Concrete Ways to Alleviate Shortages in Cuba

If the government/military is willing to give up their monopoly and settle for a flat tax on sales, the state coffers would benefit

21 de julio 2021


First of all let me say, like so many Cubans have stated on our publication, the shortages of basic foods, personal hygiene products and medicines is not something at all new on the island.  It has been going on, off-and-on, for six decades.

However, extreme shortages have also occurred, etched in many Cubans’ memories. The ones in the 1990s and the current 2019-2021 shortages stand out as the most extreme for those people born after Fidel took over in 1959.

What’s most incredible to me is that instead of taking bold action the government makes people routinely line up, risking Covid infection, to get something to eat for their families. Likewise, for any personal hygiene or home cleaning product that might be for sale.

To give you an idea of how bad the situation is, when people see a line with dozens or hundreds, they join in to get their place without even knowing what might be for sale if they actually make it into the store.

A major contradiction in discourse/reality is that on the TV news the president and other leaders keep telling people they need to be more productive to produce more food and consumer products. How in the hell does one do that if they must wait 3 to 6 hours in line during the day?

I’m convinced the reason is the Communist Party/Government’s unwillingness to pursue a non-perfect solution to the extreme situation. It would mean breaking inertia and taking the bold step of giving up the monopoly over all retail sales on the island and the huge mark up the military corporation puts on their products.

There are numerous multinational supermarket chains in the non-US world (to avoid the embargo) that would most likely love to open stores in Cuba as long as they had real security over their properties/investments and be able to manage their own finances including importation of goods and the taking out of profits. Carrefour, Almacenes Éxito S.A., Grupo Elektra S.A.B. de C.V. are three of them but there are dozens more possibilities.

These chains would sell in US dollars or other hard currency equivalents, not in the devalued Cuban pesos that the Cuban government doesn’t want either.  The state could put on a big sales tax and benefit in that way without having to run inefficient, poorly stocked stores as it does today. Workers in the foreign chain stores will no doubt be better paid and the service far more consumer friendly than what exists today.

This, again, is not a panacea. If the Cuban military corporation, CIMEX, was able to stock their stores and provide stable product supplies, even if at highly taxed prices, the idea of offering a multinational to come in would not be as necessary.

However, there are two key precedents. Two of Fidel Castro’s favorite multinationals were Nestle and Adidas, for ice cream products and sports shoes and clothing respectively.  He gave them both a virtual monopoly on the captive local market.  The financial arrangements and what the Cuban government or Communist Party got out of it were never made public. Fidel himself was often seen wearing a warm-up outfit with the Adidas label in plain sight, in a country where advertising was a no-no.

The chain would probably want to sell with less than the over 200% markup the military puts on most of their products.  The foreign company would likely want to promote greater sales by making more reasonable prices.

Yes, just like the government/military’s US dollar stores today, not everyone would be able to shop there. However, the illicit market would garner its supplies to resell just as is happening today with those stores.

With the government out of the picture except to collect the tax levied, the stores would be full of products according to consumer demand.  Wouldn’t that be better than the current desperate situation? The same could be done with medicines. Let a reputable foreign pharmacy company open shops under a similar arrangement. Thus, alleviating some of the hardship that leads to pain and desperation.

Again, these suggestions are not a best-case scenario. Probably two thirds of Cubans don’t have frequent or any access to dollars or equivalents because they don’t receive help from family abroad. But at least when they are able to shop occasionally, or to purchase on the illicit market, an abundance of products in the country would no doubt bring down the outlandish prices Cubans pay today for scarce basic goods, when and if they appear.

If the government/military is willing to give up their monopoly and settle for a flat tax on sales, the state coffers would benefit, and Cubans might have more time to work harder as the president and other leaders urge as the patriotic thing to do in these hard times.

This article was originally published in Havana Times

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Havana Times

Blog cubano independiente, fundado en 2008 por el estadounidense Circles Robinson, quien llegó a la isla en 2001. Ahí trabajaba en la agencia de traducción oficial de Cuba, con la revisión de traducciones al inglés para publicaciones en línea de medios oficiales cubanos y en su tiempo libre inició su propio blog. Robinson salió de Cuba en 2009.


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