Cuba Moves to Allow More Small Private Business Operations

A former chair of the Harvard Academy for International and Area Studies, Dr. Jorge I. Dominguez is known for his work in the area of US relations with Cuba. With a new US administration having changed the regional calculus, Dr. Jorge Dominguez closely watches policy directions in the communist island nation, which suffers stagnant economic prospects.

As reported by Reuters, the Cuban government in February 2021 announced that it would take a significant step in liberalizing its state-dominated economy, through allowing the operation of small private businesses in a majority of sectors. With 124 “exceptions” set to remain in place, the field of activities accessible to such enterprises will increase from 127 to more than 2,000.

This shift was agreed to at a Council of Ministers meeting, in which Labor Minister Marta Elena Feito Cabrera laid out the case for such measures. A major impetus was an already flat economy that experienced an 11 percent contraction in 2021, due to the pandemic and resulting loss of tourism, as well as a tightening of US sanctions. Many basic consumer goods experienced scarcity pressures, and long lines were common at retail outlets.

Even with this policy change, self-employed individuals will find it challenging to navigate a complex transactional environment that has traditionally operated to provide state-sanctioned companies a major advantage. However, the existence of a non-official parallel market in some sectors may make the transition less daunting than many expect. The “self-employed” non-state sector beyond agriculture already makes up 13 percent of Cuba’s labor force and ranges from craftspeople to taxi drivers, with a focus on meeting tourist needs.