Strengthening Africa-Caribbean commerce and funding in an period of World Commerce Disruption

We’re residing in precarious occasions.

In an period marked by international financial uncertainty, geopolitical tensions, and fragmented provide chains, Africa and the Caribbean are at a vital juncture.

Most Caribbean international locations now face a blanket 10% tariff on items exported to their largest buying and selling associate, america, which takes 40% of their whole exports. The so-called reciprocal tariffs on African nations vary from 10-50%, with Lesotho dealing with the only highest tariff of all US buying and selling companions, thereby nullifying preferences granted by the African Development and Alternative Act (AGOA). 

These are actual challenges, particularly for smaller corporations which might be having to adapt with little time and infrequently scarce assets. However there are additionally promising prospects on the horizon – if we dare to grab them.

Africa, for one, is now transferring into full, accelerated implementation of the African Continental Free Commerce Settlement (AfCFTA), arguably the most important resolution made by African Heads of Governments in six many years. This treaty has the ability not solely to revolutionize African commerce and growth but in addition to equip African international locations with stronger negotiating energy in multilateral arenas, subsequently boosting their collective means to vary the phrases of worldwide commerce. 

The Caribbean, with its smaller, distant, and import-dependent economies, is one area most susceptible to exterior shocks, whether or not from tariff escalations, local weather disasters, or provide chain disruptions. But it surely additionally has a novel alternative to put money into long-term stability and financial development by diversifying exports and buying and selling companions, processing items earlier than export to retain extra worth, and strengthening regional and worldwide commerce ties.

Whereas many are taking a wait-and-see strategy on what this subsequent part of worldwide commerce will seem like, for Africa and the Caribbean, that is an strategy that neither can afford. With the longstanding sociocultural historical past shared by the 2 areas, the time is ripe to forge deeper ties by mutually useful, trade-led financial development and growth, which can function a mannequin of South-South cooperation that can encourage others to comply with of their footsteps.

Investing in interregional, value-added commerce

Regardless of efforts at regional integration, commerce between Africa and the Caribbean stays minimal. ITC information exhibits that bilateral commerce has by no means exceeded 6% of whole exports for both area. African exports to the Caribbean have declined since 2014 and have been near 0.1% since 2020, whereas Caribbean exports to Africa stay risky, from simply 0.8% of whole exports in 2020 to 2.3% in 2022.

There may be room to develop, from the present $729 million in interregional commerce to doubtlessly $2.1 billion inside the subsequent 5 years, if commerce obstacles are slashed and investments are made in key sectors.

A formalised commerce hall might cut back regulatory divergence and non-tariff obstacles. For example, Caribbean rum exporters at present face an 88% tariff when promoting to African markets – a major barrier to development.

However eradicating or reducing commerce obstacles alone isn’t sufficient.

Entry to commerce and Funding finance is important for tapping into the most important untapped development potential in commerce in value-added items. That is vital for precedence sectors like minerals and metals, processed meals and animal feed, manufactured merchandise, journey, transport, and artistic industries, the place the areas have comparative benefits and synergies are attainable. Commerce between the areas at present depends closely on unprocessed commodities, which displays missed alternatives for industrial collaboration, innovation, and financial diversification.

Afreximbank’s presence within the area, by its Barbados workplace established about two years in the past, will considerably increase commerce between the 2 areas. That is additional strengthened by the continued challenge to create the Afreximbank African Commerce Centre (AATC), and the initiative to arrange the CARICOM Eximbank – an Afreximbank subsidiary. Moreover, the CARICOM Cost and Settlement System (CAPSS), being developed by Afreximbank and CARICOM central banks, will deepen and enhance the effectivity of intra-CARICOM funds in nationwide currencies. By its integration with the Pan-African Cost and Settlement System (PAPSS), CAPSS will speed up the mixing of economic programs of the 2 areas whereas boosting Africa-Caribbean commerce and investments.

Within the fast-growing inventive economic system, as an example, each areas have already got longstanding traditions in textiles, ceramics, and woodwork, and may construct on their shared cultural heritage. The collaboration between African and Caribbean designers, musicians, and artists additionally presents important potential for development.

Afreximbank’s Inventive Africa Nexus (CANEX) has highlighted style, design, and crafts as a precedence worth chain, and has doubled programme funding from $1 billion to $2 billion for the following three years, aimed toward offering infrastructure, financing, and assets to scale Africa and diasporic inventive industries globally. The Financial institution can be growing a $500 million non-public fairness movie fund to help African filmmakers. These efforts mirror the size of ambition required to remodel the inventive industries into international development engines.

Breaking bottlenecks

To make the most of these financial development alternatives, foundations have to be laid. The key hurdles in enhancing Africa-Caribbean commerce embody weak institutional frameworks, logistical inefficiencies, and infrastructural gaps. Regardless of their geographic proximity – simply 1,600 miles aside – the dearth of direct transport hyperlinks and weak regulatory frameworks make commerce between the 2 areas cumbersome.

Logistics, sadly, stays a significant bottleneck. ITC information present that 57% of unrealized commerce potential stem from logistical challenges. Each areas rating poorly on the logistics index, in keeping with the World Financial institution, rating among the many lowest on the earth when it comes to transport effectivity. Investing in interregional infrastructure shall be key, together with direct maritime and air transport hyperlinks, bettering ports, and enhancing digital infrastructure.

For instance, the Afreximbank has an ongoing $3 billion credit score facility for CARICOM international locations to spice up commerce infrastructure and the competitiveness of small companies. These are the kinds of preparations, when replicated, that make a distinction in the long run.

Empowering small companies to grab the second

However all of this may very well be for naught except small companies within the area are empowered to behave and seize these alternatives for themselves. The Strengthening AfriCaribbean Commerce and Funding Mission, an initiative spearheaded by Afreximbank and the ITC, is forging important hyperlinks between the non-public sectors of Africa and the Caribbean. This formidable endeavour goals to domesticate not solely strategic industrial partnerships but in addition cultural connections. In collaboration with the Caribbean Personal Sector Group and the African Enterprise Council, the challenge empowers each areas to establish enterprise alternatives and stimulate business-to-business exchanges, paving the way in which for a dynamic synergy to raise the financial panorama of each Africa and the Caribbean.

Small companies are the spine of the African and Caribbean economies, however stay underrepresented in commerce. The primary-ever World Small and Medium-sized Enterprises Ministerial Assembly was hosted by ITC and the Authorities of South Africa in Johannesburg from 22-24 July 2025, forward of South Africa’s G20 presidency. The assembly positioned small companies as key gamers in international commerce reform. Afreximbank enabled the participation of 15 ministers on the assembly; 10 from Africa and 5 from the Caribbean.

The AfriCaribbean Commerce and Funding Discussion board (ACTIF) kicks off in St. George’s Grenada from 28 to 30 July 2025, the place the work to extend commerce and funding between the 2 areas will proceed. To take part, please go to actif2025.com.

Our alliance is greater than only a response to international uncertainty; it’s a blueprint for inclusive, resilient, and opportunity-driven commerce within the twenty first century. Collectively, Africa and the Caribbean can showcase South-South commerce as an answer in a time of nice change.