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Jul012015

Cuban Entrepreneurs Embracing Changes to Economy

Wednesday, July 1, 2015 at 11:10AM

The Caribbean island of Cuba has gone its own way economically and socially since its revolution in 1959. The country has seen significant gains in its human development in the decades since, and can boast impressive education levels and good public health care.

Cuba enjoys a good ranking on the Human Development Index (HDI) – 59 out of 187 countries – and it has been rising since 1980. For Latin America and the Caribbean, Cuba is above the regional average (http://hdrstats.undp.org/en/countries/profiles/CUB.html).

But the country has also had a turbulent economy with periods of severe economic contraction. This has increased poverty levels and hunger, in particular during the Special Period beginning in 1990 (http://www.historyofcuba.com/history/havana/lperez2.htm) when the significant subsidies enjoyed by the country from the Soviet Union were pulled and the country saw a steep drop in its ability to import fuel and other goods. Cuba is still trying to repair the economic damage.

In the book Cuba: Between Reform and Revolution, Louis A. Perez, Jr. explains: “The old socialist bloc Council of Mutual Economic Assistance (CMEA) had accounted for almost 85 percent of Cuban trade, transactions conducted almost entirely in nonconvertible currency. Commercial relations with the former Soviet Union declined by more than 90 percent, from $8.7 billion in 1989 to $4.5 billion in 1991 and $750 million in 1993. Trade with eastern European countries ended almost completely.

“Soviet oil imports decreased by almost 90 percent, from 13 million tons in 1989 to 1.8 million tons in 1992. Shipments of capital grade consumer goods, grains, and foodstuff declined and imports of raw materials and spare parts essential for Cuban industry ceased altogether.”

Conducting private business in Cuba was discouraged after the revolution as the state became the dominant arbiter of all economic transactions. Since the fall of the Soviet Union, Cuba has experimented at various times with moving to a mixed economy, only to pull back and return to the old ways. But now things are changing significantly after economic reforms that have accelerated since Cuban President Raul Castro took over from his brother Fidel in 2008.The reforms began in 2008 with the liberalizing of access to mobile phones, and accelerated between 2010 and 2013, when the number of people working in small businesses tripled.

Cuentapropistas – the Cuban term for entrepreneurs, named after “cuenta propria,” the ability to do business for oneself – have flocked to be officially registered as small businesses, with the number shooting up from 143,000 in 2010, to 429,000 by June 2013 (Report on Business).

Gustavo Kouri told the Report on Business magazine, “Although I enjoyed the work I was doing before – at an information centre in specialized health sciences – it wasn’t possible to earn enough to support my family.

“And then the state opened more opportunities to develop private businesses, for cuenta propia.”

He now owns the Rio Mar restaurant (https://www.facebook.com/restauranteriomar).

Artists and athletes have also been attracted to the opportunities that have opened up.

One is former volleyball Olympic gold medalist Mireya Luis (http://en.wikipedia.org/wiki/Mireya_Luis), who now owns Las Tres Medallas (http://www.alamesacuba.com/en/la-habana/restaurant/las-tres-medallas/), a pizza-and-pasta restaurant.

For Luis, becoming an entrepreneur means the chance to “realize a dream.”

“Being able to open a place – a restaurant, a bar, a cafeteria, whatever – is a good opportunity for self-development, for people to demonstrate a capacity for business, and for them to grow personally,” she said. “It’s something incredible.”

Gilberto Valladares owns a hair salon in Old Havana, Arte Corte Studio, and has been able to employ others.

“Initially, it was a dream of dignifying and recovering a certain degree of respect for the trade of hairdresser and barber,” he told the Report on Business. “As my business grew, so did the dream.” He now employs a half dozen people from the neighborhood.

Cuba is attempting to reform and modernize its economy while holding on to the things people hold dear and see as the good achievements of the revolution: free healthcare, education and other public services.

Gregory Biniowsky is a Canadian-trained lawyer and political scientist who has spent more than 15 years living and working in Cuba and works for Havanada Consulting, a firm that focuses on sustainable development projects and social enterprise initiatives. “The irony is those that will save the Revolution are the emerging small- and medium-sized private businesses,” he said. “And those that could destroy it are those elements in the bureaucracy that resist those changes.”

