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By Ebioro
Financial Freedom for all Cubans
OrunPay’s mission to provide financial freedom to all Cubans was borne out of frustration over their lack of autonomy to make financial decisions. Financial independence is particularly relevant today, where a choked Cuban economy, made worse by government mismanagement, stringent US sanctions and a serious decline in tourism brought on by the Covid 19 pandemic, is driving the need for fresh funds to reach the hands of the Cuban people. This is pushing Cubans to find innovative solutions to send and receive payments, as well as to manage their personal finances.
Cubans’ lack of financial autonomy is the result of several factors, including an undeveloped financial infrastructure (i.e. payment services, investment options, borrowing capabilities, etc.), a strong internal focus on Cuban government-led businesses and financial institutions, and US sanctions which stifle the Cuban economy’s access to external markets. The US Embargo has blocked all US companies from working with Cuba, but this has also had a serious chilling effect on non-US entities as well. While non-US companies are allowed to work in Cuba, many do not out of fear of direct or indirect US reprimand. For example, the vast majority of European banks refuse to deal in any way with Cuban transactions, even when fully compliant with all rules, as a result of heavy fines imposed on several European banks because of their Cuban dealings. Consequently, many fully owned European companies, that are by law authorized to conduct business with Cuba, cannot make payments to their Cuban counterparties because their European banks will not authorize the transactions. The same happens for payment flows exiting Cuba because the receiving banks will not accept the payments. Ironically, this chilling effect has also harshly affected the Cuban private sector despite the intention of the US sanctions legislation to encourage its growth. Instead, most Cuban merchants and small businesses cannot accept credit card payments for products/services they wish to sell online or at a point of sale because credit card processing companies will not onboard Cuban customers.
The strong internal focus by the Cuban government on its government-led businesses also means that the foreign capital that does manage to enter Cuba through foreign investment is usually managed by other entities linked to the Cuban government, rather than by the foreign investors bringing the money in. Similarly, Cuban companies who have operations outside of Cuba face the same issue when entering foreign capital into Cuba. For both these types of companies, access to their funds is essentially given to them based on a hierarchical structure decided by Cuban government-affiliated entities. Even remittances, the largest source of income and a lifeline for many Cuban individuals, is first received by Cuban authorities before being distributed to individuals in local currency.
Throughout the years, Cubans have developed a deep mistrust towards their and government institutions and national currency, due to government mismanagement and currency devaluation as a result of many periods of economic uncertainty. Cuba is currently experiencing a drastic devaluation because of difficulties faced by the Cuban government in unifying the Cuban Peso (the official currency) with an alternative currency that has been circulating in parallel since 1994.
All of these issues have largely isolated Cuba from the world overtime, severely affecting its economic development and the financial options of its population. What remains is a chaotic, expensive and highly inefficient way of dealing with day-to-day finances for everyday Cubans and businesses. There is therefore a great need to provide a comprehensive solution that equips Cubans with the financial independence that they need.
OrunPay is developing a payment platform that places autonomy back into the hands of Cuban nationals and companies. Our solution is outside of any government control and allows Cuban individuals and companies to send and receive payments in a variety of different currencies. Additionally, Cuban nationals will have a lower level of exposure to currency devaluations because it will be possible for them to store their money in foreign-denominated stablecoins, outside the control of Cuban government financial institutions. This will all be done in a compliant manner and is what we hope to be the first step in the broader digitalization of the Cuban economy.
$236.8K
Yulexi Matienzo
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