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The private sector in Cuba dominates more than half of the retail trade and generates nearly a third of employment in the country, but its actual growth capacity is limited by government obstacles, legal restrictions, and limited access to international markets.
A recent report from economist Ricardo Torres Pérez, published by Cuba Study Group, indicates that Cuban entrepreneurs are facing an increasingly hostile environment, with limited participation in exports and lacking sufficient access to financing for expansion.
The situation worsens with power outages, resource shortages, and the decline of private tourism, which was thriving in 2024 but was hit in May 2025 by Airbnb's withdrawal from the country.
The data from a revealing graph
The data from the report "Private Sector in Cuba: Escape Valve or Development Engine?" shows how Cuban entrepreneurs generate more than 31% of employment in the country.
The private sector accounts for 55% of retail trade, even though its contribution to Gross Domestic Product (GDP) barely reached 15% in 2024.
The graph included in the study presents a dual reality. On one hand, self-employed individuals are essential in visible areas of the economy such as trade, services, and tourist accommodation, but they are marginalized in strategic sectors with higher productivity.
Only 3.2% of exports are carried out by the private sector, a critical indicator that confirms its exclusion from international integration and demonstrates how the State continues to maintain absolute control over foreign markets.
23% of the State's budgetary revenue comes from taxes collected from the private sector, which reinforces the perception that small and medium-sized enterprises (mipymes) and self-employed individuals not only create jobs but also fund a substantial part of public spending.
However, the current tax system puts them at a disadvantage compared to foreign investors, who enjoy exemptions and privileges that domestic players do not have access to.
Private tourism in crisis: 2025 marked a silent setback
One of the areas where the growth of the private sector was most evident was tourism, with a 24% share in overnight stays of international visitors by the end of 2024. This trend took a significant hit in May 2025, when the platform Airbnb suspended payments to hosts within Cuba.
The decision, made without prior notice, forced many landlords to seek bank accounts overseas or leave the platform. Airbnb processed existing reservations but blocked new transactions unless they comply with its conditions, linked to federal regulations in the United States.
The measure affected more than a thousand private accommodations and experiences, especially in Havana. Airbnb Experiences that included cultural tours, cooking classes, and music sessions led by Cubans were also suspended, leaving many entrepreneurs without income or immediate alternatives.
Most hosts face higher commissions, difficulties ensuring basic services like electricity and water for their clients due to the energy crisis in the country. Additionally, there is a reliance on family members abroad to collect the few funds they manage to coordinate.
The Cuban authorities, for their part, have intensified their commitment to state tourism, announcing new hotel investments, leasing of tourist facilities, creation of foreign currency bank cards, among other initiatives.
While the State opens up to foreign investment, the private sector endures regulations, price controls, legal insecurity, and a forced banking system that complicates operations in the Cuban context.
A productive sector without access to the economic heart
The graph from the Cuba Study Group report clearly reflects the limitations of the private sector in the Cuban model. Despite generating employment, contributing taxes, and leading retail trade, small and medium-sized enterprises (mipymes) and self-employed workers remain outside the control of foreign currency, exportation, and key sectors of the economy.
This imbalance is not coincidental. The regime's policies act as a structural brake, imposing obstacles on foreign trade, financing restrictions, stringent regulations, and an approach that regards the private sector more as a social safety valve than as a true economic driver.
The private sector in Cuba demonstrates dynamism, innovation capacity, and resilience in the face of structural obstacles. However, the rules of the game remain unchanged, and its role is limited to filling the gaps left by the State, without reaching the transformative potential that the country needs.
Frequently Asked Questions about the Private Sector and Tourism in Cuba
Why is the private sector in Cuba unable to grow despite its importance in trade?
The Cuban private sector faces structural obstacles, legal restrictions, and a lack of access to international markets. Despite accounting for 55% of retail trade and generating nearly one-third of employment, its capacity for growth is hindered by a lack of financing and the exclusion of strategic sectors. Furthermore, the regime's policies regard private entrepreneurs as a "necessary evil," which reflects a lack of commitment to this emerging sector.
How has the exit of Airbnb impacted private tourism in Cuba in 2025?
The withdrawal of Airbnb has struck a hard blow to private tourism in Cuba, particularly affecting over a thousand private accommodations and experiences. Hosts have had to seek alternatives abroad to receive payments, while facing higher fees and technical issues due to the energy crisis in the country. This has left many entrepreneurs without income or immediate alternatives.
What is the current situation of international tourism in Cuba?
International tourism in Cuba is in crisis, with a hotel occupancy rate of just 24% in the first quarter of 2025. The arrival of visitors has significantly dropped, primarily from key markets such as Canada and Russia. Despite investments in hotel infrastructure, the sector faces service issues, an energy crisis, and a lack of competitiveness, which has deterred tourists and investors.
What role do SMEs play in the current Cuban economy?
SMEs have proven to be a real engine of hope and supply in Cuba. Despite bureaucratic hurdles and pressures, these businesses have managed to stock shelves, reactivate production, and generate employment. However, the government views them as a threat and imposes excessive limits and controls, hindering their full development.
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