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Microcredit in Cuba
El Microcrédito en Cuba

It is currently against Cuban law for small businesses to receive funding from outside the country, so this is done informally on a large scale.


Cuban Economic News        Small Business in Cuba      Cooperatives in Cuba  Las Cooperativas en Cuba



Who Really Benefits from US Funding for Cuban Entrepreneurs?  5/28/2022 Havana Times: "The Cuba Study Group’s Executive Director and consultant on US-Cuba policy, Ricardo Herrero, believes this interest is beneficial and positive as it gives Cuban entrepreneurs payment platforms and microfinance, thereby opening up a field of opportunities. “Cuban Law stipulates that a SMEs can’t accept members that aren’t permanent residents in Cuba, but it also stipulates that they can join and make connections with private foreign companies. So, there is a chance they can receive this microfinance. We know it exists; people have been doing it on the down-low, because they’d send remittances to the entrepreneur to set up their business and then they’d split the profits,” Herrero explained."

Pymelab 2022: event on MSMEs in Cuba  5/1/2022 On Cuba: "Since the authorization of the first 35 Cuban MSMEs last September, there are already more than 3,000 of these new economic actors, most of them private (3,093), to which are added 51 state-owned, and 50 non-agricultural cooperatives (CNA), according to data updated this Thursday. Of them, 56% correspond to reconversions of pre-existing businesses, 114 are part of local development projects, while construction, services, food production and the manufacturing sector are currently leading the way in their conformation… The need for more expeditious ways to access credits and microcredits, both in Cuban pesos and in foreign currency, the presentation of projects and rigorous feasibility studies to financial entities, the contradictions between regulations in force and adequate communication to take advantage of opportunities existing today, were among the aspects debated."

Cuba must shun capitalism and seek development solutions from within  11/11/2016 Guardian: ""Cuba needs to learn quickly what these other countries learned to their cost – that institutions matter. Rather than plunging into the cauldron of free market forces, the Cuban government needs to build the solid institutional framework that has been termed “the developmental state”." ...The Cuban government should resist any recalcitrant calls to deploy the microcredit model as a major part of its transition strategy. Microfinance has not succeeded in generating a sustainable, “bottom-up” development trajectory anywhere in the world (and for clear lessons one need only look at the disaster that has taken place in Bosnia and Herzegovina)."

Autoridades bancarias quieren promover el microcrédito estatal entre cuentapropistas  3/27/2016 Diario de Cuba: "A partir de abril una decena de gestores de microcrédito empezará a operar en el municipio de Holguín como experiencia piloto promovida por las autoridades bancarias, con el propósito de extender este tipo de servicios a trabajadores por cuenta propia necesitados de financiación."

The next step for developing Cuba? Microfinance  3/21/2016 Devex: "Microfinance is only available through local, state-owned banks, which cannot afford to provide the scope of financing needed in the country. Microfinance is expensive, and Cubans have little experience with microloans and credit scoring. To encourage external finance to the island, the Cuban government must allow international microfinance banks to operate and must be more welcoming to nongovernmental organizations."

Luxembourg duchess seeks return to Cuba to develop microfinance  3/7/2016 Straits Times: "She fled Cuba with her bourgeois family as revolution brewed, and later married into one of Europe's royal dynasties. Today, as the Communist-ruled island emerges from long economic isolation, Luxembourg's Grand Duchess Maria Teresa says she hopes to return home to pitch the cause of micro-credit to help the country's poor."

Institutional Changes of Cuba’s Economic Social Reforms  8/1/2014 Brookings: "Overall, Mesa-Lago concludes that institutional reforms in Cuba are advancing in a positive direction, albeit slowly. The most important of these so far has been the establishment of microcredit, bank accounts and wholesale markets for the non-state sector, and the sale of homes and establishment of inheritance rights for usufructuaries and home owners. However, key structural changes and components are still missing: integral price reform, elimination of monetary duality, a realistic exchange rate and bank system restructuring."

