As discussed in a prior post, a group of Cuban entrepreneurs recently attended a conference in Miami, Florida.[1] According to the Miami Herald, this conference provided the following insights into the current status of private enterprise on the island.[2]
“In just two years, . . . the small and medium enterprises have played a significant role in importing food and other basic supplies.” But some of the Cuban visitors are “producing other goods like clothes . . . fruit juice and preserves . . ., lamps . . ., and decorations and furniture . . . . Other enterprises export software and provide services like logistics, transportation, interior design and company-management solutions. And the companies are spread throughout the island, not concentrated just in Havana.” And “many of the companies have diversified.”
These enterprises fact many problems. “A major roadblock: lack of access to the international banking system.” They cannot easily “borrow money to buy supplies, pay workers and expand their businesses.” While the Biden Administration is planning to allow these enterprises to open U.S. bank accounts, “experts believe few U.S. banks will take the risk” because the U.S. still lists Cuba as a state sponsor of terrorism.
Those Cuban enterprises that have bank accounts in other countries face the difficulty of converting the Cuban peso into foreign currencies, especially the U.S. dollar. And the Cuban government recently limited cash withdrawals from Cuban banks and demanded that most transactions take place online.
Cuban enterprises also face difficulties in obtaining capital, credit, technology, expertise, cheaper providers and basic materials like food preservatives and packaging from the U.S. and other countries. They also need help in training employees on new technologies.
These challenges are “particularly acute in the construction field, where it is difficult to retain labor because of the continual mass emigration of Cubans to the U.S. and other countries.” This will be worse in the near future because “most of Cuba’s infrastructure and residential buildings are in bad shape.”
Some enterprises are forced to buy essential supplies from Europe and China, which increases their costs and, therefore, their prices in Cuba.
Of course, these enterprises still face challenges from the omnipresence of the Cuban government regulating what they can do.
On the plus side, the recent gathering in Miami of Cuban enterprises has led to the opening of an office in Florida to support Cuban entrepreneurs visiting the U.S. with work space, car rentals, mail and other business essentials.
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[1] Signs of Increasing Connections Between Cuban Private Enterprise and the U.S., dwkcommentaries.com (Sept. 27, 2023).
[2] Torres, Miami visit gave a rare inside look at Cuba’s fledgling capitalists. Some key takeaways, Miami Herald (Oct. 2, 2023).
Cuba should just dollarize the Cuban economy to curb inflation. The dollar is already widely accepted by private businesses.