With the dismantlement of the USA – Cuba Trade Embargo,  we visited Cuba earlier this year to see if there are opportunities for innovative first mover companies to set up branches / manufacturing plants in Cuba.

From a purely travel perspective, it is a must see (sooner rather later). Old dilapidated buildings, classic cars, live music, cigar smoke and rum. It’s like a step back in time and in every way a sensory stimulating experience. It confronts you with that strange emotion of “nostalgia” for the days of yore mixed with sadness for the lack of development.

Aiming to address that lack of development, the Cuban government has recently appealed to international companies to invest over $8 billion in specific sectors, with the establishment of trade agreements and economic development zones (both in process). Given its location, i.e. proximity to US markets; it would seem that Cuba has the potential to be a very lucrative market, if you have the proverbial “hair on your teeth” (i.e. courage with little risk aversion).  It is however quickly apparent that investing in Cuba will probably come with a lot of challenges, which could hamper profitability and deter investors.  At least initially, Cuba will remain a state-driven economy dominated by large government holding companies and the authorities will dictate the direction and pace of change. Most foreign ventures will also come with majority Cuban ownership.

That said, according to the Department of Trade and Industry (DTI) in South Africa, Cuba possesses favourable investment opportunities for South African businesses to explore. As part of the bilateral trade and investment relations between South Africa and Cuba, Cuba is creating a special economic zone in the port of Mariel, which provides unlimited opportunities for the South African companies to invest in. What the specifics of this special economic zone will be, one will have to wait and see.

In the interim, it could be worth the while to have a look at this insightful article (here), to get a realistic view of the current trade environment. The challenges notwithstanding, the market is open – and we expect that for the innovative client, it could be a lucrative opportunity and one worth exploring*

*Contact us for Internationalization Strategies and Feasibility Studies / daniel@concilioconsult.co.za

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