Private sector growth
Over the past few years, entrepreneurial activity has taken off in Cuba as a result of economic reforms and a growing tourism sector. The Cuban government has loosened many restrictions on private sector licensing, employment, and property ownership. Additionally, the Cuban government announced it would legalize small and medium-sized enterprises in May 2016. Private enterprises continue to acquire market share from state entities. While Cuban entrepreneurs and small business owners still face many barriers, including the inability to import and export and limited access to internet, private sector employment is growing rapidly and now amounts to an estimated one third of the total workforce.
Along with economic reforms from the Cuban government, U.S. regulatory changes have spurred growth in the private sector, which is fueled by tourism and remittances to the island. While Americans are still prohibited from traveling to Cuba for tourists purposes, the easing of travel restrictions has allowed U.S. travelers to Cuba to skyrocket. In 2016, 500,000 U.S. citizens and Cuban-Americans visited the island. The previous administration also eased regulations on U.S. remittances to Cuba. Remittances have accounted for 70-80% of investment capital in the private sector, despite high transfer costs due to a Cuban taxation on self-employment.