Cuban state U-turns on enterprises - 6th September 2021

In the wake of mass opposition protests last month, the island nation of Cuba is currently seeing momentous changes in state policy. The communist government now deems it legal to establish small to medium-sized private firms.

President Miguel Díaz-Canel declared that Cuba, where nationalised industries and companies are standard, was taking firm steps to update its economic model, and from now on would permit enterprises with a workforce of up to 100.

Cuba is in a state of turmoil, and critics have put the government's turnaround down to the angry demonstrations a few weeks ago, in which thousands of protesters rallied countrywide to complain about economic ruin. Marchers condemned the handling of the pandemic and urged for political reform. Dozens of members of the public were taken into custody and at least one person lost their life in the disturbances.

Recently, inflation has skyrocketed and as a consequence, in July, officials allowed foreign visitors to bring in items of food, medication and other basic essentials without paying import duties, in the hope of alleviating shortages of vital commodities.

Unfortunately, the economic situation remains dire, exacerbated by national and international circumstances. Tourism, one of Cuba's most significant industries, has been shattered by the impact of travel constraints due to the pandemic. Instances of Covid-19 cases are currently soaring, whilst hospitals and clinics are being rapidly overwhelmed with patients.

To add to the chronic financial situation, another key earner for Cuba, the sugar crop, suffered a weak harvest as a result of climate change.

With reserves of foreign currency depleted, it's now out of the question for Cuba to import replacements of essential items, a step which is customarily taken in times of need.

Although Cuban politicians have attributed both the civil unrest and the island's financial crisis to the US and its economic sanctions, many islanders will be thrilled at the prospect of a green light for the private sector.