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Cuba's Budding Entrepreneurs Travel A Rocky Road Toward Success

Jun 24, 2014
Originally published on June 24, 2014 10:57 am

When Americans think of business in Cuba, they think of government-owned enterprise. And the vast majority of Cubans do work for the state.

But in recent years, private business owners known as cuentapropistas have flourished on the island.

Cuentapropismo literally means "on your own account." As far back as the 1970s, Fidel Castro was talking about how socialism and small business ownership could coexist. Today, they do so more than ever: Between 2010 and 2013, the Cuban government expanded the list of privately owned business ventures, such as construction work, restaurants and tailoring, that are legal on the island.

About 1 million people — or 20 percent of the Cuban workforce — can now be classified as wholly in the private sector, according to a report by Richard Feinberg of the Brookings Institution.

Barbara Fernandez Franco remembers being excited when that list of government-permitted businesses first came out. She combed through the 200-odd jobs, and thought carefully about which she could do. She decided on the "tailor and seamstress" category.

We met 28-year-old Barbara in one of the aging but gorgeous buildings that line the narrow colonial streets of central Havana, Cuba's capital. Sitting in the stairway, she tells us it's been a difficult road full of stumbles.

She started off reselling clothing a friend made, but the profit margins were very small. Then, she began buying clothing from abroad — from countries like Dominican Republic, Peru, Ecuador and Mexico — which she then resold.

At first the project was as rocky as any startup business. But a few months down the line, she says, the profits were outstanding. Barbara was able to save a good amount of money — which today is helping her purchase a new home with her boyfriend, Michel Perez Casanova.

But that boom in business soon came to an end when the government announced that importing clothing for resale on the island would be illegal as of Dec. 31, 2013.

Barbara was devastated by the news, she says, but while other businesses shut down, she chose to carry on as best she could: She learned how to sew and created her own line of baby clothing and mosquito netting for cribs.

At a small restaurant in the port city of Mariel, owner Onil Lemus told us everyone he knows is absolutely thrilled about the widening scope of legal business ventures. In fact, he jokes that he liked it better when there where fewer cuentapropistas — because he had less competition.

Even though business is good for Onil, he echoed what several other small enterprise owners said to us: One of the biggest challenges has been the lack of raw materials. In Mariel, for example, Onil said, there's no access to wholesale food markets, which are so important to the restaurant industry.

Pointing to the delicious lamb stew he'd prepared for us, he explained that he'd had to go to a farm to buy the meat, but foods like rice and beans — staples in Cuban cuisine — are hard to buy in large quantities at good prices.

Similarly, Barbara said certain fabrics and ornaments are so expensive, it would be impossible for her to make a profit if she were to use them.

The widespread sentiment here is that the U.S. embargo — which has been in place for more than 50 years and is known as el bloqueo, or "the blockade," on the island — is largely responsible for these kinds of difficulties.

Since taking over for his brother Fidel in 2008, Raul Castro has been pushing to modernize the economy. Onil said he's confident that as the number of private business owners grows, the government will address these issues.

Barbara's boyfriend, Michel, on the other hand, seemed more disheartened.

"Some tourists say that this country's growing up now and it's going to get better and better," he said. "But, you know, the system here is so slow. Step by step. Very, very, very slow."

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RENEE MONTAGNE, HOST:

Starting a small business can be tough - getting financing, maybe finding the right real estate, dealing with suppliers. So imagine doing that in a communist country where the entire notion of being an entrepreneur is at odds with the prevailing political philosophy. It's a challenge our colleague David Greene saw firsthand when he was in Cuba last week.

DAVID GREENE, BYLINE: We came to Cuba to listen to people on the streets, to business owners, government officials and dissidence. There has been talk of change in this country for years and no doubt the society is evolving. But what has it really meant to people's lives? Impatience is growing even as people try to find their way in this murky society created by the Castro brothers and largely cut off from the United States. Now, one change that's been taking place slowly is in small business. There are more small business owners on the island than ever before - half a million, that's about a fifth of the workforce. A lot considering President Raul Castro insists he's still committed to socialism. We went to meet one. A young woman at a loud market in central Havana. Her name is Barbara Fernandez Franco, she's 28 years old and she sells baby clothing at the last stall on the left.

GREENE: You're selling jewelry, shoes, sandals, jeans, belts and she has a little area of the store for herself and a little counter where - there's her baby clothing, it's beautiful, it's pink, blue, yellow. She's standing there really proudly, everything is hung up on little hangers behind her and she looks like a proud business owner.

