.2 49.1 28.1 3.6 58.8 72.4 24.0 3.6 1.3 II 24.6 13.4 51.9 32.6 2.1 74.7 83.7 14.8 1.5 1.4 III 27.7 12.6 41.4 44.3 1.7 69.5 82.6 14.0 3.4 1.4 IV 26.3 6.8 58.8 32.3 2.2 76.5 93.6 5.2 1.2 4.5 Richest 23.1 4.0 52.9 43.1 0.0 84.1 97.6 2.4 0.0 1.6 Zone Managua - Urban 25.8 3.8 49.8 45.0 1.4 79.8 98.2 1.8 0.0 1.6 Managua - Rural 23.3 16.0 51.9 32.0 0.0 100.0 78.1 21.9 0.0 1.4 Managua 25.6 4.7 50.0 44.0 1.3 81.0 96.5 3.5 0.0 1.6 Pacific - Urban 21.4 10.3 51.7 36.7 1.3 81.0 96.5 2.2 1.3 1.4 Pacific - Rural 27.0 19.6 54.1 25.5 0.8 69.4 91.8 8.2 0.0 1.4 Pacific - Total 23.8 14.9 52.8 31.2 1.1 75.2 94.4 4.9 0.7 1.4 Central - Urban 21.1 12.3 49.8 36.3 1.6 72.6 92.4 7.6 0.0 1.3 Central - Rural 23.8 19.4 54.1 23.7 2.7 65.0 75.5 21.3 3.2 1.2 Central - Total 22.8 17.0 52.7 28.0 2.3 67.6 81.7 16.3 2.0 1.2 Atlantic- Urban 33.0 8.3 47.7 41.3 2.7 73.5 91.2 8.8 0.0 1.6 Atlantic - Rural 33.4 12.6 44.3 38.8 4.4 56.4 49.9 40.6 9.5 1.4 Atlantic - Total 33.3 11.5 45.1 39.4 4.0 60.5 62.2 31.2 6.6 1.4 Source: 2005 LSMS data 162 Table A2 ­ F08 Nicaragua 2005 - Incidence of Diarrhea and Type of care of those reporting Diarrhea (Children under 5 years of age) Of those reporting Diarrhea: Diarrhea Type of Treatment (%) Consulted (%) Mean last month Consulted Home Saline/Oral Consultations (%) Medicine None someone (%) Doctor Nurse Other remedy whey (number) All 28.1 12.3 50.2 35.4 2.1 72.3 85.4 12.8 1.8 1.4 Extreme Poor 29.3 17.9 52.4 25.9 3.8 57.7 70.6 25.7 3.7 1.3 Moderately Poor 27.5 14.7 44.7 39.4 1.3 73.5 84.2 14.0 1.8 1.4 Poor 28.1 15.8 47.4 34.6 2.2 67.8 80.1 17.6 2.3 1.3 Non-poor 28.0 8.0 53.7 36.4 1.9 78.1 91.1 7.8 1.1 1.5 Urban 26.3 7.6 49.6 41.2 1.6 79.8 96.3 3.7 0.0 1.5 Extreme Poor 32.4 14.4 45.8 39.6 0.2 77.0 94.1 5.9 0.0 1.3 Moderately Poor 25.9 6.7 46.7 45.3 1.3 81.0 94.2 5.8 0.0 1.4 Poor 27.0 8.3 46.5 44.2 1.1 80.1 94.2 5.8 0.0 1.4 Non-poor 25.9 7.1 51.5 39.4 1.9 79.6 97.5 2.5 0.0 1.5 Rural 30.0 17.1 50.9 29.5 2.5 65.1 72.1 24.0 3.9 1.3 Extreme Poor 28.6 18.8 45.0 22.5 4.7 52.9 61.9 33.1 5.0 1.3 Moderately Poor 28.9 20.7 43.2 34.8 1.3 67.8 75.3 21.4 3.3 1.3 Poor 28.8 19.9 47.9 29.4 2.8 61.2 70.2 25.8 4.0 1.3 Non-poor 33.9 10.0 58.4 29.8 1.8 74.9 75.9 20.2 3.9 1.3 Quintile Poorest 29.1 18.1 49.8 28.5 3.6 59.4 72.7 23.8 3.5 1.3 II 26.7 14.0 50.7 34.1 1.2 75.7 84.1 14.3 1.6 1.4 III 29.7 13.9 39.4 44.8 1.9 71.4 82.5 14.9 2.6 1.4 IV 29.5 5.8 61.2 30.6 2.4 80.7 94.3 5.2 0.5 1.5 Richest 24.2 4.5 51.5 44.0 0.0 83.5 97.9 2.1 0.0 1.6 Zone Managua - Urban 28.2 4.0 47.6 46.8 1.5 79.8 98.1 1.9 0.0 1.6 Managua - Rural 24.1 19.1 61.8 19.1 0.0 100.0 73.9 26.1 0.0 1.5 Managua 27.8 5.0 48.5 45.0 1.5 81.0 96.2 3.8 0.0 1.6 Pacific - Urban 22.7 10.0 53.2 35.3 1.5 83.5 97.7 2.3 0.0 1.4 Pacific - Rural 30.7 18.3 55.3 25.6 0.8 72.1 91.4 8.6 0.0 1.4 Pacific - Total 26.1 14.1 54.2 30.5 1.2 77.7 94.8 5.2 0.0 1.4 Central - Urban 24.2 12.5 50.1 36.3 1.1 78.0 92.8 7.2 0.0 1.2 Central - Rural 25.9 20.8 52.3 25.1 1.9 64.4 75.5 20.9 3.6 1.2 Central - Total 25.3 17.9 51.5 29.0 1.6 69.1 82.3 15.5 2.2 1.2 Atlantic- Urban 35.7 7.4 48.2 41.4 3.0 74.8 91.4 8.6 0.0 1.6 Atlantic - Rural 36.3 12.2 45.3 37.9 4.6 58.0 50.5 41.1 8.4 1.4 Atlantic - Total 36.1 11.0 46.0 38.8 4.2 62.0 62.7 31.4 5.9 1.4 Source: 2005 LSMS data 163 Table A2 ­ F09 Nicaragua 2005 - Reason for Not Seeking care for those reporting Diarrhea last month (Children under 6 years of age) Economic Know of Not serious Too far Bad care No Medicine Other Problem Sickness All 18.9 16.3 17.8 4.7 7.2 31.0 4.0 Extreme Poor 12.9 30.7 13.9 6.1 10.5 21.8 4.1 Moderately Poor 12.7 15.4 13.0 4.9 4.1 43.0 6.8 Poor 12.8 22.7 13.5 5.5 7.1 32.9 5.5 Non-poor 29.2 5.4 25.3 3.4 7.4 27.9 1.4 Urban 27.9 0.6 23.5 6.4 1.9 35.0 4.7 Extreme Poor 5.2 0.0 8.9 11.5 8.9 51.7 13.7 Moderately Poor 17.1 2.2 11.8 6.7 0.9 49.5 11.9 Poor 13.9 1.6 11.0 8.0 3.0 50.1 12.4 Non-poor 36.2 0.0 30.9 5.5 1.2 26.0 0.2 Rural 13.6 25.5 14.5 3.7 10.4 28.8 3.5 Extreme Poor 14.0 35.0 14.6 5.4 10.7 17.6 2.7 Moderately Poor 10.8 21.2 13.5 4.1 5.6 40.1 4.7 Poor 12.5 28.6 14.1 4.8 8.3 28.1 3.6 Non-poor 17.4 14.5 15.9 0.0 17.8 31.1 3.3 Quintile Poorest 13.6 28.0 12.0 6.9 8.7 27.3 3.5 II 15.2 16.7 14.5 4.6 3.0 42.4 3.6 III 14.2 7.6 35.4 2.4 4.6 27.4 8.4 IV 29.9 1.3 15.0 5.3 15.9 32.3 0.4 Richest 51.8 12.6 4.5 0.0 1.3 29.8 0.0 Zone Managua - Urban 21.1 0.0 41.3 0.0 0.0 30.0 7.6 Managua - Rural 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Managua 21.1 0.0 41.3 0.0 0.0 30.0 7.7 Pacific - Urban 39.9 0.0 9.6 3.8 0.0 40.5 6.1 Pacific - Rural 27.0 10.9 5.7 6.5 6.7 36.9 6.2 Pacific - Total 31.9 6.8 7.2 5.5 4.2 38.3 6.2 Central - Urban 35.5 0.0 8.9 10.3 4.6 39.7 1.0 Central - Rural 16.0 25.2 8.5 4.0 8.5 32.2 5.6 Central - Total 21.5 18.0 8.7 5.8 7.4 34.3 4.3 Atlantic- Urban 13.9 4.2 21.6 21.8 5.6 31.8 1.1 Atlantic - Rural 4.9 33.1 23.9 2.2 13.7 21.7 0.5 Atlantic - Total 6.3 28.4 23.6 5.3 12.4 23.4 0.6 Source: 2005 LSMS data 164 Table A2 ­ F10 Nicaragua 2005 - Reason for Not Seeking care for those reporting Diarrhea last month (Children under 5 years of age) Economic Know of Not serious Too far Bad care No Medicine Other Problem Sickness All 17.5 17.5 17.6 4.9 6.3 32.6 3.6 Extreme Poor 12.5 33.3 14.3 5.3 11.3 21.7 1.6 Moderately Poor 10.6 14.2 12.1 5.5 3.7 46.4 7.5 Poor 11.5 23.3 13.1 5.4 7.3 34.7 4.7 Non-poor 28.4 6.7 26.0 4.0 4.4 28.8 1.7 Urban 25.9 0.0 23.2 7.5 2.3 37.0 4.0 Extreme Poor 6.8 0.0 11.6 15.0 11.6 55.0 0.0 Moderately Poor 15.4 0.0 10.2 7.4 1.0 52.8 13.2 Poor 13.3 0.0 10.5 9.3 3.5 53.3 10.0 Non-poor 33.8 0.0 31.2 6.4 1.5 26.8 0.3 Rural 12.7 27.3 14.5 3.5 8.5 30.1 3.4 Extreme Poor 13.1 37.4 14.6 4.1 11.3 17.7 1.8 Moderately Poor 8.5 20.6 12.9 4.7 4.9 43.5 4.9 Poor 11.0 29.7 13.8 4.4 8.3 29.6 3.2 Non-poor 19.2 18.1 17.1 0.0 9.2 32.3 4.1 Quintile Poorest 13.2 29.9 12.2 6.3 9.3 27.6 1.5 II 11.8 15.9 14.1 5.3 1.7 47.6 3.6 III 13.7 7.6 34.6 2.7 5.2 26.1 10.2 IV 27.4 1.7 17.3 6.9 8.6 37.5 0.5 Richest 49.9 13.3 4.7 0.0 1.4 30.7 0.0 Zone Managua - Urban 22.6 0.0 37.0 0.0 0.0 32.2 8.2 Managua - Rural 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Managua 22.6 0.0 37.0 0.0 0.0 32.2 8.2 Pacific - Urban 32.8 0.0 12.4 5.0 0.0 49.8 0.0 Pacific - Rural 30.0 9.7 6.9 3.7 3.4 38.9 7.5 Pacific - Total 31.0 6.2 8.9 4.1 2.1 42.9 4.7 Central - Urban 33.4 0.0 8.3 13.4 6.4 37.1 1.4 Central - Rural 12.0 27.9 9.1 4.5 8.1 33.9 4.4 Central - Total 17.2 21.1 8.9 6.7 7.7 34.7 3.7 Atlantic- Urban 14.9 0.0 19.1 25.3 6.5 33.0 1.2 Atlantic - Rural 4.9 35.2 22.8 2.5 11.3 22.7 0.6 Atlantic - Total 6.5 29.6 22.2 6.2 10.5 24.4 0.7 Source: 2005 LSMS data 165 Table A2 ­ F11 Nicaragua 2005 - Place of Consultation by Poverty group, Quintiles and Geographic Area (excludes children under 6 years of age reporting diarrhea) Place of consultation for those consulting for illness Health Ill (%) Hospital - Patient's post/Health INSS Private1 Other2 Public House Center All 45.7 51.1 13.1 10.8 19.5 3.9 1.6 Extreme Poor 43.9 81.7 8.0 0.6 3.6 6.0 0.2 Moderately Poor 45.3 70.7 11.8 5.4 7.0 4.2 0.9 Poor 44.8 73.6 10.8 4.1 6.1 4.7 0.7 Non-poor 46.4 38.0 14.5 14.6 27.3 3.5 2.2 Urban 44.0 40.8 14.8 16.0 23.1 3.3 2.0 Extreme Poor 37.3 75.8 15.6 0.9 2.7 4.8 0.2 Moderately Poor 40.9 64.4 15.2 10.2 7.4 2.5 0.3 Poor 40.2 66.3 15.3 8.6 6.6 2.9 0.2 Non-poor 45.5 33.5 14.7 18.0 27.9 3.4 2.5 Rural 47.8 66.3 10.6 3.0 14.1 4.9 1.1 Extreme Poor 45.6 83.4 5.7 0.5 3.8 6.3 0.2 Moderately Poor 48.3 75.2 9.4 2.0 6.7 5.4 1.4 Poor 47.3 77.9 8.2 1.5 5.7 5.7 1.0 Non-poor 49.0 50.2 13.9 5.2 25.7 3.7 1.3 Quintile Poorest 44.7 80.8 8.6 0.9 4.2 4.8 0.8 II 44.7 70.6 11.4 6.4 6.4 4.4 0.8 III 46.8 58.0 14.5 8.2 14.6 4.0 0.6 IV 47.3 39.8 15.7 16.1 23.0 3.9 1.6 Richest 45.0 25.6 13.3 16.4 38.0 3.1 3.6 Zone Managua - Urban 44.6 30.0 13.4 24.9 26.0 3.3 2.3 Managua - Rural 43.0 54.0 7.7 11.8 21.6 3.2 1.7 Managua 44.5 32.3 12.9 23.7 25.6 3.3 2.2 Pacific - Urban 40.8 43.6 13.8 13.4 22.4 4.6 2.3 Pacific - Rural 46.2 62.1 13.2 4.8 14.9 4.4 0.6 Pacific - Total 43.1 51.2 13.6 9.9 19.3 4.5 1.6 Central - Urban 46.3 54.1 16.1 6.4 20.0 2.2 1.2 Central - Rural 48.6 69.1 9.4 1.7 14.2 4.3 1.3 Central - Total 47.7 62.6 12.3 3.7 16.7 3.4 1.3 Atlantic- Urban 47.4 47.7 22.0 7.1 20.0 1.7 1.4 Atlantic - Rural 49.5 70.1 10.0 0.7 10.1 7.6 1.4 Atlantic - Total 48.8 61.9 14.4 3.1 13.8 5.4 1.4 Source: 2005 LSMS data 1includes private clinic, private hospital and work place 2includes pharmacy, community health worker, medicine man's house and other 166 Table A2 ­ F12 Nicaragua 2005: Place of Consultation by Poverty group, Quintiles and Geographic Area (includes all ill excluding children under 6 years of age reporting diarrhea) Place of consultation for those consulting for illness Health Medicine Health Health Hospital Hospital Work Private Community Man's Patient's Post Center public private INSS Place Pharmacy clinic worker House House Other All 8.7 42.4 13.1 1.1 10.8 0.4 1.3 18.0 0.5 0.3 1.6 1.7 Extreme Poor 21.6 60.0 8.0 0.2 0.6 0.1 0.6 3.2 1.9 0.7 0.2 2.8 Moderately Poor 14.3 56.4 11.8 0.0 5.4 0.1 1.1 6.9 0.8 0.6 0.9 1.7 Poor 16.3 57.4 10.8 0.1 4.1 0.1 1.0 5.9 1.1 0.6 0.7 2.0 Non-poor 4.2 33.7 14.5 1.7 14.6 0.6 1.5 24.9 0.2 0.2 2.2 1.6 Source: 2005 LSMS data Table A2 ­ F13 Nicaragua 2005: Place of Consultation by Poverty group, Quintiles and Geographic Area (includes all ill and children under 6 years of age reporting diarrhea) Place of consultation for those consulting for illness Health Medicine Health Health Hospital Hospital Work Private Community Man's Patient's Post Center public private INSS Place Pharmacy clinic worker House House Other All 8.8 42.4 13.0 1.1 10.7 0.4 1.3 18.1 0.5 0.3 1.6 1.7 Extreme Poor 21.8 60.0 7.9 0.2 0.6 0.1 0.6 3.2 1.8 0.7 0.2 2.8 Moderately Poor 14.5 56.2 11.7 0.0 5.3 0.1 1.1 7.1 0.8 0.6 0.9 1.7 Poor 16.5 57.2 10.7 0.1 4.1 0.1 1.0 6.0 1.1 0.6 0.7 2.0 Non-poor 4.3 33.7 14.4 1.7 14.5 0.6 1.6 25.1 0.2 0.2 2.1 1.6 Source: 2005 LSMS data 167 Table A2 ­ F14 Nicaragua 2005: Place of Consultation by Poverty group, Quintiles and Geographic Area (includes all ill and children under 6 years of age reporting diarrhea) Place of consultation for those consulting for illness Health Hospital - Patient's Post/Health INSS Private1 Other2 Public House Center All 51.2 13.0 10.7 19.6 3.9 1.6 Extreme Poor 81.8 7.9 0.6 3.5 6.0 0.2 Moderately Poor 70.8 11.7 5.4 7.1 4.1 0.9 Poor 73.7 10.7 4.1 6.2 4.6 0.7 Non-poor 38.0 14.4 14.5 27.4 3.5 2.2 Urban 40.9 14.7 15.8 23.3 3.3 1.9 Extreme Poor 76.0 15.5 0.9 2.7 4.8 0.1 Moderately Poor 64.7 15.1 10.1 7.4 2.5 0.2 Poor 66.6 15.2 8.5 6.6 2.9 0.2 Non-poor 33.5 14.6 17.9 28.1 3.4 2.4 Rural 66.4 10.5 3.0 14.1 4.9 1.1 Extreme Poor 83.4 5.7 0.5 3.8 6.3 0.2 Moderately Poor 75.1 9.3 2.0 7.0 5.3 1.3 Poor 77.8 8.1 1.5 5.9 5.6 1.0 Non-poor 50.4 13.8 5.1 25.5 3.9 1.3 Quintile Poorest 80.6 8.5 0.8 4.6 4.8 0.7 II 70.7 11.4 6.3 6.4 4.4 0.8 III 58.3 14.4 8.1 14.5 4.1 0.6 IV 39.8 15.6 16.0 23.1 3.9 1.6 Richest 25.6 13.2 16.3 38.2 3.1 3.6 Zone Managua - Urban 30.2 13.3 24.7 26.2 3.3 2.3 Managua - Rural 54.0 7.7 11.8 21.6 3.2 1.7 Managua 32.4 12.8 23.9 25.8 3.3 2.2 Pacific - Urban 43.6 13.7 13.3 22.6 4.5 2.3 Pacific - Rural 62.0 13.2 4.7 15.2 4.3 0.5 Pacific - Total 51.2 13.5 9.7 19.5 4.4 1.6 Central - Urban 54.3 16.0 6.3 20.0 2.2 1.2 Central - Rural 69.1 9.4 1.7 14.1 4.4 1.3 Central - Total 62.6 12.3 3.7 16.7 3.4 1.3 Atlantic- Urban 47.6 21.9 7.0 20.4 1.7 1.3 Atlantic - Rural 70.8 9.8 0.7 9.9 7.4 1.4 Atlantic - Total 62.4 14.2 3.0 13.7 5.3 1.4 Source: 2005 LSMS data 1includes private clinic, private hospital and work place 2includes pharmacy, community health worker, medicine man's house and other 168 Table A2 ­ F15 Nicaragua 2005: Of those consulting for Illness, time spent waiting for medical attention by facility Time spent waiting for medical attention last time (hours) Health Hospital Hospital All Health Post Center Public Private INSS Pharmacy Private Clinic All 1.0 1.0 1.2 1.0 0.4 0.9 0.2 0.6 Extreme Poor 1.0 0.7 1.2 0.8 * * * 1.2 Moderately Poor 1.1 0.9 1.3 1.1 * 0.8 0.1 0.6 Poor 1.1 0.9 1.2 1.1 * 0.8 0.1 0.7 Non-poor 0.9 1.1 1.2 1.0 0.4 0.9 0.3 0.5 Urban 0.9 1.3 1.2 1.0 0.4 0.8 0.3 0.5 Extreme Poor 0.8 1.2 0.8 0.8 * * * * Moderately Poor 1.1 1.5 1.3 0.9 * 0.7 0.2 0.5 Poor 1.1 1.4 1.2 0.9 * 0.7 0.1 0.5 Non-poor 0.9 1.3 1.2 1.0 0.4 0.8 0.3 0.5 Rural 1.1 0.9 1.2 1.1 0.6 1.5 0.1 0.7 Extreme Poor 1.1 0.7 1.3 0.8 * * * 1.3 Moderately Poor 1.1 0.8 1.2 1.4 * 0.9 0.1 0.7 Poor 1.1 0.8 1.3 1.3 * 1.0 0.1 0.8 Non-poor 1.0 1.1 1.1 1.0 0.6 1.8 0.1 0.7 Quintile Poorest 1.1 0.8 1.2 0.7 * * * 1.1 II 1.1 1.0 1.2 1.2 * 0.8 0.2 0.6 III 1.0 0.9 1.1 1.1 * 1.2 0.2 0.4 IV 0.9 1.4 1.2 0.9 0.6 0.8 0.3 0.6 Richest 0.9 1.0 1.3 1.1 0.3 0.8 0.3 0.5 Zone Managua - Urban 1.0 1.8 1.5 1.0 0.3 0.8 * 0.5 Managua - Rural 1.8 * 2.1 * * * * 0.7 Managua 1.0 2.4 1.6 1.0 0.3 0.8 0.5 0.5 Pacific - Urban 0.9 1.1 1.1 1.0 * 0.6 0.2 0.5 Pacific - Rural 1.0 1.2 1.1 1.2 * 0.8 0.1 0.7 Pacific - Total 0.9 1.2 1.1 1.1 0.7 0.7 0.1 0.6 Central - Urban 0.9 1.6 1.1 1.1 * 0.9 0.1 0.5 Central - Rural 1.1 0.8 1.2 1.0 * 3.5 0.1 0.9 Central - Total 1.0 0.9 1.2 1.0 * 1.5 0.1 0.7 Atlantic- Urban 0.8 0.6 1.0 0.8 * 0.8 * 0.4 Atlantic - Rural 0.8 0.6 1.1 1.1 * * 0.1 0.5 Atlantic - Total 0.8 0.6 1.0 1.0 1.0 0.8 0.1 0.4 Source: 2005 LSMS data * n< 10 169 Table A2 ­ F16 Nicaragua 2005: Of those consulting for Illness, cost of round trip transportation for last consultation by facility Cost of round trip transportation for last consultation Health Hospital Hospital All Health Post Center Public Private INSS Pharmacy Private Clinic All 15.8 2.8 5.1 38.1 37.8 19.6 4.6 28.5 Extreme Poor 5.3 0.4 2.7 16.8 * * * 37.8 Moderately Poor 10.8 4.0 5.8 33.1 * 21.4 5.5 19.6 Poor 9.3 2.7 4.9 29.8 * 22.9 5.7 22.3 Non-poor 19.6 2.9 5.2 41.7 36.2 19.0 4.2 29.3 Urban 13.6 3.5 2.6 26.2 32.0 18.4 2.0 10.5 Extreme Poor 2.4 0.5 0.9 4.5 * * * * Moderately Poor 7.3 2.9 3.5 15.7 * 19.1 0.9 8.8 Poor 6.5 2.4 3.0 13.8 * 19.1 1.1 10.4 Non-poor 15.7 4.4 2.3 29.9 32.2 18.3 2.3 22.7 Rural 19.2 2.6 7.9 62.9 67.4 28.9 10.5 43.8 Extreme Poor 6.1 0.4 3.4 26.4 * * * 39.3 Moderately Poor 13.4 4.2 7.6 53.3 * 29.3 10.7 27.9 Poor 11.0 2.8 6.2 47.0 * 35.2 10.4 30.2 Non-poor 30.3 2.1 11.3 75.7 57.9 26.3 10.6 48.1 Quintile Poorest 8.2 1.2 5.7 27.9 * * * 30.0 II 9.9 4.8 4.2 33.0 * 19.2 6.7 20.9 III 14.9 1.8 5.1 45.2 * 17.4 2.0 25.6 IV 17.1 1.5 5.3 42.7 42.9 17.9 8.2 20.3 Richest 23.9 8.5 5.2 33.4 43.5 21.5 0.9 34.9 Zone Managua - Urban 12.1 5.7 3.6 25.1 21.0 16.0 * 10.8 Managua - Rural 14.1 * 5.3 * * * * 27.5 Managua 12.3 4.1 3.9 25.4 22.7 16.3 0.6 12.2 Pacific - Urban 9.9 7.5 1.3 23.4 * 14.0 1.5 16.3 Pacific - Rural 12.1 3.6 3.4 35.7 * 28.6 10.9 21.8 Pacific - Total 10.8 4.6 2.3 28.3 22.8 17.0 4.2 18.0 Central - Urban 10.9 0.7 2.9 26.3 * 15.7 8.1 18.2 Central - Rural 19.3 2.6 8.6 54.5 * 33.6 7.8 53.4 Central - Total 15.6 2.4 6.2 38.5 * 20.2 8.0 35.0 Atlantic- Urban 43.9 0.9 2.6 36.5 * 101.9 * 127.1 Atlantic - Rural 32.1 2.6 18.9 145.2 * * 19.7 73.8 Atlantic - Total 36.6 2.4 12.4 84.3 161.4 92.5 18.4 102.4 Source: 2005 LSMS data * n< 10 170 Table A2 ­ F17 Nicaragua 2005: Of those consulting for Illness, cost of last consultation by facility Cost of last consultation by appointment last month Health Hospital Hospital All Health Post Center Public Private INSS Pharmacy Private Clinic All 22.0 1.5 0.8 