Africa Finance Corporation (AFC) and global reinsurer Munich Re have established a $1 billion risk-sharing programme intended to expand the capacity of African banks to finance trade. Announced by AFC in October 2026, the arrangement provides committed risk support for eligible trade-finance transactions rather than a $1 billion cash transfer to participating banks.
The Unfunded Managed Debt Mobilisation Programme allows Munich Re to assume an agreed share of risk on qualifying transactions originated through AFC. Under the arrangement, the parties have established risk parameters and limits in advance, reducing the need to negotiate separate risk-sharing terms for every eligible deal. AFC will retain exposure on each transaction.
The initial programme covers 38 financial institutions across 11 African countries. Its eligible instruments include commercial letters of credit, trade loans and trade guarantees. These products help banks serve companies importing inputs, exporting goods and managing the payment and performance risks associated with cross-border transactions.
Trade finance is not simply a source of working capital. Letters of credit, for example, can provide payment assurance between trading partners that may not know each other well. Guarantees can also help manage contractual obligations. A shortage of bank risk capacity can therefore constrain transactions even where buyers and sellers are willing to do business.
Under the new programme, Munich Re shares eligible credit exposure while AFC continues to originate and manage financing relationships. Because covered transactions can have maturities of up to 12 months, risk capacity may be released and used again as obligations are repaid. This revolving feature means the headline capacity should not be confused with the value of trade that will ultimately be supported.
The agreement also marks a change in a relationship that began in 2018. AFC said the two institutions had previously shared risk on individual loans, including transactions completed in 2026. Moving to pre-agreed programme terms is intended to make the process more predictable and scalable.
AFC describes the arrangement as part of a broader managed debt mobilisation strategy that seeks participation from institutional investors through funding or risk-sharing. This approach can help development finance institutions make greater use of their existing balance sheets, although the volume of additional financing will depend on the transactions that qualify and are completed.
The timing is relevant to African efforts to deepen regional commerce under the African Continental Free Trade Area. Businesses moving goods between African markets still need reliable trade-finance instruments, but the programme itself does not guarantee that financing will reach every country, sector or small business.
AFC also established a captive insurance subsidiary in August 2026, backed by up to $30 million in equity capital. Whereas a captive can help manage risks retained within the group, the Munich Re arrangement is designed to transfer an agreed portion of eligible exposures to an external reinsurer.
The key measure of the programme’s impact will be its implementation: how many transactions are supported, which banks gain capacity and whether the arrangement improves access to financing for firms conducting trade. AFC’s announcement identifies the initial institutional reach, but does not report $1 billion in completed loans or disbursements.
Source: Official institutional or organisation website.
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