Cuba’s Emerging Individual Entrepreneur

By Norma Tania Rivero & José Luis Fernández de Cossío  (Progreso Weekly)

Private restaurant in Old Havana.
Private restaurant in Old Havana.

HAVANA TIMES — In Cuba, the figure of the Self-employed Worker, regulated by various labor, economic and fiscal rules, is currently utilized to define and regulate three economic actors with different legal properties:

– The self-employed worker in the strictest sense, the tradesmen and women (carpenters, plumbers, barbers, hair dressers, craftsmen, artists, cooks, etc.) who perform jobs of a private nature, without the complexity of a labor organization and the need for capital.

– The worker for private enterprises (hired by self-employed entrepreneurs), whom our current legislations treats in a manner different from that of the rest of the Cuban workers, as if the former were something different.

– The individual entrepreneur, the proprietor and founder of the small and midsize businesses that have been organized throughout the country. This figure lacks official recognition (political and legal) other than the label of “cuentapropista” [worker on his own], even though he/she is regulated as a “subject in disuse” in the current Commercial Code.

The “disuse” of the individual entrepreneur in Cuba and the disuse of the legislation that regulates him (the Commercial Code) is due to the fact that, for decades, practically the entire economy was state-run. This socio-economic subject was eliminated from the Cuban landscape and, with him, many institutions in the Mercantile Law, which regulates private legal relations, also fell into disuse.

But, as a result of what has been called “the actualization of the Cuban economic model,” approved by the Sixth Congress of the Communist Party of Cuba and the National Assembly of the People’s Power, the government began to give the “non-state sector” a chance to have an economic space within the country’s development. Thus did the figure of the individual entrepreneur emerge, in the sectors of production, services, wholesale trade and even retail trade.

Beginning in 2007, some specialists pointed out that self-employed activities — initially undertaken as an option of subsistence for persons not integrated into the state economy, organized in personal jobs or in family collectives — had grown in complexity and specialization and occasionally enjoyed a high grade of structuring in the relations of labor and the division of tasks within them.

Accordingly, the observations continued, the activities of several “cuentapropistas” activated strategies of savings, accumulation of gains, and peculiar forms of investment and capitalization. Some of these private businesses had turned into well-organized micro-businesses with an entrepreneurial structure.

There are still no public statistics on this, but it can be said that, of the more than 500,000 persons supposedly in the private sector, a minority but visible portion has progressed and built up its activities and trade to the level of PYMES [small and midsize businesses], above and beyond the figure of the Self-employed Worker.

Some of these people operate franchises, have expanded, repaired and remodeled establishments and real estate and even have set up trade schemes abroad to guarantee their income.

Examples can be found among the craftsmen who sell art objects wholesale, producers of footwear and leather goods, makers of furniture, owners and operators of beauty salons, owners of classic rental cars known as “almendrones,” proprietors who lease one or several pieces of real estate, owners and operators of “paladares” [private restaurants] and coffee shops, owners and operators of gymnasiums, repairmen of domestic appliances or telephone devices, real estate brokers, etc.

In the past, people have asked why an individual entrepreneur cannot be within the figure of the “cuentapropista.” Some explain that, from an economic point of view, when an activity reaches a specific volume and vigor, it ceases to be an individual endeavor and turns into a small or midsize enterprise.

Strictly speaking, the individual entrepreneur, as opposed to the “cuentapropista,” undertakes an activity that constitutes a business, through which he organizes its different elements, such as the capital, the labor force and the means of production, for the purpose of achieving a production or service and making a profit.

For that reason, they perform and assume a variety of actions, tasks and responsibilities of greater complexity, which are inherent in the investment and entrepreneurial activities they perform and develop.

For example, the investment of capital despite the risks; the control of investments; the decision-making related to the development strategy or the formation of capital; the obligation to assume responsibility for the debts and damages caused to the consumer or client, to the environment and nature, among others.

The Law must acknowledge reality and guarantee security in the judicial traffic, trying to adjust the law to life, guaranteeing the duties and rights of the parties, enabling the tutelage of the State to guarantee the legality and efficacy of the judicial relations.

If all this is so, then why not acknowledge that many of the private activities developed by some of the “cuentapropistas” have turned into small and midsize businesses (PYMES)?

Why not recognize the legal figure of the individual entrepreneur, who is already an actor in Cuba’s economic reality, disguised as a “cuentapropista”?

Why not apply mercantile norms and concepts to the legal figure of the private entrepreneur, as well as to his economic relations with the private sector and the state-run sector?

We believe that the idea should be not to fool ourselves as a country.

6 thoughts on “Cuba’s Emerging Individual Entrepreneur

  • August 13, 2015 at 5:52 pm

    No! But, a tourist can take in a bike.

  • August 5, 2015 at 11:48 am

    I have a question. Does anyone know if a self employed person in Cuba is allowed to import bikes on a one time basis if they need them for delivery purposes?

  • July 27, 2015 at 10:57 am

    It appears that, at this time, the State is realizing INCOME by getting workers off their payroll But there will be the day of reckoning, when the state coffers are low and money is not coming in. To have the entreprenurial system, there must be the accompanying Income Tax to fill the pot AND to avoid a society of the RICH and the POOR – no middle class- I have met State workers who toil all week for wages of $15 – $40 a month and entrepreneurs who are reaping $200 a month profit.
    However, in a corrupt system, will the tax be collected or simply pad someones pocket?

  • July 25, 2015 at 3:52 pm

    Why not go one step further and acknowledge for economic analysis and planning purposes, that there is a reasonably large group of self employed Cubans who operate outside the legally permitted framework of government. It makes no sense to deny the existence of so many Cubans who operate taxi services without licenses to do so, the ladies who support their families while on their back with their legs pointed skyward, and the many who hustle tourists in various forms. All illegal, true, but still a significant part of the overall economy.

  • July 25, 2015 at 11:35 am

    Currently five cruise ship companies will visit / port in Cuba next year and this help estabish many more small business ventures. A lot will be financed by off shore money to Cuba and some Cuban Americans will return th their home land.

  • July 25, 2015 at 9:42 am

    Well written. The reality is moving a little faster than the official model. There is much value to the state in recognizing reality and putting in the legal frame work.

    Modern states are complicated. It will take adopting sophistication in regulations.

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