Opportunities for Economic Growth and Development Presented by the Afreximbank-CARICOM Partnership

By Adiella Lewis

From 30-31 October 2023, Heads of Governments, delegates, private sector representatives, and other key stakeholders from Africa and the Caribbean gathered in Georgetown, Guyana for the second annual AfriCaribbean Trade and Investment Forum (ACTIF) organized by the African Export-Import Bank (Afreximbank).

Building on the success of the first ACTIF, held in September 2022 in Bridgetown Barbados, ACTIF23 was intended to foster stronger economic ties, encourage trade, and facilitate investment opportunities between Africa and the Caribbean. The recently concluded forum also served to highlight the significant progress made by the Afreximbank-CARICOM partnership since the first ACTIF during which the International Trade Centre’s (ITC) report entitled “Expanding African-Caribbean Trade” was launched.

The report, which acknowledged the regions’ shared history and similar developmental challenges, emphasized the unique opportunities for collaborating between the regions in order to promote and facilitate their simultaneous economic growth and development. One such opportunity is through the realization of strong, diversified, two-way trade between the regions, the potential for which the ITC estimates at US $1 billion over a five-year period.

Furthermore, in an effort to assist with the unlocking of South-South trade potential, the report outlined four lessons for policymakers, firms, and international organizations in Africa and the Caribbean. This Trading Thoughts discusses how each of these lessons is reflected in the partnership between Afreximbank and the Caribbean Community (CARICOM).

Lesson #1: Create a market intelligence ecosystem that focuses efforts, fills data gaps, and overcomes misperceptions.

Identifying misperceptions and information asymmetries/gaps as significant barriers to South-South partnerships, the ITC’s report states that African and Caribbean governments, trade/investment promotion organizations, and international organizations need to make a concerted effort to create easily accessible, business-friendly tools designed to make Africa-Caribbean trade more transparent and assist with identifying a list of sectors as a starting point for trade promotion and a list of institutional partners to target for early buy-in.

The Afreximbank-CARICOM Partnership presents numerous opportunities to fulfil the aforementioned objectives and therefore provide transparency and focus for market opportunities. The first of which is the Bank’s Africa Trade Gateway (ATG). Launched in collaboration with the African Continental Free Trade Area (AfCFTA), the ATG is a suite of five digital platforms – MANSA, the Pan-African Payment Settlement System (PAPSS), the TRADAR Club, the Africa Trade Exchange (ATEX) and ATG Connect – designed as a single window to enable the provision of critical services to support and promote African trade.

Each of the aforementioned platforms addresses clearly identified barriers to African trade and investment. For example, the MANSA Data Repository Platform, which is described by the Bank as “a pan-African customer due diligence repository for financial institutions, corporate entities, and SMEs”, is a single source of the primary data required for Customer Due Diligence (CDD) and Know Your Customer (KYC) checks on African entities in accordance with best practices, therefore addressing the perceived risk of doing business in Africa. 

MANSA therefore provides solutions to a number of the key trade-related challenges faced by CARICOM corporations, financial institutions, and SMEs such as lack of market information, high cost of doing business, and discovering counterparties. Furthermore, the platform is especially useful for CARICOM member states, many of which, as reported by the Caribbean Financial Action Task Force (CFATF) in its 2019 “‘De-risking’ in the Caribbean Region – a CFAFT Perspective” report, have been negatively impacted by ‘de-risking’ due in part to the burdens related to the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) requirements.

The second opportunity presented by the Afreximbank-CARICOM Partnership is the establishment of an Afreximbank Africa Trade Centre within the region, construction for which is expected to begin in Barbados before the end of 2024. In his speech during ACTIF23, the President of Afreximbank, Professor Benedict Oramah, stated that this facility – which will be modelled similarly to other projects in Africa – will house the Bank’s permanent Caribbean office as well as a hotel, technology centre, trade information centre, and conferencing facilities.

Lesson #2: Build relationships through trade fairs and business-to-business meetings.

The second focus of the ITC report concerns the need for trade fairs and business-to-business meetings to create visibility and promote the sustainability of trade links. The Afreximbank-CARICOM Partnership satisfies this need in a number of ways namely through its AfriCaribbean Trade and Investment Forums (ACTIF) and Intra-African Trade Fairs (IATF).

Firstly, ACTIF provides a platform for attendees and participants to easily identify and connect with potential business partners by facilitating business-to-business meetings, organizing site visits, promoting investment opportunities, and providing a publicly available ‘marketplace’. The 2022 ACTIF boasted over two thousand participants originating from more than ninety countries and representing a variety of sectors.

Furthermore, in her remarks during the opening ceremony of ACTIF23, Dr. Carla Barnett, Secretary-General of CARICOM, highlighted the signing of a Memorandum of Understanding (MoU) between Afreximbank, the Africa Business Council, and the Caribbean Private Sector Organization establishing the Africa-Caribbean Business Council. The Council will work to deepen business, trade, investment and people relations between the private sector and people of CARICOM and the African Union.

Secondly, IATF, the third of which was held in Cairo, Egypt from 9-15 November, 2023 provides a platform to showcase and exhibit goods and services and explore African business and investment opportunities. For the first time since its inception, IATF featured a Diaspora Day which included a retail and exhibition space for diasporic companies and brands, business-to-business and business-to-government networking, and a ‘Diaspora Deal Room’ which provided a focused platform to facilitate business transactions between Africa and its diaspora.

Lesson #3: Tackle high tariffs and non-tariff barriers, building on regional integration initiatives.

The ITC emphasizes the need for investment in port and land freight infrastructure and better logistics and customs services to address high transport costs which it states is one of the most insurmountable barriers to African-Caribbean trade.

In line with its main strategic pillars, Afreximbank offers a number of trade financing programmes and solutions which are now accessible to CARICOM member states which have ratified the partnership agreement. This includes the Project-Related Financing facility through which the Bank provides limited recourse financing to eligible export projects including infrastructure projects such as ports. The approval of a US $500 million transaction to support an infrastructure development project in Guyana was announced by Professor Oramah during ACTIF23.

Another way in which the Afreximbank-CARICOM partnership addresses the issue of transport costs is through its commitment to establishing direct air and sea links between the regions.

Lesson #4: Focus on the future of trade, particularly services exports.

Afreximbank facilitates and encourages trade in services in a number of ways, the most innovative of which is through the Bank’s Pan-African Payment Settlement System (PAPSS) which was recently endorsed by the Governors of the Caribbean Central Banks and unanimously adopted as their preferred system for handling intra-regional trade transactions.

PAPSS is a cross-border, financial market infrastructure which connects payment transactions across Africa, designed to enable Pan-African payments in the local currencies of the originators and beneficiaries thereby reducing the region’s dependence on foreign currencies and facilitating cross-border trade in services.

Another way in which the Bank facilitates trade in services is through its Creative African Nexus (CANEX) Programme which it uses to facilitate the development and growth of the creative and cultural industries in Africa and the Diaspora. CANEX’s key instruments of intervention include financing for the development and production of films, music, and events.

Lastly, the Bank facilitates trade in services through its Construction and Tourism-Linked Relay Facility (CONTOUR) which is aimed at promoting the development of tourism projects and facilities. During ACTIF23, it was announced that the Bank would be assisting with a tourism revitalization project in Barbados.

In conclusion, the Afreximbank-CARICOM partnership presents a number of unique opportunities to realize the trade and investment potential estimated in the ITC report and therefore the regions’ shared economic growth and development.

Adiella Lewis is a Research Assistant with the Cave Hill Campus of the University of the West Indies’ Shridath Ramphal Centre for International Trade Law, Policy, and Services.