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Monday, March 01, 2021

Cuba lifts ban on most private businesses: Here’s what it means

The measure, which was first announced in August last year, was approved Friday during a meeting of the Cuban Council of Ministers, according to the daily Granma, the Cuban Communist Party’s official newspaper.

By: Express Web Desk | New Delhi |
Updated: February 10, 2021 7:31:53 pm
Wearing protective masks as a precaution against the spread of the new coronavirus, pedestrians make their way home before the start of a 9 pm curfew, in Havana, Cuba, Friday, Feb. 5, 2021. (AP Photo/Ramon Espinosa)

Faced with the crippling economic impact of the coronavirus pandemic, Cuba’s communist-run government announced that it will allow private businesses to operate in most sectors of the national economy. With this, Cubans will now have the option of seeking employment or starting businesses in nearly all fields of work.

The measure, which was first announced in August last year, was approved Friday during a meeting of the Cuban Council of Ministers, according to the daily Granma, the Cuban Communist Party’s official newspaper.

Before this, Cubans were permitted to work in merely 127 government-approved private sector job descriptions, which included working as a barber, a palm tree trimmer, tire repairer and as a “dandy” — a term used to refer to people who dressed up and posed with tourists for photographs. After the government’s latest reform, Cubans can now work in more than 2,000 authorised industries. A few sectors will, however, continue to be dominated by the state.

Currently, private activity is largely confined to tourism, a sector hit hard by the coronavirus pandemic. As international travel has plummeted, so have the incomes of thousands dependent on tourism, such as tradesmen and taxi drivers.

According to Cuban government data, over 600,000 Cubans, or 13 per cent of the country’s 11.2 million population, work in the private sector prior to the latest reforms, with a majority of them working in service sector jobs, such as running restaurants, or driving taxis.

Now Cuba’s labour ministry has expanded the list of approved private sector jobs, and narrowed down the number of job descriptions prohibited for the private sector to 124 though the government is yet to announce which jobs are restricted. According to CNN, the list is likely to continue the state’s monopoly on healthcare, telecommunications and the media.

The country first began lifting restrictions on the private sector in 2010, but private activity started to pick up only in 2014 when the US led by then-President Barack Obama made an aggressive move to restore diplomatic relations with Cuba. But this was later reversed under the Donald Trump administration. Most recently, Trump re-designated Cuba as a “state sponsor of terrorism” days ahead of Joe Biden’s swearing-in ceremony in January, this year. Biden has vowed to re-establish ties with the island nation.

But why were the reforms introduced now? Following the economic fallout of the coronavirus pandemic and the Trump-era sanctions, Cuba’s economy shrunk by 11 per cent in 2020, its worst performance in three decades, leading to shortages of basic goods.

Once the long-overdue reforms are implemented, small businesses which are already operating on the Caribbean island are expected to expand, allowing private players to move beyond tourism and small farms. The economic crisis has also forced the state to announce other reforms, such as the devaluation of Cuba’s peso currency, deregulation of state businesses and foreign investment, as per a Reuters report.

Last year, the country’s President Miguel Diaz-Canel announced that the country would be initiating reforms to increase exports, reduce the dependence on imports and stimulate domestic demand, in an effort to tide over the country’s economic challenges.

According to Reuters, over the last six months the Cuban government has even attempted to give small businesses access to wholesale markets and to import and export, though only through state companies.

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