Ministers explore development challenges facing independent MSMEs

Photo by Max Letek

20 June 2022

A week-long series of meetings held between Government and those running independent medium, small and micro enterprises (MSMEs) have indicated both the significance of their future role, and the complexity of their development in a planned economy.

Jornada Econômica Produtiva Cuba 2022, organised by the National Association of Economists and Accountants of Cuba (ANEC) and the Cuban Chamber of Commerce, saw from 7-14 June, meetings, debates and workshops take place on a face to face and virtual basis with the Ministers of Agriculture, Construction, Internal Trade, the Food Industry, Foreign Trade and Investment, and other national economic entities.

According to Cuba’s state media, the event saw newly independent enterprises discuss the difficulties, and challenges they face, and ministers emphasise the potential of the entrepreneurial sector.

The often-detailed reporting highlighted participating MSMEs’ principal concerns as related to obtaining financing and foreign exchange, the bureaucracy, taxes, shortages of raw materials, and ignorance of the new regulations by the authorities and state enterprises.

Prensa Latina reported that from a government perspective the fundamental focus was “on the search for ways to replace imports, increase exports, boost foreign investment and satisfy the needs of the population through production chains”, as well as the role of the new economic actors “in their relationship with other forms of production.” It quoted the First Vice Minister of Economy and Planning, Leticia Morales, as saying: “The conference helps to articulate the views of different actors and implement development strategies at all levels, while contributing to the economic transformation that the country is going through.”

Reporting on the discussions that took place, Cubadebate noted that nine months after authorising the creation of MSMEs on the island “there are still difficulties to be solved, despite progress in the inclusion of these economic actors in society.” Of these, the media platform indicated, the most significant remains the ability of independently managed enterprises to raise financing. It also noted difficulties in obtaining foreign exchange to obtain inputs and raw materials, sometimes difficult or uncomprehending relationships with state enterprises and parts of the bureaucracy, and more general complexities in trying to develop businesses at a time of shortages and the devolution of government decision making to the provinces and municipalities.

The reporting implied that Ministers had few immediate answers and still needed to find ways to close the gap between their national priorities and often small, very local difficulties.

During the conference, the Minister of the Food Industry, Manuel Santiago, stressed the importance of prioritising the use of local inputs, the need to produce more with what is in the country, and to seek at the local level solutions to problems that prevent the further progress of the new economic actors. However, the reports noted the problem of developing the reliable linkages required, at a time of national shortages, referencing the problems faced by a company from Villa Clara that feared losing a large quantity of mangoes due to the lack of sugar for processing and of packaging.

In another reported exchange about bureaucratic obstacles, fines, and relations with state enterprises that “go against the development of a company,” the Minister of Internal Trade, Betsy Díaz was quoted as advising the enterprise to “seek legal advice.”

Closing the weeklong series of events, Cuba’s Minister of Foreign Trade and Foreign Investment, Rodrigo Malmierca,  stressed the importance of seeking creative solutions to increase income from exports and to make savings for “the effective substitution of imports.” MSMEs, he said, together with cooperatives had become a necessary element in the process of economic revitalisation. Stressing the importance of linking such enterprises with socialist state companies, he told participants, “this is vital for the growth and development of our economy.”

Cuba now has some 3,765 independently managed MSMEs which can be owned and run on a private, state, or mixed basis. Of these 3,660 are private. Some 55% are conversions of pre-existing businesses and 45% are new ventures, the majority being in Havana and Granma provinces, and are principally in services, manufacturing, and construction.

In a recently published commentary, Dr Augustin Lage, one of Cuba’s most respected scientists and now an advisor to the President of BioCubaFarma, set out the political justification for further developing Cuba’s independent business sector. Observing that “For the first time in decades we have more private companies in Cuba than state companies,” he went on to note that rather than “demonising non-state MSMEs, or putting obstacles to their emergence,” Cuba he said, “needs them for the functioning of the economy”.

“The problem is not that new companies emerge dynamically in the private sector. The problem is that they do not emerge with the same dynamics in the state sector. And the problem is even more important now than when Lenin identified it in 1922, 100 years ago, because the economy of the 21st century is a high-tech economy, much more linked to science, technology, and innovation”, he wrote on his blog republished in Cubadebate. Such innovations, he noted, very frequently enter the economy through new and initially small companies.

Then, in an indication of the apparent dilemma facing government, he noted: ” The challenge is that we have not yet found a way to reconcile in practice, property concentrated in the hands of the people, through the State, with the diverse and dynamic forms of management demanded by high technology and the imperative of international insertion. How this is achieved from socialism is something that we still do not know well. It will be necessary to explore this with intelligence and audacity.”

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