Africa Finance Corporation (AFC) and Munich Re Sign US$1 Billion Managed Debt Mobilization Programme to Unlock Trade Finance for African Banks

Africa Finance Corporation (AFC) (www.AfricaFC.org), the continent’s leading infrastructure solutions provider, today announced a US$1 billion Unfunded Managed Debt Mobilisation Program (UMDMP) with Munich Re, one of the world’s leading reinsurers. The programme provides US$1 billion of committed risk-sharing support for AFC’s trade finance lending to African financial institutions, at a time when African banks need significant liquidity to finance intra-African and international trade flows that boost their domestic economies.

For African banks, the programme means more trade finance, delivered faster. Munich Re and AFC have agreed risk parameters and limits up front, so that Munich Re takes a share of eligible AFC transactions automatically. AFC retains a part of the risk on every transaction, keeping both institutions’ interests aligned. As the transactions under the programme mature, the programme’s capacity is freed up and reused to finance new investments.

The first phase covers commercial letters of credit, trade loans and trade guarantees; the instruments African banks rely on to finance their clients’ imports and exports. It starts with 38 financial institutions across 11 African countries, and both parties have agreed to review the programme’s scope, including additional instruments and sectors over time.

Commenting on the programme, Banji Fehintola, Executive Board Member and Head of Financial Services at Africa Finance Corporation, said: “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. Managed debt mobilisation sits at the heart of this transition, enabling institutions like AFC to leverage our origination capabilities, structuring expertise and risk management frameworks to attract institutional capital at scale. This programme with Munich Re demonstrates how we can translate that ambition into practical, scalable solutions that expand financing capacity while optimising the deployment of our own capital. 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.”

Wola Asase, Deputy Director & Head of Syndications and AFC Captive Insurance Company Ltd,  commented: “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. 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.”

Herbert Müller, Head of Global Credit Solutions  at Munich Re, said: “Munich Re benefits from the strong pan-African footprint of AFC while AFC benefits from the strong capacity of Munich Re.  The trust built between our two organizations 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. 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.”