Whether or not President-elect Donald Trump follows through on plans to reverse the U.S.’s economic opening with Cuba, entrepreneurship on the island will be hard to get rid of. Reforms enacted by President Raúl Castro in 2011 (three years before the U.S. rapprochement began) have already led to a boom in restaurants, bed-and-breakfast inns, private taxis and other small ventures on the island. Though Cuba’s economic liberalization is unlikely to come in a straight line, the direction of change is apparent.
But exactly who will enjoy the fruits of that change remains to be seen. As Cubans have benefited from new economic opportunities, the country’s sizable Afro-descendant population has increasingly been left behind. President Barack Obama recognized the role that U.S. policy played in making these problems more acute and said he would cooperate with Castro in finding ways to stem the island’s rising inequality. It is an area of the economy in which Cuba could use a willing partner.
A big part of the problem can be traced to Afro-Cubans’ limited access to capital. An estimated 70 to 80 percent of Cuba’s small businesses are funded with remittances from abroad or through family money, but the percentage of Cubans living off the island is heavily skewed toward the white population. As many as 85 percent of Cuban-Americans identify as white, for example.
It’s no surprise, then, that there is a noticeable disparity between the rate at which white Cubans and Afro-Cubans have been able to establish businesses. According to a 2014 study of the island’s remittance recipients, approximately 81 percent of those who already owned a business were white.
The differences are especially stark in profitable tourist-serving ventures such as paladares (private restaurants) and casas particulares (bed-and-breakfasts). In Open for Business: Building the New Cuban Economy, author Richard E. Feinberg estimates that 80 percent of paladares “benefit from expatriate funding.” The Afro-Cuban community is less able to draw upon the resources of family members in the U.S. and elsewhere as a source of start-up capital.
The Obama administration’s complete removal of the caps on remittances to Cuba has allowed Cuban-Americans to support their families in developing an entrepreneurial class.
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