The entrepreneurial spirt gripping the island is infectious. At one time, much of the only reading material available in bookshops were works with a communist or socialist theme.
But Cubans now have an alternative: an English-language bookshop called Cuba Libro (https://www.facebook.com/cubalibroHAV). It is filing an urgent gap in the marketplace for English-language books and foreign works in general.

Set up by an American writer and journalist Conner Gorry (connergorry.com), who has been living in Havana, Cuba since 2002, the bookshop has become a hub for free thinking and new ideas.

“I know how hard it is to get English-language sources here,” she told The Associated Press. “So I started cooking this idea.”

Libro is the Spanish word for book and the play on words is meant to evoke a Cuba Libre, a rum-and-cola drink named for the country’s liberation from colonial Spain. The store bills itself as a “cafe, bookstore, oasis,” and its logo features a woman reclining with a cup of coffee and a good book for reading.

The idea came about when a friend of Gorry could not find a place to unload 35 books she had. In time, Gorry amassed a collection of 300 English-language books, and this embryonic library became the book shop. The store also carries magazines, including U.S. titles The New Yorker and Rolling Stone.

So far, the store faces little competition. Government book shops feature the occasional Cuban novel translated into English or the English-language versions of state-run newspapers such as Granma (http://www.granma.cu/ingles/).

Cubans are enjoying the slow thaw and what it could bring. “It is increasing in Cuba, the possibility to have different alternatives,” said Carlos Menendez, a 77-year-old retired economist Menendez.

Cuba Libro has two licenses to operate – one for selling food and one for selling used books – and is run as a type of cooperative, a group-owned private enterprise with five Cubans.

Doing business in Cuba is not without challenges. The bookshop needs to steer a steady path and avoid selling anything that would be considered “counterrevolutionary.” Gorry also needs to avoid problems with the U.S. government, which bans Americans from any financial transactions with the Cuban government.

“I’ve had to tread extremely carefully, everything above-board and legal, because I’m an American, I’m a North American, I am beholden to U.S. laws,” she said. “And so I’m not in agreement with those laws, but I abide by them.”

The bookshop has the benefit of a well-educated pool of potential customers; the annual Havana book festival is a popular draw in the country (http://feriadellibro.cubaliteraria.cu/).
There is a strong thirst for self-improvement in Cuba, and to gain knowledge is to get a better paying job. To widen access to the shop, there will be a lending library for those who can’t afford to buy the books on offer, and there will also be English classes.

And how will the bookshop get restocked in a country that still exercises a lot of control over information?

“Getting donations is going to be another interesting piece of it, because importing books here is very difficult,” Gorry said.

By David South, Development Challenges, South-South Solutions

Published: October 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Follow @SouthSouth1

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Havana’s Restaurant Boom Augers in New Age of Entrepreneurs

Thursday, June 25, 2015 at 8:42AM

Cuba, the Caribbean island nation known for its 1959 revolution and its tourism industry, is undergoing a shift in its economic strategy. The country has had heavy state control of its industries and business activities since the country adopted the official policy of state socialism and joined the Communist economic sphere headed by the Soviet Union.

When the Soviet Union fell apart in 1991, Cuba was pitched into an economic crisis as it lost access to preferential trade subsidies. This period is known as the ‘Special Period’ (http://en.wikipedia.org/wiki/Special_Period) and was marked by a severe reduction in access to fuel as supplies and subsidies from the Soviet Union disappeared. Some of the iconic images of the time include people abandoning their cars and turning to bicycles to get around, or using make-shift truck-buses packed with workers. Exports collapsed and slashed the size of the economy by a third.

Fast-forward to today, and tourism is booming. A record 2.7 million tourists went to Cuba in 2011, earning the country US $2.3 billion. And it is catering to this tourism market that probably offers the best near-term opportunities. With wages still just 50 per cent of what they were in 1989 many are taking up this new opportunity to become entrepreneurs.

To become an entrepreneur, Cubans need to apply for a pink identification card with their name and photo and the words “Autorizacion Para Ejercer el Trabajo por Cuenta Propria.” This gives authority “to work for your own account.” With the card, a person can start a business, hire staff and pay them what they like.

Cuba’s economy has been through many phases since the revolution, swinging between loosening up the ability of people to establish private businesses – and pulling back, restricting private enterprise. But since 2008, there has been a significant shift to encouraging greater private enterprise, entrepreneurship and the ownership of private property – once banned – to stimulate the economy.

