Twenty-one months after the Obama administration's historic rapprochement announcement, the flurry of excitement about investing in Cuba has dwindled. Analysts blame the lull upon the US Presidential race or a backlash in Havana by an elite that fears a loss of control. But such thinking belies a simpler truth, that some investors are losing their patience with the legal and bureaucratic obstacles confronting their projects in Cuba.
Investor frustration was on full display at the inaugural www.cubainvestmentforum.com held in Ft. Lauderdale on May 12, 2016. It was a remarkable event for three important reasons. Firstly, a high-profile forum discussing investing in Cuba held in South Florida was ignored by protestors. Secondly, senior officials of both the Cuban and American governments participated as speakers, providing objective and supportive presentations of investment opportunities in Cuba. But the most surprising aspect of the day was the plainspoken testimony coming from seasoned business people who have conducted business in Cuba for as long as two decades. Their anecdotes spoke the truth about investing in Cuba: that opportunities abound but the challenges remain formidable in spite of the rosy pronouncements by governments on both sides of the Florida Strait.
For American companies, the path to investing in Cuba begins in Washington, at the revived Cuban embassy. There, a capable but small commercial team vets new investment projects that are brought to them. The Cuban embassy is the front line of investor frustration because the commercial team is under direction from Havana to promote investment in pre-fabricated projects designed by Cuban government officials to help fill gaps in Cuban infrastructure or accelerate the development of favored sectors, such as bio-technology where Cuba fancies itself a global leader.
Many of the 300+ projects in hand do fulfill a burning economic need and therefore should merit investor consideration, but they also rely mostly on domestic demand, to be paid for by the Cuban government or Cuban consumers, both suffering fiscal hardship in the short term as Venezuelan aid dwindles. Many foreign investors prefer their own projects in areas like tourism, exports, and foreign-financed infrastructure, all of which target US dollar revenues. When an investor arrives at the embassy with his own business plans outside the guidelines of the Cuban preauthorized projects, then the vetting process is considerable.