Many analysts agree that the Cuban economy hit rock bottom in 2021, and continued contracting in the first half of the year, when GDP fell by 16.2%:
-Exports -31.0
-Imports -40.0
-Tourism (visitors, January-September) -87.4
-Tourism (revenue, January-June) -73.0
This complex scenario opened the doors to the creation of new economic actors and the perfecting of other figures already recognized under the Self-Employed Workers (TCP) category.
Foreign trade also continued to contract in 2021, which represents one of the biggest challenges for economic recovery.
The approval last year of a legal framework that allowed for the organized constitution and functioning of Micro, Small and Medium-Sized Enterprises (MSMEs) in Cuba has allowed for a resurgence of new actors with legal security, as well as their own legal status, meaning they are subject to obligations while enjoying rights. This is an important change in the Cuban economy and poses challenges, as well as requiring the updating of other laws and regulations currently in force. Especially as regards foreign trade.
According to a report by the University of Havana’s Center for the Study of the Cuban Economy, up until August 2021, the private sector represented exports worth approximately $15 million dollars, and imports worth $80 million. These modest operations were carried out solely through state-run enterprises.
According to economist Oscar Fernández, while the state role as a mediator can be beneficial to those enterprises assuming imports and exports for the first time, it can also represent an obstacle.
“The state enterprise shouldn’t be a requirement, but rather it should exist and compete, to earn its space among others, by functioning well. The solution is to allow other actors to participate in this foreign trade dynamic,” he argues.
“If you ask me, what impacted the most on the private sector in 2021 wasn’t foreign investment or export possibilities. Actually, what most impacted were the possibilities to import in a scenario where most of these businesses had just been created and needed to acquire capital goods and supplies which, in the midst of such a complicated crisis in terms of supply, made importation the means to acquire raw materials, packaging, and everything that at one time was available in the domestic market but isn’t today.”
On the other hand, exports have been a historical necessity for the country, and remain a pending task. According to experts, hard currency income, with its multiplier effect, is vital to growth and development. Cuba’s foreign trade has moved to the export of services and to the stagnation and even drop in exports of traditional goods. Growth has only been seen in terms of exports of biotechnological products. Meanwhile, in the private sector, small steps are being taken.
“There are enterprises that have achieved exports of products and services. There are exports of software, of agricultural products; but it is too early to speak of MSME exporters, as this is still a new process in the country. However, many of these ventures managed to export in 2021 as Self-Employed Workers,” Oscar notes.
“I don’t know of any private enterprise that has officially received foreign investment. Firstly, because foreign citizens cannot be partners in an MSME. The law does allow for joint enterprises between a private Cuban and a foreign company. I don’t know of any examples yet, but many people are studying the possibility. I am sure that 2022 will see the launch of projects formed by private Cuban enterprises and foreign companies.”
The self-employed sector represented over 600,000 individuals at the close of 2019, according to figures from the National Statistics Office. A significant number of these manage their businesses like companies, even if they haven’t been legally recognized as such. There are also more than 300 non-agricultural cooperatives. While not all are interested or capable of exporting, there is potential for exports among Cuban entrepreneurs.