1.1 172.7 0.0 5 102.1 Extreme Poor 2.0 0.7 0.3 0.1 * 0.0 * 38.7 Moderately Poor 5.2 1.4 0.5 0.1 * 0.0 2.4 64.4 Poor 4.3 1.2 0.4 0.1 * 0.0 2.0 60.6 Non-poor 32.2 2.3 1.1 1.5 173.1 0.0 6.8 107.8 Urban 28.0 1.7 1.0 1.2 185.7 0.0 6.5 110.8 Extreme Poor 1.1 0.0 0.1 0.0 * * * * Moderately Poor 5.4 1.3 0.4 0.2 * 0.0 0.0 67.8 Poor 47.0 1.0 0.4 0.2 * 0.0 0.0 65.5 Non-poor 35.0 2.2 1.3 1.5 186.8 0.0 8.1 114.2 Rural 12.8 1.4 0.6 0.9 107.3 0.0 3.2 81.8 Extreme Poor 23.0 0.8 0.3 0.2 * * * 39.6 Moderately Poor 5.0 1.4 0.5 0.0 * 0.0 5.1 61.7 Poor 4.1 1.2 0.4 0.0 * 0.0 4.1 57.3 Non-poor 24.6 2.3 0.8 1.5 97.8 0.0 2.6 89.6 Quintile Poorest 2.5 0.9 0.2 0.1 * * * 44.2 II 5.2 1.6 0.5 0.2 * 0.0 2.9 70.3 III 11.5 1.2 0.7 0.2 * 0.0 0.0 74.0 IV 23.5 1.9 1.1 1.4 259.4 0.0 4.4 90.4 Richest 52.0 4.7 1.8 2.4 180.4 0.0 11.1 125.1 Zone Managua - Urban 27.2 1.3 1.9 0.3 139.6 0.0 * 96.3 Managua - Rural 16.4 * 2.6 * * * * 71.7 Managua 26.2 2.2 2.0 0.3 131.2 0.0 2.8 94.2 Pacific - Urban 27.3 8.5 0.6 0.2 * 0.0 0.0 113.3 Pacific - Rural 15.5 4.3 0.8 1.6 * 0.0 0.0 94.6 Pacific - Total 22.4 5.4 0.7 0.8 179.5 0.0 0.0 107.3 Central - Urban 31.1 0.0 0.6 2.1 * 0.0 36.5 143.3 Central - Rural 12.3 0.8 0.2 0.3 * 0.0 1.2 78.7 Central - Total 20.6 0.7 0.4 1.3 * 0.0 19.5 112.6 Atlantic- Urban 25.4 0.3 0.5 4.3 * 0.0 * 88.7 Atlantic - Rural 8.6 1.2 0.2 0.8 * * 14.9 69.2 Atlantic - Total 15.0 1.1 0.3 2.8 447.3 0.0 15.9 79.7 Source: 2005 LSMS data * n< 10 171 Table A2 ­ F18 Nicaragua 2005: Of those consulting for Illness, other health expenditures for last consultation by facility Other Costs of last consultation Health Hospital Hospital All Health Post Center Public Private INSS Pharmacy Private Clinic All 209.6 36.7 73.2 331.1 3049.9 66.2 150.1 440.6 Extreme Poor 28.7 13.6 16.7 86.8 * * * 71.5 Moderately Poor 70.1 37.2 40.4 183.9 * 32.0 114.9 207.8 Poor 59.0 28.7 33.6 164.4 * 32.1 105.8 187.6 Non-poor 297.0 54.6 112.3 402.9 3079.0 71.8 166.2 475.4 Urban 241.7 58.3 81.2 282.6 3293.5 67.4 171.5 440.8 Extreme Poor 23.4 24.3 14.8 32.7 * * * 155.7 Moderately Poor 60.4 59.4 38.7 120.4 * 25.5 133.3 144.7 Poor 54.3 51.2 34.2 105.4 * 25.0 128.9 145.5 Non-poor 297.5 64.3 107.2 335.9 3319.8 73.2 181.8 462.7 Rural 161.3 31.2 64.1 432.2 1824.9 56.9 100.2 440.2 Extreme Poor 30.3 12.6 17.3 129.6 * * * 52.0 Moderately Poor 77.3 32.9 41.7 257.9 * 55.3 94.3 256.7 Poor 61.8 25.1 33.3 228.0 * 55.0 81.8 215.6 Non-poor 295.8 49.2 123.4 598.0 1755.9 57.6 114.4 511.4 Quintile Poorest 35.4 17.1 21.3 103.5 * * * 113.7 II 62.7 36.7 37.2 166.0 * 24.2 125.2 186.3 III 128.3 55.1 71.0 281.5 * 22.3 75.8 290.9 IV 187.6 53.2 100.4 330.7 842.7 42.2 257.9 333.3 Richest 499.8 65.3 172.6 556.9 5003.2 117.9 105.6 600.9 Zone Managua - Urban 315.8 64.5 95.2 286.4 4028.9 57.8 * 466.9 Managua - Rural 155.8 * 44.3 * * * * 546.9 Managua 300.5 45.7 88.0 279.1 3804.9 57.1 215.8 473.7 Pacific - Urban 186.0 104.3 70.6 310.1 * 60.7 112.9 403.4 Pacific - Rural 140.6 52.6 60.8 311.9 * 45.7 106.3 368.5 Pacific - Total 167.2 66.2 65.9 310.8 627.0 57.7 111.0 392.2 Central - Urban 185.0 50.4 77.3 241.3 * 144.9 170.2 412.9 Central - Rural 176.9 24.2 64.5 601.9 * 83.5 80.0 402.8 Central - Total 180.5 27.2 70.0 396.7 * 129.3 126.8 408.1 Atlantic- Urban 235.4 35.3 88.6 297.9 * 82.4 * 523.4 Atlantic - Rural 158.9 36.5 80.6 374.0 * * 148.9 660.8 Atlantic - Total 187.9 36.3 83.8 331.4 1616.3 84.9 142.4 587.1 Source: 2005 LSMS data * n< 10 172 Table A2 ­ F19 Nicaragua 2005: Of those consulting for Illness, total cost of last consultation by facility Total cost of last consultation Health Hospital Hospital All Health Post Center Public Private INSS Pharmacy Private Clinic All 247.3 41.0 79.1 370.2 3260.4 85.8 160.2 571.1 Extreme Poor 36.0 14.7 19.7 103.7 * * * 147.9 Moderately Poor 86.0 42.6 46.6 217.1 * 53.4 122.9 291.8 Poor 72.6 32.5 39.0 194.3 * 55.0 113.5 270.5 Non-poor 348.8 59.7 118.6 446.1 3288.3 90.8 177.2 612.5 Urban 283.3 63.4 84.8 310.0 3511.1 85.8 180.1 573.5 Extreme Poor 26.9 24.7 15.8 37.3 * * * * Moderately Poor 73.1 63.6 42.6 136.4 * 44.6 134.2 221.4 Poor 65.5 54.6 37.5 119.4 * 44.1 130.0 221.4 Non-poor 348.2 70.9 110.8 367.3 3538.9 91.5 192.2 599.6 Rural 193.3 35.2 72.6 495.9 1999.6 85.7 113.9 565.8 Extreme Poor 38.7 13.7 21.0 156.2 * * * 130.9 Moderately Poor 95.7 38.5 49.8 311.2 * 84.7 110.1 346.2 Poor 76.9 29.1 39.9 275.1 * 90.2 96.3 303.1 Non-poor 350.7 53.6 135.6 675.2 1911.7 83.9 127.5 649.1 Quintile Poorest 46.0 19.2 27.3 131.5 * * * 188.0 II 74.1 43.1 41.9 199.2 * 43.4 134.8 277.4 III 154.7 58.1 76.8 326.8 * 39.7 77.8 390.6 IV 228.2 56.6 106.8 374.8 1145.0 60.0 270.5 443.9 Richest 575.7 78.5 179.5 592.7 5227.1 139.4 117.6 760.9 Zone Managua - Urban 355.2 71.5 100.7 311.8 4189.5 73.8 * 574.0 Managua - Rural 186.3 * 52.3 * * * * 646.1 Managua 339.0 51.9 93.9 304.8 3958.9 73.5 219.2 580.1 Pacific - Urban 223.2 120.3 72.5 333.7 * 74.8 114.4 533.0 Pacific - Rural 168.2 60.5 65.0 349.1 * 74.4 117.2 484.9 Pacific - Total 200.5 76.2 68.9 339.9 829.2 74.7 115.2 517.5 Central - Urban 227.0 51.1 80.7 269.7 * 160.6 214.7 574.5 Central - Rural 208.5 27.6 73.4 656.7 * 117.0 89.0 534.9 Central - Total 216.7 30.3 76.5 436.5 * 149.5 154.3 555.7 Atlantic- Urban 304.7 36.6 91.7 338.7 * 184.3 * 739.3 Atlantic - Rural 199.6 40.4 99.7 520.1 * * 183.5 803.8 Atlantic - Total 239.4 39.8 96.5 418.4 2225.1 177.4 176.7 769.2 Source: 2005 LSMS data * n< 10 173 Table A2 ­ F20 Nicaragua 2005: Reason for not seeking care of those ill last month No Economic Know Not Serious Too Far Bad Care Medicine Problem Disease Other All 28.8 7.9 7.4 8.6 7.4 37.2 2.7 Extreme Poor 22.7 17.2 7.1 10.6 9.2 31.4 1.9 Moderately Poor 25.7 10.2 7.9 12.3 8.6 32.7 2.5 Poor 24.7 12.5 7.6 11.8 8.8 32.3 2.3 Non-poor 33.3 2.8 7.1 5.2 6.1 42.5 3.0 Urban 34.5 0.6 6.1 7.0 6.0 43.0 2.8 Extreme Poor 28.4 1.0 5.6 16.6 7.5 38.7 2.3 Moderately Poor 32.2 1.0 6.3 12.8 6.7 39.3 1.7 Poor 31.5 1.0 6.2 13.5 6.8 39.2 1.8 Non-poor 35.7 0.4 6.1 4.3 5.7 44.7 3.1 Rural 23.5 14.7 8.6 10.1 8.8 31.7 2.6 Extreme Poor 21.7 19.9 7.3 9.6 9.4 30.2 1.8 Moderately Poor 22.3 15.0 8.8 12.1 9.5 29.3 3.0 Poor 22.1 17.0 8.2 11.1 9.5 29.7 2.5 Non-poor 27.4 8.9 9.6 7.3 6.9 37.2 2.8 Quintile Poorest 21.8 15.7 7.5 13.4 10.1 29.6 1.9 II 26.8 10.9 7.8 10.2 6.5 35.5 2.3 III 29.3 5.9 8.3 8.6 8.7 36.5 2.7 IV 35.8 2.2 7.0 4.7 6.2 41.9 2.3 Richest 33.5 1.0 5.9 3.5 4.6 46.8 4.7 Zone Managua - Urban 36.2 0.5 4.4 3.3 8.1 44.3 3.2 Managua - Rural 43.8 4.9 2.0 5.1 14.1 28.1 2.0 Managua 36.9 0.8 4.2 3.5 8.7 42.8 3.1 Pacific - Urban 38.6 0.6 6.4 4.2 4.6 43.4 2.2 Pacific - Rural 25.7 4.5 9.6 12.2 11.6 33.5 2.9 Pacific - Total 32.1 2.6 8.0 8.2 8.1 38.5 2.5 Central - Urban 28.2 0.6 7.4 11.0 5.0 44.6 3.2 Central - Rural 22.7 15.5 8.0 8.7 7.0 35.5 2.6 Central - Total 24.5 10.7 7.8 9.4 6.4 38.4 2.8 Atlantic- Urban 30.8 0.7 9.2 20.6 4.1 33.2 1.4 Atlantic - Rural 19.7 25.8 9.6 11.2 8.3 23.2 2.3 Atlantic - Total 22.7 18.9 9.5 13.8 7.1 25.9 2.0 Source: 2005 LSMS data 174 Table A2 ­ F21 Nicaragua 2005: Maternal Health by poverty and region (Women 15-49 years old) Where Gave Birth Birth attended by: ReceivedPre- natal care Health Hospital Hospital Private NGO Midwife's Patient's (%) center Public Private INSS Clinic clinic House House Other Doctor Nurse Midwife Other All 92.5 7.2 60.6 3.2 7.5 1.4 0.2 1.3 18.2 0.4 78.1 3.2 16.2 2.5 Extreme Poor 83.8 8.9 44.6 0.9 0.0 0.4 0.0 3.3 41.3 0.6 52.2 3.9 38.5 5.4 ModeratelyPoor 90.9 8.9 61.1 1.0 4.1 0.1 0.4 1.2 22.7 0.5 73.6 4.1 18.8 3.5 Poor 88.6 8.9 55.7 0.9 2.7 0.2 0.3 1.9 28.8 0.5 66.6 4.0 25.3 4.1 Non-poor 96.6 5.5 65.9 5.5 12.7 2.7 0.0 0.7 6.8 0.2 90.3 2.4 6.5 0.8 Urban 96.1 6.0 70.8 4.8 12.0 2.0 0.0 0.6 3.6 0.2 93.6 2.4 3.8 0.2 Extreme Poor 86.1 11.3 63.2 3.0 0.0 1.9 0.0 5.1 15.4 0.0 75.0 4.4 20.2 0.4 ModeratelyPoor 94.6 9.9 75.7 0.3 8.4 0.0 0.0 0.3 5.1 0.3 92.0 3.0 4.9 0.1 Poor 93.0 10.1 73.4 0.8 6.9 0.4 0.0 1.2 7.0 0.3 88.9 3.3 7.7 0.1 Non-poor 97.7 3.9 69.5 6.8 14.7 2.9 0.0 0.2 1.8 0.2 96.0 1.9 1.8 0.3 Rural 88.0 8.7 48.1 1.2 2.0 0.7 0.3 2.2 36.1 0.5 59.0 4.2 31.4 5.4 Extreme Poor 83.3 8.3 39.9 0.3 0.0 0.0 0.0 2.8 48.0 0.7 60.0 32.5 3.1 4.4 ModeratelyPoor 87.9 8.1 49.5 1.5 0.6 0.2 0.8 2.0 36.7 0.6 58.9 5.0 29.8 6.3 Poor 86.0 8.2 45.5 1.0 0.3 0.1 0.5 2.3 41.4 0.6 53.7 4.5 35.3 6.5 Non-poor 93.3 10.2 55.0 1.9 6.6 2.0 0.0 2.0 22.0 0.3 73.0 3.7 20.8 2.5 Quintile Poorest 84.9 9.4 47.4 0.8 0.3 0.3 0.0 2.6 38.7 0.4 55.6 3.8 35.2 5.4 II 91.3 6.2 63.8 0.9 4.5 0.2 0.5 1.5 21.9 0.4 74.3 3.9 18.3 3.5 III 93.3 11.0 63.8 1.9 6.8 1.0 0.2 0.8 14.0 0.4 82.8 3.3 12.3 1.6 IV 96.9 4.9 65.5 6.2 15.0 1.1 0.0 0.8 6.2 0.4 90.5 2.7 6.1 0.7 Richest 98.7 3.7 65.7 7.7 14.2 5.6 0.0 0.2 2.8 0.0 95.1 1.9 2.8 0.2 Zone Managua - Urban 96.3 2.7 65.9 7.8 19.0 3.1 0.0 0.5 1.0 0.0 97.5 1.0 1.5 0.0 Managua - Rural 94.9 23.6 44.8 0.0 22.1 0.0 0.0 0.0 9.5 0.0 90.5 0.0 9.5 0.0 Managua - Total 96.2 4.4 64.1 7.2 19.3 2.8 0.0 0.5 1.7 0.0 96.9 0.9 2.2 0.0 Pacific - Urban 96.5 3.8 78.1 2.3 11.0 1.1 0.0 0.2 3.1 0.3 94.9 1.9 3.1 0.1 Pacific - Rural 94.5 6.6 63.9 1.9 3.5 1.7 0.3 1.1 21.0 0.0 76.1 4.8 17.8 1.3 Pacific - Total 95.7 5.0 72.1 2.1 7.9 1.4 0.1 0.6 10.6 0.2 87.0 3.1 9.3 0.6 Central - Urban 97.2 11.2 75.7 2.2 4.0 1.3 0.0 0.3 4.9 0.4 91.4 3.7 4.5 0.4 Central - Rural 88.2 9.6 51.3 1.0 0.1 0.4 0.3 1.9 35.1 0.3 60.3 4.4 30.0 5.3 Central - Total 91.6 10.2 60.4 1.4 1.5 0.7 0.2 1.3 23.8 0.3 71.9 4.2 20.4 3.5 Atlantic- Urban 91.1 16.5 57.0 4.9 2.3 2.1 0.0 2.6 14.3 0.3 76.2 7.2 15.5 1.1 Atlantic - Rural 79.5 6.7 26.5 1.3 0.3 0.2 0.5 4.3 58.6 1.6 33.0 4.1 52.1 10.8 Atlantic - Total 82.9 9.6 35.5 2.3 0.9 0.8 0.3 3.8 45.6 1.2 45.7 5.1 41.3 7.9 Source: 2005 LSMS data 175 Table A2 ­ F22 Nicaragua 2005: Prenatal care by poverty and region (Women 15-49 years old) Average number of Received pre-natal controls for Non- Birth Pre-natal those who received institutional attended by care (%) any care Birth (%) Doctor All 92.5 6.0 19.8 78.1 Extreme Poor 83.8 5.3 45.2 52.2 Moderately Poor 90.9 5.7 24.4 73.6 Poor 88.6 5.6 31.3 66.6 Non-poor 96.6 6.5 7.7 90.3 Urban 96.1 6.5 4.4 93.6 Extreme Poor 86.1 5.8 20.5 75.0 Moderately Poor 94.6 6.0 5.7 92.0 Poor 93.0 6.0 8.5 88.9 Non-poor 97.7 6.7 2.3 96.0 Rural 88.0 5.5 38.9 59.0 Extreme Poor 83.3 5.2 51.5 60.0 Moderately Poor 87.9 5.5 39.3 58.9 Poor 86.0 5.4 44.4 53.7 Non-poor 93.3 5.8 24.2 73.0 Quintile Poorest 84.9 5.4 41.8 55.6 II 91.3 5.7 23.9 74.3 III 93.3 6.1 15.3 82.8 IV 96.9 6.4 7.4 90.5 Richest 98.7 6.8 3.0 95.1 Zone Managua - Urban 96.3 6.6 1.5 97.5 Managua - Rural 94.9 6.6 9.5 90.5 Managua - Total 96.2 6.6 2.2 96.9 Pacific - Urban 96.5 6.4 3.7 94.9 Pacific - Rural 94.5 5.9 22.1 76.1 Pacific - Total 95.7 6.2 11.4 87.0 Central - Urban 97.2 6.3 5.6 91.4 Central - Rural 88.2 5.4 37.4 60.3 Central - Total 91.6 5.8 25.5 71.9 Atlantic- Urban 91.1 6.4 17.2 76.2 Atlantic - Rural 79.5 4.9 64.5 33.0 Atlantic - Total 82.9 5.4 50.6 45.7 Source: 2005 LSMS data 176 Table A 2 ­ F23 Nicaragua 1998-2005: First Pre-natal visit in the First Trimester by poverty and region (Women 15-49 years old) First Pre-natal Visit in the 1st trimester (%) 1998 2001 2005 All 59.6 64.8 80.3 Extreme Poor 43.1 48.7 75.1 Moderately Poor 63.6 68.3 77.3 Poor 50.4 58.0 76.6 Non-poor 70.6 72.5 84.0 Urban 67.2 71.5 84.2 Extreme Poor 53.3 50.6 79.3 Moderately Poor 68.7 73.1 79.0 Poor 59.9 63.2 79.0 Non-poor 71.7 76.2 86.8 Rural 51.9 56.8 75.1 Extreme Poor 39.7 48.2 73.9 Moderately Poor 57.0 60.5 75.8 Poor 45.3 54.8 75.1 Non-poor 68.2 62.0 75.2 Quintile Poorest 45.5 51.4 75.3 II 51.8 64.9 78.3 III 58.7 67.5 80.1 IV 69.9 68.4 82.7 Richest 82.2 77.9 86.7 Zone Managua - Urban 85.9 Managua - Rural 80.0 Managua - Total 66.7 69.7 85.4 Pacific - Urban 72.1 75.6 84.1 Pacific - Rural 60.6 66.1 83.5 Pacific - Total 66.5 71.0 83.8 Central - Urban 68.8 73.9 82.4 Central - Rural 50.3 58.7 75.7 Central - Total 55.7 64.5 78.4 Atlantic- Urban 53.1 64.9 81.4 Atlantic - Rural 23.0 28.6 62.4 Atlantic - Total 37.3 44.9 68.5 Source: 1998, 2001, 2005 LSMS data Note: Women who have had a child in the last 5 years 177 Table A2 ­ G01 Nicaragua 2005 Prevalence of Malnutrition by Quintile, Region and Poverty Status Using NCHS Reference 1977 (Children under 5 years of age) Underweight (weight-for-age) Stunting (height-for-age) Wasting (weight-for-height) Malnourished Severe Moderate Total Severe Moderate Total Severe Moderate Total Total Total 1.1 7.1 8.2 5.0 12.1 17.1 0.1 0.8 0.9 19.1 Extreme Poor 3.2 11.3 14.5 10.8 21.0 31.9 0.1 1.0 1.1 34.2 Moderately Poor 0.7 7.6 8.3 4.5 12.5 17.0 0.1 1.0 1.1 19.8 Poor 1.5 8.9 10.4 6.7 15.4 22.1 0.1 1.0 1.1 24.7 Non-poor 0.6 5.1 5.7 3.0 8.2 11.2 0.0 0.6 0.6 12.7 Sex Male 1.1 6.9 8.1 4.6 11.5 16.1 0.0 0.8 0.9 18.3 Female 1.1 7.3 8.4 5.3 12.7 18.1 0.1 0.9 1.0 20.1 Urban 0.5 5.4 5.9 3.2 9.3 12.5 0.0 0.7 0.7 14.4 Extreme Poor 0.2 9.7 9.8 8.9 16.1 25.0 0.0 0.2 0.2 25.3 Moderately Poor 0.6 8.2 8.8 3.3 13.4 16.6 0.0 0.8 0.8 20.3 Poor 0.5 8.4 9.0 4.2 13.8 18.1 0.0 0.7 0.7 21.1 Non-poor 0.5 3.5 4.0 2.6 6.6 9.2 0.0 0.7 0.8 10.4 Rural 1.8 9.1 10.9 7.0 15.2 22.2 0.1 1.0 1.1 24.4 Extreme Poor 3.9 11.7 15.6 11.3 22.2 33.4 0.1 1.2 1.3 36.3 Moderately Poor 0.7 7.2 7.9 5.6 11.8 17.4 0.2 1.2 1.4 19.3 Poor 2.1 9.2 11.3 8.1 16.4 24.5 0.1 1.2 1.4 26.8 Non-poor 0.9 9.0 9.9 4.1 12.1 16.2 0.1 0.3 0.4 18.2 Quintile Poorest 2.4 11.2 13.6 9.8 20.3 30.1 0.1 0.8 0.8 32.1 II 0.5 6.7 7.2 4.9 10.3 15.3 0.1 1.1 1.3 17.7 III 0.9 6.4 7.3 1.8 10.8 12.7 0.0 1.0 1.1 16.2 IV 1.1 4.3 5.4 4.5 8.0 12.5 0.0 0.5 0.5 13.6 Richest 0.0 5.7 5.7 1.8 8.0 9.8 0.1 0.7 0.8 10.8 Zone Managua - Urban 0.9 5.5 6.4 4.3 8.4 12.7 0.0 0.4 0.4 15.0 Managua - Rural 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Managua - Total 0.8 5.1 5.9 4.0 7.8 11.8 0.0 0.4 0.4 13.9 Pacific- Urban 0.2 5.3 5.5 1.4 10.2 11.6 0.0 0.8 0.9 13.2 Pacific - Rural 1.6 11.1 12.7 4.4 9.7 14.2 0.0 1.2 1.2 17.3 Pacific - Total 0.8 7.9 8.7 2.8 10.0 12.7 0.0 1.0 1.0 15.0 Central - Urban 0.3 5.4 5.7 3.6 11.6 15.1 0.0 0.3 0.3 16.0 Central - Rural 2.2 8.5 10.7 8.2 19.1 27.3 0.0 0.9 0.9 29.0 Central - Total 1.5 7.4 9.0 6.6 16.5 23.0 0.0 0.7 0.7 24.5 Atlantic- Urban 0.1 4.8 4.9 2.7 5.7 8.4 0.1 2.6 2.7 11.8 Atlantic - Rural 1.6 9.3 10.9 8.3 16.2 24.5 0.4 1.0 1.4 26.9 Atlantic - Total 1.2 8.2 9.4 6.9 13.6 20.5 0.3 1.4 1.7 23.2 Note: Severe values are less than -3 z-score and moderate values are -2 to -3 z-score Malnourished is defined as either underweight, stunted or wasted Source: 2005 LSMS data 178 Table A2 ­ G02 Nicaragua 2005 - Prevalence of Malnutrition by Age Group Using NCHS Reference 1977 (Children under 5 years of age) Underweight (weight-for-age) Stunting (height-for-age) Wasting (weight-for-height) Malnourished Severe Moderate Total Severe Moderate Total Severe Moderate Total Total 0 - 5 months 0.0 1.4 1.4 1.7 3.6 5.3 0.5 0.2 0.7 6.2 6 - 11 months 0.6 7.0 7.6 1.9 9.9 11.8 0.0 0.5 0.5 14.8 12 - 23 months 0.9 9.8 10.7 4.8 12.4 17.2 0.0 1.8 1.9 20.6 24 - 35 months 2.5 8.1 10.6 5.1 10.0 15.1 0.0 1.2 1.2 17.4 36 - 47 months 0.9 6.8 7.7 6.1 14.5 20.6 0.0 0.7 0.7 22.0 48 - 59 months 1.0 6.7 7.7 7.0 15.8 22.8 0.0 0.3 0.3 24.1 Total 1.1 7.1 8.2 5.0 12.1 17.1 0.1 0.8 0.9 19.1 Note: Severe values are less than -3 z-score and moderate values are -2 to -3 z-score Source: 2005 LSMS data Table A2 ­ G03 Nicaragua 2005 - Percent of Children (0-59 months) Classified as Malnourished by Poverty