From tiny stalls selling beers and sweets in the courtyards of houses, to more established businesses selling meat, dairy and other commodities: not a week goes by without new signs appearing in the Cuban capital.

In August 2021, the communist government of the island, which until then only knew state enterprises, decided to open the economy to private "micro, small and medium-sized enterprises" (Mypimes). An announcement in the midst of an economic crisis, the worst in thirty years under the effect of the pandemic and the strengthening of the US embargo.

Bodegon 21 opened its doors shortly after in the central Vedado district, offering varied products beautifully presented on wooden shelves, contrasting with the sad shelves of state stores where mainly tin cans are lined up, to be paid in foreign currency.

A woman looks at the prices of food items for sale at the Bodegon 21 shop, on June 5, 2023 in Havana, Cuba © Yamil LAGE / AFP

"If you need something you can't buy (in state stores), you can find it here. These are things we need," said Maria Leonor, 73, who has just bought yogurt, a commodity that has also not been on the monthly food book that Cubans have enjoyed since the 1960s.

The septuagenarian, who lives from renting a room in her house, says she would have liked to buy more products, but the "prices are rather high". A kilo of powdered milk is sold in these shops for about 2,000 Cuban pesos ($16), in a country where the average salary is 4,800 pesos ($39).

After losing his job, Omar Bouso, 27, started a takeaway business with two friends, which he plans to register as an SME.

Cooks prepare food at a private takeaway food shop on June 5, 2023 in Havana, Cuba © Yamil LAGE / AFP

"We looked for a niche in the market to do something different," he told AFP in his fast-food restaurant that offers exotic Hawaiian dishes served on ceramic plates, the house's trademark.

Like others, young entrepreneurs are sourcing from private importing companies, which appeared in 2021 and now bring all types of products to the island.

"Mental barriers"

These food shops are the most visible part of the 7,800 SMEs now registered on the island.

According to a UN report, 22.4% are engaged in construction, 19.2% in accommodation and food services, 12.2% in industrial food production and 2.9% in trade, among other sectors.

A van carrying goods passes in front of the headquarters of a "mipyme", the name of SMEs in Cuba, on June 6, 2023 in Havana © Yamil LAGE / AFP

"The state used to be the one and only supplier in this country, this is no longer the case," says Oniel Diaz, director of a consulting firm for private companies.

This change comes as the country is undergoing a sharp devaluation of its currency, fueling galloping inflation since the implementation of a currency reform in 2021. The government expects it to exceed 39% of 2022 this year, even though experts put it at three digits.

Economy Minister Alejandro Gil recently blamed private companies for rising prices. "We're not going to ask people to work at a loss (...) but it is not possible to have profits multiplied by five so quickly" after investment, he denounced before Parliament.

The minister defended the state sector, which accounts for 65% of Cuban jobs. State-owned enterprises "do not generate profits and employ (their workers) at minimum wage so as not to raise prices for the population," he said.

For Oniel Diaz, the state must establish "regulation", but it must not forget that private companies are designed to "generate wealth" and reinvest, highlighting the persistence of "mental barriers".

A customer shops at the Bodegon 21 store, on June 5, 2023 in Havana, Cuba © Yamil LAGE / AFP

This economic transition in one of the last communist countries in the world is the focus of attention: US President Joe Biden promised in 2022 to help "independent Cuban entrepreneurs" despite the embargo, while the European Union, the island's largest trading partner, and Russia have recently said they want to support the private sector.

© 2023 AFP