Expanded Private Initiatives in Cuba

Graham Sowa

If you want to access services for individuals in Cuba it is going to cost you.  A case to make this point is the rise of the private gym.  In the past two weeks I’ve seen two different articles in the foreign press about private gyms in Cuba; most recently on msnbc.com.  These operations are home based, and usually frequented by neighbors and friends.

The equipment is invented or adapted from something never meant to be used as weights.  In the medical school we scavenge pieces of old buses.  Yes, in Cuba we use all parts of the bus, just like the first populations of North America used all parts of the buffalo.

The gym is an institution for the individual.  And they cost money to subscribe to.  In Playa Baracoa, the town next to the Medical School, the one gym I know of costs two Cuban convertible peso (about 2.50 USD) monthly subscription fee.  Free alternatives do exist in the form of group exercise and compulsory sports that are part of the curriculum of just about every institution in Cuba, including the Latin American School of Medicine.

So you can exercise for free with the group, or pay money to access individual fitness.  The group exercise is a government service, the gym is private.  The government is successful at managing and providing services en mass, but almost nonexistent when it comes to options and services for the individual.  So the gap is filled by the private, often illegal, market.

However, this illegal market is now in the early stages of entering new space recently opened by the Cuban government for people who want to work for themselves.  So far more than 80,000 Cubans have submitted applications for licenses to privately sell their goods and services and more than 75,000 have been approved.  Everyone, including the government, is moving quickly.  By March or April of this year 500,000 workers will have lost their government jobs and they need to cushion the blow.

So now there is legally recognized space for people to open businesses, such as home gyms.  Because these markets are now legitimate in the eyes of the government the owners will probably feel more comfortable in investing money to improve their services.  Customers should expect as much.  And just like using the gym in Cuba will cost you, setting up an individual business will cost as well.

For Cuban entrepreneurs with family living abroad the source of their start up cash is obvious.  However, Cubans without a family source of euros or dollars were going to be left behind; at least up until last week.  Then President Obama did something a bit unexpected.  Starting this month any American, no matter if they have family in Cuba or not, can send 500 USD to any Cuban citizen every three months.  Granted, these citizens cannot be government officials, or members of the Communist Party, but I doubt those people constitute a significant portion of the large crowd trying to start a private business.

Cubans now have a huge new pool of private capital to solicit for startup investment.  The new reality is that anyone in the United States of America has the ability to discreetly and directly invest in enterprising Cubans.  It remains to be seen if this idea will materialize into overseas wire transfers and person to person micro-lending.   However, with more cash to compliment the costs of living and starting a private business more Cubans should be flexing their individual finance muscles.