and Region (Using NCHS Reference 1977) Level Underweight (weight-for-age) Stunting (height-for-age) Wasting (weight-for-height) Extreme Moderately Extreme Moderately Extreme Moderately Poor Non-poor Poor Non-poor Poor Non-poor Poverty Poor Poor Poor Poor Poor Poor Managua - Urban 10.8 9.6 5.2 14.6 23.3 22.3 15.8 0.6 Managua - Rural 0.0 0.0 0.0 0.0 10.2 9.3 9.8 0.0 Managua - Total 9.4 8.3 5.0 13.0 21.5 20.6 15.5 0.6 Pacific- Urban 8.9 8.6 8.6 2.8 20.2 21.4 21.3 9.7 0.0 0.8 0.6 1.1 Pacific - Rural 13.1 8.9 10.1 16.7 24.3 16.7 18.9 17.4 1.6 2.1 2.0 0.0 Pacific - Total 11.6 8.7 9.4 7.9 22.9 19.3 20.1 12.5 1.0 1.4 1.3 0.7 Central - Urban 16.7 6.4 9.2 2.8 46.2 21.1 27.7 11.8 0.0 0.0 0.0 0.6 Central - Rural 18.2 6.7 12.4 4.9 45.2 26.9 36.0 19.6 1.6 0.6 1.1 0.2 Central - Total 17.9 6.6 11.6 3.7 45.3 25.1 34.0 15.2 1.4 0.4 0.8 0.4 Atlantic- Urban 4.8 8.2 7.6 3.3 14.5 14.3 14.3 7.5 1.7 6.1 5.3 1.1 Atlantic - Rural 12.9 9.9 11.4 9.4 36.9 26.3 31.5 22.1 0.7 2.1 1.4 1.3 Atlantic - Total 12.5 9.5 10.8 6.6 35.6 23.7 29.0 15.4 0.8 2.9 2.0 1.2 Note: Malnourished defined as < -2 z-score Source: 2005 LSMS data Table A2 ­ G04 Nicaragua 2005 - Percent of Children (0-59 months) Classified as Malnourished by Poverty and Age (Using NCHS Reference 1977) Level Underweight (weight-for-age) Stunting (height-for-age) Wasting (weight-for-height) Very Not very Non- Very Not very Non- Very Not very Non- Poor Poor Poor Age Groups poor Poor poor poor Poor poor poor Poor poor 0 - 5 months 1.0 0.5 0.6 2.3 13.6 3.8 6.7 6.9 0.0 1.5 1.0 0.3 6 - 11 months 14.2 9.9 11.3 3.8 22.2 15.1 17.4 9.1 2.6 0.2 1.0 0.0 12 - 23 months 18.6 10.7 13.5 7.7 35.5 19.1 24.9 18.1 1.3 2.6 2.1 1.6 24 - 35 months 16.2 11.5 13.3 7.5 41.5 25.0 31.0 14.2 1.4 1.0 1.1 1.3 36 - 47 months 16.3 7.0 10.1 4.4 41.4 29.8 33.5 18.2 1.5 0.9 1.1 0.1 48 - 59 months 12.4 7.5 9.2 5.9 46.0 26.8 33.6 14.5 0.0 0.6 0.4 0.3 Total 14.5 8.3 10.4 5.7 37.2 22.4 27.4 14.6 1.1 1.1 1.1 0.6 Note: Malnourished defined as < -2 z-score Source: 2005 LSMS data 179 Table A2 ­ H01 Nicaragua 2005 - Access to Services/Housing by Poverty Group Extreme Moderately Access to Services/Housing All Poor Poor Poor Own house with title 50.5 39.0 44.4 42.9 Main source of water Pipes inside 32.3 3.8 13.7 10.9 Pipes outside 32.3 21.9 33.1 29.9 Public source 2.9 6.0 5.1 5.3 Public or private well 16.5 30.0 22.6 24.7 Spring 7.1 18.4 11.7 13.6 River/stream/lake 4.4 14.5 7.1 9.2 Truck/oxcart 0.1 0.0 0.1 0.1 From another house 4.0 4.2 6.0 5.5 Other 0.4 1.2 0.6 0.8 Type of sanitary service Latrine/lavatory - Not treated 33.4 44.1 39.2 40.6 Latrine/lavatory - Treated 26.5 28.8 33.6 32.2 Toilet connected to sewage system 21.3 1.0 6.5 4.9 Toilet connected to septic tank 8.0 0.0 3.1 2.3 Toilet discharges into river/stream 0.1 0.0 0.0 0.0 There is none 10.7 26.1 17.6 20.0 Garbage Disposal Collected by truck 42.5 4.8 22.4 17.4 Authorized dump/containers 0.5 0.0 0.1 0.1 Burned 30.7 42.7 40.8 41.4 Buried 4.7 6.3 5.1 5.4 Dumped 20.9 45.1 30.6 34.7 Compost 0.7 1.1 1.0 1.0 Other 0.0 0.0 0.0 0.0 Source of Energy Electric 73.8 32.1 57.7 50.4 Generator 0.3 0.0 0.1 0.1 Solar panel 0.6 0.6 0.6 0.6 Automobile battery 0.3 0.4 0.4 0.4 Gas 18.7 50.2 31.5 36.8 Candles 4.7 10.0 7.7 83.0 Ocote 1.1 6.1 1.3 2.7 Other 0.1 0.1 0.0 0.1 None 0.4 0.6 0.7 0.6 Mean paymet for electricity 168.7 51.1 81.8 76.7 Fuel for cooking Firewood 60.1 98.5 87.7 90.8 Butane/Propane 38.3 1.2 11.3 8.4 Coal 0.6 0.3 0.5 0.4 Kerosene 0.4 0.0 0.3 0.2 Electricity 0.5 0.0 0.0 0.0 Other 0.1 0.0 0.2 0.1 Households where at least one member has public hlth insurance 29.7 7.8 17.5 14.7 Households where at least one member has private hlth insurance 0.7 0.0 0.1 0.0 Distance to health post/center (kms) 2.8 4.8 4.0 4.2 Distance to elementary school (kms) 0.9 1.1 1.0 1.1 Minutes to health post/center 36.2 68.9 50.4 55.7 Minutes to elementary school 13.7 21.2 15.6 17.2 Principal access road is paved 52.2 22.8 35.9 32.2 Credit Access Households requesting loans last year (%) 28.0 19.7 25.1 23.5 Average amount of loan 7,475.1 3,260.4 5,011.5 4,599.0 Households buying on credit last year (%) Average amount of credit Source: 2005 LSMS data 180 Table A2 ­ H02 Nicaragua 2005 - Access to Services/Housing by Poverty and Urban/Rural Urban Rural Extreme Moderately Extreme Moderately Access to Services/Housing All Poor Poor Poor Non-poor All Poor Poor Poor Non-poor Own house with title 55.8 50.0 48.3 48.6 57.8 43.0 36.2 41.9 40.0 47.4 Main source of water Pipes inside 50.9 14.3 27.8 25.6 57.8 6.3 1.2 4.5 3.4 10.4 Pipes outside 38.6 51.6 53.2 52.9 34.7 23.6 14.7 20.0 18.1 31.3 Public source 0.7 2.7 1.9 2.0 0.4 5.9 6.7 7.1 7.0 4.4 Public or private well 5.2 18.6 6.9 8.8 4.2 32.2 32.8 32.9 32.9 31.2 Spring 0.2 1.2 0.4 0.5 0.1 16.8 22.6 19.2 20.3 11.7 River/stream/lake 0.5 6.1 0.7 1.6 0.1 9.8 16.6 11.2 13.1 5.1 Truck/oxcart 0.1 0.0 0.2 0.2 0.1 0.1 0.0 0.0 0.0 0.2 From another house 3.8 4.9 9.0 8.3 2.5 4.4 4.0 4.1 4.0 4.9 Other 0.0 0.5 0.0 0.1 0.0 1.0 1.3 1.0 1.1 0.8 Type of sanitary service Latrine/lavatory - Not treated 27.4 52.4 34.6 37.5 24.6 41.8 42.1 42.2 42.2 41.3 Latrine/lavatory - Treated 21.2 35.3 35.7 35.7 17.2 34.0 27.2 32.2 30.4 39.1 Toilet connected to sewage system 36.5 5.0 16.5 14.6 42.5 0.2 0.0 0.0 0.0 0.5 Toilet connected to septic tank 11.8 0.0 7.0 5.9 13.4 2.6 0.0 0.6 0.4 5.7 Toilet discharges into river/stream 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 There is none 3.1 7.3 6.2 6.3 2.2 21.7 30.7 25.0 27.0 13.4 Garbage Disposal Collected by truck 72.0 23.4 55.2 49.9 78.0 1.3 0.3 1.1 0.8 2.1 Authorized dump/containers 0.7 0.0 0.3 0.3 0.8 0.2 0.0 0.0 0.0 0.4 Burned 16.8 52.5 29.4 33.2 12.3 50.1 40.3 48.2 45.5 56.7 Buried 2.4 4.2 3.5 3.6 2.1 7.9 6.8 6.2 6.4 10.0 Dumped 8.0 19.9 11.2 12.8 6.7 39.0 51.3 43.0 45.9 29.3 Compost 0.1 0.0 0.1 0.1 0.0 1.5 1.4 1.5 1.4 1.5 Other 0.1 0.0 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 Source of Energy Electric 95.5 68.6 91.9 88.0 97.6 43.3 23.1 35.4 31.2 60.6 Generator 0.1 0.0 0.0 0.0 0.1 0.7 0.0 0.2 0.1 1.6 Solar panel 0.1 0.0 0.0 0.0 0.1 1.3 0.7 1.0 0.9 1.8 Automobile battery 0.3 0.4 0.3 0.3 0.4 0.3 0.4 0.4 0.4 0.2 Gas 1.3 9.6 3.4 4.4 0.5 43.0 60.2 49.8 53.4 28.2 Candles 2.2 11.1 4.2 5.3 1.3 8.3 9.7 10.0 9.9 6.0 Ocote 0.5 9.7 0.3 1.9 0.1 2.0 5.2 2.0 3.1 0.5 Other 0.0 0.1 0.0 0.0 0.0 0.2 0.1 0.1 0.1 0.3 None 0.0 0.5 0.0 0.1 0.0 0.9 0.6 1.1 0.9 0.8 Mean paymet for electricity 193.5 61.7 95.0 90.4 216.7 84.2 40.3 59.3 55.3 103.8 Fuel for cooking Firewood 35.7 93.1 71.0 74.7 25.0 94.1 99.8 98.6 99.0 87.1 Butane/Propane 61.7 6.0 26.7 23.2 72.2 5.7 0.0 1.3 0.9 12.5 Coal 0.9 0.9 1.1 1.1 0.9 0.1 0.2 0.1 0.1 0.1 Kerosene 0.7 0.0 0.7 0.6 0.7 0.0 0.0 0.0 0.0 0.1 Electricity 0.8 0.0 0.0 0.0 1.1 0.1 0.0 0.0 0.0 0.2 Other 0.2 0.0 0.4 0.4 0.1 0.0 0.0 0.0 0.0 0.0 Households where at least one member has public hlth insurance 43.2 18.2 31.4 29.2 47.1 10.8 5.2 8.4 7.3 15.9 Households where at least one member has private hlth insurance 1.1 0.0 0.0 0.0 1.4 0.2 0.0 0.1 0.1 0.5 Distance to health post/center (kms) 0.9 0.9 0.9 0.9 0.9 5.4 5.7 6.0 5.9 4.6 Distance to elementary school (kms) 0.5 0.5 0.4 0.4 0.5 1.6 1.3 1.4 1.4 1.8 Minutes to health post/center 14.7 17.9 15.4 15.8 14.4 66.2 81.5 73.2 76.1 52.1 Minutes to elementary school 8.8 10.6 8.7 9.0 8.7 20.7 23.8 20.1 21.4 19.7 Principal access road is paved 76.0 61.6 64.9 64.3 79.2 19.0 13.3 17.0 15.7 23.7 Credit Access Households requesting loans last year (%) 30.0 19.2 26.7 25.5 31.2 25.1 19.8 24.0 22.5 28.7 Average amount of loan 7,802.6 2,089.5 3,853.7 3,642.0 8,750.8 6,922.7 3,532.8 5,872.7 5,162.4 8,923.1 Households buying on credit last year (%) Average amount of credit Source: 2005 LSMS data 181 Table A2 ­ H03 Nicaragua 2005 - Access to Services/Housing by Quintile Access to Services/Housing Poorest II III IV Richest Own house with title 40.5 43.9 47.9 51.7 60.5 Main source of water Pipes inside 4.1 13.6 24.4 36.5 60.2 Pipes outside 23.6 34.1 36.5 39.5 27.5 Public source 5.9 5.2 3.2 1.9 0.6 Public or private well 29.6 22.3 19.3 11.9 7.6 Spring 17.4 11.6 7.2 3.3 1.9 River/stream/lake 13.6 7.1 3.3 2.0 0.4 Truck/oxcart 0.0 0.0 0.1 0.1 0.1 From another house 4.6 4.6 5.5 4.6 1.5 Other 1.1 1.1 0.5 0.1 0.1 Type of sanitary service Latrine/lavatory - Not treated 42.5 40.1 40.1 33.5 19.9 Latrine/lavatory - Treated 29.8 33.2 32.2 25.7 17.6 Toilet connected to sewage system 1.8 6.1 11.9 25.4 44.1 Toilet connected to septic tank 0.4 2.6 5.8 9.4 15.4 Toilet discharges into river/stream 0.0 0.0 0.0 0.1 0.2 There is none 25.5 17.9 10.0 5.9 2.8 Garbage Disposal Collected by truck 6.0 22.6 35.6 51.5 71.4 Authorized dump/containers 0.0 0.2 0.4 0.8 0.6 Burned 43.0 40.6 36.7 28.1 16.1 Buried 6.3 4.9 6.3 4.3 3.0 Dumped 43.6 30.8 19.8 14.9 8.8 Compost 1.1 0.8 1.2 0.4 0.2 Other 0.0 0.1 0.0 0.0 0.1 Source of Energy Electric 33.8 58.4 74.6 85.8 94.0 Generator 0.0 0.2 0.3 0.4 0.5 Solar panel 0.6 0.6 0.9 0.5 0.4 Automobile battery 0.3 0.4 0.5 0.5 0.1 Gas 48.8 31.3 17.1 9.2 3.8 Candles 10.1 7.4 5.6 3.0 1.0 Ocote 5.5 0.9 0.6 0.1 0.0 Other 0.1 0.0 0.1 0.1 0.1 None 0.8 0.7 0.3 0.3 0.1 Mean paymet for electricity 54.0 82.9 103.2 138.7 266.2 Fuel for cooking Firewood 97.9 89.5 72.5 48.0 23.3 Butane/Propane 1.4 10.0 25.7 49.6 74.7 Coal 0.3 0.5 0.7 1.1 0.3 Kerosene 0.1 0.0 0.3 0.7 0.7 Electricity 0.0 0.0 0.8 0.4 1.0 Other 0.3 0.0 0.0 0.2 0.0 Households where at least one member has public hlth insurance 9.2 16.4 24.6 37.1 46.3 Households where at least one member has private hlth insurance 0.0 0.1 0.1 0.4 2.1 Distance to health post/center (kms) 4.8 4.1 2.9 1.8 1.6 Distance to elementary school (kms) 1.1 0.9 1.3 0.8 0.6 Minutes to health post/center 67.3 49.9 38.4 25.1 18.7 Minutes to elementary school 20.6 15.1 14.1 12.0 10.4 Principal access road is paved 23.7 35.4 47.5 59.9 74.6 Credit Access Households requesting loans last year (%) 20.8 24.5 25.6 32.5 31.7 Average amount of loan 3,163.8 4,234.3 6,702.9 6,618.4 11,636.3 Households buying on credit last year (%) Average amount of credit Source: 2005 LSMS data 182 Table A2 ­ H04 Nicaragua 2005 - Access to Services/Housing by Region Managua - Managua - Managua - Pacific - Pacific - Pacific - Central - Central - Central - Atlantic- Atlantic - Atlantic - Access to Services/Housing Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total Own house with title 51.6 34.2 49.9 55.3 40.0 48.9 63.8 48.6 54.9 56.8 37.6 44.4 Main source of water Pipes inside 61.9 16.8 57.3 44.1 7.2 28.7 48.4 5.4 23.2 25.8 3.5 11.3 Pipes outside 35.9 63.7 38.7 46.9 28.0 39.1 39.5 20.8 28.5 17.8 10.4 13.0 Public source 0.0 0.0 0.0 0.3 4.3 1.9 2.1 9.6 6.5 2.6 1.9 2.1 Public or private well 0.0 12.4 1.2 3.1 48.0 21.8 4.2 25.3 16.6 43.8 30.5 35.2 Spring 0.0 1.4 0.1 0.0 2.4 1.0 0.4 21.3 12.7 1.7 33.0 22.0 River/stream/lake 0.1 1.7 0.3 0.1 2.7 1.2 1.1 12.6 7.8 1.6 16.9 11.5 Truck/oxcart 0.0 0.0 0.0 0.1 0.2 0.2 0.2 0.0 0.1 0.1 0.0 0.0 From another house 2.1 4.1 2.3 5.3 7.0 6.0 3.9 3.6 3.7 6.6 2.4 3.9 Other 0.0 0.0 0.0 0.0 0.3 0.1 0.2 1.4 0.9 0.0 1.5 0.0 Type of sanitary service Latrine/lavatory - Not treated 23.2 54.1 26.3 26.1 40.7 32.2 31.2 39.7 36.2 43.5 44.2 43.9 Latrine/lavatory - Treated 10.5 26.2 12.1 29.0 42.7 34.7 27.0 35.9 32.2 29.6 19.3 22.9 Toilet connected to sewage system 53.8 1.7 48.6 28.3 0.3 16.7 27.4 0.0 11.3 3.2 0.0 1.1 Toilet connected to septic tank 10.2 13.2 10.5 13.6 3.0 9.2 10.6 1.8 5.4 16.8 0.6 6.3 Toilet discharges into river/stream 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.2 0.2 0.0 0.1 There is none 2.3 4.8 2.6 3.0 13.3 7.3 3.3 22.6 14.6 6.7 36.0 25.7 Garbage Disposal Collected by truck 84.0 1.7 75.7 67.5 4.1 41.1 69.2 0.0 28.7 33.7 0 11.8 Authorized dump/containers 0.5 0.0 0.5 0.8 0.3 0.6 0.5 0.1 0.3 1.3 0 0.5 Burned 8.7 68.3 14.7 20.2 73.6 42.4 18.8 36.8 29.3 40.3 39.4 39.7 Buried 1.1 13.9 2.4 2.8 7.6 4.8 2.7 8.0 5.8 7.5 6.1 6.6 Dumped 5.7 16.1 6.7 8.4 13.9 10.7 8.7 52.7 34.5 16.8 53.1 40.4 Compost 0.0 0.0 0.0 0.1 0.4 0.2 0.1 2.4 1.5 0 1.3 0.8 Other 0.0 0.0 0.0 0.1 0.0 0.1 0.0 0.0 0.0 0.4 0.1 0.2 Source of Energy Electric 99.1 94.8 98.6 98.4 70.5 86.8 90.7 32.9 56.8 79.7 9.6 34.2 Generator 0.0 0.0 0.0 0.0 0.4 0.1 0.0 1.0 0.6 0.8 0.7 0.8 Solar panel 0.1 0.0 0.1 0.0 0.3 0.1 0.0 0.5 0.3 0.1 5.0 3.2 Automobile battery 0.4 0.0 0.4 0.4 0.5 0.5 0.1 0.2 0.2 0.5 0.3 0.4 Gas 0.0 0.0 0.0 0.7 22.0 9.5 2.8 56.1 34.0 6.4 58.5 40.2 Candles 0.4 5.2 0.9 0.5 4.9 2.3 4.3 5.2 4.8 11.7 21.5 18.1 Ocote 0.0 0.0 0.0 0.0 0.0 0.0 2.0 3.0 2.6 0.1 3.5 2.3 Other 0.0 0.0 0.0 0.0 0.3 0.1 0.0 0.1 0.0 0.5 0.2 0.3 None 0.0 0.0 0.0 0.0 1.1 0.5 0.1 1.0 0.6 0.2 0.6 0.5 Mean paymet for electricity 248.1 87.7 235.0 164.0 92.0 142.2 146.1 72.0 123.3 189.5 87.1 170.3 Fuel for cooking Firewood 19.9 82.9 26.3 47.5 88.9 64.8 49.5 97.6 77.7 32.9 97.8 75.1 Butane/Propane 77.1 17.1 71.0 50.7 10.7 34.0 49.8 2.4 22.0 58.0 1.9 21.5 Coal 0.7 0.0 0.6 0.1 0.1 0.1 0.0 0.0 0.0 8.1 0.3 3.0 Kerosene 0.8 0.0 0.8 0.4 0.2 0.3 0.6 0.0 0.3 0.9 0.0 0.3 Electricity 1.5 0.0 1.3 0.8 0.2 0.5 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.5 0.0 0.3 0.1 0.0 0.0 0.0 0.0 0.0 Households where at least one member has public hlth insurance 57.6 30.8 54.9 40.4 17.7 31.0 25.9 5.9 14.2 29.5 5.3 13.8 Households where at least one member has private hlth insurance 2.1 0.0 1.9 0.5 0.7 0.5 0.5 0.1 0.2 0.4 0.0 0.2 Distance to health post/center (kms) 1.1 2.5 1.2 0.7 3.0 1.7 0.8 6.2 4.0 0.8 8.0 5.5 Distance to elementary school (kms) 0.5 0.7 0.5 0.4 1.3 0.7 0.5 1.3 1.0 0.4 2.8 1.9 Minutes to health post/center 14.4 34.7 16.5 13.1 39.6 24.1 16.9 77.1 52.2 16.3 91.5 65.1 Minutes to elementary school 9.5 13.7 9.9 7.9 16.9 11.5 8.9 21.1 16.1 8.6 27.7 21.0 Principal access road is paved 84.9 24.1 78.8 83.0 28.8 60.4 67.3 19.9 39.5 27.5 0.4 9.9 Credit Access Households requesting loans last year (%) 29.3 32.4 29.7 28.1 27.1 27.7 34.7 28.5 31.1 26.4 11.4 16.7 Average amount of loan 5,261.2 3,580.0 5,066.3 9,011.8 4,125.3 7,030.8 9,822.4 8,033.8 8,872.9 9,514.9 14,079.1 11,491.8 Households buying on credit last year (%) Average amount of credit Source: 2005 LSMS data 183 Table A2 ­ H05 Nicaragua 2005 - Households with Inadequate Walls, Floor, Ceiling, Housing and Overcrowding All households Rural Households Only Household (%) with Household (%) with Inadequate Over- Inadequate Walls1 Floor2 Ceiling3 Housing4 crowding5 Ceiling6 Housing7 All 28.7 40.0 4.6 49.9 37.2 8.1 73.2 Extreme Poor 51.9 75.0 14.8 85.6 75.0 16.9 87.9 Moderately Poor 42.3 63.0 7.6 73.6 57.5 9.2 83.6 Poor 45.0 66.4 9.6 77.0 62.4 11.9 85.1 Non-poor 19.1 24.4 1.6 33.9 22.4 2.6 56.1 Urban 16.9 25.4 2.1 33.2 30.3 Extreme Poor 37.2 71.9 6.1 76.2 73.0 Moderately Poor 28.7 50.2 5.1 58.2 61.1 Poor 30.1 53.8 5.2 61.2 63.1 Non-poor 13.2 17.6 1.2 25.5 21.3 Rural 45.3 60.4 8.1 73.2 46.9 Extreme Poor 55.6 75.8 16.9 87.9 75.4 Moderately Poor 51.2 71.3 9.2 83.6 55.1 Poor 52.7 72.9 11.9 85.1 62.1 Non-poor 34.8 42.5 2.6 56.1 25.1 Quintile Poorest 51.2 73.5 14.2 84.7 72.6 15.6 87.5 II 42.6 65.5 7.0 75.6 60.6 8.5 84.7 III 31.3 44.1 3.7 55.2 39.8 6.6 70.2 IV 20.6 28.9 1.5 38.6 29.0 1.2 56.3 Richest 13.2 12.7 1.0 21.2 9.2 0.7 41.1 Zone Managua - Urban 15.5 21.7 1.7 30.8 28.3 Managua - Rural 23.3 44.3 3.4 46.7 29.8 3.4 46.7 Managua 16.3 24.0 1.9 32.4 28.4 Pacific- Urban 14.0 