Cuba allows foreign investment in trade, a first

Residents wait to enter a store in central Havana on July 29, 2022. © Alexandre Meneghini / Reuters

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Cuba is taking a further step towards the decentralization of its economy.

In an attempt to solve the chronic shortages, the government decided on Tuesday August 16 to authorize foreign investment in wholesale and retail businesses, a year after having authorized the creation of small and medium private enterprises, which put end to 52 years of state monopoly.

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In the face of the strong restrictions we are facing, foreign investment in wholesale and retail trade, with state regulation, will make it possible to expand and diversify the offer to the population and contribute to the restoration of the national industry

 ,” Economy Minister Alejandro Gil tweeted on Tuesday, August 16.

In medio de las fuertes restricciones que enfrentamos, the inversion will extranjera en el comercio mayorista y minorista, con regulación del Estado, permitirá ampliar y diversificar la offer a la population y contribuirá a la recuperation de la industria nacional.@MEP_CUBA pic.twitter.com /Uz8pqlVtSY

— Alejandro Gil Fernandez (@AlejandroGilF) August 16, 2022

The Cuban government will, however, retain its monopoly on foreign trade.

Until now, foreign investments in Cuba were only allowed in the production of goods, services, as well as in a few sectors of activity such as the hotel industry.

Fighting shortages

From now on, wholesale businesses can be entirely owned by private investors.

The retail trade, however, will remain subject to the mixed economy regime in force in the country, in which the State will retain a stake.

Currently controlled entirely by Havana, Cuba's commerce sector faces severe product shortages and struggles to capture foreign currency.

A situation that favors the black market and fuels the rise in prices.

Another measure that goes in the same direction was recently taken by the island's authorities: banks and exchange offices will now be able to buy

US dollars at the same price as on the black market

, i.e. at an exchange rate five times the official rate.

A measure that has become necessary, because the country has a huge need for foreign currency to buy food and fuel abroad.

Unprecedented economic crisis

Cuba is currently going through an unprecedented economic crisis, aggravated by

the economic embargo of the United States

.

In addition, the country has suffered greatly from the pandemic, which has deprived it of foreign tourists, the mainstay of its economy.

In August 2021, the Cuban government had already

authorized small and medium private enterprises

, ending 52 years of state monopoly.

► To read also

: 

Cuba: nearly 400 people sentenced for the demonstrations of July 2021

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