Obama Praises Entrepreneurship in Cuba, Major Hurdles Remain

HAVANA — A thriving private sector economy. A hub for entrepreneurship and innovation. A center for small business and foreign investment.  That’s the grand vision that President Barack Obama set forth on Monday, as he spoke directly to several hundred Cuban entrepreneurs, or “cuentapropistas,” at a town hall event held at a brewery in downtown Havana.

ObamaObama used the occasion to highlight several American companies started by young people which are beginning to thrive in Cuba — chief among them Airbnb, which is rapidly growing in the country — as proof of the kind of business success that could be in store as a result of the easing of relations.  “Businesses that start small — even in a garage — can grow into some of the world’s most successful companies,” Obama told the audience. “That’s what we are encouraging here today.”

Obama, along with other senior administration officials, openly acknowledged that, despite the promise that renewed relations between the United States and Cuba holds for entrepreneurship, severe hurdles remain.  “When you meet the Cuban people, there’s an entrepreneurial spirit,” Commerce Secretary Penny Pritzker said in an interview immediately following the town hall. “There’s a desire to grow the private sector economy, but there are challenges.”

An even greater challenge is whether Cuba’s government, which has long been organized around socialism and state-sector jobs, will fully embrace the move to a private sector economy.   “There are some economic models that just don’t work,” Obama told the audience. “That’s just the objective reality that there’s some economies that have had great difficulty in how they operate, and it gets harder and harder as time goes by.”

Bridging the gap will require the government to eliminate a host of regulations which make it difficult for average Cubans to start businesses. “Work has to be done to bridge these two economies,” Pritzker said. “Cubans want to make sure they don’t lose the benefits of the socialism system, and no one is trying to upset that. It’s a question of how do they bridge into the 21st century economy?”

In a marked change of course, the government has expanded licenses for private sector employment since 2010, which has led to an increase from 145,000 in 2009 to approximately 500,000 in 2015 of Cubans working in non-state jobs. But licenses are still restricted to only certain professions, like taxi drivers, Airbnb hosts or restaurant owners.

Highest on that list, according to Pritzker, is telecommunications and wireless connectivity, which is a major barrier to starting internet-based business in the country. Only 5% of Cubans have internet access, one of the lowest rates in the world. The Cuban government has made commitments to change and has established 50 WiFi hotspots across the island over the past year.