Cuba Small Business Initiative

Goals and Objectives

Cuba Small Business InitiativeThe goal of the Cuba Small Business Initiative is to identify ways to empower Cubans on the island with the resources and information to start and operate small businesses in Cuba.

Objective 1: To identify resources, technology and information that could be employed today to empower Cuban entrepreneurs on the island.

Objective 2: To identify initiatives that could be deployed in the near future to ensure the growth and expansion of Cuban entrepreneurs.

Objective 3: To identify obstacles to the emergence of successful Cuban entrepreneurs posed by U.S. laws and regulations, and by Cuba’s anachronistic laws governing commercial activity on the island.

About the Summit

On January 19, 2011, the Cuba Study Group in collaboration with the Americas Society/Council of the Americas and the Center for Financial Inclusion at Accion will host the Cuba Small Business Summit. The purpose of the Summit is to bring together experts in the fields of microfinance, business education, and economic development to identify ways to empower small business owners inside Cuba. The Summit is not intended to be a one-time conference, but rather the kick-off of an Initiative that will result in a white paper containing specific recommendations to public and private sector leaders on ways to help empower small business owners in Cuba.

The entire summit will operate under the Chatham House Rule which states that: “When a meeting or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed." For more information about the Chatham House Rule please visit: www.chathamhouse.org.uk.

Background

Since Cuban President Raúl Castro assumed office in July, 2006 he has raised expectations that his government would undertake reforms necessary to meet the basic needs of the Cuban people. In a speech on July 26, 2007, President Castro acknowledged that “structural and conceptual changes [would] have to be introduced,” and admitting that “wages today are clearly insufficient to satisfy all the people’s needs.” Since then, the Cuban government has begun to implement economic reforms including land leases to private farmers and, more recently, the removal of up to one million workers from the payrolls of state enterprises and the concurrent expansion of entrepreneurship and self-employment. Despite these steps, the impact of these reforms will be limited because Cuban entrepreneurs lack access to the financial capital, technical knowledge, a stable legal environment and other resources required for their commercial ventures to succeed.

In the years since Cuban leaders first began limited economic liberalization after the collapse of the Soviet Union, non-profit organizations have helped millions of microentrepreneurs around the world by providing them with the resources they need to start and expand their own businesses. In 2006, when the Norwegian Nobel Prize Committee awarded Grameen Bank founder, Professor Muhammad Yunus the Peace Prize they stated that “Lasting peace cannot be achieved unless large population groups find ways to break out of poverty.” Today, ACCION International (with its partners), Grameen and many other quality microfinance institutions provide working capital loans and other financial products like savings, to roughly 150 million clients worldwide. They help the self employed poor in the informal sector realize the dream of owning and operating microenterprises and small businesses. This results in a better quality of life for their family.

Cuba’s 5.5 million workers earn an average monthly salary of about $20 and, despite state-subsidized food, housing, education and health care, many are still considered to be living in poverty. Economic productivity in Cuba has reached such lows, that the Government has been forced to acknowledge that it cannot afford to continue such expensive subsidies.

Although the Cuban government’s recent decision to expand opportunities for self-employment should be considered a positive step, the Cuban economy’s ability to absorb up to a million workers through new small businesses over the next six months is uncertain. If the announced reforms are not properly managed, they will imperil the already inadequate livelihoods of up to a million workers. It is crucial that the Cuban leadership recognize the urgent need for these new entrepreneurs to have access to capital and financial literacy, and operational know-how. It is difficult to imagine how these resources will be mobilized in a cash-strapped country where the market economy principles necessary for entrepreneurs to succeed have been absent for more than 50 years. There is much that the collective experience of microfinance and financial education organizations around the world can do to fill this void.

Cuba’s path toward economic growth, high productivity and capital creation will be a difficult one. However, by helping Cubans learn from the experiences of for-profit and non-profit organizations elsewhere, we can help to ensure that Cuba’s economic reforms fulfill their full potential and avoid the economic and political upheaval that could result from unmet expectations resulting from inadequately implemented reforms and help ensure that Cubans can take part in their own economic future.

Sponsors

Cuba Study Group

The Cuba Study Group is a non-profit, non-partisan organization, comprising business and community leaders of Cuban descent who share a common interest and vision of a free and prosperous Cuba. Our Mission is to facilitate a peaceful reunification of the Cuban nation leading to a free and open society with respect for human rights, the rule of law and a market-based economy.

In September of 2006, the Group issued a white paper entitled: “Unleashing microeconomic reforms in Cuba: Investing in Cubans,” which proposed the creation of a island-wide microenterprise project to help Cubans gain access to the capital and knowledge they need to start and expand independent businesses. The Cuba Study Group committed to syndicate and fund an initial capitalization tranche of approximately $10 million, with a plan to obtain significant additional commitments. The following year, the Group proposed the creation of a $300 million Cuban Enterprise Fund modeled after the Enterprise Funds created by the U.S. government to assist in the development of private enterprise in Eastern Europe following the fall of the Berlin Wall. The Fund would be run by independent non-governmental boards of businessmen and women who manage and invest grants received from the U.S. and foreign governments and international financial institutions to invest in small and medium sized corporations in Cuba which do not have access to capital. Together, the two initiatives aim to provide Cuban entrepreneurs with the resources they need to succeed and improve the quality of life of their families and their communities.

The Americas Society/Council of the Americas

Americas Society (AS) is the premier forum dedicated to education, debate, and dialogue in the Americas. Its mission is to foster an understanding of the contemporary political, social, and economic issues confronting Latin America, the Caribbean, and Canada, and to increase public awareness and appreciation of the diverse cultural heritage of the Americas and the importance of the inter-American relationship.

Council of the Americas (COA) is the premier international business organization whose members share a common commitment to economic and social development, open markets, the rule of law, and democracy throughout the Western Hemisphere. The Council's membership consists of leading international companies representing a broad spectrum of sectors, including banking and finance, consulting services, consumer products, energy and mining, manufacturing, media, technology, and transportation.

The Center for Financial Inclusion at Accion International

Financial services tailored to the needs of poor people contribute to poverty alleviation, social justice, quality of life and human dignity. At a societal level, these services also contribute to the economic growth and stability of emerging markets.

The Center for Financial Inclusion works with a wide variety of actors—microfinance experts, banks, investors, regulators, technology firms, universities and others—to address challenges related to financial inclusion. Center staff collaborates with experts across industries—many of whom have not yet applied their strengths to microfinance or worked at the same table—to develop solutions that enhance the lives of the world’s poor.