28.7 3.1 31.9 37.0 Pacific - Rural 30.7 56.5 7.4 60.8 46.8 7.4 60.8 Pacific- Total 20.9 40.2 4.9 43.9 41.1 Central - Urban 12.1 30.2 1.8 32.0 25.9 Central - Rural 38.0 68.5 5.4 75.9 47.5 5.4 75.9 Central - Total 27.3 52.7 3.9 57.7 38.6 Atlantic- Urban 49.8 17.4 0.6 54.3 27.9 Atlantic - Rural 91.1 52.6 16.6 94.1 50.9 16.6 94.1 Atlantic - Total 76.6 40.3 11.0 80.2 42.9 Source: LSMS 2005 1Codes 5,6,9 and 10 in q. 5 2Codes 5 and 6 in q. 6 3Codes 4,5 and 6 in q. 7 4Inadequate walls, floor or ceiling (defined in 3) 5More than 3 persons per room 6Codes 5 and 6 in q. 7 7Inadequate walls, floor or ceiling (defined in 6) 184 Table A2 ­ H06 Nicaragua 2005 Households without basic services Principal Without Without Access Safe Latrine Without Inadequate Dirt Inadequate Inadequate Over- Road is Water1 Toilet Electricity Walls2 Floor3 Ceiling4 Housing5 crowding6 Paved All 16.0 10.7 26.2 28.7 40.0 4.6 49.9 37.2 52.2 Extreme Poor 38.4 26.1 67.9 51.9 75.0 14.8 85.6 75.0 22.8 Moderately Poor 25.5 17.6 42.3 42.3 63.0 7.6 73.6 57.5 35.9 Poor 29.2 20.0 49.6 45.0 66.4 9.6 77.0 62.4 32.2 Non-poor 8.3 5.2 12.5 19.1 24.4 1.6 33.9 22.4 64.0 Urban 4.6 3.1 4.5 16.9 25.4 2.1 33.2 30.3 76.0 Extreme Poor 12.7 7.3 31.4 37.2 71.9 6.1 76.2 73.0 61.6 Moderately Poor 10.3 6.2 8.1 28.7 50.2 5.1 58.2 61.1 64.9 Poor 10.7 6.3 12.0 30.1 53.8 5.2 61.2 63.1 64.3 Non-poor 2.8 2.2 3.4 13.2 17.6 1.2 25.5 21.3 79.2 Rural 32.1 21.7 56.7 45.3 60.4 8.1 73.2 46.9 19.0 Extreme Poor 44.5 30.7 76.9 55.6 75.8 16.9 87.9 75.4 13.3 Moderately Poor 35.5 25.0 64.6 51.2 71.3 9.2 83.6 55.1 17.0 Poor 38.5 27.0 68.8 52.7 72.9 11.9 85.1 62.1 15.7 Non-poor 22.7 13.4 29.4 34.8 42.5 2.6 56.1 25.1 23.7 Quintile Poorest 36.7 25.5 66.2 51.2 73.5 14.2 84.7 72.6 23.7 II 24.4 17.9 41.6 42.6 65.5 7.0 75.6 60.6 35.4 III 16.6 10 25.4 31.3 44.1 3.7 55.2 39.8 47.5 IV 10.1 5.9 14.2 20.6 28.9 1.5 38.6 29.0 59.9 Richest 4.0 2.8 6.0 13.2 12.7 1.0 21.2 9.2 74.6 Zone Managua - Urban 2.2 2.3 0.9 15.5 21.7 1.7 30.8 28.3 84.9 Managua - Rural 7.2 4.8 5.2 23.3 44.3 3.4 46.7 29.8 24.1 Managua 2.7 2.6 1.4 16.3 24.0 1.9 32.4 28.4 78.8 Pacific- Urban 5.5 3.0 1.6 14.0 28.7 3.1 31.9 37.0 83.0 Pacific - Rural 12.6 13.3 29.5 30.7 56.5 7.4 60.8 46.8 28.8 Pacific- Total 8.5 7.3 13.2 20.9 40.2 4.9 43.9 41.1 60.4 Central - Urban 5.8 3.3 9.3 12.1 30.2 1.8 32.0 25.9 67.3 Central - Rural 38.9 22.6 67.1 38.0 68.5 5.4 75.9 47.5 19.9 Central - Total 25.2 14.6 43.2 27.3 52.7 3.9 57.7 38.6 39.5 Atlantic- Urban 10.0 6.7 20.3 49.8 17.4 0.6 54.3 27.9 27.5 Atlantic - Rural 53.8 36.0 91.4 91.1 52.6 16.6 94.1 50.9 0.4 Atlantic - Total 37.4 25.7 65.8 76.6 40.3 11.0 80.2 42.9 9.9 Source: LSMS 2005 1piped water inside or outside, standpipe or well 2bamboo, cane or palm, wood, residue or rubble, and other 3Dirt and other 4Straw or similar, residue or rubble, and other 5if inadequate walls, floor or ceiling 6More than 3 persons per room 185 Table A2 ­ H07 Nicaragua 2005: Households with access to Cable TV, Telephone and member of Farmer's association Farmer's Information Telephone Association Technologies* Home Mobile Both None Member All 17.1 7.3 16.2 6.9 69.6 1.5 Extreme Poor 0.5 0.0 1.3 0.0 98.7 1.8 Moderately Poor 4.0 1.0 5.6 0.3 93.1 1.7 Poor 3.0 0.7 4.4 0.2 94.7 1.8 Non-poor 25.4 11.2 23.1 10.9 54.8 1.3 Urban 28.9 12.3 23.5 11.9 52.2 0.5 Extreme Poor 1.7 0.0 4.8 0.0 95.2 0.0 Moderately Poor 9.5 2.3 12.1 0.7 84.9 0.3 Poor 8.3 1.9 10.9 0.6 86.6 0.2 Non-poor 34.6 15.1 27.0 14.9 42.9 0.6 Rural 0.6 0.3 5.9 0.1 93.7 2.8 Extreme Poor 0.2 0.0 0.4 0.0 99.6 2.3 Moderately Poor 0.4 0.1 1.4 0.0 98.5 2.7 Poor 0.3 0.0 1.1 0.0 98.9 2.5 Non-poor 1.1 0.7 12.8 0.2 86.3 3.3 Quintile Poorest 0.8 0.0 1.3 0.0 98.7 2.2 II 4.1 0.5 5.5 0.3 93.7 1.3 III 9.3 2.7 13.2 0.8 83.3 1.3 IV 15.8 6.9 22.2 5.4 65.5 1.7 Richest 39.9 18.6 27.8 20.0 33.6 1.2 Zone Managua - Urban 26.4 16.8 25.9 17.2 40.0 0.2 Managua - Rural 0.0 2.3 10.3 0.0 87.4 6.5** Managua - Total 23.8 15.3 24.4 15.5 44.8 0.8 Pacific- Urban 25.3 9.1 25.1 9.1 56.6 0.6 Pacific - Rural 0.4 0.3 12.6 0.3 86.8 1.8 Pacific- Total 14.9 5.5 19.9 5.4 69.2 1.1 Central - Urban 36.6 10.6 18.0 8.1 63.3 1.0 Central - Rural 1.0 0.1 2.5 0.0 97.4 3.7 Central - Total 15.7 4.4 8.9 3.4 83.3 2.6 Atlantic- Urban 33.3 5.7 21.1 5.0 68.2 0.7 Atlantic - Rural 0.6 0.1 2.4 0.0 97.5 1.4 Atlantic - Total 12.0 2.1 8.9 1.8 87.2 1.2 Source: LSMS 2005 * includes cable, satellite and internet ** n<5 186 Table A2 ­ H08 Nicaragua 2005: Type of Land Titling and Property Registration - Agricultural Households Type of Title Public Registration? Formal Informal None Yes No In Process All 63.8 15.8 20.4 77.8 17.0 5.1 Extreme Poor 47.2 19.7 33.0 62.8 31.2 6.0 Moderately Poor 58.9 17.7 23.5 75.0 19.5 5.5 Poor 54.8 18.4 26.8 71.1 23.2 5.7 Non-poor 75.4 12.4 12.2 85.1 10.3 4.6 Urban 77.0 9.6 13.4 86.9 8.7 4.3 Extreme Poor 72.9 0.0 27.1 100.0* 0.0 0.0 Moderately Poor 55.2 16.3 28.5 87.9 6.9 5.1 Poor 58.0 13.7 28.3 89.8 5.8 4.3 Non-poor 85.4 7.8 6.8 86.0 9.7 4.3 Rural 61.9 16.7 21.4 76.4 18.3 5.3 Extreme Poor 46.4 20.3 33.2 61.6 32.2 6.2 Moderately Poor 59.2 17.8 23.0 73.8 20.6 5.6 Poor 54.6 18.7 26.7 69.8 24.4 5.8 Non-poor 73.0 13.6 13.5 84.8 10.6 4.6 Quintile Poorest 49.5 19.0 31.5 65.0 29.7 5.3 II 60.6 17.2 22.2 76.4 17.4 6.2 III 58.6 19.5 21.9 80.0 15.4 4.5 IV 81.3 9.7 8.9 84.7 7.2 8.1 Richest 84.9 8.4 6.7 87.6 7.2 8.1 Zone Managua - Urban 100.0* 0.0 0.0 100.0* 0.0 0.0 Managua - Rural 37.8 28.9 23.3 79.7 13.7 6.6 Managua - Total 44.5 34.7 20.8 82.5 11.8 5.7 Pacific- Urban 76.4 14.8 8.8 88.6 1.9 9.5 Pacific - Rural 58.1 22.2 19.7 81.8 11.1 7.1 Pacific- Total 61.9 20.7 17.5 83.3 9.0 7.6 Central - Urban 79.2 5.7 15.1 89.3 10.7 0.0 Central - Rural 70.8 12.6 16.6 77.4 18.3 4.3 Central - Total 71.7 11.9 16.4 78.7 17.5 3.8 Atlantic- Urban 68.7 9.6 21.7 73.4 23.2 3.4 Atlantic - Rural 52.6 16.3 31.1 68.9 25.6 5.5 Atlantic - Total 53.9 15.8 30.3 69.3 25.4 5.3 Source: LSMS 2005 * n<5 187 ANNEX 3 ­ TECHNICAL DOCUMENT ABOUT TWO ASPECTS RELATED TO DEFINING THE EXTREME POVERTY LINE BASED ON THE NICARAGUA 2005 LIVING STANDARDS MEASUREMENT SURVEY (LSMS) By Carlos Sobrado and Juan Rocha102 1. This document was specifically written to clarify the technical and methodological rationale of two specific aspects that were considered in defining the extreme poverty line, based on data from the 2005 LSMS in Nicaragua: the price of coffee and minimum calorie requirements. Summary 2. In calculating the extreme poverty line, it was found that data contained in the 2005 LSMS about the price of coffee was not accurate. Given this problem, the decision was made to update the price of coffee in 2001, based on the same changes in prices that were used in the Consumer Price Index (CPI) for ground coffee. In this way, the price of C$27.72 per pound of ground coffee was obtained.103 3. To update the minimum calorie requirements for Nicaragua, it was found that population projections used in the past were not consistent with the results of the 2005 population and housing census. In order to make "fair" comparisons over time, and with an emphasis on the 2001 results, it was recommended that the same requirements from 2001 be used, in other words, 2,187 calories per person per day. 4. It is important to note that the effect of these two modifications on the percentages of poverty estimated for Nicaragua is not statistically significant. In other words, either with or without these changes, the results are exactly the same (statistically speaking). Introduction 5. Those responsible for conducting and analyzing surveys that are repeated over time utilize a design (for the sample, questionnaire, field work, etc.) that best reflects a country's conditions and characteristics. As years go by, the conditions in a country change, and the information obtained with the initially designed instrument is not necessarily what was originally being sought. For example, to obtain information about "total spending on services received in the home" in the 1970s, questions about cable television or internet would not have been included, since those services did not exist. For the new millennium, the failure to include questions about these two services would clearly bias the information obtained about "total spending on services received in the home." It would make sense to adapt the questionnaire and include questions about two new services that hadn't existed in the past. In fact, their inclusion would be recommendable and even necessary to be able to jointly analyze the data from both periods. 6. In the example mentioned, the solution is relatively easy since the source of change can be clearly determined and there is no confusion about its effects. On many other occasions, however, we encounter situations where such a clear-cut solution is not available, and we generally need to make more difficult decisions. In most cases, those responsible for designing and conducting surveys have a good idea about the modifications that are needed in order to obtain the best possible information available today. They are also aware that these modifications can compromise a survey's integrity, affecting its ability to make "fair" comparisons over time. 102The Poverty Map team from the World Bank includes: Florencia T. Castro-Leal (Task Manager, Nicaragua Poverty Assessment), Carlos Sobrado (Economist and Poverty Map Leader) and José Ramón Laguna (Consultant). The MECOVI-Nicaragua and INIDE Poverty Map team includes: Juan Rocha (Poverty Specialist), Berman Martinez, Eddy Roque and Benito Martinez . 103Compared to the distorted price of C$55.99 per pound that was obtained with data from the 2005 LSMS. 188 7. In general, two objectives need to be balanced: improving the quality of information obtained, and maintaining the comparability of data over time. Which of these principles is most important? In reality, there is no obvious answer, since it depends upon which is most important at a given moment, the way that data will be used, and the objectives of the analysis that will be made on the basis of the data obtained. 8. In practice, the first thing one tries to avoid is either of the two extremes: that the data is completely incomparable, or that the most recent results do not reflect the national reality. Fortunately, acceptable solutions can be found on many (most) occasions, even if they are not ideal solutions or do not answer all possible questions. What is important, first and foremost, is that a problem is clearly defined, that available options are examined, and that the impact of different options is evaluated. Description of the methodology 9. To determine the extreme poverty line, we estimate the value of the "basic basket" of consumer goods, which was defined on the basis of data from the 1998 LSMS. The same amount of each type of food that was included in estimates in 1998 is again utilized, and the updated information is obtained on the basis of new prices (whether these are for 2001 or 2005). 10. To determine the number of pounds of each product analyzed in 1998, we focus on the consumption patterns of the Nicaraguan population (how much they consumed of each product), and then calculate how many pounds would be needed to satisfy the same minimum caloric requirements and thereby maintain the same patterns or proportions. The calculation of minimum calorie requirements was based on the table of minimum requirements produced by INCAP, which specifies the amounts needed according to sex and age. The INCAP table indicates different minimum calorie requirements for men and women, and different minimum requirements according to a person's age. Using the census projections for the same sex and age groups as those indicated in the INCAP table, we are able to obtain the average per capita minimum calorie requirement in Nicaragua.104 Following this methodology, it was estimated that the average requirement in Nicaragua was 2,199 calories (Kcal.) per person in 1998. 11. To account for the fact that the population's composition has changed over time, and therefore its minimum calorie requirement (on average) has changed as well, the calorie requirement based on the new distribution of the population according to age and sex was estimated again in 2001. The new calculation used the identical INCAP table, with the new census population projections, and determined that the minimum calorie requirement for 2001 was 2,187 calories (Kcal.) per day. 12. The change in the minimum average calorie requirement was 12 Kcal. per day, or 0.5 percent (one half of one percent). To satisfy the new requirement, the amount (pounds) of each product used to calculate the extreme poverty line was increased by exactly the same proportion (0.5 percent), using 2001 prices. Problems encountered 13. The problems that arose were related to two elements that are related to the methodology used for updating the value of the extreme poverty line: prices and census projections of population growth. 14. The problems encountered were the result of unpredictable changes in conditions in Nicaragua. In the first place, consumer preferences for types of coffee have changed: the proportion of instant coffee consumed has increased, while the proportion of ground coffee consumed has decreased. Secondly, the 104A simple way to calculate this is by multiplying the calorie requirement of each group according to age and sex by the total number of Nicaraguans who fall into this same age and sex group, and adding up the product of all of these multiplications and dividing the total by the nation's total number of inhabitants. World Bank Report No.26128-NI Nicaragua, Poverty Report: increasing well-being and reducing vulnerability, December 23, 2003, Appendix 1, page 7. 189 2005 census was less consistent with population projections than expected. The impact of these changes, along with proposed alternatives and an evaluation of these, were analyzed independently. 15. It is important to mention that the impact being analyzed in this case is strictly related to calculation of the extreme poverty line. These changes have no effect on aggregate consumption, or on the percentages of poverty. Change in preferences of the type of coffee consumed a) Definition of the problem 16. To determine the prices of different products based on information contained in the LSMS, the implicit price of each product is calculated by dividing household spending by the number of pounds consumed. 