If all goes according to plan, Barbados and other Caribbean Community (CARICOM) states could soon be trading with each other in their own local currency instead of US dollars.
This is one of the plans that Prime Minister Mia Mottley and President of the African Export-Import Bank (Afreximbank) Professor Dr Benedict Oramah have placed on the agenda as they seek to establish closer trade and investment links between CARICOM and the African Union.
On Wednesday, Mottley signed a memorandum of understanding (MOU) with the Afreximbank as she kick-started the deepening of trade and investment cooperation between the two blocs.
Earlier, Oramah, who is on a four-day visit to the region, indicated that a wider CARICOM-Africa agreement would be put in place to accelerate trade and investment opportunities between the two groupings.
However, during the brief MOU signing ceremony at the Prime Minister’s official residents in Bridgetown on Wednesday evening, Mottley recalled the existence of the short-lived CARICOM Multilateral Clearing Facility (CMCF), saying she was hoping that coming out of this agreement a similar facility could be established.
“We heard you explained to us very clearly your success of being able to facilitate trade in Africa in local currency rather than seeking to find valuable hard currency to facilitate trade. And we certainly want to work with you and to learn how best [to do this],” said Mottley.
“We have maintained for some time, that even though the CARICOM Multilateral Clearing Facility failed 30 years ago, there is no reason for it to fail today if we plan it out properly and can work out what the commitments and the opportunities are. Our biggest trading partner in Barbados is in fact with Trinidad. Why should we be paying for goods in Trinidad in hard currency of US dollars and vice versa? So we need to see how best we can work together and leverage that,” she said.
The CMCF, which was established in the late 1970’s and came to an end by 1983, was a centralized payments clearing and settlement accounting system that allowed CARICOM member states and firms to, among other things, use their local currencies to settle transactions.
Pointing to several other areas for cooperation, Mottley recalled that during meetings over the past two days, officials looked at communication and direct air and sea link opportunities. She said they also discussed the need to explore opportunities for cash flow solutions for exporting firms and letters of credit.
Describing the lack of a direct air link between Africa and the Caribbean as a condemnation, Mottley said: “We accept that with the air transport market we will have to probably start with charters. And we accept that there is an increasingly large middle-class across Africa who have a desire to travel and for whom the Caribbean can be that place, which is home away from home, and we hope that we can work with you and other counties in Africa to be able to do so.”
She said it was also agreed that there were prospects for bulk procurement.
“Yesterday, we spoke about the fact that many of our countries have aged infrastructure for water and therefore we are securing prices on the basis of a limited and small market rather than seeing where else we can go with the bulk procurement,” she said,
“We are committed to being able to ensure that trade takes place of goods, movement of people and services, movement of information and once you can have information moving, people moving and goods moving then we can reconnect and ensure that the embodiment of CARICOM as the sixth region of the Africa Union can be real for all of us,” she said.
Mottley said she was hoping that by next year she would be in a position to be “very specific” about the areas of cooperation from which residents and businesspeople could start benefiting.
The MOU creates the framework for cooperation between Barbados and the Afreximbank to explore the areas of interest.
Afreximbank president Dr Oramah thanked Mottley for her “fantastic work” over the past few years of bringing the relationship to the level where it is at today. He said the MOU was the beginning of the process of turning ideas into action.
“I would like to assure the people of Barbados and the CARICOM in general that starting with Barbados, we will do what we have to do to make sure that the Caribbean returns to Africa and Africa embraces the Caribbean,” he said. (MM)