U.S. academics say Cuban reforms not going well  5/10/2014 Miami Herald: "But while up to 485,000 Cubans are reported to be licensed to work in low value-added jobs such as tailors and seamstresses, there are many constraints, Gonzalez-Corzo told the University of Miami’s Institute for Cuban and Cuban American Studies (ICCAS). An “onerous tax system” piles “taxes upon taxes upon taxes” that make it difficult for the new micro-enterprises and “confiscate the limited prosperity that people are generating,” he said. There’s a shortage of appropriate retail space needed for the new businesses, property rights remain largely unclear and government inspectors often look for bribes, the professor added. The cooperative sector is not doing as well as projected by the government, Gonzalez-Corzo said. And the average bank loan approved under a micro-credit program designed to help the private sector stands at about $55."

LOS SERVICIOS DE MICROFINANZAS EN CUBA: UNA NECESIDAD URGENTE  2/1/2013 Revista Caribeña de Ciencias Sociales: Universidad de la Habana

Pavel Vidal Alejandro: “Microfinance in Cuba”  7/31/2012 The Cuban Economy 

Microcrédito y microfinanzas, ahora en Cuba  4/18/2012 IPS: "La apertura del crédito desde la banca estatal permite sumar nuevos recursos a disposición de los emprendimientos privados."

Analysis: Cuba’s new financial policy — accelerating the economy  12/3/2011 Cuba Standard: "A foreseeable challenge is that, effectively, these three banks — whose basic experience and knowledge was formed under the logic of credit for medium-size and large enterprises — will be able to speedily assume the principles that govern microfinance. An alternative, more attuned with international practices, would have been to create microcredit banks or other financial institutions that solely specialize on serving this market segment. The formation of mixed-capital microcredit institutions (for example with some Latin American microcredit bank) would multiply the financial, logistical and know-how potential of Cuban banks facing the opening of a non-state small-business sector."

MICROCAPITAL BRIEF: Cuba May Allow Microfinance as Part of Modernization of Economic System  7/13/2011 MicroCapital: "Juan Diego Ruiz, general coordinator of the Spanish Agency for International Development Co-operation (AECID, in Spanish), an instrument of the Spanish government, said, “Today what’s being talked about more is credit policy, credit for the productive sector, and it’s an issue that is being discussed both on the street and in offices.” Tomás Marco, head of agricultural development in Cuba for AECID’s Spanish Technical Office for Cooperation, commented that it is in the area of self-employment “where microcredit fits best, with a focus on individuals. What’s opening up is a possibility; it’s not even a certainty. Nobody knows if loans in hard currency for self-employed people will be permitted.” In another sign of international interest, the Italian Permanent National Committee for Microcredit, an agency of the Italian government that was set up to facilitate microfinance activities, has also made visits to Cuba."

Microcredit Knocks Softly on Cuba’s Door  6/28/2011 Havana Times: "A microcredit system could begin operating in Cuba as part of reforms adopted by the government of Raul Castro to modernize the country’s socialist economic system. “Until about a year and a half ago, you practically couldn’t talk about this issue, but now the situation is different,” a European diplomat told IPS. He preferred not to be identified, to avoid undermining progress on the issue, which has its own particular complexities in the case of Cuba. “The idea of microcredit went from being almost sacrilege to something interesting,” he noted."

CUBA: Microcredit Knocks on Door…Softly  6/27/2011 IPS 

Cuba looks ready to allow small loans for reforms  10/11/2010 Reuters: ""We are trying to help create a financial instrument currently nonexistent in Cuba to provide the agriculture sector with credit in hard currency," said Juan Diego Ruiz, local coordinator of the Spanish government aid agency. Cuban officials have for long been wary of "microcredits" -- first developed in the 1980s to provide financial services to the poor in Bangladesh -- because they worry the small loans to groups of individuals could undermine the country's socialist principles, especially if coming from abroad. But Western diplomats say Cuba's government now appears ready to give such financing a try, even though it does not want to talk openly about "microcredits"."


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