Trade between Africa and the Caribbean presents enormous potential. Currently valued at 729 million USD, it could reach 1.8 billion USD by 2028 with strategic reforms. This often underestimated market holds promising opportunities for the transportation, manufactured goods, and SME sectors.
Africa-Caribbean : Growing trade relations
Trade between Africa and the Caribbean offers ambitious prospects, with potential estimated at 1.8 billion USD by 2028. Currently, trade between these two regions amounts to 729 million USD, excluding products such as tobacco, arms, and fossil fuels. This figure remains below its potential. Trade relations between Africa and the Caribbean account for only 3 % of their external trade, a figure far below expectations given the historical and cultural ties between these regions.
Promising sectors to boost bilateral trade
The travel and transportation sectors represent the pillars of expected growth. According to a joint study by the International Trade Centre (ITC) and the African Export-Import Bank (Afreximbank), these two sectors could make up to two-thirds of the trade in services between Africa and the Caribbean. They are essential for developing the commercial infrastructure necessary for smooth trade flows.
Minerals and metals, processed food products, and raw materials like wood, paper, and plastic also hold significant potential. By focusing on these sectors, the two regions could enhance their global competitiveness and diversify their exports. For instance, crude oil accounts for 27 % of Africa’s exports to the Caribbean, valued at 232 million USD.
Growth obstacles and potential solutions
High tariffs are a major obstacle to the development of trade between Africa and the Caribbean. These tariffs, especially high for processed goods, limit the competitiveness of both regions in the global market. Additionally, they hinder the value addition to products before export, which could potentially reduce costs and increase the variety of goods offered to consumers on both sides of the Atlantic.
From a logistical standpoint, commercial infrastructures still lag behind other regions of the world. The World Bank’s LPI index reveals that logistical performance in Africa and the Caribbean is significantly lower than in regions like Asia or Europe. Streamlining the flow of information and goods is crucial for better trade fluidity.
Future of Africa-Caribbean trade : Strategies and recommendations
To boost trade, reducing tariffs and streamlining logistical processes are key measures. By lowering tariff barriers, both regions can improve market access, leading to increased exports and reduced costs for consumers.
Simultaneously, signing bilateral trade agreements could promote harmonization of trade standards, simplify exchanges, and encourage sustainable growth. The ITC has also planned to analyze the impact of various tariff liberalization scenarios on African and Caribbean exports. This initiative presents a strategic opportunity for small and medium-sized enterprises (SMEs), which are the backbone of the economies in both regions.
Central role of SMEs in developing this market
African and Caribbean SMEs play a crucial role in the expansion of bilateral trade. They have the agility to quickly seize emerging opportunities, particularly in high-value-added sectors like manufactured goods and services. Pamela Coke-Hamilton, Executive Director of the ITC, emphasizes that these small businesses will be at the heart of strengthening trade relations. Increased collaboration between SMEs in the two regions could stimulate innovation and open new avenues for development.
To support these initiatives, Afreximbank is committed to providing financial and technical support, helping SMEs capitalize on new trade opportunities. The bank has also announced its intention to enhance the capacity of small businesses so they can favorably position themselves in this emerging Afro-Caribbean market.
