As the Obama administration enters a second round of talks with Cuban government officials, the excitement is mounting over the thaw in the relationship between the two countries.
Last week, cigar aficionados from around the world gathered in Havana, Cuba, for the annual Habanos Festival. Among them were a number of U.S. citizens, who, for the first time and as per a new ruling, were allowed to bring home $100 worth of cigars from Cuba.
Although it is going to take some more time before the U.S. trade and investment embargo is fully lifted, Cuba presents an incredible investment opportunity, one that investors are certainly ready for.
Mark Entwistle, founding partner of Acasta Capital, and Thomas Herzfeld, Chairman and President of Thomas J. Herzfeld Advisors, two financiers who have been close to Cuba for many years and have been following the Cuban story closely, have several valuable insights to share.
Mark Entwistle, Founding Partner of Acasta Capital
During his tenure as Canada’s Ambassador to Cuba in the mid 1990s, Mark Entwistle not only developed a great fondness for the country, but he also recognized Cuba’s tremendous economic potential. Entwistle quit the Canadian foreign service to form a business consultancy focused on Cuba and three years ago, he rolled that into Acasta Capital, a merchant bank he co-founded in Toronto.
“I’ve been close to Cuba for 22 years now and have seen it go through various stages in its history,” he said. “From the outside, it may seem that Cuba is a poor, developing country, but though that may be true on one level, Cuba also has all the right ingredients in place for an economic take-off.”
Cuba, which dwarves the rest of the Caribbean in size and is rich in natural elements, also boasts a very high literacy rate, Entwistle said. Over the years, the Cuban government has made significant investments in education, and in knowledge based sectors of the economy such as biotech and information technology, and it has also focused on developing other key industries like mining. Then, “about 15 years ago, the Cuban political leadership also recognized the fact that their economic model doesn’t meet their needs, and that it needs to be adjusted and opened, and the economy liberalized,” he said.
That liberalization has been ongoing within Cuba itself, Entwistle said, and the government has been encouraging the creation of a private sector (around 1.5 million Cubans have been let go from state jobs), where “all kinds of things that the government used to do before are being done by individuals, in recognition of the fact that there are some areas the state shouldn’t be in charge of, so there’s an entire recalibration of the revolutionary model.” But that doesn’t mean that that model no longer matters.