Annual Africa Caribbean trade could reach $1.8 billion by 2028: ITC Afreximbank research

Prof. Benedict Oramah, President and Chairman of Board of Directors of Afreximbank stresses a point as International Trade Centre (ITC) Executive Director, Pamela Coke-Hamilton (right) listens. The two leaders spoke in Nassau, the Bahamas as part of the release of preliminary findings of the ITC-Afreximbank 'Strengthening AfriCaribbean Trade and Investment' project.

(Nassau/Geneva) 04 July 2024: - Trade between Africa and the Caribbean could rise to $1.8 billion per year by 2028 if value addition, trade facilitation and improved logistics are prioritized, according to new research by the International Trade Centre (ITC) and African Export-Import Bank (Afreximbank).

Current bilateral trade in goods between the two regions is worth $729 million*.

These preliminary findings were released in Nassau, the Bahamas, as part of the launch of the ITC-Afreximbank 'Strengthening AfriCaribbean Trade and Investment' project during the 31st Afreximbank Annual Meetings and the third AfriCaribbean Trade and Investment Forum (ACTIF). The research shows that the travel and transport sectors offered the greatest potential contribution to that growth, making up two-thirds of the potential 'services trade' between the two regions.

These latest findings also show that, in the goods segment, minerals and metals; wood, paper, rubber and plastics; processed food and animal feed are the three most important sectors.

The objective of the project is to boost trade and investment in Africa and the Caribbean, and to enhance cooperation between the private sectors of the two regions.

Following this launch, Afreximbank and ITC will develop in-depth profiles of sectors in the two regions to map out these five promising value chains and identify barriers to, and requirements for, growth. The results of this analysis will be featured in a comprehensive report that will be published at the Fourth ACTIF in 2025.

Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, reacting to the findings, 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 $2.5 billion and an investment pipeline worth $1.5 billion, the Bank has demonstrated its commitment to realizing opportunities across the two regions. The productive collaboration between Afreximbank and ITC is a testament to this, as it aims to bridge the knowledge gap and build capacity among small and medium-sized enterprises, which are critical for the growth of Africa-Caribbean trade and investment."

ITC Executive Director Pamela Coke-Hamiltonsaid: "Small businesses can be among the first to drive and benefit from increased trade between these two regions, as they form the backbone of both African and Caribbean economies. There are huge growth opportunities if the right sectors are prioritized for development and investment."

Turning potential into exports

ITC data shows that Africa and the Caribbean - despite a shared history and rich cultural ties - export less than 3% to each other. Exports levels were low even before the global impact of COVID-19, conflict and climate change: Over the past decade, the share of bilateral exports has never surpassed 6%.

Where trade is happening between the two regions, it is highly concentrated in a few key products. For example, more than half of Africa's exports to the Caribbean are mineral primary products, with crude oil being the leading export ($232 million, 27% of total).

As for Caribbean exports to Africa, a fertilizer produced in Trinidad and Tobago - called anhydrous ammonia - makes up nearly half of all exports to Africa ($423 million, 49% of total).

Tackling trade challenges

To increase trade between the two regions, there are two key issues to tackle: High tariffs (especially on processed goods) and weak logistics. Bilateral tariffs tend to be higher than those charged to exporters from other trading partners. Tariffs also increase with the level of processing, which discourages transformation of products into value-added goods for export. Lowering tariffs benefits both regions by providing greater variety to consumers at a lower cost and allows the regions to specialize in sectors they are competitive in.

As for trade logistics, performance is significantly lower in Africa and the Caribbean compared to other regions (World Bank LPI). Streamlining the flow of goods and information can allow increased market access and foster trade.

Trade agreements are one solution to lower trade costs between the two regions. As part of the new project, ITC will analyse how different tariff liberalization and non-tariff measures harmonization scenarios may increase trade at the country and product levels.

Strengthening partnerships

The project will contribute to implementation of the memorandum of understanding between ITC and Afreximbank and build upon the cooperation on 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.

Notes to the Editor

*Thecurrent bilateral trade in goods between Africa and the Caribbean worth $729 million excludes tobacco, arms/ammunition and fossil fuels.

About the International Trade Centre

The International Trade Centre is the joint agency of the World Trade Organization and the United Nations. ITC assists small and medium-sized enterprises in developing and transition economies to become more competitive in global markets, thereby contributing to sustainable economic development within the frameworks of the Aid-for-Trade agenda and the United Nations' Sustainable Development Goals.

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About Afreximbank

African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. For 30 years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa's trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Working with the AfCFTA Secretariat and the AU, the Bank is setting up a US$10 billion Adjustment Fund to support countries effectively participating in the AfCFTA. At the end of December 2023, Afreximbank's total assets and guarantees stood at over US$37.3 billion, and its shareholder funds amounted to US$6.1 billion. Afreximbank has investment grade ratings assigned by GCR (international scale) (A), Moody's (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure (together, "the Group"). The Bank is headquartered in Cairo, Egypt.

For more information, visit: www.afreximbank.com

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