• <div class="header-image" style="background-image: url(/live/image/gid/4/3040_V7N1_header.rev.1549561230.jpg);"/><div class="header-background-color"/>

The Azucar Valley: The Grim Present For Business And The Tech Promise Of The Future In Cuba

August 03, 2016
The last remnant of the Cold War in the Americas is only 90 miles from Key West. Havana is in vogue as of late, and not only because the reestablishment of diplomatic relations between Cuba and the U.S means traveling to where 1952 Chevrolets are cabs is easier than ever before.

By: Mariela Morales, C’17

Cuba, a one party system communist state since the 1960s, is one of the last untapped consumer markets on the planet, and while political differences remain, President Obama assured the Cuban people in his recent visit that much can still be achieved between both nations [1].

Many American businesses have understood the remarks of the president as if at times when traditional diplomacy might reach a thaw with the Island, business diplomacy can still thrive. There are many good examples of this, of course. Recently Carnival Cruise line renegotiated with the Cuban government so that Cuban Americans can enter the country by sea, [2] a long-standing ban removed due to negotiations between the cruise line and the Cuban government. The hype about the future of business in Cuba is clearly shown in the enthusiasm with which American brands and companies have started flying to the Island to study its economic landscape.

However, weeks after president Obama delivered his remarks to the Cuban people in the iconic Teatro Marti in Havana, The Communist Party of Cuba celebrated its 7th Party Congress. The congress, in many ways, was ways a step back from the improvements that were achieved until and during president Obama’s visit at the beginning of the year. The congress showed historical leaders unwilling to step down and a new generation of Party leaders with no real voice or leadership. This could be bad news for American businesses hoping to expand their brand in Cuba. Because the Party is the leading force of society and of the state, [3] in order to ensure a smooth transition of power in 2018 when Raul Castro is set to retire, his predecessor must become apparent in the elections to the Politburo every five years. However, instead of giving the seat of Second Secretary of the Party to Mario Diaz-Canel, a younger party leader, Machado Ventura, a 86 year old historical party leader, was ratified instead. This situation has left only one thing clear: Cuba won’t be changing as fast as people hope it will and unclear regulations about the transition of power will create some political instability once historical leaders start dying. For American companies whose businesses demand large investments in the Island, this is not a favorable landscape.

In June, the Boston Consulting Group (BCG) released a study showing Cuba’s economic evolution and the evolving Cuban consumer. [4] BCG’s study shows that although there are many challenges ahead, companies can be slightly positive about the prospects of doing business in Cuba due to very little competition and growing disposable income. I will take the liberty of adding a time prediction to BCG’s findings: these changes won’t happen in the next five years. In Cuba, politics is a family business and business is family politics. For almost 60 years the Castro family has held the highest offices of the land. In addition, Cuba’s biggest business conglomerate, GAESA, is directed and overseen by Raul Castro’s son in law, Luis Alberto Rodriguez. GAESA owns the most important hotels in Cuba, along with a chain of stores, storages at the ports, tourism agencies and many more.

This conglomerate monopolizes business on the island. American companies with the intention of establishing business that might compete with those of GAESA will face a steep road ahead. Even if they can cut a deal that will establish the coexistence of both, right now it seems there are not enough guarantees for business in the island. This is an obvious discouragement, especially to businesses requiring large amounts of investments, in a Cuba with very little infrastructure. The embargo is still in place and although there has been advancement in diplomatic relations, the US government can only try to keep pushing the subject on diplomatic conversations instead of interceding.

However, the immediate future for American business in the Island is not as dark as it might look. Yes, Cubans are in dire need of many consumer packaged goods (CPG) and they will probably spend all of their monthly income in food and CPG’s rather than on a Kim Kardashian Hollywood app. Despite these needs, cell phone users in Cuba will continue to grow even in the middle of Internet blackouts, economic stagnation and political thaw. Cellular phones have consistently arrived in the island due to visitors and family members living abroad. The offline use of cellphones is expanding more than ever and significantly out of the reach of the government. Cellphones are allowing Cubans to connect with the world where no landlines have reached and, for those fortunate enough that live close to Wi-Fi hotspots, to see the face of their family members in the other side of the world.

In a recent event hosted by the Global Alliances Program of the Aspen Institute, a group of young entrepreneurs who recently participated in the first incubation program in Cuba, spoke about innovation within disconnection. As I looked through the app of one of participants of the incubator, I couldn’t help but to think that these Cuban tech entrepreneurs are accumulating something that no American business has been able to get their hands on: data, significant amounts of it.  

Although scattered because of the different demographics and people that they are serving, these apps and websites are accumulating data about Cuban businesses and consumers better than many government organism can. Yet, Incúbate is a mentorship program for the nascent Cuban Tech industry with no real funding for project development. Regardless, Cuban developers are finding their own ways to finance and produce their projects and American businesses are losing the opportunity to work with this group of people every passing day. All American companies can reap the benefits of working and helping fund Cuban tech scene, not only because it comes at a very affordable price but because when ferry approvals seem to sit ill at the desk of some Ministry in Havana, tech entrepreneurs are innovating on their living rooms, getting in contact with the Cuban consumer and are willing to engage in exchanges with American businesses immediately.

Ten years ago, we used to think of Africa as mainly a scenario of aid assistance; today cabbies in Nairobi prefer to get paid with digital wallets, a technology that is yet expanding in developed countries. Five years ago, a senior manager at Wal-Mart told Alibaba founder, Jack Ma that he was a young man with good hopes when Jack Ma pointed out that maybe in the future Alibaba will be as big as Wal-Mart. In times were two servers can compete with brick and mortar warehouses, American businesses, even those who are not tech companies per se, can benefit from building relations with Cuban tech entrepreneurs, equally or more than they would benefit from starting a relationship with the Cuban government. The future of politics in Cuba and diplomacy with the United States can seem at times unpredictable. The political scene will undoubtedly change without giving many guarantees. However, Cuban tech entrepreneurs have grown in a system of instability, know how to flourish through its cracks and will be Cuba’s best and brightest leap into the 21st century. More than to the white beaches, the business world should be paying attention to the amateur and audacious faces of Azucar Valley.


  [1] B. Obama, “Remarks by President Obama to the People of Cuba”, whitehouse.gov , 2016. [Online]. Available: https://www.whitehouse.gov/the-press-office/2016/03/22/remarks-president-obama-people-cuba. [Accessed: 27- Jun- 2016].

  [2] C. Herrera and D. Hanks, “Cuba will allow Cuban-born to arrive on Carnival cruise ship”,Miami Herald , 2016. 

  [3] Constitution of the Republic of Cuba . Havana: Department of Revolutionary Orientation of the Central Committee of the Communist Party of Cuba, 1976.

  [4] M. Fitzgerald, R. Stokes and J. Brennan, “Understanding the Evolving Consumer Cuban” BCG Perspectives , 2016.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>