Cuba’s Budding Private Sector Looks Nervously to Future
Possible shifts under Trump on ties to U.S., island’s own leadership add
up to uncertainty
By JUAN FORERO
Jan. 10, 2017 5:30 a.m. ET
HAVANA, Cuba—Cuba’s private-business owners, having profited from a
growing flow of funds and tourists from the U.S. under the Obama
administration, are facing uncertainty the influx—and their hardwon
U.S. President-elect Donald Trump has suggested he might reverse the
actions President Barack Obama has undertaken since 2014 to scale back
Washington’s economic isolation of Raúl Castro’s regime. Mr. Castro
himself, meanwhile, has offered his country’s budding entrepreneur class
no indication that he intends to press on with measures he began six
years ago to ease the way for some private businesses.
A third of Cuba’s 5 million workers are now in the private sector,
including 522,000 business owners, up from 150,000 six years ago. Much
of the seed capital for those businesses came from Cuban-Americans’
remittances to relatives here, a flow that has more than doubled since
President Barack Obama took office in 2009. Those funds amounted to $3.4
billion in 2015, the latest year for which figures are available—more
than Cuba’s total export earnings, according to Emilio Morales, head of
Miami’s Havana Consulting Group.
For many of the country’s restaurants, bed-and-breakfasts, nail salons,
and cafes, the mainstays of revenue are the more than 3.5 million
tourists who now visit the island annually. An increasing number of
those visitors have come from the U.S. since 2014, and in late 2015 Mr.
Obama removed limits on remittances to Cuban nationals and to the money
U.S. citizens can bring to the island.
Cuba’s small businesses inhabit a fragile sector, however, susceptible
to policies on either side of the Florida Straits.
Being an entrepreneur remains a daily struggle in Cuba, a country with a
highly controlled economy and a government that frowns on the very idea
of accumulating wealth.
Restaurateurs scour Havana for ingredients, while mechanics look for
parts. Permits and regulations are stringent, as the government
purposefully keeps businesses from growing too large. Importing
necessities is nearly impossible.
“As a business, you never know when you’re going to fail and lose
everything,” said Yaylen Vilches, 25, who runs El Dandy, a cafe-restaurant.
And while the Trump administration’s approach to Cuba remains unclear,
the president-elect has warned he may reverse the Obama administration’s
friendlier stance toward the island, fueling concerns among the island’s
emerging capitalist class and, some entrepreneurs say, already putting a
chill on investment.
Yoandy Rizo, a 33-year-old architect, said his Havana-based firm has
grown rapidly in recent years, largely thanks to contracts to redesign
restaurants for tourists and renovate homes purchased by Cuban-American
exiles. He said political uncertainty recently prompted a client to
suspend a project that would have given him and his crew of carpenters
six months’ work renovating a home.
“So I have an international crisis on my hands, because of Donald Trump,
but I also have a domestic crisis,” said Mr. Rizo.
Last month, more than 100 Cuban owners of businesses from restaurants to
nail salons made public a letter they had written to Mr. Trump asking
him not to scale back U.S. reforms.
“As a successful businessman, we’re confident that you understand the
importance of economic engagement between nations,” said the letter,
released at a press conference on Capitol Hill.
The impact of people and capital from the U.S. on the country of 11
million has been momentous, going well beyond the elegant hotels where
rooms cost hundreds of dollars a night, said Ted Henken, an expert on
the Cuban economy at New York’s Baruch College.
“A lot of people are off the beaten track, staying in private homes,
taking private taxis, eating in private restaurants,” he said, referring
the visitors. “And so this has been a powerful boost for that
Enrique Núñez del Valle, for instance, runs a picturesque
restaurant-cafe, La Guarida, with seating for 100 clients, large for
Cuba. Sitting at a table on the roof, he said the inflow of money
supports not only his business but 50 workers and, through them, all
manner of other businesses.
“If there’s a limit to the financial flow, it’s the people who’ll be
hurt,” he said.
Mr. Rizo, the architect, said he started the year with eight projects
and is now down to three. But he hasn’t given up: he is even considering
a new business providing tours of Cuba’s wild western province.
“I’m not waiting for a response from the Cuban government, or the
American,” he said. “People say, ‘You have to wait and see what
happens.’ We’ve been waiting 50 years.”
—Ryan Dube in Lima and Anatoly Kurmanaev in Cienfuegos, Cuba,
contributed to this article.
Source: Cuba’s Budding Private Sector Looks Nervously to Future – WSJ –