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Cuban rules to allow more small businesses spark hope and frustration

Economy Materials 13 February 2021 05:43 (UTC +04:00)

Communist-run Cuba’s decision to open more of its economy to small private businesses and individual initiative has sparked praise among many analysts and entrepreneurs but also frustration among some, Trend reports citing Reuters.

The measure announced last weekend expanded activities where small business were permitted to more than 2,000, from 127 previously.

Authorities said they would reduce the steps needed to open a business and allow individuals to engage in related activities, for example running a bed and breakfast along with providing transport from the airport and serving meals.

The easing of restraints on private enterprise are part of a wider series of measures by the government of President Miguel Diaz-Canel aimed at creating jobs and better linking the private sector with state companies.

Other recent changes include a currency devaluation and cuts in subsidies. Experts say the reforms are forcing greater efficiencies and opening the way for state companies to subcontract work out to the private sector.

The opening to private enterprise represents a philosophical sea-change since the first handful of small enterprises were begrudgingly allowed in 1993, after the fall of the Soviet Union, Cuban economist Ricardo Torres said.

The island’s economy, which remains largely in state hands, has stagnated for years. It contracted by 11% last year as a tough U.S. sanctions, together with a deep pandemic-sparked tourism slump, compounded local inefficiencies.

The government reported that at the close of 2020 there were more than 600,000 people in the sector - some 13% of the labor force - compared with around 150,000 a decade ago. An estimated 40% depend mainly on the tourism industry and are jobless or just scraping by.

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