CARICOM finance ministers and central bank governors will gather next week in preparation for the annual heads of government meeting in Grenada in July.
The key agenda item is the exploration of Afreximbank’s Pan-African Payment and Settlement System (PAPSS) for regional trade payments.
This initiative aims to address longstanding concerns about the existing payment settlement system.
Leadership initiatives
CARICOM Chairman and Guyana’s President, Dr. Irfaan Ali, announced at the 31st Afreximbank Annual Meeting and the Third AfriCaribbean Trade and Investment Forum (ACTIF2024) that all CARICOM countries had expressed dissatisfaction with the current system.
As a result, Dr. Ali, along with Prime Minister Mia Motley, Chair of the CARICOM Single Market and Economy (CSME), has organized a meeting with finance ministers and governors to discuss adopting PAPSS for regional payment settlements.
Building trust and leveraging existing systems
During the opening ceremony of the three-day meetings, Dr. Ali emphasized the importance of trust and leveraging existing systems rather than creating new ones.
He stressed the need for mutual trust among CARICOM members and the potential benefits of utilizing the PAPSS system, which has already proven successful in Africa.
Historical context and PAPSS Advantages
Prime Minister Mia Motley of Barbados highlighted the challenges faced by CARICOM decades ago with a similar multilateral clearing facility that lacked a guarantor.
In contrast, PAPSS offers a guaranteed mechanism, making it a more viable option for facilitating inter-regional trade.
Motley’s insights from the 2023 Afreximbank meetings in Ghana underscored the potential of PAPSS to revolutionize trade within CARICOM by allowing transactions in local currencies.
African investment in the Caribbean
Dr. Ali noted significant changes since Afreximbank began expanding into the CARICOM region three years ago.
The presence of over 50 African delegations exploring business opportunities in the Caribbean is a testament to the growing interest and investment from African entities.
This interest was further highlighted by the attendance of prominent figures such as Aliko Dangote, Africa’s richest person, at the annual meetings.
Opportunities and potential in CARICOM
Dr. Ali addressed misconceptions about CARICOM’s small market size, emphasizing the region’s potential to provide access to over a billion people through various trade relationships and agreements.
He highlighted the region’s advantages in aquaculture, renewable energy, and its competitive natural resources.
Renewable energy prospects
The CARICOM region boasts significant advantages in renewable energy, with an average of 2,755 hours of sunshine per year and high wind speeds in certain territories.
These conditions present substantial opportunities for solar and wind energy projects, which could transform the region’s energy landscape.
Vision for a sustainable future
Dr. Ali also discussed the potential for CARICOM and Africa to collaborate on environmentally sustainable projects, such as manufacturing electric vehicles with minimal environmental impact.
He emphasized the marketing advantage of producing EVs in the region with the lowest environmental footprint.
Carbon Credits and Forest Conservation
The CARICOM chairman highlighted Africa’s vast forest resources and the low deforestation rates in regions like Suriname and Guyana.
By integrating these forests into a carbon market, the region could create new areas of wealth and significantly impact global carbon trading.
Economic transformation and global impact
Governor of the Central Bank of The Bahamas, John Rolle, encouraged the Caribbean to seize the opportunities presented by Afreximbank’s presence.
He emphasized the importance of leveraging shared history, identities, and cultures to strengthen trade and investment bonds between Africa and the Caribbean, especially in the current polycrisis world.
