Cuba’s economic reforms allow small entrepreneurs to think big

HAVANA, December 7 (Reuters) – Cuban entrepreneurs Henry and Yendri Garcia have a long history of selling homemade ice cream in their small town of Bauta, outside the capital Havana, but now they’re dreaming big.

Communist-ruled Cuba in August lifted the ban on private companies in place since 1968, a move that prompts Cubans to seek business opportunities. The Caribbean island state-dominated economy has shrunk by 13% in the past two years during the coronavirus pandemic.

With this groundbreaking reform, the Garcia brothers, known as the ‘ice cream guys’ in Bauta, say they hope to move their small home business, cobbled together with patched-up discarded equipment, into a larger one. facility and increase their staffing from 12 to maybe 30 or more.

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The government has already registered its “Helados Cid” operation as a private enterprise – one of some 900 small and medium-sized enterprises to have been incorporated since September, according to the Ministry of the Economy.

“We have been recognized as a company and this increases our reach,” Henry, one of the two brothers, told Reuters. “There will be opportunities that were not available before.”

In one of the greatest economic transformations since Fidel Castro’s 1959 revolution, Cuba is banking on the creation of hundreds, if not thousands, of small businesses to help the economy rebound from the devastating impact of the pandemic, the Soaring inflation and crippling US sanctions crammed on top of the Cold War Embargo. Read more

The new rules, Henry said, mean they can now operate with foreign currencies, get credit and sell ice cream at hotels, state stores and even online.

“My lifelong dream is to have an ice cream factory and an industrial-sized business,” Henry said.

There are still many hurdles to overcome, according to economists consulted by Reuters. Regulations require companies to go through the state to engage in foreign trade, prohibit entrepreneurs from owning more than one business, and cap sole proprietorships at 100 employees.

“There are real shortcomings which I hope will be overcome quickly,” said Cuban economist Ricardo Torres, visiting professor at the American University in Washington.

“But it’s very positive. It marks a new era. You can start talking about a mixed economy,” he said.

NEW BUSINESS SCORES

An employee works in the workshop of Dforja, a furniture company run by Cuban entrepreneur Luis Betancourt, in Alamar, Cuba on December 2, 2021. Photo taken on December 2, 2021. REUTERS / Natalia Favre

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Since the Minister of the Economy announced these measures as part of President Miguel Diaz-Canel’s economic reforms in August, many companies have incorporated, allowing them to participate in the state’s wholesale system, ally with state-owned enterprises and seek loans and investors.

Activities range from construction, food processing, bakeries and industrial repairs to water supply, online home delivery and software production.

According to the government, some 40 percent are new initiatives while the rest were already functioning, but in a legal vacuum and with much more limited rights as independent “cuentapropistas”.

The government has said it plans to approve thousands of other small and medium-sized private businesses in the coming months, such as Cuba’s well-known private restaurants, bars and inns.

Dforja is another small company that benefits from the reforms. The six-person Havana-based company has shifted from restoring buildings to manufacturing iron and wood patio and interior furniture, hoping to tap the export market.

“The reforms have allowed us to mature and regularize the influx of materials and sales of our product in coordination with state-owned enterprises,” owner Luis Betancourt said outside his rustic workshop.

“Now we have to work hard and go from a small to a medium sized business,” he said.

STATE SUPPORT

Betancourt’s enthusiasm and courage in the face of a major economic crisis that saw imports fall by 40% and skyrocketing inflation are shared by seven Cuban entrepreneurs consulted by Reuters, who say they have the support of the Reuters for the first time. State.

But many stumbling blocks remain as Cuba’s nascent private sector takes hold.

The pandemic, combined with US sanctions that limit Cuba’s access to goods and finance, have profoundly reduced the flow of “convertible” currency needed to import from abroad, where the local peso has no value, said Oscar Fernandez de Deshidratados Habana, which deals with dried products. fruits.

The situation has forced public and private companies to seek alternatives and often more expensive sources of financing. Larger loans, Fernandez said, are hard to come by.

“In our case, working with a state-owned company set up to help small businesses and a foreign financial services company, we were able to buy machines in Europe for a new small factory,” he said. “But I’m afraid we are an exception.”

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Reporting by Marc Frank, Nelson Acosta and Reuters television; edited by Dave Sherwood, Daniel Flynn and Aurora Ellis

Our standards: Thomson Reuters Trust Principles.


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