The Cuban government announced that it will authorize foreign investment in both wholesale and retail businesses , in order to reduce the severe shortage on the island, but will maintain the state monopoly on foreign trade.
“In the midst of the strong restrictions we face, foreign investment in wholesale and retail trade, with State regulation, will allow the population to expand and diversify the offer and will contribute to the recovery of the national industry,” he commented on Twitter on Tuesday. the Minister of Economy, Alejandro Gil, about an announcement made on Monday night.
The measure distinguishes the investment modalities for wholesale and retail companies.
In the case of wholesale sales, firms may be 100% privately owned. Meanwhile, those that sell at retail, must take advantage of the joint venture regime in force on the island, which implies state participation in the business operated with private parties.
The decision to promote foreign investment in a sector hitherto controlled by the state is due to the difficulty of state businesses in capturing dollars and supplying themselves.
This “has caused a shortage in the domestic market of goods highly demanded by the population” and by small and medium-sized private companies, Deputy Foreign Trade Minister Ana González Fraga said Monday on state TV when presenting the initiative.
This situation has stimulated the informal trade of many basic necessities, which contributes to boosting inflation.
The increase in consumer prices closed at 70% in 2021 in Cuba, according to official figures.
Private SMEs were only approved in August 2021, after 52 years without national private companies.
In recent years, the Cuban government has taken slow steps to loosen control of trade and open the door to the private sector.
Cuban economist Mauricio Miranda Parrondo estimates that “the state monopoly of foreign trade and retail is responsible for the shortage of consumer goods in the domestic market,” according to a text published Tuesday on the La Joven Cuba website.
This researcher from the Pontificia Universidad Javeriana de Cali points out that the goods have to be “imported because the productive system —also mostly state-owned— is incapable of offering them.”
“We have not renounced and will not renounce the monopoly of foreign trade,” the deputy minister affirmed on her side, refuting in her presentation those who “try to show the state monopoly over foreign trade as a centralizing whim.”
The government’s intention, according to the official, is that these new businesses with foreign investment be oriented “to the sale of raw materials, inputs, equipment and other goods that can contribute to promoting the development of national production.”
Cubans are forced to make long lines every day to buy food and basic products, in stores where they can pay with Cuban pesos, but have very little supply.
Until a few months ago, the stores in foreign currency, which began operating in 2019, used to have a greater amount of food and cleaning supplies, but little by little their shelves have been emptying, with a bleak outlook for the citizen of a foot.
With a growing shortage of food, medicine and fuel, Cuba is going through its worst economic crisis in 30 years, amid the effects of the pandemic and the economic embargo that the United States has applied against the island for 60 years.