• IFC launches $6 billion credit insurance facility

• Insurers share risk on loans to SME lenders

• Facility to support up to $10 billion lending

The International Finance Corporation (IFC) on Tuesday, Feb. 24, launched a $6 billion credit insurance facility in partnership with a consortium of 19 international insurers.

The arrangement is based on risk sharing. Participating insurers will cover part of potential losses on loans extended by the IFC to commercial banks and other financial institutions that lend to small and medium-sized enterprises (SMEs).

Backed by the $6 billion guarantee, the IFC expects to support up to $10 billion in new SME lending across emerging markets. The structure allows the institution to reduce its balance-sheet exposure while expanding lending capacity without raising additional equity.

SMEs account for more than 90% of businesses and about 70% of employment in emerging markets, but many struggle to access bank financing due to high borrowing costs, limited credit availability and collateral requirements.

By working directly with banks, the IFC aims to ease these constraints. Managing Director Makhtar Diop said the program is designed to improve access to financing needed for the growth of local businesses.

For insurers, the facility provides exposure to diversified loan portfolios across multiple countries and sectors, through transactions arranged by a multilateral development institution.

The deal marks the largest capital mobilization under a single agreement in IFC history and ranks among its largest credit insurance structures. Participating insurers include AIG, Allianz Trade, AXA XL, Chubb, Munich Re, Swiss Re and Tokio Marine.

The arrangement is intended to crowd in private capital to emerging markets at a time of elevated financing needs in the private sector. It also signals a broader shift toward risk-sharing models to scale up development finance.

Chamberline Moko