In an era marked by global economic uncertainty, geopolitical tensions and fragmented supply chains, Africa and the Caribbean are at a critical juncture.
- •The share of bilateral exports between Africa and the Caribbean, despite extensive shared history, has never surpassed 6%, according to an ITC and African Export-Import Bank (Afreximbank) study, leaving much room for growth of up to $2.1 billion within the next 5 years. according to new studies.
- •Key to this growth is adding value in priority sectors, such as minerals, processed food, manufactured products, transport, travel and creative industries.
- •Small businesses are the backbone of African and Caribbean economies but remain underrepresented in trade.
Most Caribbean countries now face a blanket 10% tariff on goods exported to their biggest trading partner, the United States – which takes 40% of its total exports. The so-called reciprocal tariffs on African nations ranges from 10-50%, with Lesotho facing the single highest tariff of all US trading partners, nullifying preferences granted through the African Growth and Opportunity Act (AGOA).
These are real challenges, especially for smaller firms that are having to adapt with little time and often scarce resources. But there are also promising prospects on the horizon—if we dare to seize them.
Africa, for one, is now moving into full, accelerated implementation of the African Continental Free Trade Agreement (AfCFTA), arguably the biggest decision made by African Heads of Government in six decades. This treaty has the power not only to revolutionize African trade and development, but also to equip African countries with stronger negotiating power in multilateral arenas—therefore boosting their collective ability to change the terms of global trade.
The Caribbean, with its smaller, remote and import-dependent economies, is one of the region’s most vulnerable to external shocks, whether from tariff escalations, climate disasters or supply chain disruptions. But it also has a chance to invest in long-term stability and economic growth by diversifying exports and trading partners, processing goods before export to retain more value, and strengthening regional and international trade ties.
While many are taking a wait-and-see approach on what this next phase of global trade will look like, for Africa and the Caribbean, this is an approach that neither can afford. With the longstanding sociocultural history shared by the two regions, the time is ripe to forge far deeper ties through mutually beneficial, trade-led economic growth and development—and serve as a model of South-South cooperation that inspires others to follow in their footsteps.
Investing in interregional, value-added trade
Despite efforts at regional integration, trade between Africa and the Caribbean remains minimal. ITC data shows that bilateral trade has never exceeded 6% of total exports for either region. In fact, African exports to the Caribbean have declined since 2014 and have been close to 0.1% since 2020, while Caribbean exports to Africa remain volatile, from just 0.8% of total exports in 2020 to 2.3% in 2022.
There is room to grow, from the current $729 million in interregional trade to potentially $2.1 billion within the next 5 years, if trade barriers are slashed and investments are made in key sectors.
Our alliance is more than just a response to global uncertainty; it is a blueprint for inclusive, resilient and opportunity-driven trade in the 21st century
A formalised trade corridor could reduce regulatory divergence and non-tariff barriers. For instance, Caribbean rum exporters currently face an 88% tariff when selling to African markets—a significant barrier to growth.
But removing or lowering trade barriers alone is not enough.
Access to trade and Investment finance are vital for tapping into the major untapped growth potential in trade in value-added goods. This is critical for priority sectors like minerals and metals, processed food and animal feed, manufactured products, travel, transport and creative industries, where the regions have comparative advantages and synergies are possible. Trade between the regions currently relies heavily on unprocessed commodities, which reflects missed opportunities for industrial collaboration, innovation and economic diversification.
Afreximbank’s presence in the region, through its Barbados office established about two years ago is set to significantly boost trade between the two regions. This is further strengthened by the ongoing project to create the Afreximbank African Trade Centre (AATC), and the initiative to create the CARICOM Eximbank – an Afreximbank subsidiary.
Additionally, the CARICOM Payment and Settlement System (CAPSS), being developed by Afreximbank and CARICOM central banks, will deepen and improve efficiency of intra-CARICOM payments in national currencies. Through its integration with the Pan-African Payment and Settlement System (PAPSS), CAPSS will accelerate integration of financial systems of the two regions while boosting Africa-Caribbean trade and investments.
In the fast-growing creative economy, for instance, both regions already have longstanding traditions in textiles, ceramics and woodwork, and can build on their shared cultural heritage. The collaboration between African and Caribbean designers, musicians and artists also offers significant potential for growth.
Afreximbank Creative Africa Nexus (CANEX) has highlighted fashion, design and crafts as a priority value chain, and has doubled programme funding from $1 billion to $2 billion for the next three years, aimed at providing infrastructure, financing and resources to scale Africa and diasporic creative industries globally. The Bank is also developing a $500 million private equity film fund to support African filmmakers. These efforts reflect the scale of ambition required to transform the creative industries into global growth engines.
Breaking bottlenecks
To take advantage of these economic growth opportunities, foundations need to be laid. The major hurdles in enhancing Africa-Caribbean trade include weak institutional frameworks, logistical inefficiencies and infrastructural gaps. Despite their geographic proximity—just 1,600 miles apart—the lack of direct transport links and weak regulatory frameworks make trade between the two regions cumbersome.
Logistics, unfortunately, remains a major bottleneck. ITC data show that 57% of unrealized trade potential stems from logistical challenges. Both regions score poorly on the logistics index, according to the World Bank, ranking among the lowest in the world in terms of transport efficiency. Investing in interregional infrastructure will be key, including direct maritime and air transport links, improving ports and enhancing digital infrastructure.
For example, the Afreximbank has an ongoing $3 billion credit facility for CARICOM countries, to boost trade infrastructure and the competitiveness of small businesses. These are the types of arrangements, when replicated, that make a difference in the long term.
Empowering small businesses to seize the moment
But all of this could be for naught unless both regions’ small businesses are empowered to act and seize these opportunities for themselves. The Strengthening AfriCaribbean Trade and Investment Project, an initiative spearheaded by Afreximbank and the ITC, is forging vital links between the private sectors of Africa and the Caribbean.
This ambitious endeavour aims to cultivate not only strategic commercial partnerships but also cultural connections. In collaboration with the Caribbean Private Sector Organization and the African Business Council, the project empowers both regions to unearth business opportunities and stimulate business-to-business exchanges, paving the way for a dynamic synergy to elevate the economic landscape of both Africa and the Caribbean.
Small businesses are the backbone of the African and Caribbean economies but remain underrepresented in trade. The first-ever Global Small and Medium-sized Enterprises Ministerial Meeting, was hosted by ITC and the Government of South Africa in Johannesburg this month, in the year of South Africa’s G20 Presidency, which positioned small businesses as key players in global trade reform.
Afreximbank enabled the participation of 15 ministers to attend, 10 from Africa and five from the Caribbean. Days later, the AfriCaribbean Trade and Investment Forum (ACTIF) will kick off in St. George’s Grenada from 28 to 30 July 2025, where the work to increase trade and investment between the two regions will continue.
Our alliance is more than just a response to global uncertainty; it is a blueprint for inclusive, resilient and opportunity-driven trade in the 21st century. Together, Africa and the Caribbean can showcase South-South trade as a solution in a time of great change.
Pamela Coke-Hamilton is the Executive Director, International Trade Centre.
Prof. Benedict Oramah is the President and Chairman, Afreximbank.