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Africa-Caribbean Trade: What are the prospects?

by Barbados Today
7 min read
The President of the Republic of Ghana Nana Akufo-Addo

In mid-June 2019, President of Ghana, His Excellency Nana Akufo-Addo, visited five Caribbean countries: Barbados, Guyana, St Vincent and the Grenadines, Trinidad and Tobago, and Jamaica. Aiming to build on the shared historical and cultural ties between his continent and the Caribbean, President Akufo-Addo took the opportunity to sign bilateral cooperation agreements and to encourage Afro-Caribbean descendants to take part in Ghana’s Year of Return which marks 400 years since the commencement of the Trans-Atlantic slave trade.

President Akufo-Addo’s visit presents an opportune occasion to consider the prospects for deepening Caribbean-African trade and economic ties, particularly in light of the recent entry into force of the African Continental Free Trade Area (AfCFTA) which will transform 52 out of 55 African countries into the world’s largest free trade area.

Current Caribbean-Africa trade

The Caribbean Community (CARICOM) comprises 15 member states and territories in the Caribbean. Africa is one of the few trading partners with which the region enjoys a trade surplus. According to data from the ITC Trade Map, CARICOM countries exported US$449 million worth of goods to Africa in 2017, representing 2.6 per cent of CARICOM’s total exports to the world. Whereas, the region imported US$258 million worth of goods from the continent in that same year. Africa’s exports to CARICOM represented a mere 0.06 per cent of its total world exports in 2017.

CARICOM countries and many African countries are both members of the Africa, Caribbean, Pacific (ACP) grouping and the Commonwealth of Nations. While CARICOM currently does not have a free trade agreement with any African country, some individual CARICOM Member States have bilateral investment treaties (BITs) and double taxation agreements (DTAs) with individual African States, not all of which are in force.

Tourism between Africa and the Caribbean remains underdeveloped due to the lack of direct air links. Getting to Africa from the Caribbean or vice versa requires going through a major international gateway, usually London or New York City.

Prospects for deepening Caribbean-Africa trade

There are several developments that seem promising for an expansion of Caribbean-Africa trade.

1.     Caribbean push for export partner diversification

Caribbean countries have stepped up their attempts to diversify their export partners, particularly through promoting south-south trade. Thus far, among CARICOM Member States, Guyana, Haiti, Jamaica, Trinidad & Tobago and Suriname have a diplomatic mission in at least one African country. Barbados has announced an intention to establish an embassy in Ghana by the end of 2019.

Establishing a joint diplomatic mission in strategic African capitals, similar to what the Organization of Eastern Caribbean States (OECS) has done in key international capitals, is something CARICOM may wish to consider. Trade and investment liaisons could be attached to the missions to help promote business and investment. Since it is firms which trade and not countries, building linkages between chambers of commerce and investment promotion agencies in the Caribbean and African countries would also be strategic steps.

2.     Africa is on the rise

Africa is home to some of the world’s fastest growing economies and according to the United Nations (UN), the world’s youngest population, comprising one fifth of the global youth population (aged 15-24). Despite challenges related to unemployment, Africa’s youth have the potential to unleash positive change and are an asset in a rapidly digitizing global economy.

The perceived lack of opportunities for youth in Africa may be the Caribbean’s gain leading to the export of highly skilled services. Ghana, for example, which has a surplus of nurses, has agreed to assist Barbados with its nurses shortage. Indeed, there is already a small but growing ‘recent’ African diaspora in many Caribbean countries making sterling contributions in diverse fields, such as education, medicine, law and the like. There are also prospects for Caribbean-Africa trade and economic cooperation and sharing of expertise, particularly in the areas of education, renewable energy and health. Expanding links between universities in the Caribbean and those in African countries would allow for student and faculty exchanges.

3.      Increased Caribbean-African awareness

Caribbean people are becoming better aware of the continent through, for example, Nollywood/Gollywood movies, African music, traditional African dance and the The Africa Channel broadcast in the US and the Caribbean. The potential exists for collaboration in the creative industries, particularly in film production, dance, the visual arts and music. Caribbean musical genres such as reggae, dancehall and soca are becoming quite popular in some African cities. For instance, Nigerian artiste Timaya and Trinbagonian soca artiste Machel Montano have collaborated on several songs. 

Caribbean persons of African descent are increasingly interested in travelling to West African countries like Ghana, from which the majority of persons enslaved during the Trans-Atlantic slave trade were derived, in order to trace their ancestral roots and explore the Motherland.

The absence of direct air or modern day sea links between the Caribbean and the African continent is a challenge. It is therefore refreshing to hear the current Barbados Prime Minister speak to the possibility of negotiating an air services agreement with Ghana, and of the island possibly being a gateway for Africa-Caribbean trade due to its easterly location.

4.   AfCFTA – a single African market

At a time when some major world powers are retreating to protectionism and isolationism, all but three countries on the African continent (except Benin, Eritrea and Nigeria) have formed a continental-wide single market, a step towards a continental customs union.

The AfCFTA was signed in March 2018 and entered into force on May 30, 2019. It represents the world’s largest free trade agreement with a collective GDP of $2.5 trillion and a population of 1.2 billion people. The AfCFTA will eliminate tariffs on 90 per cent of goods traded within the countries party to it.

While there is still much unfinished work to be done, as well as political, legal and regulatory hurdles to overcome before the ambitious AfCFTA can be operational, some of the potential benefits of the AfCFTA are apparent.

Firstly, a company which establishes in one African State would not have to navigate a byzantine maze of regulations and other non-tariff barriers in order to trade across the continent.

Secondly, though the existing African regional economic groupings are not replaced by the AfCFTA, the AfCFTA means CARICOM and other third parties seeking to secure a free trade agreement with Africa could negotiate with one grouping as opposed to several.

Thirdly, the AfCFTA and the Protocol on the Free Movement of Persons could make sourcing inputs and hiring staff from other parts of the continent easier and more cost-effective. Additionally, Africa and CARICOM (including the even more tightly integrated OECS) can learn from each other’s experiences in their respective regional integration efforts.

In summary, Caribbean-Africa trade is small but with growth potential. The single African market contemplated by the AfCFTA is an exciting development which makes the prospects all the more alluring for deepened Caribbean-Africa trade based on a shared history, friendship and the potential for mutual benefit.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a Caribbean-based international trade and development consultant.

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