History, Politics, Economy and Startups in Cuba.
Cuba is the country of a sugar and the revolution.
In the early 1990th, because of world’s market prices downturn, the sugar industry stopped to be the major provider of the revenue for the Cuban government together with the remittances from the Soviet Union. After the collapse of the Soviet Bloc and the dissolution of the USSR Cuba experienced so-called ‘Special Period’ during which central authorities suppressed several anti-government movements. More that 30% reduction of Cuban economy forced the ruling communist party to re-introduced some elements of the capitalism including opening country’s border for the foreign tourists and allowing an US dollars circulation.
Cuban love life with revolutions have a long and appealing history. The stream of revolts had started in Cuba at the end of 19th century with growing pro-independence movement directed against Spanish colonizers. After Cuba obtained its independence in 1902, other revolutionary groups, which directed their dissatisfaction with the existing social order against several more or less democratic governments installed in Cuba and supported by the USA, emerged. However, the most famous revolution of the second-halve of 20th century is, of course, the Castro family’s amazing and bloody journey to power in 1959.
Not long after Castro senior had established his rule in all of Cuba he declared that he will be a prime promoter of the worldwide revolution. During 1970th and 1980th Cuban government actively supported (by men and arms) more than 17 Marxist-Leninist orientated governments and liberation movements in Africa including famously those in Mozambique, Ethiopia, and, specifically, in Angola where more than 50,000 Cuban mercenaries participated in military actions against the South African army.
Of course, those days of passionate revolutionary ordeals are now the subject of the ancients history. However, even with Castro family slowly but surely leaving the Cuban political Olympus that unusual country still presents itself a very peculiar spot on the world map. Among other things Cuba today is arguably the only one country in the world which maintains the socialist economy in its most archaic, soviet style, ‘classical’ form.
Cuba still preserves major traits of that economy including food rationing, rigorous central planning system, severe restricting on private business (allowing only closely monitored, small-scale businesses), very limited and privileged (based on personal relations with government bureaucrats) access of foreign companies to the Cuban market etc. However, after Obama administration had started to implement its ‘re-approachment’ strategy towards Cuba in the mid-2010th, its authorities introduced some alleviations to the doctrinal approach to politics and economics, like, for example, abandoning expensive and hard-to-get travel vouchers for its citizens.
Cuba today is like a dilapidated socialist Disney Park, which nobody really wants to destroy but very few want to experience.
Cuba, the country with outdated telecommunication infrastructure and where Internet mostly consists of government’s owned network and few external channels available for foreign guests in international hotels, presents very little opportunities for high-tech founders.
Although private entrepreneurship in Cuba is officially allowed, it is restricted to several regulated spheres of public service markets, such as hair-saloons, taxi, small restaurant (not exceeding 20 places) or laundry. It doesn’t include e-commerce, FinTech or anything of that sort, of course. All of those activities are officially illegal in this Marxist type economy.
Access of private citizens to Internet is reduced to several WiFi spots available in Havana’s public squares. Its further limited not only by scopes of the government managed “Cubazon” (mostly made of rudimentary e-mail and HTTP pages) but also by almost prohibitive Internet access tariffs and unimaginably slow speed (64K at best). It costs from one to four dollars per hour in a country with an average monthly salary of $20, that’s why most Cubans use their smart-phones (which were legalized only several years ago) not to browse but to upload and download a much information as possible in few available for them minutes of super-slow ans shaky Internet connection.
However, that doesn’t mean that none of Cuban inhabitants can be involved in the Internet entrepreneurship of a sort. For example, there is a coaxial cable, connecting Venezuela to Cuba, which is, according to some rumors, is used by public officials on both sides for recording American TV shows and music on DVD, flesh or computer drives and then selling them through the underground network of so-called “transporters” to across all of Cuba. There are also at least couple of dozen USA startups, launched in past two years, which business model includes facilitating transfer of cash (credit cards and bank accounts are not available for Cuban) and small goods to and from the Communist Island.
It’s obvious that without major changes in the government policies development of the startup ecosystem in Cuba is hardly imaginable.
Business Notes for Startups Founders:
- political climate: prohibitive;
- economic climate: hostile;
- regions to focus: locally;
- industries to focus: e-commerce, FinTech;
- major limitations: government politics towards private entrepreneurship and Internet access;
- opportunities: very high educational level of population (almost 100%).