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Tim Cole

Former British Ambassador to Cuba

Part of UK in Cuba

4th July 2014 Havana, Cuba

Can the internet spur economic growth in Cuba?

One of the more unusual visitors to Havana in the last week was perhaps Eric Schmidt, the Chair of Google. His visit coincided with the news that the Cuban economy is growing more slowly than hoped – at only 0.6% in the first six months of 2014, the coming into effect of the new foreign investment law and the knock-out phase of the World Cup. The missing link between all of these and Mr Schmidt’s visit? The need for better access to the internet in Cuba.

Lots has been written about how the internet helps drive economic growth. A Mckinsey Global Institute report from 2011* showed that the internet accounted for 3.4% of GDP of the world’s biggest economies, had contributed more than 10% of total GDP growth over the previous five years in China, India and Brazil and that its total contribution to global GDP was bigger than the whole Canadian economy. As internet access, infrastructure and usage increase, businesses benefit by being able to operate more efficiently, public services are delivered more effectively and customers can buy goods and services at cheaper prices.

This may all seem a long way off in Cuba but the benefits would be tangible for state enterprises, cuentapropistas (self-employed entrepreneurs), cooperatives and everyone else. Imagine a scenario where a farmer’s cooperative in Mayabeque wants to sell its pineapples and can’t easily find a buyer but a couple of hours down the road in Varadero, there’s a hotel that needs some. What’s the best way for them to ‘meet up’? Online of course. Today the internet provides the best marketplace for buyers and sellers. That’s been proved by the incredible success of websites like ebay and Revolico where people sell and buy new and used items. Imagine too being able to pay your ETECSA bill online and not having to queue or having your weekly groceries delivered to your door. In countries with good internet, both are normal practice; I’ve been using electronic banking for about 12 years and pay all my bills online. It’s easier for me and for the companies receiving my money.

If, sitting in your rocking chair on your porch in Viñales, that still seems unreal, what about being able to send money via SMS on your mobile phone to a cousin in Santiago? Many millions of Kenyans have been doing that for years, although presumably their cousins live somewhere else. An astonishing $24 million a day (yes, a day) is transferred across Kenya via the M-pesa system. That’s a lot of happy cousins.

But it’s not just Cubans who would benefit from better access to internet. Foreign investors would too. The new Cuban foreign investment law is bound to attract more foreign companies setting up in Cuba. But they’ll all need good, fast internet connections to be able to transfer documents and data to their head offices or clients outside and within Cuba. And their foreign employees, used to easily accessing Facebook, Twitter and YouTube back home will be frustrated if they can’t get online easily here.

And finally the World Cup. More I think than any event since I’ve been here, the World Cup has lit up Cuba. Everyone’s talking about, everyone’s got an opinion, everyone’s got a favourite team (rarely England I’m sorry to say, despite my best efforts). In the past few weeks the thirst here for knowledge, facts and understanding about football and the World Cup – its history and its stories – has been striking. That’s where the internet comes in. With a tablet, cellphone, laptop or desktop anyone can get online and learn more, exchange views with friends overseas, comment on online forums, share their opinions, send tweets to their favourite players. This sharing deepens the experience and enhances your knowledge. It enriches those conversations in the barber’s or at the dominoes table.

I don’t know exactly what Mr Schmidt said when he was here last week. Unfortunately I didn’t get a chance to meet him. He probably didn’t talk about pineapples, dominoes or cousins in Kenya. But I’m pretty sure he made a very good case for more internet in Cuba. As I hope I have. Your comments welcome below.

* ‘The Great Transformer: The Impact of the Internet on Economic Growth and Prosperity’ by James Manyika + Charles Roxburgh, October 2011

9 comments on “Can the internet spur economic growth in Cuba?

  1. Dear Ambassador,
    your article is very illustrative on possible ways to increase growth by accepting internet in Cuba.
    it is my belief that your government could do some practical help on this, specifically by providing low cost (second hand) equipment which is badly needed in Cuba for the purposes described in the article.
    I am thinking of POS devices for the cooperative and private sector, and wi-fi routers.
    both types of equipment can be found relatively easy in the UK and could contribute to the development of the communication technologies you advocate for.
    thanks again for the article!

  2. Carlos Lage pointed out the economic benefits of the Internet shortly after Cuba connected in 1996. He was not alone at the time, but Raúl Castro and others were also keenly aware and afraid of the impact that open communication had had in the Soviet Union and the decision was made to control the Internet. (See http://laredcubana.blogspot.com/2011/02/dictators-dilemma.html).

    In addition to helping the economy, an open Internet would enhance Cuban education and health care — and it would not be a one-way street. Cuban educators and health care professionals have much to share with the rest of the world. (See http://laredcubana.blogspot.com/2012/06/online-education-application-for-alba-1.html).

