The African Continental Free Trade Area (AfCFTA) contains the elements to utterly transform Africa and its economy. Established in 2021, this landmark agreement is ambitious in its scope and scale: dismantling the colonial boundaries devised during the Berlin Conference of the 19th century, and in so doing fostering economic unity across the continent. By leveraging economies of scale and gains in competitiveness, the AfCFTA seeks to accelerate Africa’s industrialization and diversify its growth sources, ultimately raising living standards and delivering an economy able to support an African population which will represent, by 2050, more than 25% of the global population. But the free-trade scheme also has profound implications for the Caribbean, which is asserting its membership of the global African community – both cultural and economic.
Naturally, given the centrality of the AfCFTA to Africa’s economic future, its implementation and impact constituted a central focus of the recent Afreximbank Annual Meetings in Nassau, Bahamas. The theme of the meetings – “Global Africa” – foregrounded increased trade between Africa and the Caribbean as a core goal, reflecting a shared history and the potential for mutually reinforcing economic growth. The meetings also highlighted the role which smaller, sustainable ventures can play in the wider African-Caribbean economic project, and the extent to which partnerships can accelerate growth and inter-regional collaboration.
A significant highlight of this “Global Africa” effort was the launch of a report by the International Trade Centre (ITC), under the leadership of Executive Director Pamela Coke-Hamilton, identifying $1 billion in export potential between Africa and the Caribbean. This study, along with the extension of a five-year partnership between ITC and Afreximbank, aims to tackle trade barriers and build business capacity in both the Caribbean and Africa. Moreover, the ITC’s work underscores the priorities set out in the renewed Memorandum of Understanding signed at the Afri-Caribbean Trade and Investment Forum 2022 in Barbados, which focussed on trade and market intelligence, the creative economy, and green solutions – especially for small businesses.
In rhetoric echoing discussions at the recently concluded Afreximbank Annual Meetings, the ITC’s Expanding African-Caribbean Trade report emphasizes the need for partnerships to tackle global economic crises. Indeed, while the report identifies huge untapped trade export potential between the two regions, it also cautions against complacency: to realise these trade links we must work to establish stronger relationships between African and Caribbean traders, remove trade obstacles, and invest more heavily in growth areas. With the right support, Africa could boost its annual exports to the Caribbean by $171 million by 2026, a 54% increase over 2020 levels. Similarly, the Caribbean could expand goods exports to Africa by $80 million or 29%, with even greater potential in strategic areas like travel and transport.
But as with every opportunity worth pursuing, there exist obstacles to the transformational capacity of the AfCFTA: Africa’s infrastructure deficit arguably constitutes the bloc’s definitive challenge. Bridging this gap will require significant investment, estimated at $130-$170 billion annually. However, the continent and those financing its development must wrestle with sometimes competing priorities: infrastructural improvements are essential for supporting trade and economic growth, but trade itself requires capital to grow and for businesses to upscale. The complex task of allocating sufficient resources to finance development initiatives and tackling supply-side constraints will prove indispensable if we are to support growth and export diversification.
The AfCFTA represents a bold vision for a unified, prosperous Africa and the CARICOM states. By addressing infrastructural and financial hurdles, Africa and the Caribbean can create a robust economic environment benefiting all citizens.
But to make the AfCFTA work, there needs to be a reunion of spirit as well as of economy. Africa and the Caribbean must build on their shared history and develop mutually beneficial economic partnerships which reflect their particular situations, advantages and challenges. Both regions should focus on creating supportive ecosystems for MSMEs, enabling them to scale operations and meet market demands.
It’s always best to lead with actions, not mere rhetoric. The ITC-Afreximbank partnership, through initiatives like the Business Council and training programs on how to export with the AfCFTA, represents a significant step toward realizing a status quo in which partnerships can provide the bridge between African states, and between the continent of Africa and its diasporic communities in Caribbean countries.