Private Businesses in Cuba’s State-Centered Economy
An ongoing tale of loosening up and cracking down
By Francisco Acevedo
HAVANA TIMES – This is a recurring topic these days because it seems that the Cuban government is playing cat and mouse with private business owners.
Recently, it was announced that 16 municipalities in the country will soon experimentally promote new private businesses, which appears to be an opening for local entrepreneurship. However, given past examples (as we have covered on these same pages with the events at the China Import store), not everything is as rosy as it seems.
As explained by an official on the National Television News, the goal is to eliminate resellers and instead foster businesses that genuinely produce in Cuba, rather than buying cheap products from the United States to resell them.
The scarcity of food, fuel, water, and electricity in the nation makes it impossible to eliminate reselling, but the ideal scenario would be to guarantee basic services using the existing infrastructure, modernizing it as needed.
I don’t know what needs to be experimented with because everything has already been invented in this world. And it’s been shown here that when there’s a private owner with a name and surname, things work better, even in such a depressed market where one must resort to illegal activities for almost everything.
For instance, official sources confirmed that more than 600,000 people (over 1 in 20 on the island) are struggling with water supply issues, which, according to the leaders, is due to a lack of fuel. Yet water is a strategic sector, and the state mindset refuses to hand it over to private management.
In Havana, water leaks abound in the streets, sometimes gushing out for months before the state-owned water company arrives to fix the problem. By the time the leak is fixed, millions of liters of water are wasted. This scenario is repeated across municipalities throughout the country.
There is also a shortage of spare parts for the outdated water infrastructure, such as pipes and pumps, and without fuel, the number of water trucks available to solve the problem is insufficient.
The same thing happens with the basic food rations, a “conquest” that is becoming more and more diminished. This week, it was announced that starting this Monday, the weight of the rationed daily bread rolls sold to the population through will be 60 grams instead of the usual 80.
The price will be reduced by 15 cents from its usual price of one peso, but the poor quality will likely remain the same (despite the official note claiming otherwise), and the flour shortage will continue to pressure the state bakeries.
Official data indicate that the island requires about 700 metric tons of flour daily, mostly imported, equating to around 21,000 tons monthly. But the question remains: how is it that private businesses can offer quality bread using the same infrastructure and raw materials?
There are several specialized sales points where one can buy croissants and baguettes, but what reaches the local ration store is a half-raw dough that is only digestible when freshly made.
According to the authorities, the flour and other raw materials used by the state-run Cuban Bread Chain are “not comparable with the amount of flour imported by private producers, who, in just the first half of the year, imported only a fraction of what the Food Industry requires to guarantee this service.”
The entity that has long been the leader in public complaints will continue to hold that position, even though private businesses have the solution at hand, albeit at a higher price, but at least accessible for those who can afford it. The bakeries making the bread rolls are yet another sector that the state resists handing over to private businesses, even though it is overwhelmed by the task.
However, on the other hand, it is hard to understand the easing of restrictions on importing luxury cars from Japan, South Korea, China, and the United States.
In a country where it is common to see cars from the 1950s and Soviet-era Ladas, modern Mercedes, Teslas, and 4x4s are becoming increasingly common. They have exorbitant customs taxes and tariffs, but some private companies, or individuals with questionable benefits, manage to acquire these luxurious foreign vehicles, which are much more in line with current environmental goals.
For context, in the first quarter of this year alone, more than 20 million dollars were spent on car purchases from the United States, imported by private companies. This figure was already double the total acquired in 2023, according to statistics from the US-Cuba Economic and Trade Council.
The prices of cars sold by the state remain outrageous, and while those imported by private businesses are a little cheaper, they are still unattainable for the vast majority of Cubans. Most cannot even dream of buying a car; instead, they spend hours waiting at a bus stop for state transport or pay exorbitant taxi fares to private drivers for short distances in the capital or longer journeys across the rest of Cuba.
The narrative often blames the tightening of US sanctions, but it ignores the issues of bureaucracy, mismanagement, and corruption that plague the state’s management, which has contributed to the record exodus of Cuban migrants in recent years.
With private businesses, it’s the classic tale of loosening and tightening. They are the necessary evil to keep the national economy afloat, given the incapacity of the state sector. But they can be abruptly shut down at any moment, causing both Cuban and foreign investors to lose their time and money, and the government its prestige and credibility.
