Deputy Prime Minister Oscar Pérez-Oliva Fraga announced that Cubans residing abroad will be able to invest in micro, small, and medium-sized enterprises (MSMEs) and participate in foreign investment programs. The announcement is historic, but its real impact will depend on how long-standing obstacles are resolved and how quickly the mechanisms to connect supply and demand are activated.
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The facts: what changes with the announcement
On March 11, Deputy Prime Minister Oscar Pérez-Oliva Fraga confirmed what many had been expecting for years: Cubans residing abroad, regardless of their immigration status in Cuba, will be able to invest directly in the island’s private sector. This is not an isolated measure. It is part of a package of actions the government has been implementing to open up opportunities for private capital in a context of profound energy crisis and economic hardship. But what was announced now opens doors that were previously closed, even for those who had emigrated and maintained economic ties with the country.
The announced options are three, and each has different implications.
- Being a partner in a newly created private micro, small, or medium-sized enterprise (MSME). A Cuban residing abroad can establish a new private company in Cuba with other partners (residents or not). This grants them full ownership rights over a Cuban legal entity, with the capacity to hire workers, operate throughout the national territory, formalize contracts with state-owned, private, or foreign companies, import goods for commercial purposes, and engage in any activity not prohibited by the current list. They can also lease real estate or facilities, both private and state-owned, and bring equipment, raw materials, and means of transport into the country to support their operations.
- Joining an existing micro, small, or medium-sized enterprise (MSME) as a partner. Those who already have a business operating in Cuba can receive investment from a foreign resident, who contributes capital and acquires shares. The conditions are defined by the bylaws of the receiving company. This avenue allows for capitalizing existing businesses, supporting them in accessing new markets, and, in many cases, legalizing shares that already existed in practice but could not be openly declared.
- Participating in foreign investment models alongside Cuban private companies. The Foreign Investment Law currently allows for the creation of joint ventures and international economic association agreements. What’s new is that now a Cuban resident abroad can be the foreign partner of a Cuban private company, forming a new legal entity that inherits the advantages of the foreign investment regime: the possibility of carrying out a wider range of economic activities and direct access to foreign trade.
Added to this is a development that had already been brewing: the participation of Cubans residing abroad in the Cuban financial system, through the creation of non-bank financial institutions, investment fund management companies, and various types of banks, subject to prior licensing by the Central Bank of Cuba. In recent months, more than five such entities have emerged and are beginning to take their first steps.
Why this matters now: context of crisis and opportunity
This announcement does not come in a vacuum. It comes amid the worst energy crisis Cuba has faced in decades, with blackouts of up to 20 hours a day, fuel shortages that paralyze the economy, and an external embargo that has been progressively tightening.
In this context, opening the door to investment from Cubans living abroad is more than just a step towards openness: it’s an acknowledgment that the country needs to mobilize all available resources to weather the storm. Cubans in the diaspora have capital, international experience, networks, and, in many cases, the desire to contribute to the country of their birth.
Investor profiles: note veryone is looking for the same thing
One of the most common mistakes when analyzing these types of measures is treating “Cubans residing abroad” as a homogeneous group. They are not. Their motivations, investment capacity, and legal restrictions vary enormously. Identifying these profiles helps to understand what type of investment might arrive and through what channels.
- Profile 1: The One Who Never Wanted to Leave and Wants to Return to Invest
This is the Cuban who maintained their emotional connection to the island, who visits regularly, who perhaps already sends remittances or supports family members. Their motivation is not solely financial: they seek a sense of belonging, they want to rebuild something in the place they left. They are usually willing to invest for longer periods and accept moderate returns if the project has emotional significance. For them, legal security is important, but trust in the local partner may outweigh the legal framework.
- Profile 2: The Successful Individual Abroad Who Sees a Business Opportunity
This profile is more detached, more analytical. He has been successful in his country of residence and views Cuba with the eyes of a professional investor. He seeks profitability, scalability, and clear exit strategies. He is not driven by nostalgia, but by a return on investment. He will evaluate country risk, regulatory stability, the ability to repatriate profits, and the growth projections of the sector where he plans to invest. For him, formal guarantees are crucial.
- Profile 3: The one who was already sending remittances and now wants to formalize their participation.
This is a very common profile: the Cuban who for years has sent money to family or friends to start or maintain a business, but did so informally, without paperwork. Now he sees an opportunity to convert that flow into a legal stake, with clear rights. His main motivation is not so much future profitability but the security of what has already been invested. He seeks to protect what already exists, rather than embark on new ventures.
- Profile 4: The Cuban-American with U.S. citizenship.