    You mention that an open Internet would be good for foreign investors, but I would not want to see the Cuban Internet taken over by, for example, AT&T or Comcast. Cuba should find a path to a competitive, decentralized Internet.

    Cuentapropistas are already running illegal “sneaker nets” (see http://laredcubana.blogspot.com/search/label/sneakernet) and local area networks (see http://laredcubana.blogspot.com/2014/06/cubas-wifi-crackdown-substance-or.html) — how about legitimatizng their activity for a start? Some day we might even see cuentapropistas selling satellite connectivity (http://laredcubana.blogspot.com/2013/12/a-cuban-approach-to-achieving-internet.html).

    In the long run, Cuba should look toward Europe, not the US, for models of Internet infrastructure investment policy.

  3. Dear Tim,

    Paying Etecsa bills online is possible and also recharging Cubacel mobile phone online at http://www.ding.com (Irish company, formerly ezetop).

    Given the low penetration of credit cards in Cuba our customer is mainly people living abroad supporting their loved ones in Cuba, but it is also available for Cubans with credit card that want to recharge their mobile instantly and avoid having to queue for paying ETECSA bills. We should talk to help spread the word about this service!

    1. @erika
      Dear Erika, yes you are right International Mobile TopUp available but Mr. ambassador is speaking how internet can make life more comforter if within Cuba using local banks like Metropolitano, Bandec, etc without having to pay too much tax, one can pay his utility bills and buy presents. Just imagine making things happen rapidly.

      It will have positive impacts on Cuban economy, I am sure.


  4. Dear Tim ,
    well , after reading yr. article there ‘s – to me – one important fact very clear that is saying it more or less all : if it ‘s for the entire world a ” must” to have free & full access to the internet / web without any kind of censorship , than it must be also & of course sthg. like a human right or a basic for a l l these described Cuban people too.
    Best wishes & a nice start into yr. working-week, liebe Grüßle & ond a guter Wochenstart, Ingo-Steven , Stuttgart.
    P.S.: There’s also – in my opinion a direct link between this new report of yours and yr. once written “..why on earth would an Ambassador…….t w e e t ? , March 14th. 14

  5. I don´t see the economy of this country seriously developing until we have normal Internet access, which almost no one in Cuba has. The 25% of the population who, according to official statistics, has access to “the Internet” includes a large group of people who (1) exclusively have access to websites in the .CU domain, (2) have access to all kinds of domains, but are assigned a monthly quota, 10MB, 20MB, etc., depending on the company or university providing the service (3), have unrestricted access in terms of data volume, but through a connection where social media websites like FB and Twitter are blocked (probably because the head of the workplace providing the access has no idea what those websites are for and does not want his/her subordinates using the Internet to “waste time”); (4) use the Internet at ETECSA offices or at hotels, where price (4.50 CUC, almost 5.00 USD) is then the regulating factor. All these restrictions show that decision makers in Cuba have a very limited idea of what the Internet is and can be used for. Until that changes, our highest aspirations with regards to economic growth will be at the level of the resources we have at hand, that is, businesses that will flourish as far as ham sandwich and pizza prices can reach.

  6. Mr. Cole, the current US embargo stymies any positive impact the internet could have on Cuba’s economic growth. Mr. Schmidt’s trip and that of the US chamber of commerce, suggests that many in the higher echelons of my country’s business elite are for the ending of the embargo & for normalizing relations with Cuba. One could only hope that Congress & President Obama are paying attention.

  7. And not to mention the Cuban diaspora wishing to retain meaningful relationships with friends and relatives at home in Cuba and are unable to do so because of prohibitively high telecommunication costs. The inability to keep in touch with loved ones by skype, facebook, facetime etc etc especially in times of family problems affects health and wellbeing. And of course Cubans in Cuba who can only dream of joining the rest of the world on the world wide web regardless of status, employment situation, availability of technology etc.

Comments are closed.

About Tim Cole

Hi! I’m Tim Cole, the British Ambassador to Cuba. I arrived in Havana in August 2012 and presented my credentials as British Ambassador the following month. I’ve been a diplomat…

Hi! I’m Tim Cole, the British Ambassador to Cuba. I arrived in Havana in August 2012 and presented my credentials as British Ambassador the following month. I’ve been a diplomat since 2001; before Cuba, I spent 5 years in London where I worked on Pan-African policy and global economic issues and 6 years in southern Africa as Deputy Head of Mission in Mozambique and Zimbabwe. Most of my career has been in Africa as before joining the FCO I ran humanitarian aid programmes in Central Africa for the British NGOs Christian Aid and Save the Children. I’m married to Clare and we have 2 children – Jonathan and Zea.

The idea of this blog is to tell you what the British government is doing in Cuba and why. If you enjoy the blog and want to read more, please follow me on Twitter.