17. In the original design of the household questionnaire (1998), respondents were asked about the amount (in pounds105) of coffee they consumed, and the cost of that consumption. The question did not differentiate among types of coffee consumed: either ground or instant. In 1998, the amount of instant coffee consumed in the country was relatively small, and the effect of this was not significant. By 2005, however, the amount of instant coffee consumed had risen to such an extent that the implicit price being calculated is a mix of the price per pound of ground coffee and instant coffee.106 TABLE A3.1 Nominal prices of coffee in Nicaragua: córdobas per pound 1998 2001 2005 % Change 01-05 LSMS: mix 17.79 20.72 55.99 165.4 LSMS: ground coffee 20.50 17.11 24.99 46.1 CPI: ground coffee 22.49 23.77 31.8 33.8 CPI: instant coffee 81.26 108.45 33.5 18. Proof that the problem is a new one can be demonstrated by a comparison between the price of coffee obtained for households from the LSMS, and that obtained from other sources of information where the question is asked in relation to ground coffee, or instant coffee, or both. These comparisons are presented in Table A3.1. Figure 1 Nicaragua : Coffee prices $60 dn $50 oup rep $40 as obd $30 ór C$20 $10 1998 2001 2005 LSMS: Household survey LSMS Price survey CPI: ground coffee "observed" 105The answer could be according to different unit sizes, such as half pound packages or 100 gram packages, or something similar. Information about the size of the package was also obtained, in order to later transform "consumption" into pounds or kilograms. 106In 2001, coffee represented 3.85 percent (C$8.62) of the total value of the monthly extreme poverty line (C$ 224). 190 19. If we compare the evolution of prices that have been obtained from households surveyed in the LSMS, with the price questionnaire, and with the CPI for ground coffee, we see a significant difference (See Figure 1). The fact that the values for 2001 and previous values are very similar (although not equal) is proof that a distorting factor was introduced in 2005 that had not existed previously. b) Alternatives 20. As a general recommendation, it is suggested that another source of information be used for determining the price of coffee when calculating the extreme poverty line. The two alternative sources of information are the price questionnaire (that is collected jointly with the household surveys) and the CPI. To insure the independence of other sources, and to improve the "transparency" of calculations, the use of CPI data for purposes of estimates is preferred. 21. The recommended process for estimating the percentage change in the CPI price of coffee between 2001 and 2005 is applying this same increase (in percentage terms) to the price of coffee used in 2001 when calculating the extreme poverty line. In other words, the only thing we have done is update the price (from 2001 to 2005) using the increase reported by the CPI. 22. The last decision that needs to be made is related to which of the two types of coffee reported by the CPI should be used to update prices. Given the fact that the CPI price of ground coffee and the price of coffee used for defining the poverty line in 2001 are very similar (C$23.77 and C$20.72 per pound), it is recommended that the CPI price for ground coffee be used for this exercise.107 23. If the price of coffee used for the poverty line in 2001 (C$20.72) is updated by the same percentage change for ground coffee reported in the CPI (33.8 percent), we obtain the price of C$20.72*1.338=C$27.72 for coffee in 2005. c) Evaluation of impact 24. In terms of the evolution of coffee prices, the new estimate offers much more reasonable results that are completely consistent with the trends seen in CPI data for Nicaragua and prices from the price survey (collected during the LSMS in commercial establishments). Figure 2 indicates the trends that are obtained from the estimated value for 2005 (the red line with triangular markers). Figure 2 Nicaragua : coffee prices $60 $50 undop r$40 pe sab $30 rdo Có $20 $10 1998 2001 2005 LSMS: Household survey LSMS Price survey CPI ground coffee : "estimated" 107Given the fact that what is being used from the CPI is the percentage change in the price of coffee, there is almost no difference between either of the two types used, since they are very similar: 33.8 percent for ground coffee and 33.5 percent for instant coffee (See Table A3.1). 191 25. The values for the poverty line that are calculated with estimated coffee prices will be lower than those obtained on the basis of the original value. Preliminary work indicates that the impact of this factor on estimating poverty at the national level is less than one (1) percentage point. Change in the minimum required calories a) Definition of the problem 26. In light of the new housing and population census for 2005, it was found that the census projections for population growth being used were further from reality than expected. The difference was due to the size and composition of Nicaragua's population (groups of people by age and sex). When calculating the value of the extreme poverty line, the change in composition is the only change that is relevant. 27. If we were to be strictly consistent with the methodology, we would be using census population projections again in 2005, since that would insure using exactly the same assumptions as in the past. However, since there is new census data available for 2005, it would be illogical (and to a certain degree it is) to utilize census population projections from 1995 when we have data that has been 100 percent updated. To illustrate how the minimum caloric requirements would change depending upon the use of census projections or the use of real 2005 census data, estimates were made using both information sources and these are presented in Table A3.2. Table A3.2 Minimum Calorie Requirements for Nicaragua Projections 1998 2001 2005 2005 Census Minimum average calories 2199 2187 2205 2241 Increase in relation to Calories -12 18 71 the previous period Percentage -0.5 0.8 3.2 28. When we base our estimates on the census data, we find that there is a much larger difference than anticipated: a 3.2 percent increase rather than the 0.8 percent change that was estimated. These numbers are evidence of a problem that was building up over time (it is uncertain since when) and that possibly affected (to a lesser extent) the estimates of minimum calorie requirements in 2001. Figure 3 Minimum calorie requirements y 2300 da 2250 erp 2200 esirola Projections 2150 Census C egare 2100 2050 Av 2000 1998 2001 2005 Year 29. Figure 3 illustrates the evolution of caloric requirements based on census projections of population growth (in black, with triangular markers), and the value determined by the 2005 population census (blue with square marker). Clearly, the evolution based on census projections changes significantly when we use data from the real census. 192 2) Alternatives 30. The situation presented here is extremely complex. On the one hand, we do not wish to utilize census projections given that real data is available, and because we know that the projections are not consistent with the reality. On the other hand, the use of real census data signifies a change in the methodology, which would bias the comparisons of poverty done over time. 31. From an analytical viewpoint, the solution would be to first make new projections for 1998 and 2001 using data from both the 1995 and 2005 censuses, or to make inter-census projections, estimating caloric requirements based on the new projections and estimating new poverty lines for 1998 and 2001, and using data from the 2005 census for that same year. The problem with this solution is not related to the methodology, but rather to the "transparency" of the procedure. It would be difficult to convince the audience to simply "forget about previous poverty results," and refer only to the new poverty results for 1998 and 2001. From the viewpoint of communication, and the public's perception of the reliability of results obtained in this manner, the danger is enormous and could possibly be a complete failure. 32. Given the problems mentioned previously, another "transparent" alternative is recommended, which has a certain logic for most people: use the exact same calorie requirement that was used in 2001, in other words, 2,187. 3) Evaluation of Impact 33. The recommended option is not only transparent, but is also very reasonable given that for many countries, establishing a minimum calorie requirement and not changing it over time--in other words a fixed minimum requirement--is a normal practice when calculating poverty. In terms of poverty, the impact would be a reduction of around 1.3 percentage points in the extreme poverty rate, and of 1.4 percentage points in Nicaragua's overall poverty rate. 193 ANNEX 4 ­ POVERTY MAP OF NICARAGUA By Carlos Sobrado and Juan Rocha108 I. Introduction 1. The main objective of the Poverty Map is to classify Nicaragua's municipalities on the basis of various poverty indicators, including incidence, the depth of poverty, and inequality. This organization or classification gives us a good idea of how poverty is distributed throughout the country, and is a very useful tool for planning policies and programs aimed at more efficiently targeting and distributing poverty reduction resources. Also, having more than one measurement of this type over time allows us to assess changes in poverty in different municipalities, and relate these measurements to the public investments being made. 2. Combining census data with household surveys (that contain information about people's consumption) allows us to take advantage of both the breadth of the census and the detailed information provided in household surveys. This document briefly describes the work that was carried out and reports on its results. 3. This work utilized the methodology of Hentschel et al (2000),109 since it allows different measurements of poverty to be calculated, while also precisely and reliably determining the results associated with each estimate.110 4. This work has been a joint effort of the Program to Improve Living Standard Measurement Surveys in Nicaragua (MECOVI), the National Institute on Development Information (INIDE)111 and the World Bank (WB). II. The Poverty Map as a Targeting and Evaluation Tool 5. The 2005 Poverty Map of Nicaragua is a reliable tool that provides a detailed description of the spatial distribution of poverty in the country. Those using the poverty map should view it as one of the various pieces of information available about poverty. If interventions/programs are decentralized, information available at the local level should also be utilized, and it is essential that beneficiaries participate in assigning program benefits. Rather than using the poverty map as the sole criterion for targeting, other reliable information about these areas/municipalities should be considered along with the poverty map before any decisions are made. 6. Given that a similar exercise was carried out in Nicaragua in 1995,112 we are able to compare the results of both exercises and identify changes in different poverty indicators at the municipal level. We are also able to understand how municipal poverty has evolved between 1995 and 2005. Since the results of the 1995 poverty map were used to target various programs of the Emergency Social Investment Fund 108The Poverty Map team from the World Bank includes: Florencia T. Castro-Leal (Task Manager, Nicaragua Poverty Assessment), Carlos Sobrado (Economist and Poverty Map Leader) and José Ramón Laguna (Consultant). The MECOVI-Nicaragua and INIDE Poverty Map team includes: Juan Rocha (Poverty Map Specialist), Berman Martinez, Eddy Roque and Benito Martinez . 109Hentschel J., Lanjouw J., Lanjouw P & Poggi J. Combining Census and Survey Data to Trace the Spatial Dimension of Poverty: A Case Study of Ecuador. The World Bank Economic Review, 14 (1), January, 2000. 110The correct calculation of the standard error is key to any poverty map, since it is impossible to determine whether the differences observed in the estimates are significant or not without this measurement. 111Previously known as the National Statistics and Census Institute (INEC). 112The Extreme Poverty Map of Nicaragua, 1995 Census-1998 LSMS, Government of Nicaragua, INEC, March 2001. Nicaragua Poverty Assessment, Report No. 20488 NI, World Bank, February 21, 2001. 194 (FISE), we can also determine whether these municipal-level expenditures are related to the poverty indicators produced previously. III. Brief Description and Validation 7. Poverty maps are spatial descriptions of estimates of poverty that are anticipated for small areas, and for which poverty measurements cannot be calculated using only household surveys. Given that the map is an estimate of poverty at a specific moment in time, the period in which the census and household survey were conducted is an important consideration. In 2005, the Government of Nicaragua carried out the Eighth Population Census and the Fourth Home Census, as well as the Fourth Living Standard Measurement Survey of Households (EMNV05, or "LSMS") during that same year. 8. We believe that the existence of a representative nationwide survey of households that includes detailed information about spending, as in the case of the 2005 Living Standard Measurement Survey, allows resources to be targeted in the best possible way, using the methodology described here to create a Poverty Map of Nicaragua.113 9. Aside from its methodological logic, this poverty map also allowed us to develop diagnostics for evaluating the relevance and validity of results. As a first diagnostic, we compared our poverty estimates in each of Nicaragua's seven regions (based on the poverty map exercise) with the results obtained by the 2005 LSMS (EMNV05) (Table A4.1). Our estimates for the 2005 Map are very similar to those obtained by the 2005 LSMS,114 thereby confirming the robustness of this methodology. TABLE A4.1 REGIONAL ESTIMATES OF POVERTY IN NICARAGUA Scope of Extreme Poverty Scope of General Poverty 2005 LSMS 2005 MAP 2005 LSMS 2005 MAP % SE1 % SE1 % SE 1 % SE 1 Managua 3.4 1.2 3.0 0.5 19.5 2.9 21.4 1.2 Urban Pacific 4.8 0.9 4.4 0.6 35.9 2.8 32.2 1.1 Rural Pacific 17.0 2.3 16.5 1.2 58.2 2.6 62.0 1.2 Urban Central 10.5 2.1 13.4 1.0 37.9 3.0 40.6 1.2 Rural Central 32.9 2.1 35.6 1.2 74.4 1.9 79.5 0.9 Urban Atlantic 7.4 1.7 10.0 1.1 34.8 3.4 40.3 1.7 Rural Atlantic 31.2 2.6 32.7 2.2 74.9 2.3 76.9 1.7 1Standard Error per 100 10. As a second diagnostic, we compared the Poverty Map's estimates for extreme poverty and for general poverty at the departmental level115 with the results obtained by the 2005 LSMS (Table A4.2). The 2005 Map's estimates are very similar to those obtained by the 2005 LSMS,116 again confirming the 113Appendix 1 contains a description of the main poverty measurements used, and Appendix 2 contains a complete description of the methodology used. Information about this and other methodologies may be found in Hentschel et al (2000), Elbers et al (2000) and Alderman et al (2000). 114Statistically, there is no difference between the regional poverty estimates found in the 2005 LSMS and the 2005 Poverty Map. 115With 15 departments and two autonomous regions, for a total of 17 divisions or estimates. 