Africa Finance Corporation (AFC) and Munich Re have signed a $1 billion risk-sharing programme to expand trade finance for African banks, aiming to ease liquidity constraints and support intra-African and international trade.
The Unfunded Managed Debt Mobilisation Programme (UMDMP) provides committed risk-sharing support for AFC’s trade finance lending to financial institutions across the continent, enabling banks to access increased financing capacity and faster transaction approvals.
The programme’s first phase covers 38 financial institutions across 11 African countries, focusing on commercial letters of credit, trade loans and trade guarantees used by banks to finance clients’ imports and exports.
Under the arrangement, Munich Re will automatically assume an agreed share of eligible transactions within pre-established risk parameters, while AFC retains part of the risk to align both institutions’ interests. As short-term transactions mature, the programme’s capacity will be recycled to support new deals.
Executive Board Member and Head of Financial Services at AFC, Banji Fehintola, said the initiative reflects a growing shift among development finance institutions towards mobilising private capital to meet Africa’s financing needs.
He said traditional balance-sheet lending alone is insufficient to address the continent’s funding requirements, making risk-sharing and institutional investment increasingly important to expanding development finance.
According to him, the programme would enable AFC to leverage its origination capabilities, structuring expertise and risk management frameworks to increase financing capacity while deploying its capital more efficiently.
Fehintola added that the initiative would help address capacity constraints faced by banks financing trade as the African Continental Free Trade Area (AfCFTA) deepens commercial links between African economies.
Deputy Director and Head of Syndications at AFC Captive Insurance Company Limited, Wola Asase, said the agreement builds on a relationship in which Munich Re has shared risks on AFC loans on a transaction-by-transaction basis since 2018.
He said the new arrangement replaces the deal-by-deal approach with pre-agreed risk parameters, allowing eligible transactions to receive automatic risk-sharing support and helping banks obtain faster decisions.
Asase said the programme also establishes a framework for attracting additional institutional investors, either as funders or risk-sharing partners, through AFC’s broader Managed Debt Mobilisation Programme.
Head of Global Credit Solutions at Munich Re, Herbert Müller, said the partnership combines AFC’s pan-African presence with Munich Re’s risk-bearing capacity to support African financial institutions more efficiently.
He said the cooperation, strengthened through transactions completed since 2018, including two in 2026, had enabled both organisations to move towards a programme-based approach.
Müller added that African trade presents a long-term opportunity for them to expand their business while improving portfolio diversification.
Insurance and reinsurance play an important role in expanding access to finance by allowing lenders to share potential losses and support transactions that might otherwise exceed their risk limits. Such arrangements can increase funding for trade, industrialisation and job creation.
AFC said the $1 billion programme would also serve as an anchor for its wider Managed Debt Mobilisation Programme, through which other investors can provide funding or share risks alongside the corporation. It is currently in discussions with African and international institutional investors about participating in the platform.
This initiative follows AFC’s establishment in August 2026 of AFC Captive Insurance Company, a wholly owned, Bermuda-based subsidiary backed by up to $30 million in equity capital.