Cuba plans to legalize small and medium sized businesses
July 22, 2016
Slowly, one of the last socialist countries in the world is preparing to make changes to its economy, but how will this be done?
With the easing of sanctions announced earlier in the year, Cuba has now announced a gradual rebalancing of its economy, opening up the private sector for small and medium-sized enterprises (SME’s). The measure will encourage the entry of private investment in a country that has been communist for more than 50 years.
The challenges of making these changes are huge. Until now, the government has only allowed private enterprise by self-employed individuals and businesses in several established categories such as tourism, hospitality and transport. In practice, these enterprises are small businesses employing local workers and there are widespread complaints about the difficulties of running a business in a system that does not officially recognise private business.
Since Raul Castro became President in 2008, more than half a million Cubans have started to work in the private sector – despite the limitations of being self-employed. Additional categories of small and medium sized businesses offer potential for more jobs in the private sector; however, Castro’s economic reforms have been slow and marked by periodic reversals.
There is no denying that Cuba has been gradually opening up to the capitalist world. We have seen the arrival of an American cruise for the first time in six decades, the first-ever Chanel fashion show in Havana, the first US film with scenes shot in Cuba (Fast and Furious 8) and the historical Rolling Stones gig in Havana, which, according to the Rolling Stones’ twitter account, attracted 1.2 million people.
In all this, I believe that opportunities are going to arise in the future. For interested investors, it’s a matter of watching, waiting and moving, when the opportunity opens to gain access to this market from the earliest stage.