116Statistically, there is no difference between the regional poverty estimates found in the 2005 LSMS and the 2005 Poverty Map. 195 consistency between the two estimates. Comparisons between poverty estimates at the municipal level cannot be made, since data from the 2005 LSMS is not representative at this level.117 TABLE A4.2 REGIONAL ESTIMATES OF POVERTY IN NICARAGUA Scope of Extreme Poverty Scope of General Poverty 2005 LSMS 2005 MAP 2005 LSMS 2005 MAP % SE1 % SE 1 % SE 1 % SE 1 5 Nueva Segovia 28.3 5.0 29.4 1.60 69.4 3.8 70.2 1.1 10 Jinotega 27.0 3.2 33.1 2.10 66.3 3.5 74.3 1.3 20 Madriz 35.6 5.1 41.0 2.80 69.9 5.1 77.8 1.1 25 Esteli 15.5 3.4 14.9 1.40 49.3 4.9 47.0 1.6 30 Chinandega 11.4 2.8 12.3 0.90 54.2 4.9 50.5 1.6 35 Leon 13.1 3.1 11.9 0.80 49.4 4.0 48.7 1.0 40 Matagalpa 30.2 4.3 32.2 1.70 64.2 4.7 70.5 1.3 50 Boaco 12.8 2.9 16.8 1.90 50.7 6.2 52.9 2.5 55 Managua 3.4 1.2 3.0 0.50 19.5 2.9 21.4 1.2 60 Masaya 3.4 1.2 3.9 0.60 33.0 3.9 33.4 1.8 65 Chontales 8.9 2.6 10.3 1.00 40.8 5.0 41.8 2.0 70 Granada 4.7 2.0 5.8 0.80 39.0 5.2 37.8 1.7 75 Carazo 12.7 3.1 9.8 0.70 39.7 6.2 45.6 1.0 80 Rivas 14.0 3.4 11.1 0.90 50.4 5.4 48.5 1.1 85 Rio San Juan 15.5 2.7 20.8 1.80 59.9 3.5 64.0 1.9 91 RAAN 30.3 3.8 33.1 2.40 68.6 4.1 71.4 1.5 93 RAAS 28.3 2.8 19.4 1.90 56.8 3.9 59.8 1.8 1 Standard Error per 100 11. Given the theoretical and empirical evidence, we conclude that the Poverty Map of Nicaragua is a reliable and very valuable tool for targeting programs.118 IV. Sources of Information 12. The sources of information were the 2005 Census of Nicaragua (Censo05) and the 2005 LSMS (EMNV05). Only questions that were considered the same or very similar from the 2005 Census and the 2005 LSMS were used. Questions that were included in the Census but were not found in the LSMS (or that were in the LSMS but not in the Census) were not included. Also, the calculations of aggregate consumption and poverty lines made by INEC--with technical support from the World Bank119--were used. 13. The SPSS and STATA statistical programs120 were used, and an open access program that is available to the general public (developed by the WB) was also used for the final calculations of the poverty 117When the comparison is made at the national level, the 2005 LSMS reports 14.9 percent extreme poverty and 46.2 percent general poverty rates, while the Poverty Map reports 15.8 percent extreme poverty and 48.3 percent general poverty rates. The differences between these are not significant (p 5%). 118A more detailed explanation of the results and the methodological evaluation may be found in Appendix AX.2. 119Instituto Nacional de Estadísticas y Censos (December 12, 2006). Indicadores Básicos de Pobreza Encuesta de Medición de Nivel de Vida 2005: Principales Resultados. 120The STATA program is exclusively used for conducting the Hausman test and determining whether or not expansion factors need to be used, and to determine the type of distribution for regression residuals from the first stage (see Appendix AX.2 for more information). 196 measurements.121 All participating institutions have unrestricted access to all of the sources of information and programs developed as part of this exercise. V. The 2005 Poverty Map of Nicaragua 14. Tables A4.3, A4.4, and A4.5 present the results of the Poverty Map, by region, department and municipality. These tables include the following columns: Region, Department or Municipality; (1) Population reported in the 2005 Census; for Extreme Poverty: (2) Incidence; (3) Gap Index; (4) Value of the Gap; and (5) Relationship between the value of the individual gap with the value of the national gap; and for General Poverty: (6) Incidence; (7) Gap Index; (8) Value of the Gap; and (9) Relationship between the value of the municipal gap and the value of the national gap. 15. A description of indicators (2) through (10) may be found in Appendix A4.1. 16. Indicator (6), or the Proportion of the National Extreme Poverty Gap, was used to classify each geographic area according to its need for more or fewer resources for closing the Extreme Poverty Gap in relation to the Total National Extreme Poverty Gap. If the total amount of resources needed to close the Extreme Poverty Gap at the national level is 100%, then each region, department and/or municipality will receive their corresponding proportional amount, based on the contribution of the sum of the gaps between each individual's consumption and the extreme poverty line for each geographical area to the national total.122 17. For example, some 0.76% of resources are allocated to San José de Cusmapa--the municipality with the worst extreme poverty (63.4%)--which corresponds to the proportion that this municipality's Extreme Poverty Gap contributes to the total National Extreme Poverty Gap. Meanwhile, extreme poverty in Tuna la Dalia accounts for 45.0% of the population, and this municipality receives 3.6% of resources. One of the reasons why a municipality with a lower percentage of extreme poverty accounts for a greater proportion of the gap is because of the size of its population. Another explanation could be related to how poor the municipality's poor are (in other words, how far they are from no longer being poor). VI. Comparisons of the 1995 and 2005 Maps 18. Although the methodology used for estimating the Poverty Map has changed in some ways between 1995 and 2005, it is basically the same. This allows us to compare the results obtained from both exercises.123 19. At the regional level, we see a decrease in the incidence of poverty and in the poverty gap index-- both for extreme poverty and general poverty--in all regions except Managua, where the changes observed are not statistically significant (Table A4.6). 20. Comparisons at the departmental level indicate a trend toward reductions in the four indicators being compared--extreme and general poverty and the extreme and general poverty indices--except in the Madriz department, where a significant increase in extreme poverty (37.1% to 43.1%) was reported, along with an increase in general poverty from 74.8% to 78.9%. Increases in extreme and general poverty were also reported in the Matagalpa and Managua departments, but these changes are not statistically significant. In the remaining departments, with the exception of Nueva Segovia, we see reductions in extreme poverty. With respect to general poverty, we also find statistically significant reductions in the 121This program runs off of a screen in DOS. 122This is the order for deciding the level of investment recommended for each geographic area. The Municipal table is organized according to the Extreme Poverty Gap index. 123With the exception of two new municipalities that existed in 2005 but not in 1998: San José de Bocay in Jinotega and Mulukuku in the RAAN. 197 departments of Estelí, Chinandega, León, Boaco, Masaya, Chontales, Granada, Rivas, and Río San Juan and in the RAAS (Table A4.7). 21. To compare the changes in poverty in the 1995 and 2005 poverty map exercises, we have diagramed three relationships between the indicators from both periods: (i) the percentage of extreme poverty; (ii) the percentage of general poverty; and (iii) the organization of municipalities according to the extreme poverty gap index. Go to page 9 Table A4.3 Indicators of the 2005 Poverty Map of Nicaragua, by Region Extreme Poverty General Poverty (4) (8) (2) Value of (5) (6) (9) (1) 2005 (3) Value of Inci- the Gap Propor- Inci- (7) Gap Propor- Region Census Gap the Gap dence (thousands tion of dence Index tion of Population Index (thousands (%) of the Gap (%) the Gap of córdobas) córdobas) Managua 1,254,793 3.0% 0.5% 24,047 3.3% 21.4% 5.5% 476,193 7.7% Pacific 1,507,456 9.5% 1.8% 101,041 13.9% 44.6% 13.6% 1,414,966 23.0% Central 1,637,022 27.2% 7.2% 432,317 59.3% 64.7% 26.4% 2,989,211 48.6% Atlantic 713,208 25.6% 6.5% 171,852 23.6% 65.5% 25.8% 1,270,962 20.7% Table A4.4 Indicators of the 2005 Poverty Map of Nicaragua, by Department Extreme Poverty General Poverty (4) (8) (2) Value of (5) (6) (9) (1) 2005 (3) Value of Inci- the Gap Propor- Inci- (7) Gap Propor- Department Census Gap the Gap dence (thousands tion of dence Index tion of Population Index (thousands (%) of the Gap (%) the Gap of córdobas) córdobas) Nueva Segov. 207,694 29.4% 7.6% 58,265 8.0% 70.2% 28.7% 412,660 6.7% Jinotega 328,563 33.1% 8.9% 107,984 14.8% 74.3% 31.4% 713,459 11.6% Madriz 132,046 41.0% 11.5% 56,057 7.7% 77.8% 35.7% 326,080 5.3% Esteli 200,193 14.9% 3.6% 26,727 3.7% 47.0% 16.7% 231,750 3.8% Chinandega 376,803 12.3% 2.4% 33,963 4.7% 50.5% 16.2% 423,114 6.9% Leon 353,966 11.9% 2.4% 30,881 4.2% 48.7% 15.6% 382,761 6.2% Matagalpa 465,968 32.2% 8.5% 146,757 20.1% 70.5% 30.0% 967,946 15.7% Boaco 150,243 16.8% 4.2% 23,134 3.2% 52.9% 18.9% 196,758 3.2% Managua 1,254,793 3.0% 0.5% 24,047 3.3% 21.4% 5.5% 476,193 7.7% Masaya 288,967 3.9% 0.6% 6,840 0.9% 33.4% 8.3% 166,361 2.7% Chontales 152,315 10.3% 2.4% 13,393 1.8% 41.8% 13.3% 140,558 2.3% Granada 166,788 5.8% 1.0% 5,967 0.8% 37.8% 10.3% 118,729 1.9% Carazo 165,484 9.8% 1.8% 11,163 1.5% 45.6% 14.0% 160,281 2.6% Rivas 155,448 11.1% 2.1% 12,227 1.7% 48.5% 15.2% 163,720 2.7% Rio San Juan 95,392 20.8% 4.7% 16,502 2.3% 64.0% 23.1% 152,726 2.5% RAAN 312,426 33.1% 9.1% 105,266 14.4% 71.4% 30.6% 661,986 10.8% RAAS 305,390 19.4% 4.4% 50,085 6.9% 59.8% 21.6% 456,251 7.4% 198 Table A4.5 Indicators of the 2005 Poverty Map of Nicaragua, by Region (1 of 3) Extreme Poverty General Poverty (9) (4) (5) (8) (6) Prop (1) 2005 Value of the Propor- Value of the (2) Inci- (3) Gap Inci- (7) Gap or- Department Municipality Census Gap tion of Gap dence (%) Index dence Index tion Pop. (thousands the (thousands of (%) of the of córdobas) Gap córdobas) Gap Madriz s.j. de cusmapa 7064 0.634 0.2047 5336.5414 0.7% 0.925 0.494 24140.213 0.4% Madriz totogalpa 11861 0.552 0.161 7050.3551 1.0% 0.894 0.4475 36722.107 0.6% Madriz las sabanas 4013 0.514 0.1609 2383.1387 0.3% 0.871 0.4297 11930.218 0.2% Madriz san lucas 12937 0.55 0.1592 7604.0176 1.0% 0.906 0.4484 40130.935 0.7% RAAN prinzapolka 15590 0.491 0.1544 8883.0494 1.2% 0.869 0.4189 45185.414 0.7% Jinotega San Jose de Bocay 41884 0.475 0.1403 21695.246 3.0% 0.875 0.4113 119177.67 1.9% Madriz telpaneca 19010 0.504 0.138 9681.6914 1.3% 0.892 0.4241 55777.63 0.9% Matagalpa rancho grande 26193 0.489 0.1355 13098.148 1.8% 0.9 0.4212 76332.769 1.2% Nueva Segovia murra 14812 0.491 0.1324 7235.9492 1.0% 0.906 0.4231 43359.745 0.7% Matagalpa tuma-la dalia 56527 0.45 0.1219 25428.277 3.5% 0.871 0.3963 155001.99 2.5% Jinotega wiwili 57050 0.425 0.1213 25538.036 3.5% 0.854 0.384 151576.62 2.5% RAAN waslala 49219 0.429 0.1201 21825.317 3.0% 0.825 0.3758 127966.76 2.1% Madriz s.j. rio coco 21088 0.427 0.1174 9140.8265 1.3% 0.814 0.3724 54329.433 0.9% RAAN waspan 47020 0.403 0.1151 19983.444 2.7% 0.811 0.3615 117596.21 1.9% Nueva Segovia wiwili de abajo 16332 0.431 0.1147 6917.1193 0.9% 0.85 0.383 43270.04 0.7% Nueva Segovia macuelizo 6070 0.436 0.1133 2538.797 0.3% 0.874 0.3896 16360.569 0.3% Matagalpa san ramon 30656 0.422 0.1119 12664.109 1.7% 0.843 0.3767 79885.733 1.3% Nueva Segovia c. antigua 4865 0.427 0.111 1993.6214 0.3% 0.876 0.3871 13030.232 0.2% Matagalpa rio blanco 30580 0.386 0.1079 12181.896 1.7% 0.759 0.3415 72243.399 1.2% RAAN siuna 63662 0.377 0.1059 24891.471 3.4% 0.78 0.3428 150993.25 2.5% Matagalpa muy muy 14440 0.346 0.0997 5312.5936 0.7% 0.755 0.3265 32622.43 0.5% Nueva Segovia quilali 26096 0.348 0.0991 9547.9131 1.3% 0.785 0.3349 60462.948 1.0% Nueva Segovia santa maria 4402 0.396 0.099 1608.4703 0.2% 0.857 0.3687 11228.967 0.2% Matagalpa matiguas 40980 0.374 0.0983 14861.316 2.0% 0.792 0.344 97528.891 1.6% Nueva Segovia mozonte 6785 0.382 0.0982 2460.0959 0.3% 0.792 0.3452 16204.696 0.3% Jinotega cua-bocay 43045 0.364 0.0941 14951.577 2.1% 0.824 0.347 103349.96 1.7% Matagalpa san dionisio 16270 0.386 0.0937 5625.99 0.8% 0.837 0.3582 40313.997 0.7% Madriz yalaguina 9539 0.323 0.087 3062.0607 0.4% 0.755 0.3142 20735.417 0.3% RAAS el tortuguero 22306 0.346 0.0868 7143.6338 1.0% 0.812 0.3345 51612.654 0.8% Jinotega s.m. de pantasma 37821 0.335 0.0858 11978.633 1.6% 0.788 0.3256 85191.579 1.4% Leon sta. rosa del p 9441 0.356 0.0855 2980.7176 0.4% 0.812 0.3378 22061.259 0.4% Jinotega s.s. de yali 26828 0.313 0.085 8414.8218 1.2% 0.751 0.3087 57290.313 0.9% Nueva Segovia dipilto 5204 0.335 0.0847 1627.0193 0.2% 0.79 0.3255 11719.359 0.2% RAAN Mulukuku 29726 0.328 0.0834 9146.2484 1.3% 0.762 0.3144 64655.786 1.1% Matagalpa terrabona 12708 0.336 0.0816 3828.0577 0.5% 0.771 0.3214 28256.382 0.5% Matagalpa esquipulas 15875 0.327 0.0797 4668.2955 0.6% 0.762 0.3154 34639.766 0.6% Esteli san nicolas 6766 0.301 0.0779 1944.5497 0.3% 0.756 0.3018 14124.937 0.2% Nueva Segovia el jicaro 25856 0.317 0.0768 7333.119 1.0% 0.771 0.3127 55940.562 0.9% RAAN bonanza 18599 0.277 0.073 5010.661 0.7% 0.648 0.2655 34169.1 0.6% RAAN rosita 22716 0.273 0.0692 5798.2622 0.8% 0.682 0.2716 42682.471 0.7% Madriz somoto 33741 0.264 0.069 8587.9263 1.2% 0.612 0.2525 58939.444 1.0% Madriz palacaguina 12793 0.268 0.068 3210.7715 0.4% 0.66 0.2641 23374.163 0.4% Matagalpa matagalpa 131308 0.244 0.0669 32428.403 4.4% 0.57 0.2344 212956.3 3.5% Nueva Segovia san fernando 8544 0.263 0.0655 2065.319 0.3% 0.673 0.2652 15676.932 0.3% Rio San Juan el castillo 19786 0.274 0.065 4749.9951 0.7% 0.728 0.2818 38574.559 0.6% Jinotega s.r. del norte 17699 0.266 0.063 4117.2845 0.6% 0.704 0.2738 33531.473 0.5% Esteli san juan de limay 13423 0.261 0.0625 3096.4517 0.4% 0.71 0.2729 25340.051 0.4% Leon achuapa 13779 0.282 0.0594 3019.9526 0.4% 0.792 0.301 28691.425 0.5% Jinotega jinotega 97750 0.225 0.0569 20512.939 2.8% 0.585 0.2285 154500.04 2.5% Matagalpa c. dario 40971 0.241 0.0563 8519.8322 1.2% 0.637 0.2464 69837.56 1.1% RAAS ayote 12360 0.226 0.0557 2538.9679 0.3% 0.661 0.2455 20997.118 0.3% 199 Table A4.5 Indicators of the 2005 Poverty Map of Nicaragua, by Region (2 of 3) Extreme Poverty General Poverty (9) (4) (5) (8) (6) Prop (1) 2005 Value of the Propor- Value of the (2) Inci- (3) Gap Inci- (7) Gap or- Department Municipality Census Gap tion of Gap dence (%) Index dence Index tion Pop. (thousands the (thousands of (%) of the of córdobas) Gap córdobas) Gap Nueva Segovia jalapa 54241 0.225 0.0548 10970.87 1.5% 0.646 0.242 90799.168 1.5% Leon el sauce 27847 0.246 0.0519 5329.7093 0.7% 0.729 0.2705 52122.83 0.8% Boaco camoapa 34908 0.193 0.0508 6549.6418 0.9% 0.551 0.2058 49696.779 0.8% Esteli condega 28441 0.204 0.0499 5238.6295 0.7% 0.604 0.223 43871.413 0.7% RAAS paiwas 31683 0.222 0.0496 5806.2191 0.8% 0.688 0.2487 54503.713 0.9% Esteli pueblo nuevo 20605 0.206 0.0489 3721.8198 0.5% 0.635 0.2299 32777.254 0.5% RAAS c.r. grande 23281 0.223 0.0484 4156.6585 0.6% 0.71 0.2545 40987.312 0.7% RAAS n. guinea 66744 0.208 0.0482 11874.839 0.0% 0.623 0.2284 105460.29 0.0% Rio San Juan san miguelito 17004 0.217 0.0482 3024.8794 0.4% 0.664 0.2414 28394.435 0.5% Matagalpa sebaco 32068 0.19 0.0479 5668.5663 0.8% 0.547 0.2038 45219.606 0.7% Boaco santa lucia 8253 0.194 0.0469 1428.0185 0.2% 0.606 0.2181 12452.751 0.2% RAAS el rama 52410 0.205 0.0464 8968.8874 1.2% 0.631 0.2284 82802.753 1.3% Chinandega villanueva 25559 0.22 0.0449 4236.6105 0.6% 0.731 0.2591 45813.699 0.7% Rivas altagracia 19858 0.219 0.0447 3275.1793 0.4% 0.724 0.2574 35365.812 0.6% Rivas cardenas 6980 0.214 0.0446 1148.6381 0.2% 0.679 0.2429 11727.703 0.2% Chinandega cinco pinos 6776 0.222 0.0445 1113.1092 0.2% 0.731 0.2595 12165.336 0.2% Chinandega s.pedro del n. 4716 0.219 0.0434 755.39081 0.1% 0.737 0.2609 8512.2804 0.1% Rio