Friday, October 22, 2021
CubaPolicy & Research

Cuba opens up its economy to private businesses

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Cuba has announced it will allow private businesses to operate in most sectors, in what is a major reform to its state-controlled economy.

Labour Minister Marta Elena Feito said the list of authorised activities had expanded from 127 to more than 2,000.

Only a minority of sectors would be reserved for the state, she said.

The communist country’s economy has been hit hard by the pandemic and US sanctions introduced by the Trump administration.

Last year its economy shrank by 11% – its worst decline in almost three decades – and Cubans have been facing shortages of basic goods.

Ms Feito said just 124 economic activities would be exempt from private involvement although she did not mention which ones.

“That private work continues to develop, is the objective of this reform,” Ms Feito was quoted by AFP as saying. She said the move would “help free the productive forces” of the private sector.

Experts on Cuba’s tangled and complicated economy say the step essentially opens up almost all economic activity on the island to some form of private enterprise, the BBC’s Will Grant in Havana says.

This will be a significant shot in the arm for those families and individuals who harbour hopes of moving beyond just the very small businesses into medium-sized ventures, he notes.

Apart from hundreds of thousands of small farms, Cuba’s non-state sector is composed mainly of small private businesses run by artisans, taxi drivers and tradesmen. Around 600,000 people, around 13% of the workforce, joined the private sector when the opportunity arose.

However a large number of private businesses are involved in the island’s tourist industry, which has been hard hit by the pandemic and sanctions.

Given how slowly reforms tend to move in Cuba, it may still be some time before the change is noticeable in daily economic life, our correspondent says.

Some 60 years of hostility between the US and Cuba were eased in 2015 when then US President Obama and Cuban leader Raul Castro agreed to normalise relations, allowing US citizens to visit the island and empowering local businesses.

But Obama’s efforts were rolled back by his successor, President Donald Trump, with the support of hawkish Cuban-Americans who saw Mr Obama’s historic opening as an appeasement of Castro’s communist regime.

New US President Joe Biden – who was Barack Obama’s vice-president – has previously signalled that he wants to improve US-Cuban relations but observers say it is not clear how high it might be on his priority list.

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