State Startups: The Cuban Government Also Innovates

A new campaign brings together more than 40 traditional Cuban ventures with the purpose of not overlooking “February 14” and supporting each other amidst the outbreak of COVID-19 in Havana. As pasrt of this campaign, they create gifts that they deliver to homes and get paid through the Enzona or Transfermóvil apps, which have been decisive in accelerating the adoption of electronic payment for private and state services.

These state “fintechs” and other apps are examples of the “mobile first” approach promoted by the Cuban state due to the increase in mobile lines and subsequently internet access through mobile data (lxDM).

Because of this, the state has developed various computerization projects from banking to telemedicine. For the latter and in the midst of the pandemic, Cuba has opted for self-survey apps for the population such as “Pesquisador Virtual” (Virtual Investigator) and Pesquizactiva 19, the official platform of the national epidemiology department of the Cuban Ministry of Public Health (MINSAP).

This has also occurred in the transport sector with apps such as Viajando to acquire and reimburse a bus ticket without having to travel to the Viajero and La Guagua agencies, in addition to knowing in real time the itinerary of the buses in certain locations.

As part of the LexCuba project, created by the Legal Informatics Research Group belonging to the Center for Electronic Government (CEGEL) at the University of Information Sciences (UCI), the m-government (mobile government) has been deployed, which allows a much more direct service to citizens though mobile apps. An example of this is the development several apps such as iLexMinjus for Cubans to access and request criminal records, wills, and declarations of heirs.

There are also other state apps that go beyond a specific use, such as Apklis—the Cuban application store—, toDus and Picta, an instant messaging app and a platform for disseminating audiovisual content, respectively.

In the State Radiography Apps/Startups in Cuba there is a systemization of 24 mobile applications from 2016 to present day which shows how the state sector innovates with solutions in various sectors from telemedicine to job searching. The database includes a search table with fields from the names of the institutions that created them.

This is all evidence of the stipulations outlined in the Comprehensive Policy for Improving the Computerization of Society in Cuba. Ratified in the Decree Law 370, it relates to the generation of services and digital content based on technological sovereignty promoting the “socialist state business as the main actor in this industry, together with the forms of non-state ownership and management.”

Can you consider some of these applications startups? Yes, and many of them also seek a sustainable, replicable, and scalable business model. Such is the case of the digital platforms toDus, Picta, and Apklis—since November 2020, they have been allowed to retain “five percent of payments made to individuals who market their goods or services on them by way of a Personal Income Tax on the account, which contributes to the State Budget.” This way, these state startups would not only be self-sustainable, but would also offer a path towards digital taxation for those who use them for commercial purposes.

Many of these apps and state startups are the result of the co-creation, both individually and together, of the industry-government-university triad. In the registry of computer programs and applications, state actors abound to the detriment of private ones in a scenario that seeks to “establish business models between telecommunications operator and the providers of computer services and applications in a way that stimulates the production of national digital content.”

While these startups advance, the private sector has obtained solutions to some of the problems Cubans have who lack advantages the state has, such as legal and tax support, as well as access to a national market, since in most cases when users use state apps, they do not infer the costs associated with the internet (it can be free of charge or accessed by using megabytes set aside for national websites).

Additionally, the state counts with mass dissemination in the media and access to spaces that support their insertion in society through alliances with the Ministry of Transportation or the Cuban Telecommunications Company (ETECSA).

We also witness a relatively fair competition between some state and private sector apps with similar purposes such as Apklis and Cubapk; NCuba and the extinct Qbola; D’Taxi and multiple variants of Cuban Ubers. But in in reality, this competition leaves the private sector unprotected by not fighting on an equal playing field.

If there is a path on which both state and private startups travel on equally new ground, it is that of data protection and privacy for citizens within the framework of responsibility for the content or services they offer. For example, in the case of apps where purchases are made, there has been no transparency in terms of where that data goes, or for how long it’s collected. It turns out that Cuba still does not have a Data Protection Law, though it is expected to be ready by November of this year.

How to achieve a balance between these two sectors is still a pending task. In Cuba, compliance was restricted to specific licenses, though the government recently notified it was eliminating the previous list of 127 approved activities, and the National Classifier of Economic Activities (CNAE) will be adopted, though illegal areas such as child labor and hunting and fishing prohibited species remain off the list.

With this announcement, 2021 will be a year of expectations and obstacles for entrepreneurship, but undoubtedly a boost for tech-based entrepreneurship, which is booming with several advances. Among them, the creation of technology parks and The Foundation at the University of Havana, where both forms of management are considered.

Sandra Madiedo Ruiz is a journalist. She writes about entrepreneurship and technology and investigates how technology platforms impact society. She lives in Havana, Cuba.

Illustration by Wimar Verdecia Fuentes. Find him on twitter @FuentesWimar