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As I write, I’m overlooking the waves crashing on the Malecón – a 5-mile sea-wall esplanade separating Havana from the waters of the Florida Straits. For so many Cubans who fled the island in decades past, the Malecón was a final point of contact with familiar land before risking so much at sea. Those who chose to stay continued to face a harsh reality under the Castro regime and, although individual freedoms have increased in recent years, daily life in Cuba still requires the ability to resolver.
We’ve had the privilege of meeting with a wide variety of cuentapropistas (private business owners) across Cuba – from owners of paladares (private restaurants) to casas particulares (small hotels operated out of individuals’ homes). Building a profitable enterprise is a challenge in and of itself, but the complexities and erratic nature of Cuban law make it all the more difficult for cuentapropistas.
Coming from the United States, it’s easy to take for granted a robust wholesale market and access to supplies. Raw materials for nearly any business can be found domestically or imported fairly easily. Supply chains in Cuba, however, require a bit more resolver.
El bloqueo (the blockade, as the embargo is referred to on the island), effectively restricts cuentapropistas from purchasing anything directly from the US. Business owners with US visas, however, are able to travel to the United States, purchase goods, and carry them back as luggage. As such, the international arrivals terminal at Havana airport is littered with bundles of foreign goods destined for private homes or businesses in Cuba. This workaround is effective, but a single traveler can only carry so much and is forced to purchase goods at full retail prices in the US.
Those without US visas can purchase goods from popular intermediary markets in the region such as Panama or Mexico. Regardless of country of purchase, there are tax limitations to this import policy. Each Cuban citizen is limited to 120kg of tax-free imports per year. Imports on a larger scale introduce further bureaucratic complexity and financial burdens. For those unable to leave the country, a black market exists – but the prices become even more punitive.
Rather than craft a workaround for imports, many choose to resolver by using supplies found on the island. Clandestina, a local fashion producer and retailer, sources all its fabrics in Cuba. Their latest line – for example – includes clothing crafted from window curtains. They purchase the curtains in Cuban state-owned stores and repurpose the material into button down shirts, bandanas, and more.
Mediterráneo, a restaurant in Havana, is proud to be Cuba’s premier farm-to-table paladar. Given the massive food shortages on the island (the Cuban government imports ~65% of the food provided to citizens) and limited agricultural resources (lack of agricultural diversity and technology), it’s quite impressive that our meal at Mediterráneo was one of the best on the island.
Without significant reform on both sides of the Florida Straits, it is unlikely that life as a cuentapropista will become any easier. A lifting of the US embargo and reform of Cuban import regulations would massively improve the chances of success for private businesses in Cuba, but – until then – the Cuban people will have to fall back on their ability to resolver.
Casey Buckley is a 2020 MBA Candidate at Columbia Business School