Africa Finance Corporation (AFC) and Munich Re have launched a US$1 billion risk-sharing programme to expand trade finance for African banks, as the continent seeks to increase intra-African trade, strengthen regional supply chains and accelerate implementation of the African Continental Free Trade Area (AfCFTA).
The programme will provide risk-sharing support for AFC’s trade finance lending to financial institutions across Africa, enabling banks to access financing more efficiently and allowing AFC to increase its lending capacity without concentrating additional risk on its balance sheet.
The first phase will cover 38 financial institutions across 11 African countries, focusing on commercial letters of credit, trade loans and trade guarantees that banks use to finance imports, exports and regional commerce.
Under the arrangement, Munich Re will automatically assume an agreed share of eligible transactions within predefined risk limits, while AFC retains part of the risk to align both institutions’ interests. As short-term transactions mature, the programme’s capacity will be recycled to support additional financing.
The initiative comes as Africa seeks to address persistent barriers to cross-border commerce, including limited access to trade finance, high transaction costs, fragmented markets and inadequate transport and logistics infrastructure.
According to the African Export-Import Bank (Afreximbank) and the African Union Commission’s African Trade Report 2025, intra-African trade reached approximately US$220.3 billion in 2024, representing growth of about 12.4 per cent from 2023. Despite the increase, trade within Africa remains below the continent’s potential, highlighting the need for stronger financial systems and more efficient regional supply chains.
Limited access to affordable trade finance remains a major obstacle for African businesses, particularly small and medium-sized enterprises seeking to enter regional markets. By sharing credit risks with a global reinsurer, AFC expects to increase the volume of financing available to banks supporting businesses engaged in cross-border trade.
The programme could also support AfCFTA implementation by helping companies source inputs from neighbouring countries, expand exports into new markets and participate in regional manufacturing and distribution networks.
Banji Fehintola, AFC Executive Board Member and Head of Financial Services, said the initiative reflects a shift towards mobilising private capital to meet Africa’s growing financing needs.
He said the programme would expand AFC’s financing capacity and support trade between African economies as the AfCFTA advances regional economic integration.
Wola Asase, Deputy Director and Head of Syndications at AFC Captive Insurance Company Ltd, said the arrangement builds on cooperation between the institutions dating back to 2018. It replaces individual, transaction-by-transaction risk-sharing agreements with a standing programme intended to accelerate financing decisions and improve operational efficiency.
Herbert Müller, Munich Re’s Head of Global Credit Solutions, said the partnership would enable the reinsurer to leverage AFC’s pan-African presence while expanding its exposure to African trade through a structured risk-sharing framework.
The programme also forms part of AFC’s broader Managed Debt Mobilisation Programme, which seeks to attract additional institutional investors as funders or risk-sharing partners. AFC is already engaging African and international investors about participating in the platform.
In August 2026, AFC established AFC Captive Insurance Company, a wholly owned Bermuda-based subsidiary backed by up to US$30 million in equity capital.
Together, the initiatives are intended to strengthen AFC’s risk-management capacity and enable more strategic deployment of its capital.
For African economies, the potential impact will depend on how effectively the additional financing reaches businesses, particularly exporters, manufacturers and smaller enterprises seeking to benefit from regional market integration. Increased access to trade finance could help businesses fulfil larger orders, diversify suppliers, expand production and create jobs.
As African countries pursue greater economic integration, partnerships that combine continental financial institutions with global risk-management expertise could help close financing gaps and turn the AfCFTA’s promise of a larger regional market into increased commercial activity.
