The two departments of Le?n and Chinandega, in the north-west of Nicaragua, have ridden numerous waves of prosperity over the past few centuries which can be seen embodied in the splendid colonial cathedrals of Le?n, the remains of a nineteenth century railway line in the hill towns of El Sauce and Achuapa that once carried coffee to markets in Europe before even roads reached these communities, or the walled hacienda of the larger and more successful landowners that have managed to survive and even recover from the land reforms of the 1980s.

One thing that has remained constant in this landscape though is the sight of rich, deep-brown soils, lovingly tilled by their owners,  that have been fed over the millennia by a range of  active and semi-dormant volcanoes - the Maribios Cordillera - with ash and lava that have helped create some of the deepest and most fertile soils in Central America - some say even in the world.

Sugarcane, maize, bananas, peanuts, sorghum, cotton, amongst many other crops, have all prospered at one time or another in these soils, providing the wealth-creating basis of the regional economy that supports approximately 20% of Nicaragua's 5m population.

However, as is typical in so many developing countries, that wealth is not well-distributed. Conspicuous luxury consumption in the shape of turbo-charged SUVs that are the status symbol de riguer of the wealthy, or the four-wheeled beach buggies driven precariously along country lanes by their pre-adolescent children, co-exists uncomfortably alongside dire poverty. Other barefoot, pre-adolescent children look on from makeshift steep-roofed shacks called home, that in this part of the country are built from wooden poles and covered with cornstalks - a traditional campesino type of construction that hasn't changed in centuries.

The economic booms and busts along with natural disasters, have all contributed to perpetuating this precarious co-existence of prosperity alongside poverty.

From the 1950s through to the 1980s, this region was a booming cotton-growing region. During the harvest season, cotton particles and  fluff floated in the air and lined the roadsides and fields. Trailers stacked high with 500-pound cotton bales, clogged the highways as they headed  for the local port of Corinto and overseas markets in Asia. The buzz of crop-dusting aircraft and the ubiquitous, acrid tang of pesticides became almost emblematic of this bustling  corner of Nicaragua.

However, the international cotton market collapsed in the 1990s, and today little remains of the infrastructure that sustained that industry. The ginning mills have disappeared and the crop-dusting airstrips lay abandoned, some still identifiable by a tattered windsock, or the skeletal frame of an aircraft protruding through the weeds.

Bananas and sugar cane continue to be major sources of income in the region, while sorghum, peanuts and soya have since replaced the cotton crops. Shrimp farming is a more recent, and capital-intensive industry that has sprung up in the mangrove swamps and estuaries bordering the Gulf of Fonseca.

Nine years ago though, this region of Nicaragua was severely battered by  its worst natural disaster in recorded history. Hurricane Mitch was what meteorologists described as a "one in 300-year event", and brought with it torrential rains that fell almost non-stop over a period of ten days in late October 1998. In this short period, Chinandega received the same quantity of rain that normally falls in two years. The effects were devastating.

Bridges and roads were washed away. In the Posoltega municipality, some 3,000 lives were lost in a catastrophic mudslide from the Casitas volcano. Flooding caused an estimated US$65m in damage to housing in Leon and Chinandega alone.

Nationwide, one in every five persons had their lives severely disrupted by the hurricane. One in every twenty persons lost their homes and belongings and one in ten lost their immediate source of income and sustenance due to the destruction and flooding of crops. On a localised scale, the proportion was much higher in many municipalities, especially in Le?n and Chinandega that bore the brunt of the storm.

The disaster was compounded by environmental deterioration that has been a direct product of the fertile coastal plain's agricultural success. The concentration of farms into large plantations and capital-intensive mechanised units over time, has gradually displaced the smaller and poorer farmers onto marginal hill lands. These lands have been steadily deforested and degraded, as their owners attempt to subsist by growing staple grain crops on lands that are really only suitable for forestry. Erosion and run-off have become major problems, affecting not only the hill farmers, but as was demonstrated by hurricane "Mitch" tens of thousands of others living downstream

It is into this context that the Millennium Challenge Corporation (MCC) arrived in 2002, with a fund of US$175m and a goal of achieving sustainable economic growth alongside poverty reduction, and to convert the region into an engine of economic growth for the entire Nicaraguan economy. An ambitious goal, admits its programme director Juan Sebastian Chamorro. "We can't expect to do or achieve everything, but by concentrating these resources in this region we do expect to make a significant and lasting impact, moreso than if the funds were dispersed throughout the country" he said.

The MCC is an organisation set up under a US government initiative in 2002 called the Millennium Challenge Account (MCA), under which a total of US$5bn in funds have been ear marked as additional grant aid for developing countries that pursue economic policies conducive to promoting investment, monetary and fiscal stability, and poverty reduction. The underlying thrust of the aid is to stimulate private investment as the means to sustain economic growth and attack poverty. "In a correct policy environment, every dollar in aid attracts two dollars in private investment" states an official MCA document.

