New law will require state enterprise to be ‘efficient and effective’

20th February 2023

A new law applicable to Cuban state enterprise is in preparation.  The document which is expected to be far-reaching is likely to be approved when the country’s National Assembly meets in December.

Reporting that discussions on a new business law are underway, the Cuban News Agency ACN quoted Deputy Prime Minister, Alejandro Gil, the Minister of Economy, and Planning (MEP), as referencing a call by former President Raúl Castro “to shake [up] socialist state enterprise”.

Speaking at a meeting of the Cuban Government’s Inter-Institutional Council, Gil said that the principles of future legislation relating to state enterprise will be guided by language in the country’s 2019 Constitution, and the economic and social guidelines agreed during the seventh Communist Party Congress.

ACN quoted Gil and Johana Odriozola, Vice Minister of the MEP, as saying that because of the “weight of the state company in the Cuban economy, as the main provider of goods and services, it must be distinguished by its efficiency and effectiveness.”

The legislation is expected to create a new approach to the organisation, motivation, responsibility, and future direction of state entities. Gil highlighted the importance of the debate and consultations that will soon take place across Cuba to inform thinking about the initial draft.

ACN reported that work has been underway since last year and has involved a survey of 646 business leaders of state enterprises “in search of a first consensus.” It also indicated that the date of presentation of the draft law to the National Assembly has been brought forward from what was originally planned.

Among the areas the new law is expected to address is the state business model that Cuba will need in future. ACN noted that it will define “the economic regime, autonomy, financial relations with the State, the participation of workers, their governing bodies …. management, social responsibility and control, and internal audit”. It will also establish the mission of state enterprises, their “governance, governing boards, OSDE (superior business management organisation), resource allocation, [and] powers to promote insertion international and business creation with foreign investment.”

In recent months, senior political figures from Cuba’s President downwards have stressed the need for Cuba’s inefficient, poorly managed, bureaucratic, and loss-making state enterprises, to operate on a decentralised, professionally-managed basis, making profits, taking independent decisions, and when relevant working with the non-state sector and foreign investors. At the same time, Cuba’s official media has been highlighting the experience of those enterprises that are well managed, responding to demand in the internal market, making surpluses, and in some cases developing their potential for export. 

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch.