Remittances to Cuba: With 28 Cents
HAVANA TIMES, Nov. 18 — Responding to one of my posts, some readers said that some Cubans living in Cuba spend their vacations in five-star hotels in the cays, paying for their expenses with money sent to them from émigré relatives in Miami.
I found the comment very original, and it also gave me the idea of dealing with the issue of family remittances by trying to discern their true social impact and economic repercussion in Cuba, going beyond any politically motivated myth.
When I raised this possibility with researchers at Havana’s Center for the Study of the Cuban Economy, everyone smiled. “It’s difficult to find a Cuban who sends more than $100 USD a month, and I assure you that those who receive it can’t pay for their vacations with that,” they told me.
I verified with friends and neighbors that this was true, but it still remained for me to discover the total amount of remittances received. That task is not easy because almost half of this money arrives hidden in the pockets of “mules” who travel to Cuba.
In any case, there are serious approximations, such as those of Manuel Orozco, a specialist in remittances with Inter-American Dialogue, a think tank headquartered in Washington D.C. He calculates the annual value of Cuban remittances as being between $830 million and $985 million USD.
This figure concurs with the International Fund for Agricultural Development of the United Nations and with the Multilateral Investment Fund of the Inter-American Development Bank. Both estimate the amount of remittances to be $983 million USD.
Math was never my strong suite, so allow me to round the figure up to $1 billion to facilitate my accounting. Supposing that 80 percent of Cubans receives remittances, this would then result in each of them getting around $0.28 USD a day.
I can assure you that the life in Cuba is not so cheap as to permit someone to eat, dress and pay their electric bill, etc. on a quarter a day. Nonetheless, there are optimists who suppose that the money is for vacationing in five-star hotels!
There are those who assure that the quantities sent are well above those received by people in other countries of the region, with this demonstrating the success of the Cuban community that emigrated. However, I have the impression that the Cuban émigrés are much more detached.
Let’s again compare Cuba to El Salvador, a country with half the number of residents. In January 2010 alone, $236 million USD was received in that small Central American nation, which means that annually this community sends their families almost three times more than Cubans do.
In the poorest homes in Cuba, remittances can end up doubling the family income. However, this proportion is not produced because of the large amounts that are sent, but because of the low wages the government pays to its employees.
In some families this aid is the key to making it to the end of the month, and family members would go hungry if this were not sent. In other cases it means that this indispensable extra money allows people to buy a TV or a washing machine, or to repair the house or throw their daughter’s “sweet 15” birthday party.
But there are also those who don’t need remittances, those who pay their own way, including on vacations. Reading my post from last year titled “Pobrecitos los cubanos” (Poor Little Cubans), can help one understand who these national tourists are and where their money comes from.
It’s only when those 28 cents filter into the hands of the government that they turn into $1 billion USD, cash that winds up in the nation’s coffers thanks to a 240 percent tax placed on all products sold in hard currency.
Putting this into context is to say that remittances represent a revenue stream similar in magnitude to that of tourism. However, the million Cuban emigrants barely send a fourth of what is obtained abroad from the labor of 50,000 Cuban aid workers.
During the economic crisis of the 1990s, the transfer of remittances into the country was a matter of life or death for the government and also for the population. Today its importance has decreased, but it continues to be a significant source of hard currency for the economy.
Trying to drown Cuba, US political leaders and exile groups tried to put limits on remittances, but it was a futile struggle. Even an anti-Castro radical like the late Celia Cruz sent money to the island all her life, as his sister admitted to me.
But not even the amounts that the singer sent were enough to pay for five star hotels. So those who send remittances can sleep soundly, no one in Cuba is blowing the money that required so much sacrifice for them to earn.
$0.28 x 30 days = $8.40 which is a considerable increase of 42% above the $20.00 average monthly Cuban wage.
Oh and @ ML: Just because someone “looks like” they don’t receive remittances doesn’t mean that they aren’t getting some money from abroad. I don’t send remittances to Cuba. But I know plenty of Cuban families here in the states and have met their families in Cuba and they are not running around flashing Ipods and fancy clothes. That money primarily goes to essentials and maybe the occasional luxury item.
I can only speak from personal experience. But, most of the Cuban immigrants I know send about $100-$150 per month. My partner in Cuba receives remittances from his Mother in Canada (about 100cuc/month). The money his family receives goes towards food, clothes and other essential items. He is certainly not running around at resorts on his remittances. Even when I visit with him we can’t afford resorts. I stayed at a hotel (not a resort) once (on a political delegation) where many Cuban nationals vacation. But, they were generally people who were getting perks from their employer or through the CTC (Trade Union) for the July 26th holiday. The majority of the Cubans staying at this hotel were not paying full price for their stay. I agree with this article and your previous one, that there are Cubans who can afford to stay at hotels. But chances are that this money is not coming from remittances but from CUC business they are operating inside of Cuba or because they get perks from their job etc…
Do you think 80% of the Cubans receive remittances from abroad? Perhaps you are right about the 28 cent per day figure–in which case they would only have enough money to purchase extra food at stores selling in divisa. Of the folks I have visited, only a minority of families have the signs of receiving extra income from abroad (e.g. nice/new furniture, stereo system, dvd player, newer tv, bathroom with amenities, etc.). On the other hand, I have visited with many folks who receive absolutely no assistance from the Cuban diasphora, including the family I “adopted” four years ago. Until I arrived–unbidden–on their doorstep, they survived on combined incomes of $16 to $20 per month, plus their librettas, and, of course, whatever else they could do on the side. Although I wish I could help them out more, my means are limited. I send them, and bring them, what I can, which approximates your monthly figure. One positive observation from my most recent month long trip in October: more stores are selling reasonably-priced merchandise in moneda nacional (e.g. furniture, clothing, household sundries, etc)
Fernando,
Your 0.28 cents logic is flawed.
I send money to my sister and I assure you that she does not sit in the sidewalk giving random passerbys ).28 each. nor any other person I know that receives remittances.
As to Cubans in the resorts, yes I have share with them the facilities several times. And it is shameful the way that in several ocassiones I have seen them treated by the Cuban employees.
By enlarge, the visiting cubans cannot “tip” so they are treated like pariahs.
I send money to Cuba, to my parents. I send about 120CUC(150USD) per month. But during the summer, I worked some extra to make sure they could go to a five star hotel in Guardalabaca for 3 days. Something that otherwise, they could never do in their whole life. So, some Cubans, DO go to hotels because the money we send from the US.
Thanks,
Y