Small Business

Cuba's Entrepreneurs Come Creeping Back


By David E. Gumpert

MY BOY, THE BELLHOP. Now Cuban parents must deal with children who no longer aspire to become teachers or dentists, and instead covet bellhop jobs. Even the people running the tourist industry seem to be former professionals in other fields. Tony Diaz, vice-director of Havanatur, a $150 million government enterprise, is a trained economist who spent 20 years as a diplomat before taking over at what is now one of Cuba's largest companies. "I consider myself an entrepreneur," he told me at his spacious Havana office, hooked up to the Internet and with CNN playing in the background. He isn't exposed to tourist tips, and he says his salary is only "a little more" than the $20 average, which limits his upside.

So what is his incentive? "My rent is 65 cents. The education of my three daughters is free. Medical care is free." So his incentive, he says, "is Cuba -- making more money for my country. I know the money will be used socially." Unlike the rest of Central and South America, bribery is unheard of, and no one gets fancy cars or houses, as in capitalist countries, he points out.

Diaz feels that "the fact that so many people with university degrees are in our industry is wonderful." He expresses the hope that they are doing it for the same reasons he is: love of job and country.

SONG SUNG GREEN. I heard few such observations from the new entrepreneurs I spoke with. Take Sonja, lead singer of a four-person band that plays at Old Havana restaurants. (Sonja isn't her real name. I have disguised her identity because, as you will see, the legal and tax aspects of these entrepreneurs haven't been fully resolved and I wouldn't want to get anyone in trouble.)

Sonja's band plays Cuban music at lunch and dinner at a couple of different restaurants, which "hire" her band, at no cost. Sonja doesn't care that she's not being paid by the restaurant. After all, she's an entrepreneur, and she just wants access to the end users, the tourists.

After playing a while on a warm January evening, she passed the hat, and offered the band's three CDs for sale. The Canadian, French, and American tourists at the cafostly either stuffed a dollar in the hat, or bought a CD for $10 (yielding a profit of $7.50 each). At the end of a typical month, the band gets to divide about $1,000 of net profit, for $250 apiece, or more than ten times the average Cuban salary. With their dollars, Sonja and the band can purchase meats, fruits, vegetables, and other difficult-to-obtain items in dollar-based farmer's markets and at special dollar stores that are closed for the most part to ordinary professional Cubans. Even the dollar stores' $200 washing machines and $500 refrigerators have become available to the band members over recent years.

MATTRESS INVESTING. Now that their basic necessities are covered, one of the biggest problems for Sonja and other Cuban entrepreneurs is what to do with their money. They're in a legal gray area, since all of their income is in cash, and it's difficult for authorities and entrepreneurs to know or define what each expects of the other under the law, such as it is.

The Big Brother nature of the island's Communist government makes entrepreneurs nervous about converting their dollars into pesos and putting them into local banks, for fear of authorities knowing too much, and also because of fear of surprise currency devaluations. So at least a few, like Sonja, resort to stealth. They gain the help of trusted foreigners to establish joint accounts in the U.S. or Canada. Some hide their money under the proverbial mattress, or convert it into gold jewelry.

These Cuban entrepreneurs are quick learners.

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