Africa Finance Corporation (AFC) and global reinsurer Munich Re have signed a $1 billion Unfunded Managed Debt Mobilisation Programme (UMDMP) to expand trade finance for African banks, easing liquidity constraints and supporting intra-African and international trade.The programme provides committed risk-sharing support for AFC’s trade finance lending to financial institutions across the continent, enabling banks to access increased financing capacity and faster transaction approvals. The first phase covers 38 financial institutions across 11 African countries, focusing on commercial letters of credit, trade loans and trade guarantees used by banks to finance clients’ imports and exports.
Under the arrangement, Munich Re will automatically assume an agreed share of eligible transactions within pre-established risk parameters, while AFC retains part of the risk to align both institutions’ interests. AFC Chief Risk Officer Gaurav Asase said the programme replaces the previous one-transaction-at-a-time approach with pre-agreed risk parameters, so eligible trade finance transactions are covered automatically and banks get faster decisions.
As short-term transactions mature, the programme’s capacity will be recycled to support new deals, with the revolving structure intended to extend the reach of the initial $1 billion commitment over successive transactions. The programme’s scope will be reviewed periodically, with provisions to introduce additional credit instruments and economic sectors as the portfolio matures.
The $1 billion programme will also serve as an anchor for AFC’s wider Managed Debt Mobilisation Programme, through which other investors can provide funding or share risks alongside the corporation. AFC is currently in discussions with African and international institutional investors about participating in the platform, with the aim of building a framework for attracting additional institutional capital into African trade finance.
The partnership builds on a relationship between AFC and Munich Re that has involved individual credit-risk syndications since 2018, including two transactions completed earlier in 2026. The UMDMP institutionalises that pipeline into a standing, revolving facility designed to scale trade finance liquidity across Africa.
The programme comes as the African Continental Free Trade Area deepens trade between African economies, with banks facing committed capacity constraints in financing that trade. The risk-sharing arrangement helps solve those constraints, strengthening AFC’s ability to finance Africa’s development and support cross-border commerce.
For African banks, the programme means more trade finance, delivered faster, with the practical contribution ultimately measured by the volume of trade finance supported, the number of transactions financed over time and the extent to which participating banks can use released capacity to fund new trade.
Africa Presents is a Pan-African digital magazine and monthly publication covering politics, business, economy, culture, tech, and the stories shaping Africa and its diaspora. Visit africapresents.com and follow @AfricaPresents for daily coverage and monthly themed magazine editions.
Leave a comment