Dear Editor,
This letter seeks to highlight a particular observation of a small area of Cuba’s macroeconomic disposition. In recent years, private individuals were given the opportunity to pursue business endeavours in and out of the country. This new policy sought to provide a road map to economic freedom that was so desired. This was a great strategic decision by the Cuban leaders. It allowed for the opening and regularization of what could have been considered as a “shadow economy.” There is a need for a number of products in that country. While businesses there are thriving, it only allows for the conversion of local commodities into goods and services.
In recent years, there has been an increase in the number of Cubans visiting Guyana. This increase was driven by the new policy and the wonderful relationship between the two countries. In addition to this harmony, there was the decision of the U.S. to only issue visas to the citizens of that country through their Guyana consulate. As a result, this did not only foster the opportunity for business and trade but for the transition to the U.S.. This is a great opportunity for Guyana. It stands at the centre of helping to develop fragmented industries in Cuba and a path to immigration.
Many Cubans from all walks of life are aware of this opportunity. The ‘bicitaxi’ rider, tour guide, hotel manager, restaurant host, and even the guy hustling cigars in the street. What does this mean for Guyana? The opportunity for trade and business operations should also help to develop local businesses. New policies and standards must be developed. They should parallel those in Cuba and aim to develop local, nationally operated businesses. There is a very unique opportunity to increase the wealth of Guyanese and Cubans if a strategic economic ecosystem is developed. Guyana’s leaders must look at this as a very strategic national interest that not only focuses on currency exchange, tax, and visitor metrics but as a functional activity that has greater economic potential for Guyana. Our businesses must understand their interests and cater to operations that are profitable for all involved.
The top inputs into the ecosystem are those basic activities such as transportation, accommodation, food, and wholesale purchases. Guyana does not own the airline that manages the route nor the agencies that cater to its operations. Guyana does not control or limit purchases or regulate the activity. There is a free economy. However, the majority of purchases are at non- national businesses. In Cuba, there is a policy that states that foreign businesses must enter into a 51/49% profit share. This clearly identifies that national interests are maintained in any business. While this may be considered differently based on opinion, it shows the interest the country has in developing their local economy. In contrast, businesses operate in Guyana without such conditions. Therefore, a foreign business in Guyana that supplies goods to Cubans is evading that situation yet benefiting from a scale economy in this new ecosystem.
What are the implications to Guyana? Top management in Guyana should perform a thorough analysis of this business environment. This analysis should not be limited to local activities but the entire supply chain that supports the trade agreement signed between CARICOM and Cuba. In doing so, they should look at cost structures and the profitability of conducting business with Cubans. They should focus on developing policies that not only benefit Guyana but that provide a better return on investment for those individual Cuban entrepreneurs. The reason why this should be done is because their invested capital is much greater when considering the cost of travel, food, and accommodation. In Cuba, this cost is calculated as a fraction of the price of the product sold. This is then transferred to the local Cuban customers who pay much more than us for a particular product. A classical example would be toothpaste. A tube of Colgate toothpaste cost US$1 in the Dollar Tree store in the U.S., about $395 in Guyana, and CUC$ 6 in Cuba, in a local individual shop. The Trade and Economic agreement falls short in defining this outcome to their local economy. Their citizens may not have the purchasing power to buy this product. This means that, contrary to the agreement, there is little or slow return on invested capital, little expansion on trade, and slow liberation, in in terms of economic and financial freedom of our Cuban family.
The analysis should also parallel one of the considerations of President Donald J. Trump’s four policy objectives for Cuba. In laying the groundwork for the empowerment of the Cuban people, Cuba’s strategic management has evidently created the atmosphere for the development of economic liberty. This is indicative by the new policy mentioned above, the fact that there is trade activities, and the continuous growth of Cuba’s presence in Guyana. This means that Guyana, by proxy, is creating a favourable relationship between the U.S. and Cuba. However, while political liberty is for citizens in a nation state to decide, we can clearly observe that there is a greater potential for increased economic liberty on the island. Guyana must put resources into ensuring that a very granular economic framework is developed so that Cubans investing in shopping here have a greater return on investment and that the customers in that country can afford these products at favourable prices. Similarly, Cuba has to ensure that taxation of these products offer both customer and investor satisfaction. In this year 60 of the Revolution, there has been great progress in advancing the macroeconomic disposition of the island. Currently, there is even greater possibility for obtaining individual financial freedom and the development of fragmented industries that may become consolidated overtime. Viva!
Yours faithfully,
Dustin E. Fraser
