Africa and Caribbean eye $1.65bn trade opportunity

A recent report by the International Trade Centre (ITC) and African Export-Import Bank (Afreximbank) has identified significant trade opportunities between Africa and the Caribbean. The report, launched on the sidelines of the Commonwealth heads of government meeting in Antigua and Barbuda, suggests that annual trade in goods and services between the two regions could reach up to $1.65bn by 2030. This growth is contingent upon active promotion and facilitation of trade and investment.

The report highlights that as much as 80% of Africa's annual export potential to the Caribbean remains untapped. This offers substantial opportunities for export growth. The identified business opportunities span several priority sectors, including processed food and animal feed, chemicals, minerals and metals, apparel and textiles, leather and footwear, tourism, transport services, and creative industries. These sectors have been pinpointed through trade and export potential analysis, detailed sector assessments, and a survey of 1,175 businesses and business support organisations.

The report's findings are particularly relevant given the current global trading environment. They come on the heels of the US's decision to exclude South Africa from the African Growth & Opportunity Act (Agoa) preferential trade programme, effective January 1. This move has intensified debates over whether South Africa is adequately exploring alternative export markets amid growing protectionism. The ITC/Afreximbank report underscores the importance of diversified trade partnerships, especially in the face of geopolitical tensions, supply-chain disruptions, and climate-related shocks.

Historically, Africa and the Caribbean share deep cultural and social ties, but these connections have only partially translated into sustained economic and commercial relations. The report notes that South Africa, alongside Algeria and Nigeria, accounts for almost 60% of African exports to the Caribbean. The principal destinations in the Caribbean include the Dominican Republic, Cuba, and Jamaica. Conversely, the Bahamas and Trinidad and Tobago account for most Caribbean exports to Africa, with Morocco, Zimbabwe, and Ivory Coast being the main destinations.

Despite the potential, several constraints hinder bilateral trade between Africa and the Caribbean. These include market access, connectivity, information, and institutional constraints that raise the costs and risks of doing business in relatively distant and unfamiliar markets. African exporters face high tariffs in Caribbean markets for certain products, while Caribbean exporters face high tariffs in several African agricultural and manufacturing sectors. Additionally, freight costs between Africa and the Caribbean are among the highest faced by either region.

The ITC's export potential indicator projects that, under the right conditions, Africa's exports to the Caribbean could reach $539m annually by 2030, with only about 20% currently realised. Conversely, the Caribbean's export of goods to Africa could reach $499m a year, with about 82% of this potential already realised. The report suggests that for Africa, overcoming market information gaps, compliance costs, and weak commercial networks is crucial. For the Caribbean, targeted interventions focused on specific products and markets are recommended.

The report's insights are timely as South Africa seeks to strengthen economic ties outside the US and Europe, including more balanced trade with fellow Brics members such as Brazil, India, and China. By addressing the identified constraints and leveraging the opportunities in the priority sectors, both Africa and the Caribbean can benefit from increased trade and investment. This approach could contribute to diversified trade partnerships and more robust economic relations between the two regions.

Key points

• Annual trade between Africa and the Caribbean could reach $1.65bn by 2030.
• 80% of Africa's annual export potential to the Caribbean remains untapped.
• The report identifies priority sectors for trade growth, including processed food, chemicals, and creative industries.