African Finance Corporation (AFC) and Munich Re have announced the launch of a $1 billion risk-sharing program designed to enhance trade finance in Africa. The initiative, which began in 2026, aims to address the persistent challenges of credit risk and limited access to financing for small and medium-sized enterprises (SMEs) across the continent.
The program will provide guarantees to financial institutions, enabling them to offer more credit to businesses involved in international trade. By sharing the risk of default, AFC and Munich Re aim to reduce the reluctance of banks to lend to African traders. The initiative is expected to support over 50,000 businesses in its first year, with a focus on sectors such as manufacturing, agriculture, and technology.
This collaboration follows years of discussions between AFC and Munich Re, driven by the need to improve financial inclusion and support economic growth in Africa. The program is part of broader efforts to modernize trade finance infrastructure and align it with global standards.
The risk-sharing mechanism is a response to the high levels of non-performing loans in the region, which have hindered the expansion of credit. By pooling resources and expertise, the two organizations hope to create a more stable and predictable environment for trade financing. The initiative also aligns with the African Continental Free Trade Area (AfCFTA) goals, which aim to boost intra-African trade.
The program will be implemented through a combination of direct funding and risk mitigation tools, with a focus on sustainable and inclusive growth. It represents a significant step toward addressing the financial barriers that have long constrained African economies.
