The genie is out of the rum bottle. 3G arrived in Cuba last December, and with it, a renewed sense of optimism about e-commerce, entrepreneurship and the development of Cuba’s economy.
“You can’t over-estimate the power of 3G here,” Ariel Menendez told me recently. He’s one of the co-founders of A La Mesa, a website and app for booking and reviewing restaurants in Cuba, similar to OpenTable.
When I share this quote with others, they wonder what it means. ‘How much can 3G change things,’ they ask. In a place where the only option to get online was either at a hotel charging $10-$20 an hour, or local parks with WiFi spots and vendors selling scratch cards for a few bucks, the answer is a lot.
Just over two years ago, when I last visited Cuba, people mostly used the internet for social media and to connect with family and friends abroad and social media. A very small percentage of developers used to download work assignments from companies abroad, some run by the Cuban diaspora in places like Canada. They’d complete their work off-line and then upload it.
Connectivity drives entrepreneurship
As access has increased, first, at the end of 2016, with Google’s limited pilot program, which provided 2,000 homes with internet access and now with 3G mobile data, connectivity has grown exponentially. Greater availability brings more usage, more usage expands the application, Menendez points out.
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“We’re Googling things now. That wasn’t an instinct two years ago.”
But, how can the average Cuban afford the devices and the $7 a-month basic package on an official average salary of about $200 a month? They don’t. As I witnessed from my time on the ground, and as many locals will openly share – everybody has a side hussle. Everybody. It’s not uncommon for Cubans with means, to travel to the U.S. or Panama to buy electronics and other goods to fill up containers and send them via cargo ship to Havana.
Remittances to Cuba from friends and family in the U.S. toppled $1.4B in 2015. That doesn’t include support that comes through platforms likeFonoma.com, co-founded by a Cuban who left decades ago. The site facilitates payments from friends and family abroad to fund pre-paid mobile phones and WiFi accounts.
With more Cubans connected, entrepreneurship is set to expand, so long as government policy on licenses for entrepreneurs remains stable. Over the last two years, Cubans have seen bureaucratic flip-flopping resulting first in tighter regulations and punitive taxes on successful businesses. Late last year, in an unprecedented reversal, the government backed off some of its rancorous reforms. These are the typical push-pull growing pains of an emerging market evolving from a socialist state into a more democratic one.
Despite the lack of a stable and international-standard regulatory policy, the number of entrepreneurs in Cuba increased from 150,000 to 500,000 from 2010 to 2015, according to the World Policy Journal. Today, that number is estimated to be over 600,000.
The biggest areas for growth are solutions to everyday problems for Cubans; things like inefficient transportation. Already, an Uber look-alike has emerged.
A La Mesa began as a solution for tourists, providing a way for visitors to plan and book restaurants before and during a trip to Cuba. Since the tourism boom of 2015 and 2016, the site has expanded to include experiences with locals, like culinary classes, or rum and cigar pairings. Using OFAC (Office of Foreign Assets Control)-licensed Centennial Bank, Menendez and his co-founders are also enabling the site to accept payments from abroad for friends and family to send pre-paid meals and dining experiences to Cubans. Tourists will also be able to allocate money to fund their restaurant meals while in the country since U.S. credit cards are not accepted.
As more Cuban businesses move online, there’s now a need for digital marketing agencies.
The Role of the Diaspora
Members of the Cuban Diaspora have always found a way to support those back at home – either through Western Union remittances years ago, or hiring web developers and designers to work remotely. As I reported in a story for PBS Newshour, others partner with locals either to help fund small businesses, homes to rent on Air BnB , and through other channels. Increased connectivity has enabled Cubans living overseas to help set up e-commerce sites, specifically for those living in smaller cities and rural areas outside Havana, with less access to commercial opportunities. The development of 3G will enable these activities to increase and make knowledge sharing and mentorship from Cubans living abroad more meaningful.
The Genie’s Not Going Back
Unlike other reforms, it’s difficult to put the 3G genie back in the bottle. The government may decide to prevent or slow further digital and mobile advancements, or command the state-run telecoms firm to raise prices for access as a deterrent, but it’s difficult to imagine the latter. A more likely outcome to prevent any sense of too much change too quickly for the government’s taste, is to continue the patterns of testing reforms to limit and control the opportunities gained from 3G and the entrepreneurship it will enable. Meanwhile, Many Cubans will still gather in parks to access WiFi, it’s just that now they no longer have to.
Read more about entrepreneurship in Cuba here.