The End of Wholesale Trade in Cuba Between Private Entities
A death foretold
By Eloy Viera Cañive (El Toque)
HAVANA TIMES – On December 5, 2024, the Official Gazette published Resolution 56 from the Ministry of Domestic Trade. Among other provisions, it mandates the cancellation of all commercial licenses granted to cooperatives and small and medium-sized private businesses that had authorized wholesale trade as a secondary activity within their main activity. Furthermore, similar commercial licenses issued to self-employed workers are also revoked.
The regulation requires private businesses, including cooperatives, and self-employed workers affected by the provision to liquidate “their inventories and goods in transit and on hand, intended for wholesale trade or bulk sales, within a maximum period of 120 business days from the resolution’s effective date.” This deadline extends slightly beyond the first quarter of 2025.
Is the measure really surprising? The answer is a resounding no.
In December 2023, Cuban Prime Minister Manuel Marrero Cruz announced during the sessions of the National Assembly that a series of measures would be implemented to “correct” what his administration considered “distortions” in the private sector of the Cuban economy.
At that time, I wrote an article stating: “The prime minister’s statements suggest that the government, without the same popular pressure as after the July 2021 protests, believes it can control inflation (the main economic issue at the moment) its own way — by imposing restrictions.”
Back then, some optimists told me I was exaggerating and that Marrero’s words were merely a strategy to appease the regime’s more reactionary factions, rather than a genuine intention to roll back the gains made by private businesses.
Just eight months later, in August 2024, the regime published a regulatory package that made the restrictions announced in December concrete. Within this regulatory framework, expressed through various legal provisions, Decree 107 stood out. This decree clarified in its annex that the wholesale trade of products authorized in the list of permitted activities “could only be carried out by micro, small, and medium-sized private enterprises and non-agricultural cooperatives as a primary activity and through contracts involving state entities.”
It was thus made clear that neither private businesses with wholesale trade authorized as a secondary activity nor self-employed workers could perform this function. Additionally, Decree 107 stipulated that private economic actors could not market goods “imported for non-commercial purposes or acquired through the retail trade network.”
In this context, Resolution 54 regulates what had already been outlined in August 2024. However, the regulation provides elements that reveal the extent of the rollback disguised as a “correction of distortions.”
One of the aspects established by Decree 107 is that private businesses authorized to conduct wholesale trade as a primary activity could continue doing so, but only with the “participation” of state-owned enterprises through “contracts.” This implied that the Cuban regime intended to involve itself, in a manner not yet specified, in a market it had always monopolized but that private actors were beginning to compete.
Resolution 54 defines how Cuban authorities intend to participate alongside private businesses in wholesale trade. They do not approach this as strategic partners who might intervene through various contractual modalities, but rather as mandatory intermediaries monopolizing wholesale trade.
The regulation is explicit in its third section, stating that private businesses and cooperatives authorized to conduct wholesale trade as a primary activity can only do so “directly with state entities or through state-owned wholesale trading companies.” This decision delivers a blow to the supply-and-demand system — which considers real costs, risks, and market conditions — that had fostered the development of various private businesses importing products and supplying goods in bulk to small businesses and self-employed workers.
The mandatory state intermediary model established by Resolution 54 appears to align with the logic, previously defended by the Cuban regime, that only state intervention can curb inflation. They argue that inflation is a result of the private sector’s unbridled profit-driven motives.
In December 2023, Marrero stated that the liquidity and access to foreign currency held by private businesses — partly because they obtain it in a market his administration deems illegal — alongside their ability to freely import, “instead of solving a major problem for the people, has been a difficulty that has not allowed for the reduction of inflation or prices.”
For this reason, the resolution grants a 90-day period for private businesses authorized to conduct wholesale trade as a primary activity to decide whether they will continue operating under the new conditions established by the regulation.
However, according to professor and economist Pedro Monreal, the measure reflects an excessive confidence on the part of Cuban authorities in the ability of “restrictive state regulations” to control the private sector. Monreal suggested on social media that private actors have liquidity in foreign currencies and are not defenseless, so they may take measures to “mitigate risks, including moving their funds elsewhere.”
Monreal also stated that Resolution 54 appears designed to “oxygenate” the state wholesale sector by suffocating the private sector. In his view, the regulation exposes “the fallacy of ‘equality’ among economic actors” because it “discriminates against the private wholesale sector by stripping it of its market.”
First published in Spanish by El Toque and translated and posted in English by Havana Times.
