Cuba paves the way for small businesses

Posted: 30-May-16 12:07

Having fought against private business ownership for many years, Cuba announced earlier this month that it will soon legalise small and medium-sized private enterprises in what is one of the world's last communist countries. With the move welcomed by many Cuban economists, we take a closer look at what the changes could mean for trade on the island nation and beyond.

Cuba paves the way for small businesses

On Tuesday last week, Cuba announced that it would legalise small and medium-sized private business ownership in a move that could significantly expand private enterprise in the country.

With the news being well-received by Cuban business owners and economists alike, many are now hoping that the reform will allow private firms to import wholesale supplies and export their products to foreign countries, removing a significant obstacle to business growth.

While the Cuban government offered no immediate details as to what the changes will actually entail, a selection of new business categories appear to be the next stage in reforms initiated by Raul Castro after he took over from his brother Fidel in 2008. The 32-page document that was published was the first public account of the decisions taken by the party congress – which was closed to the public and international press – and could have a major bearing on Cuba’s ongoing financial reform.

An important step

This is a tremendously important step”, said Alfonso Valentin Larrea Barroso, who is the director of a cooperatively run economic consulting firm in Havana called Scenius. He added:

“They’re creating – legally speaking – the non-state sector of the economy. They’re making that sector official.”

Having previously cracked down on private businesses that flourish and compete with the country’s current state monopolies, it now seems as though Cuba is relaxing their stance on private enterprise to stimulate their struggling economy – and this despite some hard-line communists warning that the US simply wants to turn entrepreneurs into a tool to overturn the island’s socialist revolution.

Certainly, this is a view that is not currently shared by many small business owners on the island. Vanessa Arocha, a 56-year-old Cuban architect who makes hand-made bags and purses at home under a self-employed worker’s license, welcomed the reform, stating that it would both improve the functionality of her business and allow her to generate local jobs and income for Cuban citizens. Arocha said:

“I could import fittings, zippers, vinyl. Being a small business would be a new experience, one we know little about, but something very positive.”

While the latest change will take some time to become law – reforms typically require approval from Cuba’s National Assembly, which only meets twice a year – should the proposals go through, it could significantly change the outlook for a country that currently imports most of what it consumes. This could in turn lower prices for Cubans and remove the need for the illegal importation of basic goods. For more information on private bussiness, click here.


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