Marc Frank, Mario Fuentes

HAVANA, Reuters – Cuban entrepreneurs Henry & Yendri Garcia have sold home-made icecream for many years in Bauta near Havana. Now they’re dreaming big.

In August, communist-run Cuba lifted the ban on private businesses that had been in effect since 1968. This move has left Cubans looking for new business opportunities. During the coronavirus pandemic, the Caribbean’s economy that is dominated by the state shrank by 13% in the past two years.

The groundbreaking reform has allowed the Garcia brothers to expand their home-based business, which was built with discarded equipment and a few other bits.

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

Henry, one the brothers said, “We have been recognised as a company, and this increases our reach.” There will be new opportunities.

In one of the biggest economic transformations since Fidel Castro’s 1959 Revolution, Cuba is banking on the creation of hundreds – even thousands – of small businesses to help the economy rebound from the devastating impact of the pandemic, soaring inflation and crippling U.S. sanctions heaped atop the Cold War-era embargo.

Henry stated that the new regulations allow them to operate in foreign currencies, get credit, and sell ice cream at hotels and state-run shops, as well as online.

Henry stated, “My lifetime dream is to own an ice cream factory” and an industrial-sized business.

According to economists consulted, Reuters still has many hoops to clear. For foreign trade to be legal, businesses must register with the state. It also prohibits entrepreneurs from having more than one firm. Individual firms can have a maximum of 100 employees.

Ricardo Torres (Cuban economist, visiting professor at American University Washington) stated that there are “real shortcomings” and hoped they would overcome them quickly.

But this is very encouraging. This is a sign of a new age. He said that we can now talk about a mixed economic system.

SCORES OF NEW COMPANIES

Scores of new businesses have formed since August when the Economy Minister announced these measures. This allows them to take part in the State Wholesale System, work with government-run enterprises, seek investors and loans, and also gives them the opportunity to ally with those that are state-run.

These businesses include construction, food processing and bakeries as well as industrial repair. Waterworks, online delivery, and software production are also available.

According to the government about 40% of these initiatives are new while some other percent were existing but not legally able and have far less rights than the self-employed, “cuentapropistas.”

The government has said it expects to approve thousands more small and medium-sized private businesses over the coming months, such as Cuba’s well-known private restaurants, bars and hostels.

Dforja is another small company that has been impacted by the reforms. Six Havana companies switched their focus to building restoration in order to make patio iron, indoor iron and wooden furniture with the goal of expanding into the international market.

Luis Betancourt, owner of Luis Betancourt’s rustic workshop said that reforms had allowed him to normalize and coordinate the sales and inflow of material.

He stated, “Now we need to work hard and expand from a smaller to medium-sized business.”

STATE SUPPORT

Seven Cuban entrepreneurs consulted Reuters share Betancourt’s optimism and grit under severe economic pressures that have seen imports drop 40% and inflation soar.

As Cuba’s private sector grows, there are still many obstacles.

Combine the U.S.-imposed sanctions on Cuba that restrict Cuban access and finance with the pandemic have severely affected the “convertible,” currency flows required to import from overseas, where the local peso does not value. Oscar Fernandez of Deshidratados Habana (which processes dried fruits) said:

This has forced state and private companies to find alternative funding options, which can often be more expensive. Fernandez explained that larger loans are difficult to find.

His words were: “In our case we worked with a state-run company to support small businesses and a foreign finance services company to enable us to acquire machinery in Europe for our new small factory.” However, I worry that we may be an exception.