Wednesday, January 11, 2012

In Cuba's hinterland a businessman is born

In Cuba's hinterland a businessman is born
By Marc Frank
GUAIMARO, Cuba | Wed Jan 11, 2012 6:06am EST

(Reuters) - Guaimaro, just one of many small poor and dusty towns along
Cuba's sparsely travelled central highway, is best known as the spot
where the island's first constitution was signed during the independence
war with Spain.

These days the talk of the town is about a different sort of
independence in state-dominated Cuba - the privately owned Magno
restaurant, the most luxurious place in Gua imaro. Its owner Tomas
Mayedo Fernandez is a local boy who once did jail time for involuntary
manslaughter but now, in just over a year as an entrepreneur, is a big

The eatery is one of more than 1,000 home-based restaurants, or
paladares, that have opened on the Communist-run island since
restrictions on small private businesses were loosened in late 2010, as
part of a broader reform of the Soviet-style economy undertaken by
President Raul Castro.

A meal at the Magno will cost you the equivalent of a few dollars for a
beer and sandwich to $10 or more for steak and lobster, in a land where
the average wage is less than $20 per month.

There are just two other private eateries and a few shabby looking
state-run restaurants in Guaimaro, located 400 miles (650 km) east of
Havana. But they cater more to the local population rather than
passersby and do not boast air-conditioning, lobster, shrimp, beef,
whiskey and aged rum.

"I didn't know anything about running a restaurant, but I liked the idea
of going into business and so when the law changed I began, little by
little," said Mayedo, a strapping young man and son of a cattle rancher
in his mid-30s .

Mayedo lived in the second story of the once-crumbling, century-old
building. He sold clothing from his living room to make ends meet and
looked down on the ruins of the empty store front and big back yard the
neighbours had turned into a garbage dump.


The place nevertheless had potential because it fronted the central
highway, giving it access to a larger customer base than just the small
town, he decided.

"We were already working to clean the place up before the law changed,"
Mayedo said recently, taking time off from his chats with arriving
suppliers and his pacing back and forth with mobile phone in hand.

He began with a small cafeteria, but then on December 10, 2010, he
opened the restaurant beside it . His plans did not stop there.

"We also have a jewellery repair shop and in two or three years I want
to build a place in the back to rent out rooms," he said.

Like the rest of Cuba, many of Guaimaro's residents have family living
abroad, especially in Florida, and as luck would have it, U.S. President
Barack Obama lifted restrictions on Cuban Americans visiting their
homeland just a few months before the Magno opened for business.

Over the recent holidays the town - where legs, bicycles and horse-drawn
buggies are the main form of transportation - was dotted with rental
cars, many of them driven by visiting Cuban Americans who wanted to
treat their relatives and friends to a nice meal while out on the town.

There was only one place to go - the Magno, which has become a sort of
destination restaurant that is well known in the area .

"December was by far the best month we have had," Mayedo said.

His wife Yaima Lopez helps run the Magno, while his aunt, a retired
state economist, takes care of the books. Two cousins, with some cash
earned working in Angola, where thousands of Cubans work as doctors,
construction workers and teachers, lent him the seed money.

"I'm paying them back little by little, but they don't pressure me," he

The hardest times were when Mayedo waited for his clientele to build up
and worried he might go bankrupt.

"Like all businesses the first year or two are the most difficult. And
this is the countryside, not the capital where there is more demand.
Here we depend on the people who pass by on the highway," he said.


As his business has grown, Mayedo has added eight full-time employees to
help operate it.

The biggest challenge has been training a workforce that is disciplined
and pays attention to details, he said.

Mayedo said he has had no serious problems with the government, is
grateful for the reforms underway and believes they are here to stay.

"I thank them for giving us the opportunity to demonstrate to ourselves
that we are capable of doing this well," he said.

"No state can subsidize an entire population, it is impossible.
Furthermore, we provide jobs, pay taxes and help the economy in a big way."

Mayedo doubted he would become a millionaire any time soon because,
despite the reforms, there are still limits.

"The system is designed to allow us to keep living, not become rich. But
yes, my life will keep improving," he said.

In a land where everyone worked for the state and there was no income
tax until recently, one is now being levied on hundreds of thousands of
small businesses and farms that have appeared due to Raul Castro's reforms.

Mayedo said his aunt was preparing his first income tax return even as
he spoke.

Now that was something to worry about at a sliding scale of up to 50
percent of earnings, Mayedo admitted, but better to pay 50 percent of
earnings than no tax on no earnings at all, he said with a shrug.

(Editing by Jeff Franks and Philip Barbara)

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