The fall reflects the deep crisis in the country, they say economists

The number of private businesses in Cuba fell in more than 200 between September and December of last year, according to official data. Economists point out that the figure is a reflection of the deep crisis that the country is going through and the little profitability of many of the ventures.

Since the MSMEs were authorized in 2021, the number of companies of this type registered on the island had continuously increased until the last quarter of 2024. Between September and December of last year, 222 private mipymes were recorded less, according to the National Office of Statistics and Information (Onei).

This 2.35% decrease compared to the previous quarter «could be reflecting both the current stanflation and longer -term structural problems,» said Cuban economist Pedro Monreal in a publication In the social network X.

The situation seems to also point to «an exacerbation of the supply deficit,» added the expert.

For economist Miguel Alejandro Hayes this fall in the amount of MSMEs was «expected.»

«There is no economic reason to think that in a context such as that of limited capacity to create and demand, there is an expanding sector,» adds the expert, which considers that «the inflationary process is leading to an increase in costs. There are businesses that to be profitable would have to put prices that would not allow them to sell.»

The expert indicated that «there is a natural and structural limitation in the private sector due to the conditions of the Cuban economy. Behind this there are other elements that can be key, such as a drop in expectations to invest in Cuba, either due to economic insecurity and all policies associated with the war economy that discourage investment, as well as all insecurity in terms of infrastructure.»

In December 2024, a resolution ordered the cancellation of commercial licenses granted to the MSMEs to exercise wholesale trade. The regulations also required the liquidation of all the merchandise for that trade.

This prohibition is one of the elements that make up the complex scenario of the private sector on the island, which must also operate in the midst of an energy crisis that leaves blackouts of more than 20 hours in a row in several provinces of the country. Other challenges are the decrease in the purchasing power of Cubans and «a growing dollar state monopoly competition,» Monreal said.

The economist pointed out that the companies dedicated to industry, commerce and hotels and restaurants were the ones that decreased the most. So did those dedicated to construction, business services; and transport, storage and communications.

In the case of decreased industrial MSMEs «a hypothesis could be the energy crisis, investment and working capital difficulties, and the deficit of agricultural supplies,» Monreal explained.

Regarding the change in tourist and gastronomic «it seems reasonable to assume that the decisive factor would have been the derailment of international tourism, especially in the late 2024,» he said. And as for trade, «I could indicate a major problem,» since «private MSMEs had 25% of total retail sales in 2023,» said the economist.

Although, according to Monreal, calculating the impact of this situation is difficult because «regular statistical series on employment, investment, production and services are not officially disclosed»; They are visible «structural problems (crisis of the growth model and inappropriate regulatory and institutional framework) and a recessive macroeconomic environment of staining (economic contraction and inflation of 2 digits),» he concluded.

Hayes on the other hand points out that «businesses close when something essential happens that is the fall of their profitability and the latter falls when costs increase and the level of sale decreases. In the case of Cuba both are happening.»

«A country where there are continuous cuts of electricity, a country with all these vulnerabilities in infrastructure, of course it scares investors, especially those who are associated with the commercial sector. Also the increase in violence creates an additional expense because you have to think too much about security. And the other is the limitation of capital to finance investments. All this makes it not grow more and that, even, even the business owners decide to leave.