Africa Finance Corporation (AFC) and Munich Re, one of the world’s leading reinsurers, have launched a $1 billion risk-sharing programme to expand trade finance capacity for African financial institutions, as demand for financing to support imports, exports and cross-border trade grows.
The programme provides $1 billion in committed risk-sharing support for AFC’s trade finance lending to African financial institutions, enabling the corporation to support more transactions while sharing eligible risks with Munich Re.
Under the Unfunded Managed Debt Mobilisation Programme (UMDMP), the two institutions have agreed on risk parameters and limits in advance, allowing Munich Re to assume an agreed share of eligible AFC transactions automatically.
AFC will retain part of the risk on every transaction, ensuring that both institutions remain exposed to the outcomes of the financing arrangements.
The programme comes as African banks require significant liquidity and risk capacity to finance intra-African and international trade flows that support domestic economies.
The first phase covers commercial letters of credit, trade loans and trade guarantees, which banks use to finance clients’ imports and exports. It initially covers 38 financial institutions across 11 African countries, with both parties agreeing to review its scope for possible expansion to additional instruments and sectors.
According to AFC, the programme’s short-dated transactions, which have tenors of up to 12 months, will allow its risk-sharing capacity to be reused as transactions mature, creating room to support additional eligible trade finance deals.
The arrangement marks a shift from the transaction-by-transaction risk-sharing relationship between the two institutions, which began in 2018, to a standing programme designed to support eligible transactions more efficiently and at scale.
Banji Fehintola, executive board member and head of financial services at AFC, said the initiative reflects a growing recognition across the development finance sector that Africa’s financing needs cannot be met through traditional balance-sheet lending alone.
He said development finance institutions were increasingly adopting an originate-to-distribute model, with private capital mobilisation becoming central to expanding their development impact.
“Managed debt mobilisation sits at the heart of this transition, enabling institutions like AFC to leverage our origination capabilities, structuring expertise and risk management frameworks to attract institutional capital at scale,” Fehintola said.
He added that the programme would help address capacity constraints faced by banks financing trade as the African Continental Free Trade Area deepens commercial relationships between African economies.
Wola Asase, deputy director and head of syndications at AFC Captive Insurance Company Ltd, said the arrangement replaces a deal-by-deal approach with pre-agreed risk parameters, allowing eligible transactions to receive risk-sharing support automatically and helping banks obtain faster decisions.
She said the wider Managed Debt Mobilisation Programme would also provide a framework for attracting additional institutional investors as funders or risk-sharing partners.
Herbert Müller, head of global credit solutions at Munich Re, said the partnership would enable AFC to benefit from Munich Re’s risk capacity while allowing the reinsurer to leverage AFC’s pan-African footprint to expand its exposure to African trade.
He said the programme would support the institutions’ shared objective of financing African trade while allowing Munich Re to diversify its business.
The initiative also anchors AFC’s broader Managed Debt Mobilisation Programme, through which other investors can participate by providing funding or sharing risks. AFC said it was in discussions with other African and global institutional investors about providing funding through the platform.
The programme 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.
While the captive insurance company allows AFC to retain and manage more risk internally, the new programme enables it to share eligible risks with Munich Re, forming part of a broader strategy to deploy its capital more efficiently and extend its financing capacity.
Established in 2007, AFC provides infrastructure investment, project development, financial advisory and risk capital across Africa. The corporation has 48 member countries and said it had invested more than $19 billion in 36 African countries since its inception.
Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.
