The kick-start to private business growth

Government authorities defined the emerging Micro, Small and Medium-sized Enterprises (MSMEs) set to burst into the nation’s productive framework in a few weeks as “a novel actor with a dynamic role in the Cuban economic scenario.”

There is also the intention to prioritize certain sectors for the start-up of these entities, such as food production, activities where technology is the core of the business (technology-based companies), local development and circular economy projects, such as recycling.     

For example, when we speak of food production, we refer mainly to manufacturing production, that is, the transformation of raw materials and supplies into food products for distribution and consumption. Thus, food service activities are relegated to later stages of implementation. 

When the rules governing this economic actor came into force on September 20, only businesses related to the four sectors mentioned above were allowed to register. However, the Ministry of Economy and Planning (MEP) foresees a continuous process of conducting periodic calls through which it will announce the activities that can initiate the application process to form a MSME, a list that will be in line with the immediate needs of the country.

Since the publication of the regulations, an official information channel was established by MEP through Telegram: the Economic Actors Channel (t.me/actores_economicos_cuba), a space where the details for the formation of non-agricultural cooperatives (CNAs) and MSMEs are discussed in depth, while documents to support the process are shared.

From this digital channel, it is recommended that the application and the rest of the procedures be carried out through the website of the Platform of Economic Actors (pae.mep.gob.cu), provided that the area relating to your business has been convened.

If you are thinking of taking the leap, then you should take into account beforehand that for the creation of a private MSME several important data are requested, such as the main economic activity to be developed (according to the ONEI National Classification of Economic Activities), the description of the activities to be developed by the business, the statutes and the proposal of founding partners (documents that are attached), and the names of the members of the Administration and Control and Auditing bodies, among other details.

The process of creation of MSMEs is estimated to take a maximum of 25 days, after sending the Application Form and other documents to the MEP through the digital platform. You should know that the first phase of the process involves commercial banks (for the opening of Demand Deposit Accounts); notaries (formalization of the Notarial Deed); and commercial registries (Certification of Registration in the Commercial Registry).

Then, for the exercise of the activity, the registration in the Taxpayers Registry of the Tax Administration Offices (ONAT); the opening of current accounts in  bank branches; registration in the Central Commercial Registry (in the corresponding cases); and the request for permits and licenses in the Procedures Offices (when required) must be processed.

While the details of each step are perfectly clarified in the Economic Actors Channel, I would not want to overlook mentioning the advantages of making the application through the digital Platform. In addition to the convenience of starting the process from home, on your cell phone or computer, and the follow-up, which allows you to check in real time the status of your application, you receive notifications of procedures so that applicants know at what time and place they must physically appear at the notary, the Commercial Registry, the bank, etc.. There is direct communication through the Platform’s internal chat with the public officials who review your application, and you will have a digital file that will facilitate all the procedures even after the legal entity has been created. 

As can be seen, the process should go smoothly at the bureaucratic level. However, a very important issue for setting up a MSME is financing, which is little talked about. Economist Pedro Monreal addressed this vital issue when he said that, “the definition of the limited liability company (LLC) as the only corporate type of MSMEs, makes it impossible to adopt the form of corporate enterprise (SA) that could be more flexible to encourage potential investors.”

The function of a MSME in the economy is to create jobs and salaries. If an entrepreneur invests in more than one company (a matter that the legislation on MSMEs in Cuba does not allow), this generates more jobs and salaries, which brings benefits to the national economy. Hence, restricting the growth of MSMEs, either in nominal or capital form, could be an issue to be analyzed in view of the upward development of both the initiative and the economy. 

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