HAVANA (Reuters) – When Cuba announced its move towards electronic banking and a “cashless” society in early August, small businesses across the country were left confused and uncertain about the implications. The introduction of a daily cash withdrawal limit of 5,000 pesos ($20) for businesses was particularly concerning for many entrepreneurs. The Cuban government implemented these measures to address a cash shortage caused by a depreciating peso and rising consumer prices.
According to Alberto Quinones, vice president of Cuba’s central bank, the changes were necessary because the demand for cash was greater than what the bank branches could provide. These changes are being implemented gradually over the next six months.
However, these new regulations have already caused difficulties for businesses like Pilares Construction, a Havana-based builder. Yulieta Hernandez, the founder and manager, explains that although her business has already adopted electronic banking, quick access to cash is often needed for emergencies on job sites. Additionally, suppliers who were previously accepting electronic transfers now only accept cash, further complicating the situation.
Cuban entrepreneurs already faced significant challenges before the introduction of these restrictions. Limited access to electricity and the internet, fuel shortages, and difficulties in exchanging local currency for dollars made it difficult for businesses to operate. For Pilares Construction and similar businesses, the inability to extract sufficient cash from local accounts poses a significant obstacle.
The new measures could potentially dampen investment in private businesses that provide goods and services in areas where state-run enterprises have struggled. Privately incorporated enterprise re-emerged in Cuba two years ago, marking a major cultural and economic shift for many Cubans. Tax compliance has become a priority for entrepreneurs, leading them to adopt electronic banking practices even before the new regulations were announced.
However, many smaller businesses and mom-and-pop stores in Cuba are still unfamiliar with the formalities of doing business, such as paying taxes. For them, the introduction of these measures has created new challenges. Cuban officials argue that the new banking measures are necessary to ensure transparency and tax compliance.
The government has taken steps to educate the public about electronic payments. In Santiago de Cuba, members of local “computer clubs” were recruited to train passersby on cellphone payment basics. However, Ronald Venero, a Havana street vendor, highlights that many farmers he works with still prefer cash payments and are unfamiliar with electronic transactions.
Overall, the impact of these measures on Cuban businesses remains uncertain. Many entrepreneurs are waiting to see if a solution will be found for the challenges created by the new regulations.
(Reporting by Nelson Acosta, Anett Rios and Carlos Carrillo in Havana, editing by Dave Sherwood, Marc Frank and Rosalba O’Brien)
Credit: The Star : News Feed
