Thursday, December 31, 2015

¿Plus ça Cuba? Cuba's Entrepreneurs Moving Ahead Despite Obstacles - Part III: Quick Facts on Cuba’s “Cuentapropistas”

Quick Facts on Cuba’s “Cuentapropistas

Click here to download.
(This post is co-sponsored by the Engage Cuba Coalition
and the Cuba Emprende Foundation, and was
originally published on the World Policy Blog)

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In late 2010, after years of antagonistic policies toward Cuba’s tiny private sector, the Cuban government dramatically altered its approach in order to unleash its employment potential. Since then the sector has grown from less than 150,000 licensed operators to more than half a million.

When combined with the island’s estimated 600,000 unlicensed or part-time entrepreneurs, the 575,000 private farmers and members of agricultural cooperatives, and the 50,000 employees of Cuba’s joint ventures with foreign companies, the private sector now comprises a full third of Cuba’s labor force.

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Despite this significant and indeed unprecedented quantitative growth during President Raúl Castro’s tenure, Cuba’s “cuentapropistas” (self-employed workers or literally, “on your own-ists”) continue to be hobbled by numerous qualitative restrictions. These include a fiercely-guarded state monopoly on foreign trade, an explicit rejection of private concentrations of wealth, and a restrictive list that limits the sector to just 201 largely unproductive, survival-oriented occupations that create little wealth and fail to take advantage of one of Cuba’s strategic assets: an innovative and highly educated workforce.
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For example, only 27 percent of licenses have gone to skilled workers or professionals, leaving the vast majority of workers trapped in semi- or unskilled jobs like knife sharpener, palm tree trimmer, button upholsterer, and sheep shearer.

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Additionally, the government has yet to set up effective and affordable wholesale markets or sources of credit to help these new start-ups grow. And while Cuba has the most educated, low cost labor force in the world, an effective ban exists on exercising most professions in the private sector.

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With international tourism arrivals up 18 percent in 2015, drivers of private sector growth are accelerating, but severe restrictions remain on converting this promise into prosperity. For example, although Cuba has a large surplus pool of computer science talent, Internet access remains among the lowest and most expensive in the Western Hemisphere. Only between 5 and 25 percent of the population have some form of web access and the typical $2 an hour cost is equal to 10 percent of the average Cuban’s monthly salary.

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Still, the private sector has benefitted from economic reforms that include easily obtained business licenses, a more responsive tax code, the ability to hire workers, and a shift in state mentality that sees the “non-state sector” as a positive compliment to the still dominant but largely inefficient and unproductive state enterprise sector.

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For example, while food service (11 percent), transportation (9 percent), and home rental (5 percent) activities are the leading entrepreneurial sectors both in terms of revenue and employment, another 20 percent of the half a million cuentapropista licenses have been issued to the more than 100,000 “contractors” who work for other private businesses. In other words, the private sector includes both the entrepreneurial owners of small businesses, like Cuba’s renown paladares (private, home-based restaurants) and bed and breakfasts, and the workers employed in those same businesses.

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Even more dramatically, starting one year ago in December 2014, the U.S. and Cuba began a process of normalization, which has included diplomatic recognition, the opening of embassies, and a series of talks focusing on improving telecommunications, and empowering the small-business sector on the island.

This diplomatic thaw has the potential to help Cuba solve its internal economic bottlenecks by providing entrepreneurs access to credit, wholesale markets, and the vast U.S. consumer base, while also allowing American companies to hire Cuban workers and enter the Cuban market.

However, all this potential will remain largely untapped as long as the U.S. embargo remains the law of the land and the Cuban government continues to lock most island entrepreneurs out of the most innovative and productive sectors of the economy.

This fact sheet aims to provide U.S. policymakers and their constituents quick access to basic information on the Cuban economy and the ongoing entrepreneurial reform process on the island so that future changes in U.S. policy can be properly calibrated to encourage and incentivize deeper reforms that unlock the full productive potential of Cuba’s entrepreneurial class.

Click here to download.