San Juan san carlos 37401 0.192 0.0431 5954.1292 0.8% 0.609 0.2177 56318.507 0.9% Esteli la trinidad 20080 0.172 0.0427 3164.7604 0.4% 0.516 0.1886 26195.139 0.4% RAAS k. hill 8758 0.191 0.0426 1376.3768 0.2% 0.634 0.2219 13447.627 0.2% Boaco boaco 49642 0.168 0.0415 7599.9836 1.0% 0.509 0.1852 63591.075 1.0% Chinandega sto. tomas del n. 7097 0.206 0.0407 1065.4376 0.1% 0.722 0.2503 12290.234 0.2% Rio San Juan s. juan del norte 1292 0.16 0.04 190.80971 0.0% 0.566 0.192 1716.1097 0.0% RAAN pto. cabezas 65894 0.161 0.04 9727.1797 1.3% 0.471 0.1727 78736.922 1.3% Boaco s.j. remates 7634 0.174 0.0399 1123.1006 0.2% 0.593 0.2063 10897.57 0.2% RAAS desemb. c.r.g. 3583 0.173 0.0395 522.61386 0.1% 0.626 0.2106 5221.0429 0.1% Rio San Juan el almendro 13350 0.178 0.0391 1927.0852 0.3% 0.597 0.2082 19224.981 0.3% Boaco san lorenzo 23592 0.151 0.0388 3375.8962 0.5% 0.486 0.1721 28087.275 0.5% Matagalpa san isidro 17392 0.169 0.0385 2471.338 0.3% 0.543 0.192 23107.102 0.4% Chinandega s.fco. del n. 6732 0.199 0.0383 952.69687 0.1% 0.724 0.2478 11543.388 0.2% RAAS muelle de b. 21990 0.17 0.038 3082.9848 0.4% 0.569 0.1982 30150.325 0.5% Leon el jicaral 10299 0.188 0.0368 1400.7995 0.2% 0.694 0.2347 16724.349 0.3% Chinandega somotillo 28927 0.176 0.0357 3808.5337 0.5% 0.632 0.216 43218.482 0.7% Carazo la conquista 3770 0.177 0.0354 492.94736 0.1% 0.628 0.2145 5594.4996 0.1% Chinandega el viejo 76454 0.166 0.0352 9933.464 1.4% 0.566 0.1956 103460.13 1.7% Chontales santo domingo 12138 0.144 0.034 1522.8422 0.2% 0.543 0.1791 15037.798 0.2% Chontales el coral 7020 0.139 0.0329 853.43918 0.1% 0.496 0.1663 8076.2886 0.1% Rivas tola 21986 0.165 0.0327 2652.1418 0.4% 0.634 0.2105 32015.669 0.5% Jinotega la concordia 6486 0.157 0.0324 775.77145 0.1% 0.592 0.197 8841.0583 0.1% Chinandega pto. morazan 13213 0.16 0.0321 1566.8827 0.2% 0.621 0.2053 18769.033 0.3% RAAS l. perlas 10627 0.151 0.0319 1253.2253 0.2% 0.55 0.1847 13582.387 0.2% Chontales la libertad 11381 0.144 0.0317 1330.4632 0.2% 0.552 0.1822 14343.071 0.2% Boaco teustepe 26214 0.142 0.0316 3057.1712 0.4% 0.531 0.1766 32032.253 0.5% Nueva Segovia ocotal 34487 0.125 0.0312 3966.8598 0.5% 0.42 0.145 34606.907 0.6% Chontales acoyapa 16943 0.126 0.0311 1946.9938 0.3% 0.501 0.1629 19095.031 0.3% Leon larreynaga 27635 0.156 0.0311 3168.5848 0.4% 0.611 0.201 38430.824 0.6% Carazo sta. teresa 16819 0.152 0.0308 1912.6746 0.3% 0.545 0.1842 21435.953 0.3% Chontales villa sandinoi 13145 0.131 0.0303 1468.298 0.2% 0.496 0.1632 14843.525 0.2% Leon telica 23227 0.15 0.0294 2518.9952 0.3% 0.595 0.1953 31379.15 0.5% Rio San Juan morrito 6559 0.139 0.027 654.77272 0.1% 0.587 0.1873 8497.0228 0.1% Chontales s.f. de cuapa 5496 0.114 0.0263 532.92562 0.1% 0.463 0.1476 5613.528 0.1% 200 Table A4.5 Indicators of the 2005 Poverty Map of Nicaragua, by Region (3of 3) Extreme Poverty General Poverty (9) (4) (5) (8) (6) Prop (1) 2005 Value of the Propor- Value of the (2) Inci- (3) Gap Inci- (7) Gap or- Department Municipality Census Gap tion of Gap dence (%) Index dence Index tion Pop. (thousands the (thousands of (%) of the of córdobas) Gap córdobas) Gap Esteli esteli 110878 0.097 0.0234 9560.8825 1.3% 0.35 0.1166 89441.67 1.5% Chinandega posoltega 16730 0.119 0.0227 1401.9413 0.2% 0.551 0.1692 19579.966 0.3% Rivas belen 16426 0.121 0.0223 1351.0035 0.2% 0.551 0.1712 19455.071 0.3% Chontales comalapa 10972 0.112 0.0222 899.70933 0.1% 0.524 0.1605 12185.518 0.2% Leon quezalguaque 8591 0.118 0.0217 688.53659 0.1% 0.57 0.1737 10321.229 0.2% Chinandega el realejo 8838 0.109 0.0208 677.67155 0.1% 0.515 0.157 9599.1518 0.2% Carazo la paz de carazo 4656 0.116 0.0207 356.14913 0.0% 0.551 0.1703 5487.1921 0.1% RAAS bluefields 45226 0.089 0.0196 3274.7686 0.0% 0.355 0.1136 35557.389 0.0% Carazo diriamba 57370 0.104 0.0192 4067.0234 0.6% 0.486 0.1488 59047.082 1.0% Rivas moyogalpa 9341 0.104 0.0185 639.41537 0.1% 0.535 0.1596 10314.099 0.2% Chontales sto. tomas 16349 0.082 0.0184 1110.8298 0.2% 0.359 0.1105 12495.093 0.2% Chontales juigalpa 51255 0.071 0.0174 3286.3068 0.5% 0.297 0.0923 32726.57 0.5% Leon la paz centro 28053 0.095 0.0173 1789.0306 0.2% 0.487 0.1449 28122.141 0.5% Carazo san marcos 28906 0.097 0.0173 1842.0278 0.3% 0.475 0.1438 28755.82 0.5% Rivas s.j. del sur 14638 0.091 0.0165 889.11602 0.1% 0.44 0.1329 13457.386 0.2% Chontales san p. de lovago 7616 0.081 0.0157 440.98211 0.1% 0.384 0.1166 6141.6808 0.1% Rivas buenos aires 5415 0.079 0.0146 291.68127 0.0% 0.437 0.1255 4700.826 0.1% Chinandega chinandega 120461 0.074 0.0137 6101.8255 0.8% 0.381 0.1117 93059.447 1.5% Managua el crucero 13388 0.075 0.0136 673.24158 0.1% 0.405 0.1169 10831.087 0.2% Carazo jinotepe 41903 0.073 0.0135 2081.5179 0.3% 0.367 0.1091 31635.28 0.5% Leon nagarote 32269 0.074 0.0133 1589.7268 0.2% 0.408 0.1172 26165.803 0.4% Leon leon 172825 0.071 0.0132 8394.739 1.2% 0.369 0.1077 128742.13 2.1% Chinandega chichigalpa 44679 0.073 0.0126 2075.4816 0.3% 0.43 0.1221 37729.502 0.6% Rivas potosi 11900 0.069 0.012 525.42439 0.1% 0.408 0.1151 9475.6743 0.2% Carazo el rosario 5316 0.068 0.0114 223.67553 0.0% 0.432 0.1194 4389.5872 0.1% Granada nandaime 34227 0.067 0.0112 1411.0033 0.2% 0.435 0.1195 28292.513 0.5% Managua s.f. libre 9406 0.068 0.0112 387.19735 0.1% 0.456 0.1239 8059.9596 0.1% Granada diriomo 22304 0.067 0.011 908.08375 0.1% 0.441 0.1205 18600.49 0.3% Granada diria 6297 0.061 0.0104 242.43961 0.0% 0.404 0.1102 4801.6905 0.1% Managua ticuantepe 26828 0.058 0.0103 1019.4989 0.1% 0.338 0.0948 17599.388 0.3% Masaya s.j. de oriente 4729 0.058 0.0097 170.13228 0.0% 0.434 0.114 3730.4011 0.1% Managua s.r. del s. 42250 0.058 0.0096 1493.6508 0.2% 0.371 0.1015 29676.582 0.5% Masaya la concepcion 31910 0.055 0.0096 1125.2633 0.2% 0.42 0.1092 24105.819 0.4% Granada granada 103960 0.052 0.0089 3405.0182 0.5% 0.344 0.0932 67034.693 1.1% Masaya tisma 10679 0.051 0.0088 344.90888 0.0% 0.402 0.1035 7646.6948 0.1% Masaya niquinohomo 14847 0.054 0.0086 472.74718 0.1% 0.438 0.1135 11659.633 0.2% Managua tipitapa 99477 0.05 0.0086 3146.527 0.4% 0.337 0.0897 61758.781 1.0% Rivas rivas 40925 0.048 0.0085 1289.0831 0.2% 0.302 0.0821 23251.634 0.4% Carazo dolores 6744 0.046 0.0075 187.05138 0.0% 0.319 0.0844 3935.6217 0.1% Managua villa c.fonseca 27360 0.046 0.0072 722.69397 0.1% 0.356 0.0919 17389.284 0.3% Masaya nandasmo 10732 0.043 0.0071 281.09308 0.0% 0.377 0.0938 6962.9886 0.1% Masaya masatepe 31493 0.039 0.0062 724.22498 0.1% 0.36 0.0884 19257.263 0.3% Masaya masaya 139189 0.036 0.006 3100.0777 0.4% 0.317 0.0786 75718.424 1.2% Managua mateare 28740 0.038 0.006 636.40384 0.1% 0.314 0.0794 15783.806 0.3% Rivas san jorge 7979 0.035 0.0056 165.81002 0.0% 0.284 0.0717 3955.8077 0.1% Managua c. sandino 74838 0.032 0.0051 1421.6732 0.2% 0.265 0.0656 33986.142 0.6% Chinandega corinto 16621 0.028 0.0045 273.58589 0.0% 0.268 0.0641 7373.0602 0.1% Managua managua 932506 0.023 0.0042 14545.706 2.0% 0.173 0.0436 281108.46 4.6% Masaya nindiri 37875 0.023 0.0039 543.62144 0.1% 0.237 0.0555 14547.53 0.2% RAAS c. island 6422 0.02 0.0036 85.958974 0.0% 0.186 0.0434 1928.0023 0.0% Masaya catarina 7513 0.02 0.0028 78.182378 0.0% 0.235 0.0526 2731.7825 0.0% 201 Table A4.6 Regional Comparison of Results from the 1995 and 2005 Maps Extreme Poverty General Poverty Incidence (%) Gap Index Incidence (%) Gap Index Region 1995 2005 1995 2005 1995 2005 1995 2005 Managua 3.6 4.2 0.7 0.9 20.1 22.2 5.7 6.3 Pacific 17.9 9.2 4.5 1.7 53.2 44.1 19.6 13.4 Central 32.2 25.2 9.9 6.6 67.8 62.2 29.9 24.9 Atlantic 36.7 25.4 14.0 6.6 69.7 65.5 33.4 25.7 Table A4.7 Departmental Comparison of Results from the 1995 and 2005 Maps Extreme Poverty General Poverty Incidence (%) Gap Index Incidence (%) Gap Index Department 1995 2005 1995 2005 1995 2005 1995 2005 5 Nueva Segovia 33.4 28.6 10.1 7.3 71.5 69.3 31.3 28.0 10 Jinotega 37.2 30.3 12.6 7.8 73.2 72.6 34.0 29.7 20 Madriz 37.1 43.2 11.3 12.6 74.6 78.9 33.7 36.9 25 Esteli 23.4 15.1 6.8 3.5 56.7 48.1 23.2 17.0 30 Chinandega 20.9 12.8 5.5 2.5 57.5 51.0 22.0 16.6 35 Leon 19.0 11.7 4.9 2.3 54.1 48.2 20.4 15.5 40 Matagalpa 31.9 33.7 9.5 9.1 67.9 71.5 29.7 30.9 50 Boaco 32.8 13.5 10.0 3.0 68.2 50.9 30.2 16.9 55 Managua 3.6 4.2 0.7 0.9 20.1 22.2 5.7 6.3 60 Masaya 14.3 3.8 3.4 0.6 48.6 32.7 16.9 8.1 65 Chontales 29.4 10.7 9.2 2.5 62.5 42.0 27.4 13.6 70 Granada 17.0 5.9 4.3 1.0 51.2 37.6 18.8 10.3 75 Carazo 15.5 10.0 3.8 1.9 49.0 46.1 17.6 14.2 80 Rivas 20.3 10.9 5.2 2.1 58.4 48.7 22.0 15.2 85 Rio San Juan 36.3 22.4 12.0 5.3 71.5 65.6 32.9 24.3 91 RAAN 43.7 34.4 20.3 10.0 72.4 72.4 39.0 31.6 93 RAAS 30.8 18.5 9.8 4.3 65.8 58.4 28.9 20.9 22. In the three figures that compare municipalities (Figures A4.1, A4.2 and A4.3), the values corresponding to 1995 are located on the vertical axis and the 2005 values are on the horizontal axis. A 45 degree line has been superimposed onto all three figures for reference purposes: values lying directly on the reference line signify that no changes took place between 1995 and 2005, while values above the 45º line imply a reduction in the municipal indicator and values below the 45º line may be interpreted as an increase in the corresponding municipal indicator. 23. In the comparisons of both extreme poverty (Figure A4.1) and general poverty (Figure A4.2) at the municipal level, we find that most of the municipalities are situated above the 45º line, which signifies a trend toward reductions in both types of poverty. In both cases, increases in poverty seem to be concentrated in those municipalities with higher levels of poverty. 202 Figure A4.1 Relationship between % of extreme poverty in municipalities in 1995 and 2005, Nicaragua 80% 1995 70% 60% 50% municipality, 40% by 30% poverty 20% 10% extreme 0% of % 0% 10% 20% 30% 40% 50% 60% 70% 80% % of extreme poverty by municipality, 2005 Source: 1995 and 2005 Poverty Maps of Nicaragua . Figure A4.2 Relationship between % of general poverty in municipalities in 1995 and 2005, Nicaragua 90% 1995 80% 70% 60% municipality, 50% by 40% 30% poverty 20% general 10% of % 10% 20% 30% 40% 50% 60% 70% 80% 90% % of general poverty by municipality, 2005 Source: 1995 and 2005 Poverty Maps of Nicaragua 203 24. Figures A4.3 and A4.4 provide an overall view of how the classification of municipalities has changed between 1995 and 2005, based on the Extreme and Overall Poverty Gap Indexes. We see that although the general trend has been to remain at the same 1995 Poverty Map classification, there have been some significant changes in some of the municipalities.124 Figure A4.3 Relationship between municipal classifications in 1995 and 2005, Nicaragua 150 Poverty 125 Extreme 100 by 1995 75 Index, 50 Gap classifications, 25 Municipal 0 0 25 50 75 100 125 150 Municipal classifications, by Extreme Poverty Gap Index, 2005 Source: 1995 and 2005 Poverty Maps of Nicaragua Figure A4.4 Relationship between municipal classifications in 1995 and 2005, Nicaragua 150 Poverty 125 Overall 100 by 1995 75 Index, 50 classifications, Gap 25 0 Municipal 0 25 50 75 100 125 150 Municipal classifications, by Overall Poverty Gap Index, 2005 Source: 1995 and 2005 Poverty Maps of Nicaragua 124The magnitude of the change (either increase or decrease) is determined by the distance that each point (municipality) lies from the 45º line. 204 Figure A4.5. Poverty Map of Nicaragua, 2005 Nicaragua N 2005 Poverty Map W E Honduras S Atlantic Ocean Range of Poverty Pacific Severe Ocean High Medium Costa Rica Low Definitions for the Map's range of poverty: Severe Poverty = poverty gap higher than 40 percent, High Poverty = 30 to 40 percent, Medium Poverty = 20 to 30 percent, and Low Poverty = poverty gap below 20 percent. Nicaragua N 1995 W E Poverty Map Honduras S Atlantic Ocean Range of Poverty Pacific Severe Ocean High Medium Low Costa Rica 205 VII. Recommendations 25. We recommend that those responsible for planning policies and programs use the Poverty Map of Nicaragua based on the 2005 LSMS and 2005 Census to target their programs. This map is clear and easy to interpret. The methodology is not based on any great assumptions, nor are there any doubts about the quality of information used. In the absence of a better source of information for helping target programs in Nicaragua, decision-makers can easily justify use of this tool. 26. We also recommend that decisions be made in consideration of the fact that in some cases, the distribution of poverty has changed substantially over the past ten years. Even when the poverty profile by regions has not changed significantly, there may be pockets of poverty in specific communities that are not perceived at the municipal level. 27. This poverty map is based on the characteristics of households that were jointly determined by the 2005 Census and the 2005 LSMS, and their relationship to aggregate consumption that was calculated on the basis of data from the 2005 LSMS. We recognize that the concept of well-being goes beyond the measurement for poverty used here, and recommend that other indicators be used to complement the information obtained in this exercise. Other sources of information may be combined with the results presented in this exercise, as long as they are available for all municipalities of the country. Some specific indicators that may be used include: · Citizen security: information about criminal or similar activity that reduces the population's quality of life. · Family violence. · Any type of risk or vulnerability, whether these are due to weather factors (above all in rural areas among households dedicated to agricultural production), or other factors. · A household's ability to respond to traumatic events. · Discrimination based on race, religion, gender, etc. · Lack of access to state services, including the judicial system. · The Map of Unsatisfied Basic Needs (UBN). 28. The manner in which the results of this Poverty Map can be combined with other indicators will depend upon the importance assigned to each of these. Regardless of how these sources of information are combined, the methodology used should be "transparent" and easy to explain. 29. When using poverty maps, the qualities of the specific programs to which they will be applied also need to be taken into consideration. Even if a municipality is considered a priority for certain public investments, this does not justify all types of interventions. For example, if a program to improve access to water is being weighed, not only the municipality's level of poverty should be examined, but also the quality of the water distribution network. It is possible that although some municipalities are poor, certain types of investments might not be justified. 30. The poverty map helps us see differences in the conditions of households at the municipal level that are not detected at either the regional or departmental levels. Nonetheless, this is not to say that all households within a given municipality have the same socioeconomic conditions. It will also be necessary to determine which households within each municipality should be beneficiaries and which ones should not, depending on the type of application and program that is utilizing the poverty map as a guide for distributing its resources. Various tools can be used for selecting final program beneficiaries, which range from targeting designs, to conditioned support, to collecting information at the household level. 