The African Export-Import Bank (Afreximbank) recently held its third trade and investment conference in the Bahamas with a key focus on encouraging trade between Caribbean firms and their counterparts from the African continent.
The proverbial question on the lips of many, whispered at the sidelines of the conference, was the practicality in forging meaningful partnerships and sustainable ventures, particularly for micro, small and medium enterprises, by Caribbean firms. Understandably, these concerns were expressed due to the transportation and logistics issues that obtain, the inability of small firms to scale their operations to meet the demand of the large African market, and a credible financial system and regulatory regime to facilitate trade and investment.
The conference sought to address these and more of the concerns that have plagued the African and Caribbean regions for centuries and have prevented business activity, tourism, cultural exchanges and simply communication between the two regions. Cognisant of the potential to correct centuries of indoctrination, abuse and ostracisation, the conference challenged participants to pursue “economic prosperity on a platform of Global Africa”. Much research has been presented to show the economic benefits for both regions, but particularly the Caribbean, where the private sector is
in dire need of accessible markets to pivot their product offerings.
Africa is the fastest growing continent in the world with immense potential for trade and investment. The African Union’s Africa Continental Free Trade Area secretariat reports that by 2035, there will be a US$450 billion boost to the economy, lifting 30 million people out of poverty.
According to the Brookings Institution, the continent is experiencing a rapidly growing young labour force, increasing technology adoption, and an expanding middle class with trillions of dollars in buying power in the coming decades.
Additionally, as the continent has garnered significant investment in non-traditional sectors, with many cities having established themselves as innovation hubs, the continent has experienced significant inward investment from across the world.
According to the International Trade Centre’s (ITC) Trade Map, in 2021, Africa’s exports to CARIFORUM accounted for just 0.001 per cent of Africa’s total exports, while imports from the region made up 0.002 per cent of Africa’s total imports. In contrast, CARIFORUM’s exports to Africa constituted 1.4 per cent of CARIFORUM’s total exports, with imports from Africa representing 0.4 per cent of CARIFORUM’s total imports.
The ITC further projects that by 2028 there will be US$1.3 billion available for trade between Africa and the Caribbean.
Research by Caribbean Export (CEDA) further shows that CARICOM’s import basket from Africa is predominantly composed of petroleum products from West Africa, with over 80 per cent of these imports sourced from Gabon, mainly consisting of petroleum and petroleum products. The primary export destination for CARICOM products in Africa is Ghana, focusing on petroleum and petroleum products.
At the CEDA Investment Forum in November 2022, Secretary General of the African Continental Free Trade Area (AfCFTA) H.E Wamkele Mene signalled the manifestation of the changing realities for the Africa-Caribbean relationship. He spoke about the AfCFTA Private-Sector Engagement Strategy which seeks to present opportunities for firms seeking to invest in Africa in four sectors: automotive; agriculture and agro-processing; pharmaceuticals; and transport and logistics, given their high potential to meet local demand and production capabilities. Other sectors identified for future intervention included financial services, telecommunications, and information technology.
The next step strategically for Caribbean firms is to create a framework where businesses can be developed to internationalise their product offering in these markets. Such a strategy ought to be linked to the overall industrialisation strategy of CARICOM to ensure we leverage the competitive advantage of each nation state, while facilitating the expansion of business. Our MSMEs do not have the capacity on their own and many cannot scale to the volume of production needed to satisfy the growing markets on the continent. National brands therefore need to be developed and, in some instances, CARICOM approaches will be required to maximise the opportunities for trade.
Evident at the just concluded Afreximbank trade and investment forum, big businesses were highlighted that accessed capital from African banks; areas included hotel construction, oil refinery and exploration, renewable energy, to name a few. MSMEs are not trading in these sectors but can, through the cluster model, trade in certain commodities, professional services, manufacturing, tourism services and cultural services, among other areas. What clearly is required is for business-minded individuals to be at the table to carve out a CARICOM strategy for expansion into the African markets. Reliance on politicians and policymakers alone will not produce the desired results.
The realisation of this objective will be a mammoth task as the tide for centuries has been against the Caribbean treating positively with the African continent. Through the colonisation process, Caribbean people have been indoctrinated to believe that the north is better – the food we eat, the language we speak, our perception of culture, and even our approach to business. For centuries, Africa was ostracised through lack of transportation, a gospel of mistrust and inferiority, and confusion in language like the tower of Babel. Even the banks from the north are seen as better, prompting scepticism about African banks and capital markets.
Similar to the ‘door of no return’ at the Ghanaian Cape Coast, every effort was made by some interest groups to ensure that the sixth region of Africa – the Caribbean – does not return to the continent.
There is therefore an urgency of now that requires brave and visionary leadership to close the gap between these two regions, to facilitate social and economic development for the peoples of Global Africa.
The Small Business Association of Barbados (www.sba.bb) is the non-profit representative body for micro, small and medium enterprises (MSMEs).
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