Economic Transformation for Global Africa in a Polycrisis World

The ties between Africa and the Caribbean run deep, and it’s these ties that can and must carry us through some of the biggest threats that we face, especially in today’s polycrisis world.

Challenges like climate change, which bears down on us daily, putting current and future generations at risk.

Challenges like supply chain disruptions, or food insecurity, or environmental degradation, or the COVID-19 pandemic’s aftermath, all of which can undo years of economic progress in short order.

But if we’re going to tackle these challenges head-on, we need more trade and investment between Africa and the Caribbean. That’s what can make economic transformation possible, and in a way that benefits both regions by drawing on our shared ties, hopes, and potential.

ITC’s newest research with Afreximbank, which we will soon publish, shows that trade between Africa and the Caribbean holds enormous potential—$1.8 billion for goods and services annually by 2028, to be exact. But we have a long road ahead of us if we’re going to actually achieve that potential in practice, because getting to that number means getting rid of all trade frictions and getting investments into the right sectors.

The past decade alone, for instance, shows that the share of African exports that goes to the Caribbean has been decreasing, not increasing. Today, less than 0.1% of African exports go to the Caribbean, and less than 3% of Caribbean exports go to the African continent.

And looking past sheer volume, we can also see those exports, in either direction, remain far too concentrated in just a handful of sectors with little value addition, like unprocessed chemicals and minerals, despite all that these two regions have to offer.

That’s despite the potential that we see in exports like machinery, electricity, plastics, rubber, processed food products, and mineral products.

Too often, it’s high tariffs and non-tariff barriers that are holding this export potential back. What’s worse is that these barriers are often more pronounced for those goods that have undergone processing—meaning that value addition, which is critical for better jobs and livelihoods, becomes counterproductive once it’s clear what exporters will face at the border.

It shouldn’t be that way. And it doesn’t have to be.

We must also do far more to boost services trade between the two regions. We already see how trade in travel and transport services are doing relatively well—which, given the extraordinary cultural and culinary traditions our regions have and the beauty of their natural environments, should come as no surprise. There’s a clear foundation we can build on.

Trade agreements are one way to help bring down barriers and open new opportunities. We’ve already got useful precedents that show us what works and what can be improved, such as the economic partnership agreements in both regions with the EU.

And while we need to come together to understand what an African-Caribbean trade framework could look like down the line, we can and must do more to improve economic integration within these two regions themselves, developing value chains further and seeing where the pain points are.

It’s why so many of ITC’s projects in Africa and the Caribbean—whether it’s our new project to support greater food security in the Caribbean or our longstanding projects to develop value chains in East and West Africa—are designed with these goals in mind.

It’s why we have a dedicated programme called One Trade Africa to ensure that small businesses, especially those led by women and youth, can take full part in one of the most transformational trade agreements to be negotiated in a generation—the African Continental Free Trade Area. Together with Afreximbank, we have trained close to 10,000 SMEs through a dedicated online training platform called “How to Export with the AfCFTA.”

It’s why we are launching a new project with the Afreximbank to turbo-charge trade and investment between Africa and the Caribbean. Together, we will focus on developing five priority value chains that have major potential for inclusive and sustainable economic transformation, led by the two regions’ small businesses, while tackling food security and other risks we face. These are minerals and metals, wood, paper, rubber, plastics, processed food, and animal feed, along with travel, including tourism, and transport.

Projects like these have also taught us, however, that value chain development and small business competitiveness can only get us so far.

Too often, poor logistics infrastructure is getting in the way of greater trade both within Africa and the Caribbean and between them. Both regions score the lowest on the World Bank’s Logistics Performance Index, and unless we invest more into changing that, then even our best efforts at spurring greater inter-regional trade and investment will be for nought.

This is borne out by ITC’s research, where logistics were among the “connected services” that our 2022 SME Competitiveness Outlook identified as being critical for making inclusive growth possible—but that, too often, are out of reach for small businesses.

It’s clear that we have a lot of work ahead of us, and it’s not going to be easy. But it’s events like ACTIF where the big conversations—the ones that lead to real change on the ground—happen.

Pamela Coke-Hamilton is the Executive Director of the International Trade Centre (ITC), the joint agency of the United Nations and the World Trade Organization. 

The article is an excerpt of the speech she delivered at the opening ceremony of Afreximbank annual meetings in Nassau, the Bahamas.