Why the U.S. Should Embrace the Rise of Cuba's Entrepreneurs

Why the U.S. Should Embrace the Rise of Cuba's Entrepreneurs
01/25/2016 08:48 am ET | Updated 16 hours ago
Ted A. Henken
Former President of the Association for the
Study of the Cuban Economy (ASCE) and Baruch College (CUNY) Professor
Cuentapropista (a Cuban entrepreneur) is a term that up until a few
years ago would not have been used to describe a large sector of Cuba's
centralized and still heavily planned economy. But despite heavy odds, I
have recently witnessed the proliferation of Cuban entrepreneurship and
its positive effects on the Island. As a Yuma (a Cuban term of
endearment referring to visiting Americans), I've seen Cuba's
"non-state" sector expand considerably, giving testimony to the
entrepreneurial successes that everyday Cubans are achieving, and hunger
to expand upon.

Engaging directly with Cuba's entrepreneurial sector -- while we push
for an end to our pernicious trade embargo -- allows us to remove the
U.S. as the Cuban government's bête noir and empower more Cubans to be
the masters of their own fates. Some hardliners in the U.S. would argue
that engaging any sector in Cuba is helping the monopolistic and
undemocratic Cuban government consolidate its power. However, the last
50 years have shown that isolation has only aided the Cuban government
in strengthening its monopolies while deflecting blame for its failing
economy onto the U.S. embargo. Engagement with cuentapropistas, on the
other hand, gives us the chance to begin to build relationships of trust
and mutual benefit with the Cuban people.

In the face of constant economic instability and state control,
cuentapropistas are the defining social and economic catalyst for Cuba's
future. They are men and women who display incredible motivation and
creativity in their business ventures, and are willing to take risks,
often at great personal cost. As a result, the burgeoning private sector
is now one of the most productive areas of an otherwise failing economy.

In a fact sheet I recently released in partnership with Engage Cuba and
the Cuba Emprende Foundation, we found that while Cuba has the most
educated, low-cost labor force in the world, private sector
opportunities for Cuban professionals continue to be severely limited.
As a result, entrepreneurial Cubans have taken their fate into their own
hands and are now estimated to be one-third of Cuba's total workforce.
The rate of self-employment has surged to new heights in the last five
years, rising from just under 150,000 to over half a million
cuentapropistas by mid-2015.

A surprising area of self-employment growth is in telecommunications.
The chronic scarcities and bottlenecks caused by the lethal combination
of state socialist planning and the U.S. embargo have resulted in the
incubation of a true "maker" culture. Highly trained but underemployed
computer programmers and telecom agents have started launching
innovative start-ups like AlaMesa and Conoce Cuba or designing "lean"
software and offline mobile apps for both a Cuban and international
clientele. Aiming to encourage this dynamic phenomenon, new U.S.
regulations issued by the Obama Administration during 2015 now allow the
contracting of Cuba's private sector IT and other professionals.

But don't be fooled. There are still drastic internal barriers for
motivated, business-minded Cubans. The tax structure is burdensome, the
private sector is legally cut off from international trade (apart from
imports and exports via "suitcase commerce"), and cuentapropistas enjoy
little reliable access to wholesale goods, rental space, credit, or
foreign investment. Basic infrastructure is woefully outdated, and
Internet access -- the driver of any modern business -- is still very
limited and costly. Perhaps this is why despite unprecedented growth
over the past five years, the cuentapropista sector contracted for the
first time in the second half of 2015, falling to 496,400 by January 2016.

There are also serious structural workforce issues. For example, every
year over 4,000 information technology engineers graduate across the
country, but there are a limited number of state positions available to
them. Therefore, many of these graduates are forced to join the historic
exodus of young professionals abroad in order to find an economic return
on their educations.

The possibilities for these young entrepreneurs will be virtually
limitless once the island is equipped with a modern telecommunications
infrastructure -- something that can be made possible with the help of
American investment. But in order for U.S. telecommunication services
and other businesses to help bring meaningful change in Cuba, Congress
needs to lift the trade embargo.

Because while American entrepreneurs and businesses await an end to the
embargo, both Americans and Cubans are missing out. It is estimated that
the U.S. is currently forgoing 1.6 billion in potential sales to Cuba
annually due to current policy. Americans from across political parties
have duly noted this fact. According to a Pew Research Center report, 72
percent of Americans, including 59 percent of Republicans, favor ending
the Cuban trade embargo.

It is ironic that many embargo supporters rightly critique the Cuban
government for restricting the free market inside the Island while
simultaneously supporting an embargo that unfairly restricts American
businesses abroad and any benefits they could bring to Cuba's struggling
entrepreneurs and its people. By allowing Americans to bring business
and investment to the Island, we will grow our own economy while
supporting the Cuban people, including cuentapropistas, in the process.

Ted A. Henken, Ph.D., is the President Ex-Officio of the Association for
Study of the Cuban Economy (ASCE) and co-author of the book
"Entrepreneurial Cuba: The Changing Policy Landscape." Henken is a
member of the Policy Council of Engage Cuba, a bipartisan organization
dedicated to mobilizing American businesses and non-profit groups to
support the ongoing U.S.‐Cuba normalization process.

This post is part of a Huffington Post blog series that is revisiting
the topic of U.S.-Cuba relations, one year after the thaw in the
long-standing tension between two Western Hemisphere foes. The series,
produced in partnership with Engage Cuba -- a bipartisan organization
working to end the Cuban embargo and normalize U.S.-Cuba relations --
will feature pre-eminent thought leaders from the public and private
sectors, academia, the NGO community, and prominent observers from both
countries. Read all the other posts in the series here.

Follow Ted A. Henken on Twitter: www.twitter.com/ElYuma

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