The Cuban Government is tying several scarnarios to help the people, why do the scribes above blame the present Administrators for all the ills of this beautiful country.
The blame must lie with the Government of the US for the crippling sanctions
Castro liberated this country from the horrors of Prostitution and gambling.
It time we realize the true nature of the problem and stop the blame game
Unfortunately the socialists have ruined that beautiful country called Cuba. The same is happening in Canada but we still have time to save it. Once these tyrants take total control they never never let go, until forced. But always remember…. resistance, no matter how small, is never futile.
Supply issues:
1. No definitive water supply
2. No non-purchased potable water
3. Rampant food inflation caused by lack of supply sources and agricultural infrastructure
4. 1,500 mgw electrical supply shortage. 30% plus ? Existing is not stable due to lack of reliable infrastructure.
5. As long as the USA uses the monetary system as a weapon, the government has an excuse to let them off the hook
Pl find the tel no of a lost Cuban batchmate in then Czecoslovakia who studied mechanical engineering from1961 to 1968 : Nilo Mas Martinez.
Ask the tel exchange.
Asoka Kuruppu from Sri Srilanka
[email protected]
Sad that likely this may make the life of the normal Cuban harder
and restrict any potential profit ( 51%minimum) to the regime
I believe the country has finally fallen to places they xan not survive. I wish them well but after 15 visits to Cuba I can no longer support the people due to such govt. Policies/failure.
Bless the people of Cuba.
This is why they need to raise up now and rake back their country. They are falling further behind the rest of the world. Communism is only beneficial to those in power while suppressing the common citizen..
Cuba’s people need to demand the end of communism. Turn the country into a socialist Democracy. Castro promised this during the revolution and never delivered it. Cubans need to take their country back. It needs to be open to alternative ways of government. The current one is morally and financially bankrupt. Viva Cuba. Citizens of the world, join it.
Fantastic Country and the people I met were absolutely amazing!
Cuba was in a place or more like a time warp when we arrived from Canada. The Senator Hotel was our choice close to Pillar and we decided to explore not a good choice!!!
Rather than detail what what happened we came to an agreement not to come back ever!
Unfortunately the current situation isn’t very promising for their Tourism industry, what will it take? We all know the ANSWER!!!
I wish ever soul on that island a better year 2025.
There is a bit of a contradiction here, but one needs to look at the reasons behind Fidel Castro having to partly compromise the Communist rational which underpins Cuba.
Russia majorly supported the Cuban economy as well as providing military security.
That is still evidenced by many aging Russian fridges in Cuban household kitchens even today.
When Russia politically disintegrated into separate States within the old “Mother Russia” , that support was withdrawn
That economic loss was partly made up for by Fidel Castro’s decision to allow “limited” but “controlled” Capitalism in the form of tourism mainly in the area surrounding the marina and Hemingway Hotel.
Those people in Havana working in tourism suddenly found themselves amongst comparatively wealthy Western tourists.
Many Cuban youngsters were envious of designer clothing worn by he tourists
I myself gave many of my clothes to such youngsters before going back to the UK
It is also the reason behind an exodus of a substantial number of the younger generation defecting to the West.
The current position has also been further complicated by crop failures and a sudden decline in tourism .
Partly as a result of Covid virus in the Western Countries (UK in particular where I live) but also an aggressively competitive “Package Holiday” industry offering holiday alternatives to Cuba.
I don’t think the current restrictions illuded to in the article are an answer to a complex problem
Martin Tibbetts
Birmingham
UK
This will kill light industry and independent tourist outlets. Last time was in Cuba only the independent shops that bought from certain suppliers and some from tourists had things like medical supplies or bottled water outside of the hotel network. The gov instead should be encouraging certain goods to trade freely at the wholesale level and tarrif only apply to non food items and no tarrif on medical supplies or water treatment equipment or solar panels or batteries when connecting to solar panels. No tarrif to anything used to produce or processing of food or the importation of certain food and medicine storage equipment
I know of a group that going to bring 2 40 foot container from Canada that works a medical place and local farms including a hail damage transport vehicle that was a written off because of a second crash.Now they have been told the Cuban gov will seize everything and to not ship the 2 container which also includes used bike and bottle water and 3 used e bikes donated that came from Costco for nurses doing home care
.we need economic reform in my opinion and try to build closer ties with non U S countries by including more duty free trade both ways to get manufacturing of things like commercial drone and bike production as well as basice food production and improved transportation in my opinion. These gov rules will be the end tourist in Cuba.