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Africa Finance Corporation (AFC) and Munich Re have signed a $1 bn risk-sharing agreement designed to increase trade finance capacity for African financial institutions and support the mobilisation of institutional capital across the continent.
The Unfunded Managed Debt Mobilisation Program (UMDMP) establishes a standing arrangement under which Munich Re provides committed risk-sharing capacity for eligible trade finance transactions originated by AFC.
- Africa Finance Corporation and Munich Re have signed a $1 bn Unfunded Managed Debt Mobilisation Program covering trade finance lending to 38 financial institutions in 11 African countries.
- The agreement replaces transaction-by-transaction risk sharing with automatic participation under pre-agreed parameters, allowing capacity to be reused as short-term facilities mature.
- The initiative complements AFC’s Bermuda-based captive insurer, backed by up to $30 mn in equity, and supports plans to attract additional institutional capital.
The agreement builds on a partnership established in 2018, during which Munich Re participated in AFC lending transactions individually. The two institutions have completed several transactions since then, including two in 2026.
Under the new structure, eligible transactions are automatically covered according to risk parameters and limits agreed in advance, eliminating the need to negotiate risk participation separately for each facility.
AFC will retain a portion of the exposure on every transaction, maintaining its direct participation alongside Munich Re.
$1 bn risk-sharing facility covers 38 African financial institutions
The program’s initial phase covers commercial letters of credit, trade loans and trade guarantees involving 38 financial institutions across 11 African countries.
Individual transactions have maturities of up to 12 months. As facilities mature, the associated risk-sharing capacity becomes available for new transactions, allowing the program to support successive rounds of trade financing.
This revolving structure is intended to increase the volume of financing AFC can facilitate within the agreed capacity limits.
AFC and Munich Re have also agreed to review the program’s scope over time, potentially extending it to additional financial instruments and sectors.
Wola Asase, deputy director and head of syndications at AFC, who also leads AFC Captive Insurance Company, said the arrangement would simplify transaction execution and accelerate financing decisions.
Munich Re has shared risk on AFC loans since 2018, one transaction at a time. This programme replaces that with pre-agreed risk parameters, so eligible trade finance transactions are covered automatically and banks get faster decisions.
Wola Asase, deputy director and head of syndications at AFC
“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.”
AFC expands institutional capital mobilisation strategy
The UMDMP will serve as an anchor arrangement for AFC’s broader Managed Debt Mobilisation Program (MDMP), a platform intended to enable other institutional investors to participate in financing activities alongside the corporation.
The platform accommodates two forms of participation: investors can provide funding directly or share the credit risks associated with AFC transactions.
AFC said it is in discussions with African and international institutional investors about providing additional funding through the platform.
The initiative forms part of the corporation’s efforts to increase financing capacity without relying exclusively on lending funded through its own balance sheet.
Banji Fehintola, executive board member and head of financial services at AFC, said development finance institutions were increasingly adopting alternative approaches to capital mobilisation.
Across the development finance landscape, there is a growing recognition that the scale of Africa’s financing needs cannot be met through traditional balance sheet lending alone. Multilateral development banks like AFC are increasingly embracing an originate-to-distribute model, with private capital mobilisation becoming central to how we deliver greater development impact.
Banji Fehintola, executive board member and head of financial services at AFC
Fehintola also connected the program to the development of the African Continental Free Trade Area (AfCFTA) and its potential to increase trade between African economies.
“As the African Continental Free Trade Area deepens trade between African economies, the programme helps to solve committed capacity constraints for banks that finance that trade and strengthens AFC’s ability to be more instrumental in financing Africa’s development.”
Munich Re agreement complements AFC’s $30 mn captive insurer
The risk-sharing arrangement follows AFC’s establishment of AFC Captive Insurance Company in August 2026. The wholly owned Bermuda-based subsidiary was established as a Class 2 insurer, supported by an equity capital commitment of up to $30 mn.
AFC created the captive to insure loans extended to its counterparties, allowing the corporation to retain and manage a greater proportion of selected risks internally.
The captive and the Munich Re agreement perform different functions within AFC’s financing strategy.
The captive provides an internal insurance mechanism for managing risks associated with AFC’s lending activities. The UMDMP transfers an agreed share of eligible exposures to Munich Re, creating additional capacity for trade finance transactions.
Together, the arrangements are intended to improve AFC’s capital efficiency and expand its ability to support financing activities through insurance and risk-sharing structures.
For Munich Re, the agreement establishes a longer-term framework for participating in African trade finance while diversifying its credit risk portfolio.
Herbert Müller, head of global credit solutions at Munich Re, said the companies’ established relationship had enabled them to adopt a programmatic approach.
The trust built between our two organisations through our cooperation since 2018 has allowed us to move from a transactional to a programmatic approach which allows us to support African financial institutions efficiently at scale.
Herbert Müller, head of global credit solutions at Munich Re
“We see African trade as a long-term opportunity, and this programme gives us an efficient way to grow our business and improve our diversification at the same time alongside a trusted partner.”
AFC was established in 2007 to promote private sector-led infrastructure investment across Africa. The corporation has 48 member countries and has invested more than $19 bn across 36 African countries since its inception.
The $1 bn agreement extends AFC’s use of risk-sharing arrangements to support lending, with the revolving trade finance structure and wider investor participation platform providing mechanisms for expanding financing capacity.
