The Private Sector in Matanzas, Cuba, Neither Good nor Bad

By Tony Vila (Progreso Weekly)

HAVANA TIMES – In the province of Matanzas, the private sector continues to penetrate the economy. The limited supply and production capacity that dominate the state-run commercial sector create opportunities for businesses, entrepreneurs, and street vendors to emerge as the primary sources of supply. In municipalities, which receive less priority than provincial capitals, this situation is even more pronounced. Food, being a basic necessity, predominantly exists in the private sector or the informal digital market. Buying and selling groups or Telegram channels have evolved into department stores, where one can find almost everything needed to fill a food basket.

We are witnessing the emergence of a new type of establishment, as former CUC stores have transitioned into MLC stores, which are rarely stocked in this part of the country. However, hot dogs, mortadella, minced meat, and various sausages, along with cleaning supplies, toiletries, and jams, are now available in small but well-stocked retail outlets, usually situated in front of people’s homes. “Puntico,” “Cafeteria,” and “Kiosk”—these are just some of the many names used, and it’s even common to refer to them as “MSMEs,” although these typically consist of self-employed workers who solely resell wholesale purchases from genuine micro, small, and medium-sized businesses. The truth is that for many Cubans, these are the new stores where they find most of what they need.

This phenomenon is neither a coincidence nor outside the law, as the measured openness of the state sector to negotiate and establish agreements with small and medium-sized enterprises enables them to serve both the population and state agencies. For instance, construction or restoration MSMEs primarily handle projects related to state infrastructure or heritage sites, which helps integrate the private sector as a vital component of not only economic development but also social well-being.

Negative or positive? MSMEs are a source of jobs across various sectors and professions, considerably enhancing the quality of life for their employees compared to those in the state sector, which contributes to a growing wage gap as the market expands. This disparity creates a new social class, akin to a middle class, which benefits many Cuban families but also highlights the shortcomings experienced by individuals in the less fortunate class.

Tourism and the private sector

The involvement of non-state actors is nothing new for Varadero. Non-agricultural cooperatives have worked side by side for years in maintenance and transportation tasks within some hotel facilities. However, MSMEs have a different and broader business model and can occupy significant commercial spaces, such as food services, the creation of local stores or brands, and direct engagement with tourists. The increase in tourism-related services operated by individuals appears to be the ideal way to support local development while promoting an increasingly diverse tourism sector. The more leisure and service options created, the greater the experience and revenue.

The money generated by a tourist hub as significant as Varadero previously went primarily to various state-owned companies or entities. With private businesses involved in nearly all of the area’s economic activities, this capital circulates locally and fosters economic growth while continuing to operate as businesses. However, small businesses still lack significant space in these new management forms.

When the light guides the market

The lack of electricity in the urban centers of some municipalities has caused a migration of commerce to areas near hospitals or blood banks, where the power supply tends to be more reliable, ensuring the continuity and quality of businesses. This peculiar phenomenon has led to the establishment of new shopping centers in locations that, due to infrastructure and tradition, should not ordinarily host them, shifting the flow of money and, consequently, people toward areas illuminated by electricity. This energy exodus, while providing a lifeline for businesses, has consequences for the local economy. By injecting a dose of economic dynamism into the recipient territories, it creates more jobs and diversifies the movement of local residents to areas that were once predominantly residential. This influx, in turn, encourages the development of new businesses and infrastructure. However, commercial enterprises abandoning the city center results in an economic decline in that area. Therefore, despite the growth it fosters in certain regions, it triggers the opposite effect in places without reliable access to electricity, leading to the closure of established businesses due to dwindling commercial activity.

Transportation and the usual things

The insufficiency of public transportation in fulfilling the mobility needs of the local population is well-known. Matanzas, Cárdenas, and Varadero still possess a larger number of buses, although most of the time, opting for a private bus or truck is necessary to reach our destination. However, when traveling within the province, citizens find themselves entirely reliant on private transportation, as few commuter buses operate between municipalities, with state routes vanishing nearly to the point of extinction. Transportation exists, it cannot be denied, but the price disparity for the Cárdenas-Colón route between the state and private sectors is telling. There is a bus that seldom appears and costs one hundred pesos, a marvel when it operates, but its frequency and schedule are neither convenient nor do they resolve the issue, leading to “machines,” or old private cars, which cost seven times more becoming the unavoidable daily mode of transport on this relatively short, yet heavily trafficked route for residents of both cities.

Is there a future without MSMEs?

Every so often, a new rumor circulates on the streets about the total or partial closure of MSMEs, often attributed to high prices or the particular wealth they generate for their owners. Realistically, when considering the scope of these business models and their increasingly close involvement with state projects, it is evident that many sectors of the country’s economy depend on these companies, making it unfeasible to eliminate them or attempt a boycott. Like any healthy ecosystem, both models are destined to coexist, as is the case in most countries— a phenomenon that we in Cuba are beginning to experience and, above all, understand.

*Tony Vila is a journalist from Matanzas.

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