The Africa Finance Corporation (AFC) and Munich Re have established a US$1 billion risk-sharing programme designed to expand trade finance for African financial institutions, offering a new mechanism to support the businesses that depend on reliable access to finance for imports, exports and cross-border commerce.
Announced in October 2026, the Unfunded Managed Debt Mobilisation Programme is structured to provide committed risk-sharing support for AFC’s trade finance lending to African financial institutions. Its first phase covers 38 institutions across 11 African countries.
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The programme is intended to support commercial letters of credit, trade loans and trade guarantees—financial instruments that enable businesses to purchase goods, pay suppliers and fulfil export contracts. Without these facilities, companies can struggle to manage payment risks, meet working-capital needs or participate in international supply chains.
The US$1 billion commitment is not a grant or a direct cash transfer to African banks. Instead, Munich Re will share an agreed portion of the risk on eligible transactions supported through AFC. AFC will retain part of the risk, while pre-agreed parameters are intended to make the process more systematic and efficient.
Addressing a constraint on African trade
Trade finance is an important link between production and markets. A manufacturer may have the capacity to produce goods but lack the financing needed to buy raw materials. An exporter may secure an overseas customer but struggle to obtain the guarantees required to complete a contract. For smaller businesses, such constraints can limit growth even when demand exists.
Risk-sharing arrangements can help financial institutions support transactions that might otherwise exceed their risk limits. By taking on an agreed share of eligible risk, a partner such as Munich Re can strengthen the capacity of AFC to provide financing through participating institutions.
The programme also allows its capacity to be reused as eligible transactions mature. The initial facilities are expected to cover trade finance transactions of up to 12 months, allowing support to be recycled into new transactions as earlier ones are repaid.
This revolving structure could help extend the programme’s reach over time, although its actual impact will depend on the volume of eligible transactions, participating institutions’ demand and the businesses ultimately receiving finance.
Connecting finance with regional integration
The initiative comes as African economies seek to deepen trade under the African Continental Free Trade Area (AfCFTA). Lowering barriers to trade is important, but businesses also need functioning payment systems, reliable logistics, competitive production and access to working capital if they are to take advantage of a larger continental market.
Trade finance can help bridge the gap between commercial opportunities and the funding required to realise them. For businesses operating across borders, access to letters of credit, guarantees and trade loans can support supplier relationships, improve payment confidence and help manage the risks associated with international transactions.
The programme could therefore be relevant to sectors ranging from manufacturing and agricultural processing to wholesale distribution and other businesses engaged in regional supply chains. However, its coverage of 38 financial institutions across 11 countries in the first phase means that the benefits will depend on how participating institutions deploy the available capacity and which businesses qualify for financing.
Mobilising capital beyond traditional lending
The partnership also reflects a wider shift towards using risk-sharing mechanisms to mobilise capital. Rather than relying solely on the balance sheets of individual lenders, structured programmes can bring insurers, reinsurers and other institutional partners into financing arrangements.
AFC and Munich Re have worked together on loan risk-sharing since 2018. The new programme moves that relationship towards a standing arrangement with agreed risk parameters, rather than relying exclusively on individual transactions.
For Africa, the test will be whether such mechanisms translate into more accessible and affordable financing for productive businesses. Large commitments are significant, but the development outcome lies in the transactions they enable: goods traded, suppliers paid, production sustained and companies able to enter new markets.
If implemented effectively, the programme could strengthen one of the financial foundations of African trade. Its broader value will be determined by how efficiently the risk-sharing capacity is converted into finance for businesses and how widely the resulting opportunities reach across participating economies.