This is the most complex profile. He faces legal restrictions that the others do not. US sanctions against Cuba prevent him from investing freely, and any transaction must be scrutinized to avoid violating OFAC regulations. His interest may be as high as anyone else’s, but his options are more limited and the costs of legal advice are higher. For him, the question is not just “where to invest,” but “how to do it without putting himself at risk.”
Winning and losing sectors: where investment will go and where it won’t
Not all economic activities are equally attractive to foreign investment. Some will attract the most interest; others will lag behind. Identifying winning and losing sectors helps businesses position themselves and investors focus their search.
Foreseeable Winners:
- Logistics and Freight Transport: In a country where the movement of goods is one of the main bottlenecks, anything that helps move products has guaranteed demand. Truck fleets, warehouses, distribution centers, cold storage solutions. It is a sector with clear needs and where investment can have quick returns.
- Renewable Energy: In the context of an energy crisis, anything that helps generate electricity off-grid has potential. Solar panel projects, wind farms, storage solutions, biofuels. It is a sector with guaranteed demand and the possibility of scaling up.
- Renewable Energy: In a context of energy crisis, anything that helps generate electricity off-grid has potential. Solar panel projects, wind farms, storage solutions, biofuels. It is a sector with guaranteed demand and the possibility of scaling up.
- Financial Services: The creation of non-bank financial institutions, fund management companies, and other actors in the financial system opens up a completely new field. Those entering now can position themselves as early players in a sector that until recently was closed to private capital.
- Agricultural Production: Cuba imports a significant portion of the food it consumes. Agricultural projects incorporating technology, irrigation, greenhouses, and mechanization can replace imports and supply the domestic market with quality products. It is a long-term sector, but one with a structural need. However, the authorities will have to clarify whether private national legal entities will be able to receive land in usufruct, a possibility that is currently denied in the draft law on land ownership, possession, and use, which is currently under discussion and will be submitted to the National Assembly sometime in 2026. Without this clarity, the private agricultural sector will continue to operate with its hands tied.
- Diverse Manufacturing to Meet Local Needs: Production of construction materials, packaging, textiles, cleaning products, and basic consumer goods. Everything that is currently imported but can be produced locally is a candidate for investment.
- Technology and professional services: Software companies, consulting firms, export services, call centers, and digital platform development. The required capital is not as high, access to foreign markets is easier, and the regulatory footprint is smaller.
- Real estate: Especially in the storage, industrial warehouse, office, and housing segments for middle- and upper-income sectors. The possibility of acquiring properties through legal entities opens up a range of options that did not previously exist. However, we will have to wait for the final version of the Housing Law, which is also currently under discussion, to fully understand the framework in which we will be able to operate.
Foreseeable losers:
- Tourism: It may seem contradictory, but in the current context, this sector is practically paralyzed. The drop in international tourism, travel restrictions from the United States, the lack of air connectivity, and the energy crisis affecting hotels and tourist services make it, currently, a high-risk area. That said, the situation could change rapidly if travel restrictions for Americans to Cuba are eased. In that scenario, tourism would once again take center stage. But until that happens, it’s not a priority sector for investment.
- Traditional retail: This is a fragmented sector with tight margins and high competition. It’s unlikely to attract significant foreign investment unless it’s for scaling up to chain formats.
- Activities with low profitability or high regulatory risk: Passenger transportation, social housing construction, and personal services are sectors where foreign investment doesn’t find clear comparative advantages.
- Activities subject to discretionary permits: The more a business depends on case-by-case authorizations, the less attractive it will be to an investor seeking predictability.
The challenge of matchmaking: connecting supply and demand
One of the most practical problems posed by this new framework is also the most fundamental: how do those seeking investment and those offering capital find each other?
Currently, there is no visible marketplace, no recognized platform, no space where supply and demand can meet transparently. There are Cuban entrepreneurs who need capital and don’t know where to turn. There are Cubans abroad with available funds who would like to invest but don’t know where.
In other countries with large diasporas, this problem has been addressed through:
– Specialized digital platforms that connect projects with investors.
– Diaspora investment funds that channel resources toward priority sectors.
– Matchmaking events organized by chambers of commerce or business associations.
– Trust networks that operate through consulting firms or law firms.
This is where AUGE can play a role. We have been supporting Cuban private companies and foreign investors for years. We have developed a practical understanding of regulatory mechanisms, real opportunities, and risks to avoid. And we have built a network of contacts that allows us to connect serious players on both sides.
It’s not about having a magic formula, but about offering what we have learned: helping to evaluate projects, structure agreements, and build relationships of trust. For those seeking investment and for those who want to invest, this support can make all the difference.
While the matchmaking ecosystem in Cuba is developing, at AUGE we are available to build bridges with sound judgment.