Nicaragua qualified for inclusion in the programme under the government of President Enrique Bola?os (2001 -2006). Following a lengthy period of discussions and negotiations, it was decided to focus the US$175m earmarked for Nicaragua on the departments of Le?n and Chinandega, as "a region with proven growth potential due to its fertile land and connection to international markets" and to prioritise three key areas of investment that had been identified as obstacles to growth: property title settlement, road improvements and rural business promotion.

The programme's projects and goals were defined and signed into a contract with the Nicaraguan government in June 2006, and which will see the disbursement of the US$175m over a period of five years. To date, US$30m have been committed under contracts, mainly in road design,  updating and modernisation of the Le?n land registry department, and rural business development and reforestation projects. Appropriate watershed management is a major element of the programme, and which is a direct result of the "Mitch" experience.

Mr. Chamorro says that one of the first tangible successes of the programme has been the organisation of an investment fair and exhibition in September last year, which attracted 60 participants from the US, Europe, Asia and Central America and resulted in the decision of two foreign companies to install a textile factory and an electronics factory in the region that will create a total of 500 jobs,  with plans to expand to a 1,000 total workforce within a few years. "We have now activated three new Free Trade Zones in Chinandega, that we plan to start filling with clients by organising an additional exhibition this year or next" said Mr. Chamorro.

 Updating and modernisation of the land registry in the Le?n department has been prioritised under the programme because of its vital importance for landowners to be able to invest, to obtain finance or to sell their properties ting

The agrarian reform of the 1980s, and the legal limbo that thousands of properties have been left in as a result, and the simple failure of owners to properly register land transfers, particularly within families, has resulted in a situation in which  Mr Chamorro says "As a rough estimate, maybe 50 to 60% of all properties in the department do not have a property deed. We expect that the updating of the registry will result in at least 43,000 new property titles being issued. From our first surveys it appears that properties have been divided up much more that had at first been thought".

He says that the programme, that is being accompanied by an aerial photographic reconnaissance of the entire department, to produce updated orthophotomaps, "will greatly improve the legal security of properties for landowners, and thereby make it much easier for them to obtain bank credit, and give them greater security to invest".

The road transportation project, which accounts for more than half the total program outlay, is designed to improve market access for producers and to stimulate development along a 60 km coastal portion of the Le?n department served by the Old Le?n Highway that has fallen into disrepair. Tourism and agro-industrial projects and development of the region's salt production industry are expected to be  key beneficiaries of the highway improvement, while the upgrading of 100 kms of rural dirt roads to all-weather hard surfaces will stimulate investment in rural farms and businesses.

The first area to be prioritised under the rural business project is to improve dairy production in the region. Around 1,500 small and medium dairy producers are being targeted out of a 12,000 total. A network of cooling plants are to be built in five municipalities, and an integrated programme of training in feeding, milking, hygiene and veterinary care of the livestock is to be carried out to increase milk production volume and quality. "We are targeting the market in El Salvador primarily, and our main challenge is to improve product quality which requires good organisation, attention to detail and an entrepreneurial outlook by the producers" said Mr Chamorro.

He said that the programme will be largely "demand-based" and projects assessed on their merits. Product diversification is being encouraged, and relatively new areas such as cashew nut, jicaro seed, honey, and sesame production are likely to be given high priority.

"We are  focussing on those producers that fall into the category of small and medium producers, not subsistence farmers nor large farmers. The latter already have their means of financing, while the subsistence farmers are unlikely to become viable farm businesses. The creation of a sustainable small farm business sector is the main goal of this project component" said Mr Chamorro.  

Asked whether the new government's policies might clash with the MCA's objectives, Mr Chamorro answered "On the contrary, we have complementary objectives. For example, the government's 'Zero Hunger' campaign shares the same goals as the MCA in poverty reduction. We have discussed a number of projects already, and we expect to implement the use of biodigestors on cattle farms for example, to encourage a reduction in firewood usage. At the macro-economic level, the government has been fulfilling the conditionality of the MCA. Four cabinet ministers sit on the board of the MCA as well as representatives from civil society. Our projects and programmes are associated with the priorities of the government".

Driving along the new highway to Le?n and Chinandega today, there is little evidence of the disaster wrought by hurricane Mitch nine years ago. Tractors are busy tilling the fields, new factories are springing up from former cotton fields, and an air of optimism now prevails where tragedy and depression had gone before.   

The MCA is in the process of  providing a major boost to this important regional economy of Nicaragua. Glory days have come and gone. The hope is that with the MCA's help, the next time round they will be here to stay.