"Cuba at the Crossroads: SMEs Arise Amid Persistent Poverty and Inequality"

Cuba finds itself at a crossroads where the opening up to micro, small, and medium-sized enterprises (MSMEs) sharply contrasts with the reality of a population facing shortages of basic food items. Amid a landscape marked by poverty, products that were once considered luxuries, such as Hershey's chocolate syrup or Hunts ketchup, are now available through distributors like Mercatoria, created by Aldo Álvarez. However, this availability is not a sign of general prosperity but rather a reflection of a fragmented economy where those who can afford to pay benefit, while the majority struggle to meet basic needs. Álvarez, a lawyer who has navigated the tortuous paths of Cuban commerce, saw the emergence of MSMEs as an opportunity. Despite returning to the island with hopes in 2018, his business faces the constant threat of governmental uncertainty. "The scenario generates a lot of uncertainty," he acknowledges, referring to the risks that the state could change the rules of the game at any moment. His experience in the private sector, however, has allowed him to adapt and grow despite the limitations imposed by the political environment. Since its inception, Mercatoria has diversified its offerings, supplying a variety of clients, from small restaurants to individuals with slightly more purchasing power. The company has grown and adapted its business model, becoming a symbol of Cuban entrepreneurial resilience. But what about those who cannot afford these luxuries? The majority of the Cuban population, which still relies on the rationing system, feels excluded from this new economic model. The historical context is crucial to understanding this dynamic. The opening of MSMEs in 2021, an attempt by the government to revive the economy amid the crisis, has brought with it hopes and fears. While there is recognition of progress in formalizing the private sector, many still distrust the government's true commitment to this opening. There are restrictions that limit the growth of businesses, such as caps on employees or bans on foreign investments, posing a dilemma: can a controlled private sector truly drive the economy? New economic actors, like Aldo Álvarez and other entrepreneurs, have had to deal with a governmental narrative that often blames them for inflation and shortages. As prices for basic goods soar, public perception of MSMEs becomes complicated. While some citizens see these businesses as a solution to state inefficiency, others view them as a source of inequality. The situation becomes even more critical when considering that the Cuban economy is at a turning point. With inflation hovering around 30% and a contracting GDP, the need for structural change is evident. MSMEs have become a pillar in areas where the state has been unable to deliver, such as in bread production, an essential good that, while guaranteed by the government, has suffered severe shortages. However, the growth of this sector has been overshadowed by government measures that often seem to contradict its own openness. The imposed restrictions not only limit the growth potential of MSMEs but also create a constant uncertainty among entrepreneurs. "Can the sector lose part of what it has gained in these three years? It could be," Álvarez reflects, highlighting the precariousness of operating in an environment where the government can change the rules without warning. On the other hand, the influx of capital and resources from abroad has begun to shape a new economic landscape. Remittances, along with the interest of Cuban entrepreneurs abroad, are fueling a business ecosystem that still has to contend with distrust and the resistance of a government that has historically been hostile to the idea of private property. This duality creates a strange environment, where growth opportunities coexist with the shadow of state control that has not dissipated. In this context, the question of where Cuba is headed becomes increasingly urgent. The perception of a shift towards a more capitalist model, while possible, faces the reality that many Cubans, especially the less fortunate, do not see significant improvements in their lives. The signs of emerging wealth contrast with persistent poverty, and the struggle for access to basic food items serves as a constant reminder of the deepening inequality. Ultimately, as the island moves forward on this new path, Cubans face a dilemma: can MSMEs truly transform the economy while also addressing the basic needs of the population? The answer remains uncertain. While some enjoy a new era of entrepreneurship, others struggle to survive in a system that, despite its changes, remains profoundly unequal. The hope for a more prosperous future is intertwined with the reality of a present that still leaves much to be desired.