Yesterday's Wall Street Journal had a very interesting article by Jose de Cordoba and Nicholas Casey about Cuba’s moves towards a free market economy. I’m very excited about the changes I expect to see in that country in the next few years. I think that tremendous business opportunities will arise for those that are actively looking. These areas include tourism, small business training, and mobile marketing.The best news out of all of this current crisis is that the country’s leaders seem ready to embrace private-sector initiatives. "Our state cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls (and) losses that hurt the economy," the statement issued by the Cuban Workers Federation said.
As we witness the end of one of the last true Communist economies in the world, it is important to remember that one of the primary keys to prosperity is the ability of its people to pursue their dreams without government restrictions. Ayn Rand taught us that lesson so well in Atlas Shrugged. Perhaps it is time for the Cuban Americans that have been hiding in Galt’s Gulch to start packing their bags for a return to a land that is truly ready for major free market reform.
The major opportunities that I see for eager entrepreneurs include these areas which require very little capital investment and hold the potential for significant return.
Tourism - What does this mean to opportunity seekers? I see immediate opportunities for the following areas: tourism and small business training. The demand for Americans wanting to visit Cuba will be extraordinarily high. Americans have a long-held fascination for all things Caribbean and in particular, have been very angry that they were not “allowed” to visit this Cuba. Indeed, I see tremendous opportunity here.
Small Business Training - As to small business training, this is a land of people that have wants and needs that have been suppressed for nearly 50 years. Many new businesses will be created. With over 85% of the Cuban work force employed by the state (2009 numbers), it is fair to say that most of them have no idea how to start or run a business. Basic small business training will be needed. Although most Cubans speak Spanish, there is a significant portion of the population that speaks English, French, and Russian. Possible options for dealing with this - hire a translator for on-the-ground work and for converting information products.
Mobile Marketing - In a country where most people do not have access to computers, smart phones will be a very hot product here as they have been in other lesser developed countries. This will be the means by which most people will get their access to the internet for all the things that we know and love - access to information, training, products, etc. People who can deliver their products and services well via mobile devices - in Spanish - will see enormous opportunity.
Although this is the first time I have written about Cuba, I have long speculated about the tremendous opportunities that await. Entrepreneurs get ready. What appears to be a slow trickle towards free markets could accelerate much the way that the fall of communism in Eastern Europe did from 1989 to 1990. Change came very fast. People that were watching closely - and that were able to act swiftly - benefited enormously from the new opportunities. Will you be ready?
My major takeaways from the WSJ article included:
- The Cuban government is laying off more than half a million state workers and encouraging them to move into private-sector jobs and self-employment opportunities. In a country where approximately 5 million workers worked for the state at the close of 2009, this is really big news that will likely be painful in the short-term but tremendously positive in the long term. (The statement said that over a million total cuts are expected in the near-term.)
- Several days ago, in an interview with The Atlantic Magazine, retired President Fidel Castro said that the Cuban model no longer worked. Although he later said that he had been misunderstood, it appears that the elder Castro is tacitly supporting his brother’s efforts to move Cuba’s economy towards capitalism.
- Cuba wants to move workers in “nonproductive jobs into areas that have not been very attractive, such as construction, farm labor, police, teachers, and industrial workers. “ Having people who are motivated to build things, make food, teach people, and do industrial work seems to me a formula for economic stimulus.
- Although the government’s list of 124 “authorized” activities for self-employment includes “carpenter,” it clearly states that carpenters are only allowed to “repair existing furniture of make new furniture upon the direct request of a customer.” This list also includes toy repairman, music teacher and pinata salesman. It is hard to argue that Cuba needs policies that are more supportive of people who want to be engaged in matters that might lead to creating things that are more business oriented.
- In an effort to address the country’s huge current-account deficit, Cuba has made significant cutbacks in imports, including “critical inputs for agricultural and manufacturing.” This has led to decreased agricultural and industrial production. Again, this is not a formula for economic success.
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