Friday, December 25, 2015

¿Plus ça Cuba? Cuba's Entrepreneurs Moving Ahead Despite Obstacles - Part II: 10 Things to Consider before Planning Your Trip

10 Things to Consider before Planning Your Trip to Cuba

Despite the recent economic reforms in Cuba and the normalization of relations with the U.S., the island is far from a predictable tourist destination. Here are a few things to consider when planning your first (or next!) trip to Cuba.

1. Cubans and Americans, a love-hate relationship
Despite half a century of mutual governmental antagonism, Cubans are exceedingly hospitable and inquisitive, and love to engage with Americans. Thus, friendly and gregarious people will become even more so when they discover you're from what they affectionately refer to as "La Yuma," i.e., the U.S.! This means that you shouldn't expect to be called a "gringo," a word Cubans actually don’t use, or a “yankee," a term only used by the Cuban government. However, Cubans are every bit as proud of their country and culture as we are of ours (which is not to say that all necessarily support their government). In fact, they often suffer from a similar "superiority complex" as many Americans do, so your conversations with them are bound to be rich and dynamic, but also hopefully more enlightening than heated.

Monday, December 21, 2015

¿Plus ça Cuba? Cuba's Entrepreneurs Moving Ahead Despite Obstacles - Part I: Return to Havana

Below is the first of a three-part series of posts (one, two, & three), "¿Plus ça Cuba?" that I published over the past month at the World Policy Institute's blog, "The Cuban Reset."

This first one I have re-titled: "Return to Havana."

[Part II is "10 things to consider before planning your trip."]
[Part III is "Quick Facts on Cuba's Cuentapropistas."]

Two things stood out most to me on a trifecta of recent trips to Havana in October 2015 after more than four long years of not visiting the island.

First, led by too many breathless press reports of a fundamentally transformed island by President Raúl Castro's economic reforms, I was surprised to find the gray dinosaur of a ruined, if often, disarmingly charming capital city largely intact.

Despite the undeniable surging innovation exhibited by hundreds of enterprising habaneros who have set up astoundingly creative and sophisticated businesses in response to Castro’s economic opening, such ventures remain islands of innovation in the sea of poverty, neglect, and inefficiency that has characterized Cuba's state-run economy.

And though I learned long ago not to give undue credence to spontaneous reports from random, anonymous cabbies, one such comment stood out to me as I took the pulse of a city I'd once called a second home.

After hopping into the ancient hulk of an American cruiser, used as a "taxi colectivo" (10-peso cab) due to its ability to fit as many as 8 passengers at once I asked the driver about the twin pair of small U.S. and Cuban flags he had mounted on his dashboard.

This was just his way of saluting the hopeful thaw in relations between our countries that had taken place during the previous 10 months, he explained. The driver, an Afro-Cuban, also lauded President Obama's youthful vision and political bravery at reversing the U.S's isolationist policy enthroned in the widely detested bloqueo (blockade).

However, he then turned to me and wondered aloud whether he could expect his government to respond by exhibiting any bravery of its own by beginning to dismantle the thick wall of control it imposed over citizens like him - referred to derisively by this Cuban as the ‘auto-bloqueo’ (internal embargo).

"Tengo esperanza," he said. "Pero la verdad es que no tengo mucha confianza." (I'm hopeful, but the truth is that I'm not very confident).

"They control everything here: the party, the economy, the media... So I don't see how they're going to give that up so easily," he noted in Spanish before adding the rejoinder, "hope dies last they say, but I hope it doesn't die before I do."

Friday, December 18, 2015

Obama & Kerry: One Year On

President Obama's Statement on U.S.-Cuba Relations

"One year ago, I announced that after more than 50 years, America would change its relationship with Cuba and put the interests of the people of both countries before the outdated ways of the past. Since then, we have taken important steps forward to normalize relations between our countries:

*re-establishing diplomatic relations and opening embassies;
*facilitating greater travel and commerce;
*connecting more Americans and Cubans; and
*promoting the free flow of information to, from, and within Cuba.

We are advancing our shared interests and working together on complex issues that for too long defined-and divided-us.

Meanwhile, the United States is in a stronger position to engage the people and governments of our hemisphere. Congress can support a better life for the Cuban people by LIFTING AN EMBARGO THAT IS A LEGACY OF A FAILED POLICY [my emphasis].