As noted in prior posts, Cuba has a small and prospering private business sector in its economy.[1]
The Biden Administration has been indicating that it will adopt regulatory changes that will bolster that entrepreneurial sector by giving Cuban entrepreneurs access to the U.S. banking system. In addition, Cubans could access U.S. internet services (e.g., videoconferencing, e-learning, automated translation, I.T. managing services and cloud-based services). These upcoming changes are prompted by the Administration’s seeing these Cuban businesses as Cuba’s best hope to grow its economy and curb the outflow of its citizens escaping the island’s dire economy. But as of September 27th no such changes have been officially announced.[2]
On September 25-26, about 70 Cuban entrepreneurs from the island attended an event in Miami that offered advice on how to improve their businesses and navigate the restrictions imposed by the U.S. embargo.[3]
Former congressman Joe Garcia, who helped organize the trip, said, ““The Cuban American community believes that an essential part of a future democratic and prosperous Cuba includes a free enterprise system.” Garcia, who does consulting for some companies doing business with Cuba’s private sector, added that the basic idea behind the trip is to prove that these enterprises are real and not a front for the Cuban government.
The Cuban visitors consists of men and women from various Cuban provinces, some of whom have never been to the United States. They own businesses in several sectors, including transportation, construction, software development, clothes and beauty products and manufacturing. Many said they are looking to cut costs and prices by contacting providers directly so they don’t have to buy from resellers. Others are searching for a market and partnerships to help them scale their operations.
One of the visitors, Zoraida Perez Barrera, has a small but successful women’s and baby clothing business in Santa Clara, a city in central Cuba with 14 employees. She wants to find a U.S. market for her products. “All of us who are Cuban know how rooted we are in our traditions and I make the traditional newborn arrival clothes. In fact, people who live [in Miami] ask us how to buy the baby clothes.”
Some of these relatively new private companies on the island have become major employers and significant importers of food and other essential goods at a time when “the Cuban state is broke,” said Aldo Alvarez, whose own company, Mercatoria, has been importing large quantities of wheat, chicken and cooking oil to sell on the island.
Several of the visiting entrepreneurs said they are particularly encouraged by news reported by the Miami Herald that the Biden administration is readying to announce new regulations allowing Cuban private entrepreneurs to open bank accounts in the United States —something they can’t do now because of the U.S. embargo that would make it easier for them to pay providers abroad.
Also in attendance were two of the largest Miami exporters to Cuba’s private sector: Hugo Cancio, the owner of Katapulk, a marketplace for over a hundred private enterprises, and Ariel Pereda, whose company, Pearl Merchandising & Distribution, first started selling food to Alimport, the Cuban state monopoly, and now is primarily exporting to the private sector.
A keynote address was provided by U.S. healthcare executive and billionaire Mike Fernandez, who said he believes Cuba’s new private businesses are “the beginning of something monumental that will change” Cuba, though there is always the threat that Cuba could “reverse the process” if it finds other ways to resolve its economic crisis.
This gathering also heard from U.S. lawyers and U.S. officials from the Departments of State, Treasury and Commerce, who explained the regulations that allow American companies to export goods to the Cuban private sector. Though the embargo generally prohibits any transactions involving Cuba, the Obama administration eased restrictions on transactions if the final beneficiary is a member of the private sector, not the Cuban government.
A few days earlier Cuba President Miguel Diaz-Canel, who was at the U.N. in New York City, met with approximately 40 representatives of the American private sector, including Hugo Cancio, and told them that the Cuban regime is considering allowing Cuban Americans to invest and own businesses in Cuba. But the President was not prepared to discuss in detail the new regulations the regime needs to pass to allow private companies in Cuba to receive investment and financing from American companies.[4]
Conclusion
Let us hope that the U.S. soon will announce the promised new regulations to enhance Cuban entrepreneurs access to the U.S. banking system and that this sector of the island’s economy will continue to prosper. Of course, the U.S. also should end its embargo of the island and its designation of Cuba as a state sponsor of terrorism, both of which would improve the lives of Cubans on the island while Cuba should end its recent expansion of Russian and Chinese military and espionage activities on the island.
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[1] See, e.g., these posts to dwkcommentaries: U.S. Needs To Improve Relations with Cuba (Aug. 4, 2023);COMMENT: Developments Regarding U.S. Private Exports to Cuba (Aug. 25, 2023);1.5 Million Tourists Tourists Have Visited the Island So Far this Year (Aug. 26, 2023).
[2] Martin & Wilcary, Biden Readies Measures to Support Cuba’s Small Business Owners, Wash. Post (Sept. 18, 2023). Torres, Cuban entrepreneurs to be allowed to open U.S. bank accounts, access internet services, Miami Herald (Sept. 19, 2023).
[3] Torres, In historic meeting, Cuba’s private entrepreneurs look for opportunities in Miami, Miami Herald (Sept. 26, 2023); Almost 70 MSME ‘entrepreneurs’ from Cuba arrive in Miami looking to do business, Diario de Cuba (Sept. 26, 2023).
[4] Diaz-Canel baits Cuban-Americans who want to own businesses on the island, Diario de Cuba (Sept. 23, 2023);Reyes, Diaz-Canel did not make the announcement in the US that businessmen expected, reproaches the anti—embargo lobby, Diario de Cuba (Sept, 25, 2023).