CARICOM moving to explore integration of Afreximbank’s payment system in regional trade

Next week, finance ministers and central bank governors from the Caribbean Community (CARICOM) will gather to prepare for the upcoming annual heads of government summit in Grenada, scheduled for July.

A central focus of their discussions will be the exploration of the African Export-Import Bank’s (Afreximbank) Pan-African Payment and Settlement System (PAPSS) as a solution to streamline regional trade payments. This initiative seeks to address long-standing inefficiencies in the current payment settlement system.

At the 31st Afreximbank Annual Meeting and the Third AfriCaribbean Trade and Investment Forum (ACTIF2024), CARICOM Chairman and President of Guyana, Irfaan Ali, expressed the collective dissatisfaction of CARICOM nations with the existing payment system.

In response to this dissatisfaction, President Ali and Barbados Prime Minister Mia Mottley – who chairs the CARICOM Single Market and Economy (CSME) – have convened a meeting with finance ministers and governors to deliberate on the adoption of PAPSS for regional payment settlements.

During the opening ceremony of the three-day event, Ali underscored the importance of building trust among CARICOM members and leveraging proven systems rather than developing new ones. He highlighted the potential advantages of the PAPSS system, which has already proven successful in Africa.

Prime Minister Mottley, drawing from past challenges faced by CARICOM with a similar multilateral clearing facility that lacked a guarantor, pointed out that PAPSS offers a guaranteed mechanism, making it a more feasible option for enhancing inter-regional trade.

Mottley’s insights from the 2023 Afreximbank meetings in Ghana emphasized the potential of PAPSS to transform trade within CARICOM by enabling transactions in local currencies. Ali noted the significant progress made since Afreximbank expanded its presence in the CARICOM region three years ago.

The interest of over 50 African delegations in exploring business opportunities in the Caribbean underscores the increasing investment interest from African entities.

This interest was further evidenced by the attendance of notable figures such as Aliko Dangote, Africa’s richest individual, at the annual meetings.

Ali addressed misconceptions about the size of the CARICOM market, highlighting the region’s potential to reach over a billion people through various trade relationships and agreements. He emphasized the region’s strengths in aquaculture, renewable energy, and abundant natural resources.

The CARICOM region is endowed with substantial renewable energy potential, receiving an average of 2,755 hours of sunshine annually and experiencing high wind speeds in certain areas. These conditions present significant opportunities for solar and wind energy projects, which could revolutionize the region’s energy sector.

President Ali also discussed the potential for collaboration between CARICOM and Africa on environmentally sustainable projects, such as the manufacturing of electric vehicles with minimal environmental impact. He highlighted the marketing advantage of producing EVs in a region with the lowest environmental footprint.

The CARICOM chairman also pointed out the vast forest resources in Africa and the low deforestation rates in countries like Suriname and Guyana. By integrating these forests into a carbon market, the region could create new wealth and significantly impact global carbon trading.

John Rolle, Governor of the Central Bank of The Bahamas, urged the Caribbean to capitalize on the opportunities presented by Afreximbank’s presence. He emphasized the importance of leveraging the shared history, identities, and cultures to strengthen trade and investment ties between Africa and the Caribbean.