Microcapital Brief: Cuba May Allow Microfinance as Part of Modernization of Economic System
- Submitted by: manso
- Business and Economy
- 07 / 14 / 2011
Wednesday, July 13, 2011.By Nisha Koul. A microcredit system reportedly may be launched in Cuba as part of a reform program adopted by the government which specifies that “the credit policy will be essentially oriented towards providing necessary support for activities that stimulate national production and generate hard currency income or replace imports, as well as activities that promote development ”
Juan Diego Ruiz, general coordinator of the Spanish Agency for International Development Co-operation (AECID, in Spanish), an instrument of the Spanish government, said, “Today what’s being talked about more is credit policy, credit for the productive sector, and it’s an issue that is being discussed both on the street and in offices.”
Tomás Marco, head of agricultural development in Cuba for AECID’s Spanish Technical Office for Cooperation, commented that it is in the area of self-employment “where microcredit fits best, with a focus on individuals. What’s opening up is a possibility; it’s not even a certainty. Nobody knows if loans in hard currency for self-employed people will be permitted.” In another sign of international interest, the Italian Permanent National Committee for Microcredit, an agency of the Italian government that was set up to facilitate microfinance activities, has also made visits to Cuba.
According to Inter Press Service (IPS), a news agency focused on global issues, credit in Cuba is primarily used for individuals’ purchases of domestic goods and financing for agricultural cooperatives. The reforms will reportedly allow credit to be disbursed to self-employed individuals to finance their working capital and asset purchases.
As of 2011, an estimated 83 percent of the labor force in Cuba is employed by the state; 5 percent is employed by cooperatives closely connected with the state; 12 percent work in the private sector; and 3 percent are self-employed, “cuentapropistas”. No institutions report to the US-based nonprofit microfinance information exchange (MIX) that they offer microfinance in Cuba.
By Nisha Koul, Research Associate
About Italian Permanent National Committee for Microcredit: The Italian Permanent National Committee for Microcredit was created as the “2005 National Committee of Microcredit” in response to the UN General Assembly proclaiming 2005 as the International Year of Microcredit. The committee’s mission was to facilitate the achievement of the Millennium Development Goals through the diffusion of microcredit and microfinance activities to reduce poverty and financial exclusion. The committee was renamed as the Italian Permanent National Committee for Microcredit in July 2006. The new, permanent committee aims to find an “Italian way to microcredit levering on the potential, professionalism and patrimony of knowledge that may be found in our country and developing, on the same time, positive synergies with other countries”. The budget figures for the committee are not available.