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Viewing cable 06MANAGUA2432, NICARAGUA: OPIC CEO MOSBACHER PROMOTES FUNDS FOR

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Reference ID Created Released Classification Origin
06MANAGUA2432 2006-11-01 22:33 2011-06-21 08:00 UNCLASSIFIED Embassy Managua
VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #2432/01 3052233
ZNR UUUUU ZZH
R 012233Z NOV 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 8094
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
UNCLAS MANAGUA 002432 
 
SIPDIS 
 
SIPDIS 
 
PLEASE PASS TO EB/IFD/JFINN 
DEPARTMENT PLEASE PASS TO OPIC/DZAHNISER, KCALLAGHAN 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ECON ECIN NU
SUBJECT: NICARAGUA: OPIC CEO MOSBACHER PROMOTES FUNDS FOR 
THE CAFTA REGION 
 
1. (U) Summary.  Overseas Private Investment Corporation 
(OPIC) President and Chief Executive Officer Robert 
Mosbacher, Jr. visited Managua on October 18 to announce five 
OPIC-sponsored investment funds and lending programs 
available for Nicaragua.  In a day-long series of high-level 
meetings and events, CEO Mosbacher signed documents related 
to the funds in a ceremony at the Presidency, met with 
President Enrique Bolanos, hosted roundtables with economic 
ministers as well as for captains of industry, and addressed 
a luncheon for members of the banking community, housing, 
construction, and energy sectors.  At the end of the day, the 
Ambassador hosted a well-attended reception in his honor.  In 
his remarks at the signing ceremony, President Bolanos 
emphasized the importance of the choice facing Nicaraguan 
voters on November 5, and urged them to embrace a modern 
future.  Luncheon and roundtable discussions centered on 
low-income housing and finance for small and medium-sized 
enterprises.  Press coverage of CEO Mosbacher,s visit was 
very positive.  End Summary. 
 
Meeting with President Bolanos 
------------------------------ 
 
2. (U) Accompanied by the Ambassador, CEO Mosbacher met with 
President Bolanos, Minister of Foreign Affairs Norman 
Caldera, Minister of Trade and Industry Alejandro Arguello, 
Minister of Agriculture and Forestry Mario Salvo, and Central 
Bank President Mario Arana.  Bolanos highlighted the need for 
Nicaragua to build a strong middle class and the importance 
of home ownership.  &If they own property,8 Bolanos 
commented, &they will protect it.8  Arana noted that the 
housing sector was one of the fastest growing in Nicaragua, 
but that construction had targeted the middle and upper 
classes.  The challenge, he thought, was to reach into the 
lower classes, where the demand was strongest and untapped. 
CEO Mosbacher explained that OPIC-supported funds targeted 
low-income earners, potential homeowners looking at houses in 
the $7,000-$20,000 range.  Caldera suggested that a way be 
found to use personal remittances to help pay mortgages on 
family homes.  CEO Mosbacher responded that OPIC had been 
looking into that possibility with Western Union.  Minister 
of Trade and Industry Arguello said that his ministry was 
trying to promote housing near free trade zones.  CEO 
Mosbacher responded that OPIC had participated in such 
projects in the past, as well as low income housing for 
workers near tourist developments.  Bolanos spent some time 
explaining his recently launched initiative to build a canal 
to rival the one in Panama (septel), a potentially massive 
undertaking.  He also mentioned that the government was 
creating one-stop shops to deliver multiple public services 
to investors at one office. 
 
Signing Ceremony 
---------------- 
 
3. (U) At the signing ceremony at the Presidency and before 
members of the press, CEO Mosbacher and President Bolanos 
addressed invited guests.  In his remarks, CEO Mosbacher 
placed OPIC activities in Nicaragua within the context of the 
Central American Free Trade Agreement (CAFTA) with the United 
States, emphasizing the central role of investment in 
fostering economic growth and development.  He announced new 
OPIC investment and loan funds for Nicaragua to support 
private sector initiatives in energy, housing, and small 
enterprise.  Among them were Latin Power II (an investment 
fund for medium-sized power projects), Paladin Realty Latin 
America Mortgage Finance and Paladin Realty Latin America 
Investors II (investment funds targeting construction of and 
long-term mortgages for low and middle-income housing), loans 
to Bancentro to support low and middle-income housing 
development, and additional funding for Global Partnerships 
to support microfinance projects.  CEO Mosbacher signed 
documents related to these funds in the presence of President 
Bolanos and the local press. 
 
4. (U) President Bolanos used the backdrop of the ceremony to 
talk about the elections, explaining that the choice 
Nicaraguans faced was whether to embrace a modern future or 
return to an impoverished past.  Bolanos said that 
Nicaraguans knew that without investment, there could be no 
production.  Without production, there could be no money for 
schools, roads, and medicine.  He stressed that OPIC funds 
targeted the private sector, reminding his audience that 
governments did not produce development, rather development 
was the sum total of many individual efforts.  Bolanos 
thanked CEO Mosbacher for the work of OPIC, which he believed 
would attract significant investment for the benefit of all 
Nicaraguans. 