It is very evident that communism DOES NOT WORK!
The major problem is that the Cuban government is more interested in building hotels for
visitors who won’t be coming.
I started visiting Cuba in 1996
until 2016 and even during those years garbage was left to pile up
In the street. As most of us know
the entire infrastructure has collapsed due to the government
Inaction on the basic needs of the people.
As a Canadian, I always enjoyed
visiting Cuba where I had developed friendships with the
People I met on a daily basis.
They are outgoing and friendly
and have a wonderful sense of humor. During those years I developed a friendship with a
young woman who sold Cuban
paintings and carvings. Over time
time I met her children and we
shared many good times together. I always stayed at the
El Capri hotel in Havana and here
I developed some more friends
among the staff. It was always a
fun time to share stories about
our lives. Now,sadly those days
no longer exist.
Now because of the difficulties
facing one of my friends and her
family , I have for the last few months sent her money to survive the catastrophic measures taken by the Cuban
government.
If you are a Canadian reading this,I urge you if you have people
you know and are friends there
and can afford to send money,
Please do so. There are banks in
Canada that you can use to do so.
The best bank and cheapest is
Royal Bank of Canada.
Since Justin is more interested
in staying in power than helping
a country his father had a strong connection to, I wouldn’t expect
him to come to the aid of the Cuban people. God bless the Cuban people.
Unfortunately communism as an economic system never worked anywhere regardless of US embargo, only Chinese communists surviving cause they change economy to capitalist system when they saw the collapse of the Soviet Union
Until Cuba can supply their own flour, increase the production of eggs, increase the reproduction of chickens and pigs, increase the production or reception of oil and gazoline; redo the infrastructures and mosly grow their own fruits and vegetables (which I still don’t understand why it isn’t done seeing that 12 month of the year favors growth) I truly do not understand. And tell me why, if so many Canadian tourists, who obviously report the conditions they’ve seen, does signal our own Canadian government to help them out. We are rich in oil, wheat, medicine and so many things that would help them. Who have we become? Let the USA act as they wish, but we can not lower ourselves to their level.
I am so ashamed and troubled by our people’s govermment non-reaction.
Imagine our children living like that? Growing up with no dreams. And they are very well educated.
I, remain a friend of Cuba forever.
Terrorists they say. What a joke. Yes they were at one point over 65 years ago, and that was only for trying to get their country back. Americans invaded them and took over. Come on people,let’s get together and aid this poor forgotten country.
Start a petition or go about it a different way, but let’s do something!!!
Sorry, but you are missing the point and not talking about a family who, for example, a father has to have his foot cut off due to diabetic gangrene, an outstanding epidiomologist nurse who works at the maternity ward in Santiago found her leg totally numb and is laid up by doctors orders a month at a time, neither of these receiving medicines from the state owned pharmacy because there isn’t any….a dedicated 16 year old student who had to turn back home when going to school because the bus didn’t come by. His face is braking out, and there is no medication for him. There is the question of denghe, an illness with many symptoms fixed by giving 1000 mg of tylenol every 6 hours, but there is none in Santiago. This disease is spread by mosquitoes. Garbage, left at corners for a first time these past two years, is seldom picked up due to lack of fuel for garbage trucks. The city used to be a clean city for the most part a year and a half ago. Children malnutrition due to no protein in their diets, even seldom sparced out frijoles negros, eggs, and chicken. The cost of food far outside the monthly salary. A pound of pork 650 pesos for a retired dentist or retired veterinarian receiving 1500 pesos a month. The half of the problem is the embargo. These things just happened this week. Thank you!
Hello I’m canadian I love cuba so much .beutiful country. I don’t understand why more vegetables or fruit is not grown.i Come from canada short season we grow no problem…
Another proletarian paradise. As far as government ownership of the means of production, didn’t Einstein define insanity as doing the same thing over and over and expecting different results.
How can a foreigner help start a non profit business to provide basic things like beans, rice, and flour. Can the government be that concerned that what they will lose control? How sad they won’t let people learn a trade to Produce and manufacture any commodities. Clothing is very popular socks, T-shirts even cigar’s are much sought after could be sold worldwide. Books, could be written, movie’s could be made. Baseball bats could be made very good Cuban players. There are so many things that could be done to make Cuba so prosperous. Such beautiful beaches. Need more visionary honest people to work together.