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Afro-Caribbean Trade : Optimizing Commercial Exchange

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Afro-Caribbean Trade : Optimizing Commercial Exchange

Trade between Africa and the Caribbean is limited and concentrated in a few sectors. More cooperation is therefore needed for mutual benefit.

Expanding trade between the two regions

The recent economic and health crises have stimulated the political will to diversify the trading partners between Africa and the Caribbean. The aim is to increase trade between the two historically linked regions.

Exports to Africa offer several opportunities for Caribbean countries. Africa has 2.3 times the potential to export goods than services to the Caribbean. Africa could increase its annual merchandise exports to the Caribbean by 171 million USD by 2026, an increase of 54 %. The Caribbean, in turn, could increase its merchandise exports to Africa by 80 million USD.

Trade figures to be improved

Trade in goods between Africa and the Caribbean is still at an early stage. About 0.1 % of African exports went to Caribbean countries in 2020, while the continent bought less than 1 % of Caribbean exports. Trade between the two regions is less diversified than exports to any other part of the world.

Nearly 70 % of African exports to the Caribbean are primary minerals (692 million USD). More than 40 % of Caribbean exports to Africa are chemicals (203 million USD). The countries of northern and southern Africa have stronger trade links with the Caribbean than with countries in other regions of Africa. Trinidad and Tobago and the Bahamas together account for nearly 70 % of Caribbean exports to Africa.

Market Access Costs Hinder Trade Integration

The absence of a free trade agreement between Africa and the Caribbean has resulted in tariffs in some countries. This naturally creates significant tariff disadvantages for exporters in both regions compared to competitors in other countries. In general, trade is more advantageous in sectors where tariffs are lower.

Reports indicate that it is difficult to comply with regulatory requirements in partner markets for several reasons, including delays, fees, stringent testing requirements, and lengthy credit checks. Transportation costs are also a serious obstacle in Africa and the Caribbean, which have some of the world’s lowest indicators of transportation infrastructure, logistics quality, and customs efficiency.

These bottlenecks weigh heavily on current trade flows and commercial potential, particularly in the trade of goods.

Africa-Caribbean: An Emerging Partnership

Trade relations between Africa and the Caribbean have remained largely unexplored for many years, despite a shared history and culture. Both regions already participate and cooperate in various multilateral organizations, such as

  • The Commonwealth of Nations
  • Organization of African, Caribbean, and Pacific States
  • The United Nations
  • The World Trade Organization

For a long time, Africa and the Caribbean have focused on consolidating relations with the major players in the world market, but they have not yet exploited all the opportunities for developing bilateral trade. This situation is gradually changing, thanks to increased efforts to strengthen cooperation, underpinned by a determination to exploit each other’s economic potential, both in terms of trade and investment.

Political will expressed by Heads of State and Government

The leaders of the Caribbean and Africa have expressed their commitment to strengthen cooperation to promote trade and investment. At a joint meeting in 2021, both parties agreed to celebrate the annual Summit on September 7 as Africa-CARICOM Day.

More recently, the African Development Bank (AfDB) and the Caribbean Development Bank signed a Memorandum of Understanding in June 2022, creating a formal agreement for the two institutions to join forces and promote bilateral trade. Economic cooperation between Africa and the Caribbean has become even more important as countries in both regions seek to deepen their economic recovery from the COVID-19 pandemic.

In addition, the tourism sector is increasingly recognized as an important pillar of bilateral cooperation.

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