IT Problems, Opportunities Await a Free Cuba

If Cuba loosens its economic grip and the U.S. drops its embargo, businesses will find a country that lacks needed infrastructure for technology.

For businesses looking at the retirement of Fidel Castro as a telltale sign of Cuba opening up to foreign investment, two words: slow down.

Even if Cuba loosens its economic grip and the U.S. drops the five-decade-old embargo, the first businesses entering the Caribbean island will find it lacks the technology infrastructure required for contemporary business operations and service delivery.

Dr. Jose Azel, senior research associate at the Institute for Cuban and Cuban American studies at the University of Miami agrees the island is ripe for foreign investment in a post-Castro, post-embargo world. But while the people are ready, the island’s crumbling, outdated infrastructure presents a major hurdle

“There is no modern infrastructure to support business the way we think of it in terms of technology, power, telecommunications, etc.,” Azel says. “There is very limited Internet access and only the government has that. The people, by and large, have no dependable access to the Internet, though some find ways.”

While this presents a problem for major corporations looking to set up shop in Cuba, it also spells opportunity for IT vendors, integrators and solution providers who can fulfill the IT needs of an island many people has pent up entrepreneurial and innovative demand.

In 1994, the Cuban government, in a rare move, started issuing licenses for private “paletes,” small privately owned restaurants and cafeterias. Almost overnight, Havana was flooded with brightly painted kiosks under technicolor umbrellas. Scents and flavors absent from the public squares since the 1968 Revolutionary Offensive suddenly abounded.

Porches were stuffed with chairs and tables and young Cubans got their first real taste of native delicacies such as mamey sapote shakes and guava pie.

It was proof, Cubans say, that communism never completely stifled the entrepreneurial energy on the island. The enthusiasm and spirit so evident in Cuban-run businesses in South Florida, for example, still flickers beneath Havana’s gray surface, waiting for a chance to blossom.

“A stroll of my native Central Havana was confirmation that the previous scarcity hadn’t been born of an innate incapacity to produce,” says 32-year-old Havana resident Yoani Sanchez, a prolific Cuban blogger. “It was caused by the ironclad state controls to private ingenuity.”

While most Cuban expatriates greeted the retirement of 81-year-old Cuban strongman Castro this week as a victory for openness and basic human rights, many also wondered what a softening of Cuba’s hard-line communism—and warmer relations with the West—might do for business there.

“All of those energies to produce are just waiting, crouching, for the restrictions to loosen --even one millimeter--to conquer again our streets and porches,” Sanchez insists.

According to the International Telecommunication Union, Cuba has the lowest rate of Internet usage in Latin America at 1.7 users per 100 residents. Cubans wait for hours in line to use Post Office computers that can send e-mail but not access the Web. The country last year embarked on a high-profile technology project that resulted in the development of a search engine that can crawl through the full text of all speeches by Castro and other government figures, but cannot search information from the Internet at large.

Azel says that before U.S. companies can rush in to take advantage of what many expected to be a tourism boom in the early days of a post-Castro Cuba, basic infrastructure needs to be addressed. The needs include not just network and utility infrastructure, but also roads, bridges and houses, he says.

The greenfield that is Cuba could provide opportunity for technology vendors and services providers, but even that requires some careful consideration, he adds.

“They have to know who are they going to partner with,” Azel says. “Under Castro--either Fidel or Raul--you partner with the state, period. You don’t get to choose your employees. The state picks your employees. You pay the state and they pass on 10 or 15 percent of that to the workers.”

Azel advises U.S. companies to continue monitoring the situation in Cuba. While he doesn’t feel markets will open or the U.S. embargo will be lifted any time soon, he says it’s important for businesses to understand how things are changing day to day.

He also says companies interested in investing in Cuba should line up experienced legal counsel, and organize Cuban-Americans in their current workforce into task forces that can strategize and develop new business opportunities.

“Technology is going to be incredibly important, ultimately, in Cuba,” Azel says. “There’s a very talented, very creative workforce there. They may not have the traditional skill sets we think of in high tech in the U.S., but they have a lot of experience with a wide variety of Soviet and Chinese technologies. They are there and they are ready to support U.S. companies who invest there.

“But I must reiterate, I don’t see this happening very soon,” he says. “We have a long, difficult way to go.”

Sanchez is equally guarded in her optimism.

“Maybe things will change now,” she wrote after Fidel Castro stepped down. “For me and the young generation, this news comes as a great relief. We've never had another president, and we saw him as an obstruction to our country's development.

“But honestly, the question of a new head of state is not people's greatest concern right now. We're too preoccupied with the problems of daily life,” she says. “Fidel's brother has made plenty of speeches about much-needed reforms for the country, but nothing's really changed. Raul's only made cosmetic changes which don't help the population at all.”