E-Commerce in Cuba with Nothing to Buy

Few Cubans trust the island’s banking system. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, September 11, 2019 — Amazing. We had to wait until the now distant point in time — April 2016, when Guideline #108 of the Economic and Social Policy of the Party and the Revolution was approved — before Cubans could start engaging in e-commerce transactions in accordance with the country’s computerization process. It is curious how one political party’s «guidelines» can still impact Cubans’ living conditions.

It should be noted, however, that e-commerce is an activity that is widespread throughout the world, even in countries whose levels of development are lower than Cuba’s. Nevertheless, Granma believes this activity now merits an article extolling and promoting its virtues on the island.

Given these circumstances, the question that comes to mind is «Electronic commerce. What for?» as Fidel Castro, with full revolutionary fervor, said of elections. E-commerce is widespread where there is something to sell, where people can take advantage of its benefits and the ways it can improve their quality of life. Can anyone explain to me how Cubans, who can seldom find what they want in old, dilapidated bodegas, are now going to do their shopping electronically? With all the obstacles that currently exist and when things are rationed when least expected, how are they going to access this platform? Who is Granma trying to kid?

The reality is that Cubans have a poor, inefficient, disorganized and antiquated retail system plagued by chronic supply shortages. As a result it is very difficult to exercise the right to free choice for desired goods and services. Commerce, logistics, distribution and «middle-men» were early victims of communist repression. Businesses and companies were violently and unjustly confiscated by militias, condemning many former owners of these once prosperous entities to either a miserable existence on the island or escape into exile to save their lives.

Decisions like this — fervently promoted by Che Guevara, with the approval of Fidel Castro — are at the root of Cuba’s economic failures. And what is even worse are the limited possibilities for overcoming the backwardness and the widespread poverty in which Cubans find themselves.

Granma’s article makes you want to laugh and, along with it, at e-commerce too. This ought to be the guideline’s slogan. But I fear this is a mistake. It is possible that some Cubans might be interested in this formula. But I cannot see how someone could earn thirty dollars a month through e-commerce, especially under current conditions.

And it is not for a lack of experience or interest. Any Cuban who moves abroad, no matter to which country, embraces these technologies and views them positively. The problem is how to do it in the desert that is the Castro economy.

Setting aside the absence of products for sale and the lack of freedom of choice, any Cuban who wants to make an electronic purchase will first need a bank account in which to deposit either his meager monthly salary, which won’t buy much, or  remittances sent by a family member overseas, which have to first be first be processed by a bank.

I also do not see many self-employed businesspeople putting their hard earned money into state-owned Cuban banks. They know that, if they do, that information will be immediately passed along to State Security, which will use it to control their operations. Without opportunities for investment, the best place for hard currency earnings is under the mattress or buried underground, as in colonial times.

Cubans’ confidence in banks is minimal. There are no statistics on the level of banking and financial development in Cuban society but its banking system is one of the most backward and inefficient in the world, owing to the fact that is it wholly owned by the state.

Without a bank account, it will be difficult to make an electronic purchase using a magnetic card at a store’s terminal, as Granma’s communists are encouraging.

But there is another much more complicated problem: How many retail establishments — the old bodegas, for example — have electronic checkout terminals at their points of sale? None. According to Granma’s statistics, there are only 21,462 such terminals, or one for every 950  inhabitants, in the entire country, one of the lowest rates in the world. Most are also concentrated in urban areas, making access limited and complicated for many people.

There may be terminals in hard-currency stores but everyone knows that these establishments represent only a small fraction of overall retail activity in the country. And they are only within reach of those with real money to spend.

In any case, economic inequality, which the Castro regime has so often criticized, is particularly virulent in this area, where the growth of computerization is limited. Many foreign tourists complain about it and about the difficulty of paying by card, something Cubans will not say.

The communist newspaper extolls electronic commerce and defines it «as a method of buying and selling characterized by the distribution, marketing and exchange of products and services in which monetary payments and receipt of funds are made quickly and securely using machines and digital networks, without the need for cash, based on available balances of magnetic cards in both currencies used in Cuba.» A good definition, no doubt, but not applicable in Cuba.

Because few Cubans can afford to engage in e-commerce due to their very limited purchasing power, they do not trust the way it is conducted on the island. Nor, it is clear, should they.

It is surprising that, in spite of offering 8% discounts on purchases made by card, the Cuban Central Bank — one of the tools the state relies on to control its citizens’ financial lives — has had little success convincing people to make purchases using its system. And with good reason. It is telling that the same discount is not needed in Miami or Madrid. On the contrary, banks there charge for this service. The Central Bank’s communist bureaucrats should take note.

The same applies to Transfermóvil, an Android app that supports ETECSA’s infrastructure and network services. This is the same company which many Cubans criticize for the high price of its services.

Though mobile banking is clearly widespread throughout the world, in Cuba it is very underdeveloped. Few Cubans use it to pay their utility and phone bills or to check their account balances. The reasons? The same as before.

To access mobile banking, a customer must have an account linked to a magnetic card issued by a Cuban bank (Popular Savings, Credit and Commerce, Metropolitan) and a Telebanca card. Mistrust in state banks is fully justified.

On the other hand, I do not believe that EnZona, Compra-DTodo or Superfácil platforms are widely used as channels for financial and digital business operations by individuals or and organizations. The fact that they are accessible by internet search engines or through Android apps on Etecsa’s platform does encourage widespread use in private sector businesses, especially given the company’s high prices.

Virtual stores, such as the one in the Commercial Center of 5th Avenue and 42nd Street, offer a home delivery service that allows customers to reserve products and pick them up at their convenience, like any Zara store. But they fail to take off for the reasons mentioned before. In fact, information suggests that store’s products are in short supply and there is little to buy on the shelves.

It is no wonder that Cubans who have spent the last sixty years waiting in line to do anything do not understand the benefits of these virtual stores. The exceptions are young people with financial resources, which highlights once again to the issue of inequality. Transactions must be conducted in hard currency; the local currency is not accepted.

The e-commerce landscape in the era of Diaz-Canel is an example of the absurdity of robbing Peter to pay Paul. It makes no sense to introduce information-based technological solutions when the economic system remains stagnant. The problem boils down to the Cuban people’s limited purchasing power, their low incomes, their mistrust of banks owned by a repressive state and the lack of consumer choice.

Everything else is just beating around the bush. And worst of all, it turns e-commerce into one more arena for increasing social inequalities in communist Cuba. Fidel Castro’s greatest legacy. Without a doubt.

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Editor’s note: This article was originally published in the blog Cubadebate and is reproduced here with the permission of the author.

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