NEW DEAL

CARICOM leaders explore financing for renewable energy, agriculture, fisheries 

By Marlon Madden

Prime Minister Mia Mottley is anticipating a potential economic boost for the Caribbean Community with the opening here Friday of the Africa Export-Import Bank (Afreximbank) headquarters here. The 30-year-old African financial institution focused on trade and investment has extended its presence beyond Africa for the first time, choosing the Caribbean as its new strategic location.

Mottley echoed the sentiment on Friday, as she joined other CARICOM leaders and African representatives in welcoming the establishment of Afreximbank’s CARICOM headquarters at the Trident Insurance Financial Centre, Hastings.

Following a ribbon-cutting ceremony, officials gathered at the Hilton Barbados Resort, where they spoke of the expectations of having the bank in the region.

Mottley reiterated her displeasure with what she said was the Caribbean’s reticent and laid-back attitude when it came to investment.

She said: “We have over US$50 billion in private sector savings in the Caribbean Community earning 0.001 per cent at a time when there is a lack of creative and innovative instruments available on the market that could help fund regional development while at the same time, creating a better return on savings for the average Caribbean person.

“We have been too reticent and too laid back in the manner in which we have sought to employ capital in this region and to risk it. Not to risk it loosely, not to risk it wildly.”

Mottley said she believed the time had come for “Caribbean people to have access to capital to be able to build out our region and ensure that they can create the platforms for prosperity, that would allow our people to benefit rather than to be seen as tenants in their land and to be the pawns of others in the creation of wealth for others”.

The Prime Minister also called for the attitude of those countries that relied primarily on tourism for their foreign exchange earnings to change, adding that the time had come for major investments in the sector to make it more progressive.

She said the presence of Afreximbank in the region provided an opportunity for funding that would fit the needs of all tourism sector operators across the region.

“We have come to the point where we need to ensure that as mature tourism destinations, we do not lag behind in terms of ensuring access to our tourism sector to renew our plants – because we are a mature tourism sector – and to provide the essential working capital that is necessary for hotels and other tourism establishments to be able to move forward,” said Mottley.

During the launch ceremony, officials outlined several sectors in the region that stood to benefit from financing options from Afreximbank, including renewable energy, agriculture and fisheries, trade and logistics, and tourism.

President and Chairman of the Board of Directors of Afreximbank, Professor Benedict Oramah, said a number of projects across the region were already in the pipeline for approval, with some of them at an advanced stage.

In the case of Barbados, the country is initially benefiting from a US$100 million loan to help with the upgrade of the Bridgetown Port.

To date, Barbados and 10 other CARICOM member states have signed the agreement with Afreximbank, with eight of them ratifying the partnership agreement.

Afreximbank has already approved a credit limit of US$1.5 billion to fund projects across the region, with a commitment to increase it to US$3 billion over time.

Several memoranda of understanding were signed during the ceremony on Friday to make way for the deepening of relations between the Caribbean and the financial institution, including one between Afreximbank and the CARICOM Development Fund (CDF), the first regional shareholder in the African-based bank.

Invest Barbados signed an MOU with Evergreen Egypt United to make way for development in the area of aquaculture, fisheries, and marine services in Barbados. One of the major projects to come from this is expected to be the development of logistical services, a production line, fish processing factory, indoor shrimp farms, a hatchery, ice, and foam factories, among other facilities.

Officials from the Sagicor Cave Hill School of Business and Management of the University of the West Indies also signed an MOU with AfriCaribbean Holdings Limited for collaboration in the identification of trade opportunities between Africa and the Caribbean.

Afreximbank was founded in 1993 with the goal of promoting and financing trade within and outside Africa. It has been successful in enhancing intra-African trade and supporting export-oriented industries, contributing to the continent’s economic growth. Afreximbank provides various financial products and services, strengthening ties with global markets.

With total assets of $61.20 billion and total equity of $10.42 billion, Afreximbank has stable credit ratings from several prominent agencies. It has a credit rating of Baa1 from Moody’s, with a stable outlook. Fitch Ratings upgraded Afreximbank’s Long-Term Issuer Default Rating (IDR) to “BBB” from “BBB-” in July 2022, with a stable outlook. The upgrade reflects a strengthening in Afreximbank’s Standalone Credit Profile (SCP) to “BBB” from “BBB-” at the previous review. The Japan Credit Rating Agency (JCR) rates the bank at A-.

This latest development in Caribbean-African cooperation on the economic and commercial front comes amid a protracted decline in foreign direct investment (FDI) flows into the Caribbean including Barbados. Experts have attributed the decline to the region’s vulnerability to external shocks, reliance on sectors like tourism and agriculture, limited access to financing for development projects, high business costs, and regulatory challenges. The multilateral financial institution’s decision to establish its headquarters is being seen as a potential boost in FDI in the region by leveraging its expertise in trade, finance and credit insurance, supporting sectors like tourism and renewable energy and fostering economic growth and development.

Afreximbank’s headquarters are in the Egyptian capital, Cairo, with branches in the largest cities of Côte d’Ivoire (Ivory Coast), Nigeria, Zimbabwe, Uganda and Cameroon.

marlonmadden@barbadostoday.bb