Cuban Government Crackdown: Dozens of Small Businesses Forced to Close

In an aggressive move, the Cuban government has announced the partial or total shutdown of numerous micro, small, and medium-sized enterprises (MSMEs). This decision is part of the so-called "Government Program to Correct Distortions and Revitalize the Economy," set against a backdrop of deteriorating economic activity and increasingly strained relations between the state and private sector initiatives.

Prime Minister Manuel Marrero addressed the National Assembly, explaining that within the framework of "restructuring, developing, and managing the socialist state enterprise and other economic actors," inspections were carried out on entities reported to be operating at a loss.

Of the 869 entities reviewed, a staggering 87% remained in this condition, prompting the closure of 65 businesses either partially or completely. Marrero Cruz highlighted issues such as inadequate accounting systems, unreported income and expenses, and overall accounting deficiencies as reasons justifying these closures. These actions directly impact a sector that, since its legalization in 2021, has become one of the most vibrant in Cuba's economy.

During his speech, the Prime Minister noted the establishment of 77 new state-run MSMEs this year, bringing their total to 330. In contrast, 816 private MSMEs were registered, reaching a total of 11,866 across the country, along with two non-agricultural cooperatives, bringing their total to 73.

Marrero emphasized ongoing "actions to organize their social objectives," a phrase that effectively means increased scrutiny and regulation. He also mentioned the approval of a wholesale trade structure for non-state economic actors, which removes the requirement to conduct wholesale operations solely through state entities.

Nevertheless, he admitted that decentralizing the authority to approve the creation of private MSMEs and non-agricultural cooperatives is progressing slowly. So far, this power has been granted to only 65 municipalities, limiting the sector's expansion nationwide.

In this context, Marrero mentioned a methodology applied for monitoring and supporting loss-making entities, although results indicate most failed to reverse their financial situations. As a result, the government chose to close several of them, a decision that contradicts the official rhetoric of revitalizing the economy.

According to the Granma newspaper, as part of Objective 4 of the Government Program focused on restructuring and managing state enterprises and other economic actors, the creation of the National Institute for the Management of State Enterprises' Assets was also announced. This new body reinforces the government's focus on the state sector, despite the crucial role private MSMEs have played in supplying goods and services the state is unable to provide.

Marrero also advocated for a Decree Law to introduce new business models between state and national private entities. These include franchise agreements, financial partnerships between nationals in production chains, and state enterprises acquiring shares in private limited liability companies. These proposals were presented as a means to "reverse the situation," yet they fit into a framework where the state maintains decisive control.

The setback for the private sector contrasts with official data released months earlier by the National Office of Statistics and Information (ONEI). In August, they published a preliminary report on the enterprise and budgeted system for the first half of 2025, deliberately excluding MSMEs and cooperatives. The report showed a slight increase in registered entities, growth in the state enterprise sector, a reduction in the budgeted sector, and a decrease in loss-making entities, along with a slight improvement in economic efficiency indicators.

The exclusion of MSMEs from this analysis was interpreted by analysts as a sign of the secondary status the government assigns to the private sector, despite its real impact on the everyday economy. For months, academic voices and independent studies have warned about the official ambivalence towards entrepreneurs, whom the regime regards as a necessary evil—a tolerated but not desired resource.

Previous reports highlight that while MSMEs have provided some economic relief and access to food, inputs, and basic goods, authorities continue to exhibit distrust towards these actors. Constant regulatory changes, bureaucratic hurdles, and ongoing controls have characterized their operations, even when over 11,000 private companies have been registered since legalization.

Ultimately, the closure of dozens of MSMEs and the emphasis on strengthening the state apparatus reinforce the perception that private initiative is accepted only in a limited and conditional manner. Although the government acknowledges their utility amid the crisis, it maintains a supervisory and restrictive approach that directly hampers these businesses' ability to stabilize and substantially contribute to the country's economic recovery.