The Africa Finance Corporation (AFC) has joined forces with Munich Re, Germany’s leading reinsurer, to introduce a $1 billion initiative designed to boost trade financing options for banks operating across Africa. This new framework delivers $1 billion in guaranteed risk-sharing capacity for AFC’s trade finance lending operations.
Known as the Unfunded Managed Debt Mobilisation Program (UMDMP), the scheme initially covers 38 financial institutions in 11 African nations. Its primary goal is to overcome a longstanding obstacle in African trade: the insufficient ability of local banks to fund cross-border transactions. Under the agreement, Munich Re will automatically assume a portion of AFC’s eligible trade finance deals, following pre-established risk criteria and exposure limits.
Shared Risk and Trade Financing
While Munich Re takes on a share of each transaction, AFC maintains residual risk exposure, ensuring both parties remain aligned. Since these transactions are structured with short repayment terms—up to 12 months—the program’s capacity becomes available again as loans are settled, allowing the same $1 billion to continuously support new trade activities. The initial phase focuses on three key instruments: commercial letters of credit, trade loans, and trade guarantees, tools that African banks most frequently use to fund their clients’ import and export needs.
Both organizations have committed to periodically reassessing the program’s scope, potentially expanding it to include additional financial products and industry sectors. This marks a transition from their previous transaction-specific collaborations to a more structured, programmatic approach, enabling quicker decision-making for participating banks and more efficient capital allocation. Since 2018, Munich Re has been sharing risk on AFC’s loans on a deal-by-deal basis, but the new framework replaces this with a standardized system.
Banji Fehintola, AFC’s Executive Board Member and Head of Financial Services, stated, “Across the development finance environment, there is a growing recognition that the scale of Africa’s financing needs cannot be met through traditional balance sheet lending alone.” He emphasized that managed debt mobilization represents a key shift, allowing AFC to utilize its deal origination expertise, structuring capabilities, and risk management frameworks to attract large-scale institutional investment.
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Broader Trade Finance Expansion
Wola Asase, AFC’s Deputy Director and Head of Syndications, explained that the program eliminates the need for case-by-case approvals by establishing pre-negotiated risk parameters. This automation ensures eligible transactions are covered immediately, while banks benefit from accelerated processing times. Because the transactions are short-dated, the capacity is recycled as they mature, and the wider Managed Debt Mobilisation Program it anchors gives us a framework to bring in further institutional investors, whether as funders or risk partners.
For Munich Re, the partnership provides a streamlined method to expand its African trade finance operations while enhancing portfolio diversification. “Munich Re benefits from the strong pan-African footprint of AFC while AFC benefits from the strong capacity of Munich Re,” observed Herbert Müller, Head of Global Credit Solutions at Munich Re. The UMDMP serves as the cornerstone of AFC’s wider Managed Debt Mobilisation Program, inviting other investors to participate by contributing capital or assuming risk alongside AFC.
AFC is currently exploring partnerships with additional African and international institutional investors to integrate them into the platform. This initiative follows the establishment in August 2026 of AFC Captive Insurance Company, a Bermuda-based subsidiary with up to $30 million in equity backing. Together, these efforts demonstrate AFC’s strategic use of insurance and risk-sharing mechanisms to optimize capital deployment and extend its financing reach.
Insurance and reinsurance mechanisms play a key role in transforming available capital into financing for African enterprises and infrastructure projects. By redistributing loss risks, these tools enable lenders to underwrite transactions that would otherwise exceed their internal risk thresholds, thereby unlocking additional funding for trade, industrial development, and job creation. For African banks, the program delivers expanded trade finance options with reduced delays, a critical advantage as intra-African and international trade volumes grow under the African Continental Free Trade Area.
The launch highlights a broader industry trend among multilateral development institutions, shifting from reliance on their own balance sheets toward mobilizing private capital. For AFC, the program serves as both an operational tool to scale trade finance and a model for future risk-sharing collaborations with institutional investors.