206 VII. Bibliography Alderman, Harold, Miriam Babita, Jean Lanjouw, Peter Lanjouw, Nthabiseng Makhatha, Amina Mohamed, Berk Özler, and Olivia Qaba (2000), Is Census Income an Adequate Measure of Welfare? Combining Census and Survey Data to Construct a Poverty Map of South Africa. Statistics South Africa Working Paper. Forthcoming. Elbers, Chris, Jean Lanjouw, Peter Lanjouw (2000), Welfare in Towns and Villages. Micro-Level Estimation of Poverty and Inequality. Tinbergen Institute Working Paper. Forthcoming. Gobierno de Nicaragua (2000), Estrategia Reforzada de Reducción de la Pobreza. Hentschel J., Lanjouw J., Lanjouw P & Poggi J (January, 2000), Combining Census and Survey Data to Trace the Spatial Dimension of Poverty: A Case Study of Ecuador. The World Bank Economic Review, 14 (1). Instituto Nacional de Estadística y Censos (March, 2000), Encuesta Nacional de Hogares sobre Medición de Nivel de Vida ­ Informe General. Proyecto MECOVI. Instituto Nacional de Estadística y Censos (March, 2001), Mapa de Pobreza Extrema de Nicaragua, Censo 1995-EMNV 1998. Instituto Nacional de Estadísticas y Censos (INEC), Proyecto "Mejoramiento de las Encuestas de Condiciones de Vida" (MECOVI) (December 12, 2006). Indicadores Básicos de Pobreza Encuesta de Medición de Nivel de Vida 2005: Principales Resultados. Living Standard Measurement Survey (Encuesta de Nacional de Hogares sobre Medición de Nivel de Vida) - 1998 National Population and Housing Census of Nicaragua (Censo Nacional de Población y Vivienda de Nicaragua) - 2005 World Bank (February 2001), Nicaragua Poverty Assessment: Challenges and Opportunities for Poverty Reduction. Report No. 20488-NI. 207 APPENDICES APPENDIX A4.1 POVERTY MEASUREMENTS The scope of poverty (extension) and the poverty gap are two measures that help us to understand the characteristics of poverty in Nicaragua. The definitions can be applied to both extreme poverty and general poverty. This document uses the following formulas: INCIDENCE (OR EXTENSION) OF POVERTY This is the number of poor people as a proportion of the total population q E = n Where: q = number of poor n = size of the population POVERTY GAP INDEX 1 q B = n i =1Z - Yi Z Where: Z = poverty line Yi = Per capita consumption. Since this is only added up for "q" households, only poor households are included. TOTAL VALUE OF THE GAP The minimum value required for making poverty disappear q V = (Z - Yi ) = B* n * Z i =1 PROPORTION OF THE NATIONAL GAP The total value of the gap can be used to develop an index composed of the poverty rates and the population or the proportion of the gap. If we consider the problem of assigning a specific amount of available resources for reducing poverty-- RDTOTAL --the estimates of the Poverty Gap-- Bj --in each municipality ­ j ­ can be used. With this value, we can easily calculate the total amount of resources that are needed, in principle, for assisting every extremely poor individual to reach the extreme or general poverty line. Thus, for each municipality ­ j ­ we have the total amount of resources needed -- RN : j RN = Bj *nj * z , j Where: 208 nj is the total population of municipality j, and z is the extreme or general poverty line. Obviously, then, the total amount of resources needed at the national level is the sum of the resources needed by each municipality: k RNTOTAL = RN . j j=1 In most cases, the available resources ­ RD ­ will not be the same as the needed resources ­ RN. Thus, the contribution that each municipality makes toward closing the Poverty Gap is considered as the basis for allocating available resources. Therefore, the resources assigned to each municipality ­ j ­ will be: RN RN RDj = j j * RDTOTAL where = Proportion of the gap RNTOTAL RNTOTAL As long as the available funds are assigned within each municipality in the same way (in proportion to each individual's consumption gap in relation to the extreme or general poverty line), then these allocations can help to reduce each individual's poverty gap in the same proportion. 209 APPENDIX A4.2 METHODOLOGY AND RESULTS FROM THE FIRST STAGE 1. The methodology that was used can be clearly divided into two parts: the estimate of equations in the first stage, using data from the 2005 LSMS household surveys,125 and the estimate of poverty measurements throughout the country using the 2005 Census. FIRST STAGE 2. The first stage exclusively used information from the 2005 LSMS and consisted of a multivariate regression between the natural logarithm of per capita consumption per household (ln yi) and the different characteristics of the household, based on questions contained in both the 2005 LSMS and the 2005 Census (vector Xi): ln yi = Xi + i (Equation 1) 3. This estimate was made individually for each of the seven regional groupings included in the 2005 LSMS126 and these were evaluated to eliminate or model problems related to the assumptions for normality, homoscedasticity, and fixed effects.127 4. To evaluate the assumption for normality, the residual from the regressions was plotted on a graph, and normal and t-student curves with different degrees of freedom were superimposed on them, selecting the curve that could best be adapted to the behavior of the regression residual used in the first stage. In the regression from the second stage, the type of distribution of the residual was indicated. 5. To model the presence of heteroscedasticity, an F test of the multivariate regression was conducted, between the square of the regression residual (dependent variable: (i )2 estimated) and a series of interaction variables created on the basis of variables selected from the first stage equation (independent variables: X i).128 6. To reduce the impact of problems due to fixed effects, average variables at the level of census segments were incorporated (calculated with the 2005 Census). The selected variables were included as part of the second stage regression for modeling heteroscedasticity. 7. Finally, the Hausman test was applied to each regression in the first stage, to determine whether it was necessary to use sample weights or not. 8. In Table A4.2.1, the general results of each of the regressions that were carried out in the first stage are summarized. 125Due to the fact that the census information is based on households, the 2005 LSMS had to be converted to data based on households. 126Managua, Urban Pacific, Rural Pacific, Urban Central, Rural Central, Urban Atlantic and Rural Atlantic. 127These assumptions are incorporated into the program developed by the World Bank, which was used to calculate poverty estimates. 128Interaction is defined as all possible interactions between the selected variables: X1 * X2, X1 * X3, X1 * X4, .... X2 * X3, X2 * X4, X2 * X5, ... ,etc. 210 Table A4.2.1 Results of the Evaluation of First Stage Equations REGIONS R2 F Test Distribution of Use of Sampling Number adjusted p < Residual weights of Cases 1. Managua 0.72 0.000 Normal Yes 554 2. Urban Pacific 0.64 0.000 Normal Yes 909 3. Rural Pacific 0.55 0.000 Normal Yes 704 4.Urban Central 0.70 0.000 Normal Yes 1,214 5. Rural Central 0.53 0.000 Normal Yes 1,436 6. Urban Atlantic 0.67 0.000 Normal Yes 853 7. Rural Atlantic 0.42 0.000 Normal Yes 1,212 9. The results of the first stage regressions, the estimated values and their corresponding standard error may be found in Table A4.2.2. It is important to note that these models are not intended to be explanatory, and the individual estimated values should not be interpreted as a measurement that relates household characteristics with levels of consumption. SECOND STAGE 10. The second stage utilized household characteristics found in the 2005 Census, and estimated the probability of each household being poor (Pi ) through using the following equation: * (lnZ - Ci ^ Pi* = E^ Pi | Xi, ^,^ [ ] = ) ^ (Equation 2) Where: = the normal accumulated distribution. ln Z = the natural logarithm for the value of the poverty line (general or extreme). ^ = estimated values in the first stage regression. ^ = standard deviation estimated in the first stage regression. Ci = values from the census about the characteristics of each household: "i". 11. The other parameters that were calculated are the gap and depth of poverty and the Theil Index, for three different alfa values (0.5, 1 and 2), where the value of 0.5 places more emphasis on the distribution of consumption in the poorest households, and the value of 2 places more emphasis on the distribution in the wealthiest households (alfa values=1 deal with all households equally, regardless of level of consumption). The calculation of the proportion ( = 0), the gap ( = 1) and the depth ( = 2) of poverty can be expressed in the following equation: i=q 1 P = (Equation 3) n i=1 z - yi z Where: Hq = the poor household with greater consumption. Z = the poverty line. yi = each household's consumption. n = the total number of observations (poor and non-poor). 12. The results of the Poverty Map include the extension (incidence) of general and extreme poverty at the regional, departmental and municipal levels. For the rest of the parameters, see the 211 SPSS archive "result_all.sav", which includes all of the parameters at all levels of aggregation that were calculated. 13. In addition, and in response to the needs of the Government of Nicaragua, the general and extreme poverty gaps were also calculated. These calculations were made at all levels of aggregation, but without distinguishing between urban and rural areas.129 129The standard deviation of the new measurement is: (Var X ) + (Var Y ) + 2COVXY where VAR X is the square of the standard deviation of the rural gap, which was averaged. Since the estimates are generated by different models, the covariance between both measurements is zero. 212 Table A42.2 Results of the First Stage Regressions ­ Beta Parameters of the Initial Regressions with the 2005 LSMS1 Variable Managua P. Urban P. Rural C. urban C. Rural A. Urban A. Rural Constant 9.14 8.64 7.73 8.93 8.97 9.40 8.62 (0.1804 ) (0.1125 ) (0.1248 ) (0.1038 ) (0.1336 ) (0.0666 ) (0.1039 ) -0.095 Gypsum, nicalit or wood (0.0286 ) FLOOR -0.122 -0.128 -0.138 -0.088 -0.150 Dirt floor (0.0399 ) (0.0334 ) (0.0331 ) (0.0296 ) (0.0369 ) WATER_A 0.175 0.147 Pipes within the home (0.0287 ) WATER_B 0.073 Pipes outside of home or well (0.0255 ) ROOF_B -0.071 Clay roof tiles, cement tiles (0.0326 ) Hom TOILET 0.326 0.095 0.094 e Any type of toilet (0.0893 ) (0.0277 ) (0.0412 ) ELECTRICITY 0.095 0.221 0.227 Electricity or solar panel (0.0351 ) (0.0437 ) (0.0417 ) GAS_ELEC 0.115 0.173 0.322 Kitchen with gas or electric stove (0.0577 ) (0.0949 ) (0.1000 ) GARBAGE 0.099 Collected, garbage dump, or pay to remove (0.0436 ) HOME_TYPE 0.136 0.132 -0.198 House, farm or apartment (0.0541 ) (0.0484 ) (0.0777 ) PROPERTY TENURE -0.071 0.124 0.174 Formal (0.0306 ) (0.0217 ) (0.0263 ) ASSETS1 0.046 0.060 0.110 0.115 Small equipment (0.0160 ) (0.0140 ) (0.0128 ) (0.0195 ) ASSETS2 0.160 0.209 0.153 0.204 0.124 0.136 Equipm Medium and large equipment (0.0216 ) (0.0171 ) (0.0148 ) (0.0239 ) (0.0177 ) (0.0295 ) ASSETS3 0.123 0.177 0.254 0.155 0.145 0.241 ent Telephone, cable TV, internet (0.0208 ) (0.0229 ) (0.0459 ) (0.0285 ) (0.0722 ) (0.0198 ) KITCHEN -0.097 With exclusive room for cooking (0.0364 ) Record player 0.194 With recorder (0.0431 ) Health HO_HEALTH -0.040 Hours to health center (0.0113 ) KM_HEALTH 0.015 -0.035 0.006 Kilometers to health center (0.0060 ) (0.0146 ) (0.0017 ) N_5 -0.104 -0.036 -0.061 -0.055 # people 0-5 (0.0153 ) (0.0146 ) (0.0196 ) (0.0134 ) N6_15 -0.060 -0.074 # people 6-15 (0.0102 ) (0.0115 ) N16_59 0.031 Size # people 16-59 (0.0111 ) N60_M -0.136 -0.100 # people 60 or more (0.0238 ) (0.0273 ) N_TODOS -0.081 -0.103 -0.077 -0.068 -0.063 # total people (0.0061 ) (0.0053 ) (0.0038 ) (0.0062 ) (0.0072 ) AGE 0.010 0.009 0.015 Average age in the household (0.0017 ) (0.0020 ) (0.0019 ) 213 Managua P. Urban P. Rural C. Urban C. Rural A. Urban A. Rural Variable LITERACY 0.319 -0.153 % literacy > 9 years (0.0644 ) (0.0663 ) LITERACY 1 0.089 Head of household (HoH) is literate (0.0248 ) Educati EDUCA 0.056 0.047 0.031 Average years of education >15 (0.0082 ) (0.0049 ) (0.0051 ) on EDUCA1 0.012 0.023 HoH: years of education (0.0038 ) (0.0040 ) STUDIES 0.097 -0.131 % of students < 15 years (0.0433 ) (0.0404 ) HAS_U1 0.179 0.172 0.559 HoH with university degree (0.0613 ) (0.0519 ) (0.1022 ) ETHNICITY1 -0.275 0.193 Other Ethnicity of HoH (0.1130 ) (0.0421 ) BORN_MUN1 -0.091 HoH born in this municipality (0.0231 ) LIVED5M1 -0.194 HoH lived same place 5 years (0.0538 ) HOURS_WORK 0.004 Average hours worked > 15 (0.0011 ) TYP1_WORK1 -0.083 -0.178 HoH is employee or laborer (0.0320 ) (0.0342 ) TYP2_WORK1 -0.247 -0.399 HoH is day laborer (0.0677 ) (0.0751 ) TYP5_WORK1 -0.046 -0.289 -0.158 HoH has own business/ cooperative/other (0.0270 ) (0.0372 ) (0.0363 ) Employment AREA1_WORK1 0.134 0.111 HoH works in agriculture (0.0374 ) (0.0411 ) AREA2_WORK1 0.112 0.137 HoH works mid-level: 4, 6, 7 or 8 (0.0278 ) (0.0394 ) OCU1_WORK1 0.362 HoH works in agriculture/fishing (0.0401 ) OCU5_WORK1 0.137 HoH unskilled laborer/military (0.0387 ) OCU6_WORK1 0.319 HoH works in personal services, artisan production, construction, mechanics, graphic arts, manufacturing. (0.0651 ) OCU7_WORK1 0.205 0.420 0.098 0.218 HoH works in commerce (0.0497 ) (0.0646 ) (0.0455 ) (0.0671 ) ANYONE_E -0.140 Has someone in household emigrated? (0.0555 ) E_5YEARS -0.070 # of emigrants past 5 years (0.0309 ) Emigration E_SEX 0.081 -0.149 Proportion males (0.0408 ) (0.0760 ) E_EDUCA 0.022 0.015 Years of education > 15 years (0.0059 ) (0.0044 ) E_EDU_MAX 0.027 Maximum education > 15 years (0.0060 ) E_COSTAR -0.063 # emigrated to Costa Rica (0.0259 ) E_USA 0.132 0.118 0.204 # emigrated to USA (0.0361 ) (0.0233 ) (0.0730 ) 214 Variable Managua P. Urban P. Rural C. Urban C. Rural A. Urban A. Rural DEPART10 0.124 Jinotega (0.0274 ) DEPART20 -0.083 Madriz (0.0393 ) DEPART25 0.176 Estelí (0.0420 ) DEPART30 0.060 Chinandega (0.0305 ) DEPART40 -0.125 Departm Matagalpa (0.0267 ) DEPART50 0.133 0.284 ents Boaco (0.0437 ) (0.0375 ) DEPART60 0.202 0.189 Masaya (0.0334 ) (0.0373 ) DEPART65 0.418 Chontales (0.0462 ) DEPART70 0.252 Granada (0.0490 ) DEPART91 -0.159 RAAN (0.0298 ) DEPART93 -0.070 RAAS (0.0276 ) WATER_A_1 -0.382 Pipes within the home (0.1709 ) WATER_B_1 0.120 Public water post, well, other (0.0453 ) FAN_1 0.317 0.268 Has fan (0.1347 ) (0.0688 ) RADIO_1 0.397 Has radio (0.0992 ) Census BIC_1 0.239 Has bicycle (0.0673 ) Averages CELL_1 0.484 Has cell phone (0.1056 ) LITERACY_1 -0.506 % literate > 9 years (0.1044 ) BIRTH5_1 -0.969 # of births in past 5 years (0.3077 ) OCU1_T_1 -0.220 HoH works in agri. or fishing (0.0550 ) WORK_T_1 0.286 % working >15 years (0.1101 ) SEX1_1 -0.261 Sex of HoH (0.1310 ) 1 Standard errors in parentheses. Cells without information correspond to variables that were not used for the corresponding region. 215