The obstacles: what can’t be solved with an announcement
All of this sounds good on paper. But those of us who have been supporting private companies in Cuba for years know that the gap between the announcement and reality can be enormous if the underlying structural problems are not addressed.
The first is the slow pace of approval for micro, small, and medium-sized enterprises (MSMEs). Since 2024, the process has been slowing down due to delays by local governments and the Ministry of Economy. A worrying level of discretion has been reinstated: business purposes are being questioned without real grounds, activities are being rejected without clear explanation, and applications have been awaiting a response for over two years. If this isn’t corrected immediately, any investor enthusiasm will crash against a wall of bureaucracy.
The second issue is the banking and foreign exchange disorder, exacerbated by the energy crisis. Banking services are affected by staff shortages, power outages, and an insufficient number of branches dedicated to the corporate sector. The ability to open dollar accounts from which to make payments abroad remains an outstanding issue, with implementation progressing very slowly. It’s unlikely that an investor will bring in capital if they don’t have guarantees that they can move it freely.
The third issue is the lack of confidence in the regulatory framework. This isn’t a new problem: decades of discretionary regulatory changes have left their mark. The “improvement” of self-employment in 2017, the 2024 regulatory overhaul, and the fickleness with which the rules are sometimes modified—all of this weighs heavily. The government needs to offer convincing, clear, and irrevocable signals that the framework will not change unless it expands opportunities. Overcoming this mistrust takes time and concrete actions.
The fourth, and perhaps most significant, factor is the external environment: US sanctions against Cuba. For Cubans residing in the US who hold US citizenship, the risk of violating OFAC regulations is real and can constitute a considerable disincentive. The Trump administration speaks of economic opening, but as long as the sanctions remain in place, any progress may remain meaningless.
Unanswered questions
An announcement of this nature inevitably raises questions. Some of them are crucial for stakeholders to make informed decisions:
How can it be justified, and on what grounds, that Cubans residing on the island remain excluded from certain activities—such as financial or professional services—while a resident abroad can participate in them through foreign investment?
Will the principle of “case-by-case approval” continue to apply to joint ventures and partnership agreements, with all the discretionary power that implies?
Will the MINCEX Single Window be the channel for these processes, or will it be necessary to navigate multiple levels of government?
How will investors repatriate their profits? What mechanisms and exchange rate guarantees will be in place?
In the case of joint ventures, how will the workforce be hired? Through employment agencies, as is currently the case with foreign investment?
How can those seeking investment connect with those offering it? At this point, the role of specialized actors like AUGE is key to building bridges with sound judgment and trust.
Why is investment from Cubans residing abroad permitted, but conventional foreign direct investment in the private sector remains prohibited? The answer to this question will define the limits of this new framework.
What those who want to take advantage of this opportunity should do
For Cubans residing abroad who are considering investing, the first step is to become properly informed. Not all options are the same, nor are they suitable for every purpose. Depending on the planned business model, it is necessary to comparatively evaluate which scheme is the most advantageous.
If you are a U.S. citizen, it is essential to seek sound advice to determine if the operation violates current sanctions and, if so, adopt the appropriate strategies to operate within the legal framework.
Identifying the right partner is perhaps the most critical decision. Considerations include reliability, experience, available resources, market share, and legal structure. A poor choice can cost far more than the invested capital. In this search, having specialized support can make the difference between a successful partnership and a troubled relationship.
And, of course, preparing the necessary documentation for the corresponding procedures in Cuba is crucial. This is not a process that can be improvised.
For micro, small, and medium-sized enterprises (MSMEs) in Cuba seeking investment, the process is similar. It’s essential to clearly identify the purpose of the capital, its intended use, and the most suitable form of financing. Having a business plan—at least an executive summary—is key to presenting the case effectively. Identifying your own strengths and contributions, building trust with the potential partner, and seeking legal counsel throughout the entire process are steps that should not be omitted.
Final thoughts: realism, not optimism or pessimism
This is a belated announcement. It comes in the midst of a profound crisis, when the country is facing an energy shortage that is paralyzing everything. In this context, talking about optimism or pessimism is unproductive. What is needed is realism.
It is urgent to halt the energy crisis as soon as possible and stabilize the country on this front. Without electricity and fuel, no business can function, no matter how well-capitalized it may be. On the other hand, the United States government should seriously consider easing the sanctions, because their weight is immense, and if this barrier is not lifted, any change in Cuba could remain a dead letter.
In such an uncertain environment as the current one, it is very difficult to determine what the true impact of this measure will be in the short term. Most likely, it will be limited if the aforementioned obstacles are not addressed and if the remaining questions are not answered affirmatively.
