In Cuba, micro, small, and medium-sized enterprises (SMEs) have achieved in a short span what the State has failed to do over decades: stock shelves, revive forgotten productions, and provide services that once seemed impossible on the island. Despite obstacles, burdensome taxes, and bureaucratic challenges, these SMEs have emerged as a genuine source of hope and supply for the people.
While the Cuban government has expanded its "convertible currencies" and foreign currency markets that marginalize the majority (CUC, MLC, and the return of the dollar), SMEs have chosen a different path: selling in Cuban pesos and operating across the nation, despite inflation and the economic crisis. They have reintroduced a variety of products into the market that people had lost hope of seeing again, from basic foods to durable consumer goods.
These businesses have even managed to revive national productions that had been extinct for years: from small lines of footwear and clothing to processed foods and manufactured goods. They've launched new commercial brands and more, where the State saw ruin and scarcity, entrepreneurs saw opportunities.
Resurgence of a Market Economy
Today, an emerging market economy is surprising many from afar. SMEs not only fill shelves; they've also expanded services. Restaurants, workshops, tech services, delivery, transportation, logistics—services the State could never sustain—are now thriving, albeit with varying quality, thanks to the entrepreneurial spirit of these innovators. They've energized the local economy and created real jobs in a country where the bloated state payrolls offered neither decent wages nor future prospects.
Government's Restrictive Approach
The issue is that, although SMEs provide a lifeline for the average Cuban, the government views them as a threat. Absurd limits, excessive controls, and rhetoric that demonizes them persist, as if independent prosperity were incompatible with the system. The reality is that the products and services they offer might not be affordable for Cubans living on state wages or pensions, but is it the SMEs' fault that the socialist economy has such low salaries and nominal pensions?
State salaries and pensions in Cuba remain low due to structural reasons. State productivity is minimal: many state enterprises produce very little or even operate at a loss, which prevents them from generating the wealth necessary to pay decent wages. Uncontrolled inflation—worsened after the 2021 currency unification known as the Tarea Ordenamiento—has further eroded the purchasing power of workers and retirees, whose earnings continually diminish against rising prices.
Path to Economic Freedom
The facts are clear: SMEs generate quality employment. Although there are no official or independent statistics on the wages they pay, there is anecdotal evidence that many offer salaries ten times higher than the state sector, or even more. Additionally, they pay taxes and are not inherently designed to evade them, despite potential irregular cases, as can happen in any system. Currently, these micro, small, and medium enterprises employ over 300,000 people in Cuba, according to official figures.
So, why not embrace a model where the majority of Cuban workers are integrated into SMEs or other forms of private management? This would free up massive resources the government currently allocates to subsidize inefficient state enterprises, allowing more funds to be directed toward pensioners and social services that are now suffering due to the indifference of leaders.
Cuba must release SMEs from the bureaucratic and political chains that suffocate them. They should be able to import and export with fewer obstacles, access financing, form partnerships, and grow without fear of confiscation. Establishing a solid legal foundation that offers real guarantees to Cuban entrepreneurs is essential. The nation needs more entrepreneurs, more competition, and more creativity.
SMEs have shown that Cubans can indeed produce, organize, and prosper when given the chance. The future of Cuba hinges on expanding economic freedom, not restricting it.
Understanding Cuba's Economic Dynamics
What role do SMEs play in Cuba's economy?
SMEs in Cuba have become a crucial source of hope and supply by stocking shelves, reviving old productions, and providing new services, despite government-imposed challenges.
How have SMEs impacted employment in Cuba?
SMEs have energized the local economy by creating real jobs and offering wages that are significantly higher than those in the state sector.
Why is the government wary of SMEs?
The government views SMEs as a threat to the socialist system, imposing strict limits and controls, despite SMEs' positive contributions to the economy.