The strengthening of the dollar will segment the markets where economic actors operate and will reinforce the dollarized circuit, further affecting companies that operate in Cuban pesos. This already occurred in 2019-2020 when the MLC was introduced and similar schemes were approved for state entities, benefiting private companies that managed to insert themselves into those chains through contracts
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2025 is the fourth year since the expansion of the private sector in Cuba and the increase in entrepreneurship opportunities. It is also another year of economic and social crisis due to the lack of comprehensive reforms to the Cuban development model, the post-pandemic effects, and the unilateral US sanctions.
Despite the complexities of the current scenario, thousands of ventures are finding new business opportunities in the market and many others are finding a way to consolidate and grow. 2025 brings starting conditions determined by the context. This article presents the roadmap of this year’s regulations, the main business trends, and their impact on the entrepreneurial community.
The economic issues to follow
The Cuban economy faces a series of external restrictions that affect the context and opportunities for entrepreneurship. These include: low growth (1% forecast for this year), high inflation (20.1% year-on-year in March), inconvertibility of the peso, financial restrictions, dependence on imports, and international sanctions.
The Government’s economic policy, summarized in what has been called the Program to correct distortions and reboost the economy, has aimed to solve macroeconomic problems and reactivate the productive sector, but with little effectiveness. An oversized focus has been placed on control over the private sector, some of whose businesses have been closed or have limited their investments, generating uncertainty that affects entrepreneurial expectations.
Access to foreign currency, one of the major problems for many entrepreneurs, remains restricted by the scarcity of dollars and other foreign currencies, which are vital for an open economy dependent on the external sector like the Cuban one. The lack of a formal market for the purchase and sale of foreign currency forces the MSME sector to acquire them outside the financial system, with the distortions that this implies.
Even so, the authorities have announced the “update” of the exchange market for the business sector. However, the current scarcity of foreign currency, whose solution is not short-term, would notably limit the type of businesses that could participate and the amounts of dollars to be exchanged. The State would enter as a player in a market that until now has operated informally without being contemplated by the monetary policy of the Central Bank.
In parallel, the authorities are implementing a partial dollarization policy that essentially covers companies in the state sector (tourism, biotechnology, tobacco…), mixed and foreign companies. Dollarized schemes are not expected to be approved for private companies. MSMEs and cooperatives will legally gain access by linking with these state schemes, functioning as suppliers of raw materials (for state/mixed/foreign companies) and final goods (for example, for dollar stores).
The strengthening of the dollar will segment the markets where economic actors operate and will reinforce the dollarized circuit, further affecting companies that operate in Cuban pesos. This already occurred in 2019-2020 when the MLC was introduced and similar schemes were approved for state entities, benefiting private companies that managed to insert themselves into those chains through contracts.
The changes in the law
In terms of specific regulatory aspects of the private sector, the new normative framework for the private sector came into force last August. This framework brought the following changes: 1) municipal approval of MSMEs and cooperatives, 2) restriction of corporate purposes, and 3) creation of a governmental institute for the control and promotion of private actors.
Although the municipal approval of private companies and cooperatives was scheduled to begin in March 2025, the process has not been fully decentralized and centralized authorization persists. This has led to great delays in the creation of new businesses and slowed the expansion of the private sector. The environment of nationally authorized MSMEs has remained at 11,300, with no changes in the last year. However, decentralization is expected to occur this year, which will reinforce the importance of local entrepreneurship, the need to ally with municipal authorities, and take advantage of the territory’s resources.
This year, the requirements for Local Development Projects (PDL), a form of entrepreneurship that has allowed many businesses to operate, will be modified. In the debate about whether or not they should be considered legal entities, PDLs have faced misunderstandings due to the legal gaps regarding their powers, organizational structure, and possibilities for linkage.
The new laws require “affinity” between the activities of the corporate purpose of companies. This imposes a bureaucratic barrier that prevents businesses from adapting quickly to changes in the market. Incorporating one or more new economic activities into the corporate purpose will be a long process that will not be able to respond in time to the demand for the good or service it intends to satisfy.
The wholesale trade of goods, essential in any economy, has been questioned. Resolution 56/2024 of MINCIN, postponed until September 2025, has generated uncertainty in supply chains, with negative effects on the expectations of economic actors and wholesale and retail consumers. Private wholesale trade will remain restricted to just over 400 MSMEs, which will generate artificial market power that will not contribute to increasing supply or reducing prices of basic goods.
More control and change in public-private businesses
2024 ended with a national control exercise after 606 thousand inspections, 980 million pesos in fines, and the regulation of almost 10 thousand business owners. Three national and several territorial exercises were announced for this year. The authorities’ discourse has positioned control of the private sector as a main objective.
In a challenging context, it is key to be up-to-date with regulations. Updated cost sheets (according to Resolution 148/2023 of Finance and Prices), products with centrally capped prices (Resolution 225/2024), the opening and use of the fiscal account (until 2024, 55% had zero balance), the timely and correct payment of taxes, and compliance with contractual relations between state and private entities, are issues under the scrutiny of most inspections and controls.
Regarding that last issue, the Government has criticized that contracts between state and private companies have been restricted to the leasing of premises or productive capacities from the former to the latter. Although economic contracting rules allow for variety and creativity, the restrictions of the macroeconomic environment hinder the linkage between these forms of ownership. First, monetary distortion (duality in exchange rates and currencies for operating) complicates operations and their accounting registration.
Some mixed participation businesses have prospered in recent years, but in general, existing conditions are not favorable. There is a lack of regulations that authorize the establishment of mixed enterprises (State-national private). It is likely that cooperative production activities, such as food and the manufacturing industry, will be prioritized.
What to expect from the new US administration in business terms
The second term of the Trump Administration generally presents challenges for the Cuban economy and society due to its declared interest in subverting the country’s political order. The private sector will also be affected, positively or negatively, by the ups and downs of the next four years. There is a new phenomenon compared to Trump’s first period: private MSMEs in Cuba are already a reality in the Cuban economy. The United States could implement a policy of support for the private sector as a spearhead to achieve its hegemonic objectives, or it could appropriate the opinion matrix established by a part of the Cuban community in Miami that the private sector in Cuba is a government farce.
In that second scenario, measures from the US government could be expected to restrict financial flows, operations, and relationships of Cubans residing abroad and the island’s MSME sector: 1) restriction of travel for American and Cuban-American visitors, 2) restriction on remittance sending, 3) particular sanctions on MSMEs for relations with Cuban government entities, 4) cancellation of licenses granted by OFAC, 5) cancellation of multiple visas, among others.
2025 is another challenging year for the entrepreneurial community. Many businesses will be able to sustain themselves, some will grow, and many others may close. Entrepreneurship is always difficult, whatever the circumstances. Successful entrepreneurs will know how to navigate the economic scenario and combine market opportunities with their business skills to get ahead. Adaptability to change, diversification of income sources, and establishing alliances with other businesses will be fundamental to traveling a path that is anticipated to be challenging.
