AFC, Munich Re Launch $1 Billion Programme to Expand African Trade Finance

October 28, 2026 | By Semahegn Nigatu

Africa Finance Corporation (AFC) has secured a one billion US dollars risk-sharing commitment from German reinsurer Munich Re to expand trade finance lending to African financial institutions, aiming to ease funding constraints affecting banks that finance imports and exports.

The Unfunded Managed Debt Mobilisation Programme allows Munich Re to assume a share of eligible trade finance risks originated by AFC under pre-agreed limits, enabling the development finance institution to support more transactions without committing its own balance sheet to the full risk exposure.

The initial phase covers 38 financial institutions across 11 African countries and includes commercial letters of credit, trade loans and trade guarantees. The programme’s capacity will be replenished as transactions mature, allowing the institutions to support further lending using the same risk-sharing framework.

The arrangement builds on a partnership dating to 2018, when Munich Re began sharing risks on AFC loans on a transaction-by-transaction basis. The new programme replaces that approach with pre-agreed parameters under which eligible transactions receive risk-sharing support automatically.

“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,” said Banji Fehintola, AFC’s executive board member and head of financial services.

The programme is intended to help African banks expand trade financing as the African Continental Free Trade Area seeks to deepen commerce between countries. Trade finance allows businesses to secure payment guarantees and short-term funding for cross-border transactions, but access to such instruments remains a constraint for many African firms.

Munich Re said the arrangement would allow it to expand its African trade finance exposure while diversifying its business through its partnership with AFC.

The programme also provides a foundation for AFC’s wider Managed Debt Mobilisation Programme, which aims to bring additional institutional investors into its financing activities as funders or risk-sharing partners. AFC said it was in discussions with African and international investors about participating in the platform.

The 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 US dollars in equity capital. The captive allows AFC to retain and manage more risk internally, while the Munich Re arrangement transfers a share of eligible exposures to an external reinsurer.

Source: FSX Business News