Welcoming Cuba as an Emerging Market, ‘Lab’ for Social Enterprise
Editor’s note: This week President Barack Obama returned to Cuba in an historic trip to re-establish relations with the United States. Cuba’s importance as potential hub for social enterprise was the subject of this post from 2014.
The Wall Street Journal headline today was, “Cuba-U.S. Thaw Could Heat Up Cigar, Rum Sales Fights”.
OK sure, discussing the cigar trade is the obvious go-to following President Obama’s announcement this week that the United States would begin normalizing relations with Cuba. But according to some pundits, the mystique around the Cuban cigar is often stronger than the flavorful reality. (Living in Ann Arbor, Michigan, I’m very close to Canada where Cuban cigars are legal. And smuggling them over that border is commonplace … but you didn’t hear that from me).
Obama’s decision to reopen an embassy in Havana, allow for increased American tourism to Cuba, and bigger remittances to Cuban nationals from $500 to $2,000 each quarter, all constitute important steps. They may not be as monumental as ending the 53-year-old embargo, which requires an act of Congress, but they’re important nonetheless. And they come at a key time when examined through an economic lens.
Cuba and Venezuela have grown far closer since the fall of the Soviet Union. Venezuela ships 100,000 barrels of subsidized oil to Cuba each day. With the global price of oil cratering, Cuba’s fiscal lifeline is narrowing.
“For Cuba, the only possible short-term replacement for Venezuela might be increased remittances and travel from the U.S.,” said Peter Hakim, president emeritus and senior fellow at the Inter-American Dialogue in a Miami Herald article.
In the “more handwriting on the wall” department, just last month the Cuban government reached out to international companies by soliciting $8 billion worth of investments in 246 development projects, ranging from agriculture to energy to tourism. As analyzed by the Brookings Institution’s Richard Feinberg: “The 168-page Portfolio of Opportunities for Foreign Investment offers fascinating insights into the current distressed state of the Cuban economy – and into the competing development visions of its economic planners. Within the lengthy document, there are many assessments and proposals that suggest that Cuban authorities are prepared to dramatically open their economy to international capital, yet there are also many provisos that suggest a much more cautious strategy.”
Insomuch as the Cuban people are underserved by their government on a host of vital services – from transportation to medical devices to Internet connectivity to agricultural development – the opportunities for social enterprises are enormous. Several organizations have been laying the groundwork for a new, pro-business relationship with Cuba’s government and its people. In 2012, Fundación Avina helped organize several meetings in Havana, bringing together Latin American leaders from government, business, diplomatic and NGO communities to discuss sustainable development. The foundation also co-sponsored visits by a Cuban delegation to Brazil.
The effort was designed to build understanding around, and support for, social enterprise. One of its champions is Eric Leenson, co-founder and coordinator of Socially Responsible Enterprise and Local Development in Cuba (SRELDC).
Leenson and SRELDC co-founder Julia Sagebien write in the winter 2015 edition of The Stanford Social Innovation Review, that the time is now to help Cuba develop new business models. Such socially-minded businesses could pivot off recent reforms that have decentralized many state-owned business operations, enabling more co-ops and independent business transactions:
“In Cuba, state leaders are acutely aware of the dark underside of economic change, but the state lacks the resources to redress most of these negative externalities. To help confront that challenge, some of the country’s newly minted entrepreneurs and cooperative leaders have begun to conduct business on a social enterprise model. In every part of Cuba, they are exploring the boundary between the private economy and the social economy—between private interest and collective well-being.
“Cuba engenders a wide range of responses, from utopian to dystopian. For many people, Cuba has been a beacon that shines brightly on behalf of social justice. For others, it has been a tropical gulag. But the reality in Cuba today requires us to look beyond those stereotypes. The country’s emerging market enterprises, though hampered by serious constraints, could provide a laboratory for the application of socially responsible business models.”
Scott Anderson is the managing editor of NextBillion.
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