Bankers, Luncheon 
----------------- 
 
5. (U) CEO Mosbacher went from there to a working lunch with 
members of the banking, construction, and energy sectors.  In 
his remarks, CEO Mosbacher outlined OPIC,s regional and 
bilateral programs in housing, energy, and micro-finance as 
examples of strong USG commitment to Nicaragua and to the 
CAFTA region.  He emphasized housing and microfinance as 
potential engines of growth for Nicaragua.  The American 
Chamber of Commerce and the Housing Institute of Nicaragua 
co-hosted the event, which was sponsored by Bancentro and 
featured an address by Bancentro President Roberto Zamora. 
Zamora focused his remarks on the $30 million in OPIC loans 
to Bancentro that were designed to facilitate long-term, 
fixed-rate mortgage lending in Nicaragua.  Attendees 
demonstrated a keen interest in OPIC funds, asking about the 
timing, nature, and availability of programs. 
 
Captains of Industry 
-------------------- 
 
6. (U) CEO Mosbacher hosted a 75-minute roundtable with 
high-level representatives of 14 of the largest businesses 
and business organizations in Nicaragua, spanning the 
agricultural, manufacturing, distribution, construction, and 
financial sectors.  Discussion ranged from infrastructure 
limitations to the lack of a mature financial market in 
Nicaragua.  Participants strongly supported creating a 
secondary market for securitized mortgages.  CEO Mosbacher 
challenged industry to be creative in the projects they 
submitted for OPIC-sponsored funding, to include, for 
example, the securitization of mortgages. 
 
7. (U) Roundtable participants acknowledged the important 
role that small and medium-sized enterprises (SMEs) could 
play as an engine of economic growth, but lacked ideas on how 
to support them.  CEO Mosbacher reminded the group that while 
there was a role for the government, the driver for 
energizing SMEs and the economy had to be the private sector. 
 CEO Mosbacher placed particular focus on the high cost of 
microfinance, which he noted was currently the only real 
credit available to most SMEs.  He suggested the bankers 
might consider creating loan packages with longer time 
horizons and grace periods as a way to make themselves more 
attractive to this important sector. 
 
Economic Cabinet 
---------------- 
 
8. (U) The issue of how to extend useful and effective credit 
to SMEs dominated the roundtable discussion with members of 
Economic Cabinet.  Attendees included the Ministers of 
Finance, Trade and Industry, and Agriculture, as well as the 
President of the Central Bank, the Executive Director of 
ProNicaragua (Nicaragua,s investment promotion agency), and 
the Technical Secretary to the President.  CEO Mosbacher 
posited that the government could play a much stronger role 
in helping to bring SMEs into the formal sector.  In a 
statement echoed by ProNicaragua Executive Director Juan 
Carlos Pereira, CEO Mosbacher said that while the number of 
days needed to incorporate a business had decreased in 
Nicaragua, the cost of doing business remained high.  For 
SMEs, accessing formal credit involved a paper intensive and 
convoluted process.  Banks needed to find ways to work with 
SMEs, a more time consuming group of customers than 
traditional clientele.  Before the SME market could take off, 
suggested CEO Mosbacher, Nicaragua needed one or two 
full-service commercial banks to take the plunge to show that 
SME lending was profitable.  OPIC stood ready to support this 
effort by providing guarantees on loan portfolios through 
existing framework agreements with U.S. banks. 
 
9. (U) Central Bank President Mario Arana and Technical 
Secretary to the Presidency Alvaro Montalvan stated that by 
December, the Government of Nicaragua hoped to have a 
proposal for an SME credit rating system that derived credit 
history data from existing microfinance institutions.  Such 
credit information would help banks move into SME lending. 
Minister of Finance Mario Flores added that there was a bill 
before the National Assembly designed to bring microfinance 
institutions under the supervision of the banking regulator, 
thus making them partners in the creation of credit histories 
for SME borrowers and facilitating the design of low cost 
loan packages for SMEs.  Minister of Trade and Industry 
Alejandro Arguello and ProNicaragua,s Juan Carlos Pereira 
said that the GON wanted to help SMEs adopt standard 
accounting methods and formulate business plans so that SMEs 
could approach the formal banking sector.  CEO Mosbacher 
stressed that the government needed to push the larger 
players in the Nicaraguan economy to reach out to SMEs with 
injections of start-up capital and support. 
 
Comment 
------- 
 
10. (U) CEO Mosbacher,s visit was well received.  The visit 
was distinctive in the high-level attention and participation 
that it drew.  Leading newspapers La Prensa and El Nuevo 
Diario ran prominent articles in their business sections the 
following day.  The Presidency,s website highlighted the 
signing ceremony along with President Bolanos, speech.  All 
major television and radio stations covered the event and 
some carried it live.  The Ambassador,s reception at the end 
of the day gave all participants the opportunity to follow up 
on ideas presented during the day,s discussion.  On the 
whole, we term the visit &very successful. 
TRIVELLI