“This is the most important thing to happen in Cuba since the revolution in 1959,” Juan Triana, senior fellow at the Centre for the Study of the Cuban Economy at Havana University, told The Sunday Times Magazine.

One visible sign of this change is the flourishing of what is called locally ‘paladar’ (http://en.wikipedia.org/wiki/Paladar), or privately run restaurants.

Paladares are usually located in a person’s home and staffed by family members. Their customers are a mix of tourists, expatriates living in Cuba, and Cubans with a high enough income to be able to afford restaurant meals.

The cost of a meal in these restaurants can run from US $40 to US $60 for two people.

Stocking the kitchen is not easy. Cuba experiences food shortages and there is still rationing for many. Basics like eggs can be hard to find. As for exotic, imported ingredients, many chefs rely on visitors to stock their larders.

Cuba will have to re-build its food sector to make this a lasting improvement.

The agriculture sector has declined and, where Cuba once provided a third of the world’s sugar harvest, the country now has to import half of its food supply. Measures are in the works to change this, with smallholder farmers now able to own 165 acres of land and sell their produce to private customers and hotels.

One restaurant owner, Héctor Higuera Martinez, told The New York Times:“You dream up a recipe that you’d like to make but then you can’t find the ingredients.

“One day you go out to get salt and there’s no salt. And I mean no salt,Anywhere.”

Martinez trained with a well-known Cuban chef and did a stint in Paris before returning to Havana. He has turned a 19th-century mansion into the restaurant Le Chansonnier (http://www.cubajunky. com/havana/restaurant_le_chansonnier.html) and decorated the walls with the work of local artists.

Martinez sees the paladares as a turning point in changing Cuba’s reputation for having boring food. “I believe we can play an important role in revolutionizing Cuban cuisine.”

Cuba is making the difficult shift from having an economy where 80 per cent of activity is in the state sector, to a mixed model balanced between private and public ownership.

Havana’s historic district offers tourists renovated colonial architecture mixed with shops, restaurants and bars. As a tourist strolls from the renovated district, they quickly come across the rest of Havana, which has beautiful buildings from the colonial period, 1950s American-influenced architecture with its fading retro signage, and more utilitarian Soviet-era architecture.

While charming and home to most of the city’s residents, much of it is rundown and crowded and in need of investment and renovation.

But things are changing fast. Oyaki Curbelo and Cedric Fernando use spices brought in by visitors for Bollywood, their restaurant in the Nuevo Vedado area (http://cubantripadvisor.com/destinations/havana-cityoutskirts/bollywood-paladar/). It has a small menu of Indian and Sri Lankan dishes, including shrimp curry with ginger and tamarind. The restaurant sources its curry leaves from a tree located in the Sri Lankan Embassy.

Another restaurant, Atelier (http://www.cubaabsolutely.com/articles/travel/article_travel.php?landa=70),located in a mansion in the Vedado neighbourhood, serves European Continental food and has a roof terrace letting diners enjoy the a view of the Havana skyline.

The restaurant Doña Eutimia (https://www.facebook.com/paladardona.eutimia) serves up Cuban favourites off the Cathedral Square. Specialties include a dish made of shredded beef with garlic, tomato, oregano and bay leaves.

At Vistamer (http://www.stay.com/havana/restaurant/4249/paladar-vistamar/),diners can enjoy garlic-laden lobster tails and lemon meringue pie. At the paladar Café Laurent (http://www.cubaabsolutely.com/articles/travel/article_travel.php?landa=71), the menu includes meatballs with sesame seeds and mustard in red-wine and tarragon sauce, according to The New York Times.

Habana Chef in the Vedado district (http://cubantripadvisor.com/destinations/havana-city-outskirts/habana-chefpaladar/) was started by Joel Begue and chef Ivan Rodriguez. Begue gained his experience in the state restaurant sector and took the opportunity to get a licence when the government offered them in 2011. He borrowed US $25,000 to start the restaurant and has been able to pay back half so far. His current success is prompting him to look into opening a second restaurant in the capital.

An enthusiastic Andrew Macdonald, who is looking for investment opportunities for a half a billion dollar fund held by the Escencia Anglo-Cuban firm, told The Sunday Times magazine, “Cuba is the top emerging tourism market in the Caribbean by a mile, and it’s in the top five emerging markets globally.”