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Microcredit in Cuba
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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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