ITC-Afreximbank research predicts Africa-Caribbean trade to hit US$1.8 billion by 2028

Trade between Africa and the Caribbean could reach US$1.8 billion annually by 2028 if efforts are focused on value addition, trade facilitation, and improved logistics, according to new research from the International Trade Centre (ITC) and African Export-Import Bank (Afreximbank).

Currently, the bilateral trade in goods between the two regions amounts to US$729 million.

These findings were unveiled in Nassau, The Bahamas, during the launch of the ITC-Afreximbank ‘Strengthening AfriCaribbean Trade and Investment’ project at the 31st Afreximbank Annual Meetings and the third AfriCaribbean Trade and Investment Forum (ACTIF). The research highlights that the travel and transport sectors hold the greatest potential for growth, accounting for two-thirds of the potential ‘services trade’ between the regions.

In the goods segment, the research identified minerals and metals; wood, paper, rubber, and plastics; and processed food and animal feed as the three most important sectors.

The project’s goal is to enhance trade and investment between Africa and the Caribbean and to foster cooperation between the private sectors of both regions.

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

Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, stated: “The report confirms the vast Africa-Caribbean trade and investment opportunities that remain untapped. It strongly validates Afreximbank’s Caribbean Strategy. With a project pipeline of US$2.5 billion and an investment pipeline worth US$1.5 billion, the Bank is committed to realizing opportunities across the two regions. The collaboration between Afreximbank and ITC aims to bridge the knowledge gap and build capacity among small and medium-sized enterprises, which are crucial for the growth of Africa-Caribbean trade and investment.”

ITC Executive Director Pamela Coke-Hamilton said: “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 indicates that despite shared history and cultural ties, Africa and the Caribbean export less than 3 percent to each other. Export 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 percent.

Where trade occurs between the regions, it is concentrated in a few key products. For instance, more than half of Africa’s exports to the Caribbean are mineral primary products, with crude oil being the leading export (US$232 million, 27 percent of total).

In terms of Caribbean exports to Africa, nearly half are comprised of anhydrous ammonia, a fertilizer produced in Trinidad & Tobago (US$423 million, 49 percent of total).

Tackling trade challenges

To boost trade between the regions, high tariffs (especially on processed goods) and weak logistics need to be addressed. Bilateral tariffs are often higher than those imposed on other trading partners and increase with the level of processing, discouraging the transformation of products into value-added goods for export. Lowering tariffs can benefit both regions by offering greater variety to consumers at lower costs and allowing regions to specialize in competitive sectors.

Regarding trade logistics, Africa and the Caribbean perform significantly lower compared to other regions (World Bank LPI). Streamlining the flow of goods and information can enhance market access and foster trade.

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

Strengthening partnerships

The project will support the implementation of the memorandum of understanding between ITC and Afreximbank and build upon 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.

Source: Afreximbank