Could Africa-Caribbean trade reach US$1.8 billion by 2028? According to recent research by the International Trade Centre (ITC) and the African Export-Import Bank (Afreximbank), this impressive milestone is achievable through strategic investments in value addition, trade facilitation, and improved logistics.
Current bilateral trade in goods between these regions stands at US$729 million, highlighting significant growth potential.
ITC-Afreximbank Project Overview
During the launch of the ITC-Afreximbank “Strengthening AfriCaribbean Trade and Investment” project at the 31st Afreximbank Annual Meetings and the third AfriCaribbean Trade and Investment Forum (ACTIF) in Nassau, The Bahamas, preliminary findings were revealed.
The research indicates that prioritizing travel and transport sectors could significantly contribute to the projected growth, accounting for two-thirds of the potential services trade between Africa and the Caribbean.
Key Sectors and Growth Opportunities
Promising Sectors for Growth
The research identifies minerals and metals; wood, paper, rubber, and plastics; and processed food and animal feed as the three most critical sectors in the goods segment. These sectors present the most substantial opportunities for enhancing trade relations and driving economic growth in both regions.
Enhanced Cooperation and Investment
The project’s primary goal is to boost trade and investment between Africa and the Caribbean and to foster stronger cooperation between their private sectors.
Following the project’s launch, Afreximbank and ITC plan to develop detailed sector profiles to map out five promising value chains and identify barriers to growth. The comprehensive analysis results will be published at the Fourth ACTIF in 2025.
Expert Opinions and Strategic Insights
Afreximbank’s Commitment
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, emphasized the vast untapped trade and investment opportunities between Africa and the Caribbean.
He said:
“The report confirms the vast Africa-Caribbean trade and investment opportunities that remain untapped. It provides a strong validation of Afreximbank’s Caribbean Strategy.”
“With a project pipeline of US$2.5 billion and an investment pipeline worth US$1.5 billion, the Bank has demonstrated its commitment to realizing opportunities across the two regions.”
ITC’s Perspective
Pamela Coke-Hamilton, Executive Director of ITC, highlighted the role of small businesses in driving increased trade between the two regions.
She stressed the importance of prioritizing the right sectors for development and investment to unlock substantial growth opportunities.
Turning Potential into Exports
Current Trade Landscape
Despite a shared history and rich cultural ties, Africa and the Caribbean export less than 3% to each other. This low level of trade persisted even before the global challenges posed by COVID-19, conflict, and climate change. Over the past decade, bilateral exports have never surpassed 6%.
Key Export Products
Trade between the two regions is highly concentrated in a few key products. For example, over half of Africa’s exports to the Caribbean are mineral primary products, with crude oil being the leading export.
Similarly, a fertilizer called anhydrous ammonia, produced in Trinidad and Tobago, accounts for nearly half of all Caribbean exports to Africa.
Addressing Trade Challenges
High Tariffs and Weak Logistics
To increase trade between Africa and the Caribbean, it is crucial to tackle high tariffs and weak logistics. Bilateral tariffs are often higher than those charged to exporters from other trading partners, particularly on processed goods.
Lowering tariffs can benefit both regions by providing greater variety to consumers at a lower cost and allowing specialization in competitive sectors.
Improving Trade Logistics
Logistics performance in Africa and the Caribbean is significantly lower compared to other regions. Streamlining the flow of goods and information can enhance market access and foster trade.
Trade agreements are one solution to lower trade costs between the two regions.
Strengthening Partnerships
The ITC-Afreximbank project will support the implementation of a memorandum of understanding between the two organizations.
This collaboration builds upon existing cooperation on initiatives such as the “How to Export with the AfCFTA” Training Programme, South Sudan National Export and Investment Strategy, Pan-African Fashion Alliance, and the Pan-African Private Sector Trade and Investment Committee Survey.
Africa Rising
The new research by ITC and Afreximbank highlights the immense potential for increasing trade between Africa and the Caribbean.
By addressing key challenges and prioritizing strategic investments, annual trade could reach US$1.8 billion by 2028.
This project aims to foster economic growth and enhance cooperation between these two vibrant regions.
Sources: THX News & Afreximbank.