But there's something sad here. A section of Barbara's shelves is totally bare and roped off. She said it wasn't always like that.

BARBARA FERNANDEZ FRANCO: (Through translator) It was full of clothing and this was not divided, it was just one big stand.

GREENE: It turns out these empty shelves tell us a lot about Cuba today. Barbara brought us to her home to tell her story and to tell us what went wrong. She lives in the community hidden behind the walls along a narrow street in Havana. I just want to describe for a minute - we're standing just outside Barbara's door, I mean, this little alley, which feels really cozy. I mean, neighbors must really know each other, you've got neighbors chatting, a baby crying. I mean, is this neighborhood - sort of everyone knows each other and talks to each other?

FRANCO: Si.

GREENE: Barbara used to work at a medicine factory, she made $35 a month - believe it or not, that's about average for people in government jobs. When she was pregnant, she gave up her job. She had a baby girl. She relied on family for a while and then she decided to take advantage of a new opportunity. The Cuban economy was struggling and the government had begun laying off hundreds of thousands of government workers. And it was permitting more people to become independent business owners - in Spanish, cuentapropistas.

FRANCO: (Through Translator) I just decided to do this. I always liked to have my own money. And then the government said that people are going to be able to have cuenta propia because there was a high unemployment rate and that everyone could do - everyone who wanted to could do it.

GREENE: That is if the profession was approved by the government. Now, being a seamstress was allowed. Trouble was Barbara had no idea how to sew, so she interpreted the category broadly. Instead of making clothing, she sold it, baby outfits that were made by her friend. She rented the stall at the market and she noticed something - other vendors were selling watches and records from other countries, and so she followed their lead. The kind of decision any resourceful business owner would make.

FRANCO: (Through Translator) She would buy jeans for women, jeans for men, panties, bras.

GREENE: Where would you buy them?

FRANCO: (Spanish spoken) - Peru, Ecuador, Mexico y Republica Dominicana.

GREENE: OK, this sounds like a good system. You're making some money.

FRANCO: (Through Translator) Yes, this worked very well.

GREENE: Really well. All those shelves were full. She was making $3,000 some months, almost 100 times her old government wage. But then something happened, she was reminded of where she lives.

FRANCO: (Through Translator) They put it in the official gazette and in the newspaper and it said starting on - December 31 is the last day to sell imported clothing, it cannot happen.

GREENE: Just like that the government banned the sale of imported clothes. She and thousands of other vendors doing the same thing were competing against state-run stores, and so the government shut them down. Some vendors have kept selling underground, but Barbara decided to play by the rules. This time she taught herself to sew. She makes baby clothing and mosquito nets in her living room. She's even hired two employees and pays them for each piece of clothing they make. Barbara is not making anywhere close to the money she was making before.

And so are you making a profit right now after paying your employees for what they make, paying the government in taxes, license fees?

FRANCO: (Through Translator) Very little, but I always make something. It's more than nothing.

GREENE: Just when Barbara was finding success, she was pulled back. Still, she sees the opportunities for cuentapropistas as a sign of progress in Cuba. But when her boyfriend of nine years came home, we heard a different story. He's got this enviable name.

MICHEL PEREZ CASANOVA: Michel Perez Casanova, that's my full name.

GREENE: Michel works as a promoter, he bring tourists to restaurants and hotels and collects commissions each time. This used to be illegal.

CASANOVA: Sometimes the cops - the policeman - they catch me and put me in the station because it was not official to talk with tourists. Nowadays it's a little more freedom, no?

GREENE: It is more free, he's actually doing this work as a legal cuentapropista now. But he says every time tourists come and ask about Cuba going through these big changes, he feels like they've got the wrong narrative.

CASANOVA: Tourists say that this country is growing up now and it's going to get better and better. We've been waiting and waiting. I don't know, I have many friends out of Cuba in the United States, in England, other countries, they say over there you have to work very hard but you can see the results. So I want to see the results here.

GREENE: And if he doesn't, Michel says he might try life in another country, which makes you wonder if Cuba is in a race against time. Will motivated and talented people like Barbara and Michel feel satisfied enough to stay and be part of future here or will they join so many other Cubans who have left?

MONTAGNE: That's our own David Greene who's just back from Cuba. We'll be hearing his stories each morning this week.

MONTAGNE: This is NPR News. Transcript provided by NPR, Copyright NPR.