Deutsche Bank and the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group have introduced a $1 billion trade finance platform that will enhance access to trade finance in frontier and emerging markets. It aims to tackle financing gaps, as access to capital can be more difficult in countries where financing opportunities have been narrowing because of the growing risks and less willingness to lend.

The partnership will help enhance the supply of trade finance, facilitate the growth of trade between emerging markets, leverage World Bank resources by providing MIGA guarantees, and facilitate increased private-sector involvement in international trade. The platform is part of a wider strategy to minimise investment risk and maintain vital supplies and economic activity in developing economies.

Promote trade in high-risk markets.

The new platform is to ensure and grow trade financing in areas where commercial financing is becoming harder to access, the organisations said. The partnership will make cross-border trading more accessible by lowering risks to cross-border funding for activities that can stimulate economic activity, employment, and business.

Trade finance is a crucial component in international trade, as it supports the import/export activities of the international community. But numerous frontier and developing markets are still in need of more trade financing, as financial institutions adopt more conservative lending policies in light of economic and geopolitical uncertainties.

MIGA is part of the World Bank Group and helps to promote investment in developing countries by offering instruments that mitigate investors and lenders' risk. It provides political risk insurance, credit enhancement products and guarantees of trade finance, which insulate financial institutions against financial losses due to the failure of the state-owned banks or the public authorities or sovereign government to pay.

Since 2024, the organisation has also been running the World Bank Group Guarantee Platform. The platform was launched to make guarantee products more accessible and facilitate investment in developing economies with a wider variety of risk-sharing tools.

The new agreement with Deutsche Bank is the first standalone, programmatic trade finance portfolio guarantee platform launched by MIGA with a global commercial bank, and an important expansion of MIGA's guarantee programme.

Guarantee Structure to Support Essential Trade

The agreement will guarantee that MIGA will protect the interests of eligible state-owned banks in trade finance transactions against non-payment risk, while Deutsche Bank will guarantee the interests of those same banks against the risk of non-performance. They tend to be significant providers of finance for imports of vital commodities or provide credit facilities to unbanked customers in frontier and emerging economies.

The guarantee structure is hoped to allow Deutsche Bank to expand its capacity to provide trade finance where financial institutions might be hesitant to do so due to high political or sovereign risk in those markets.

The organisations said that this is to be done in order to unlock extra private capital in addition to development financing to help overcome the chronic trade finance gap in developing economies.

Concentrate on Development Priorities

In addition to expanding the overall availability of trade finance, the platform also features commitments to catalyze a meaningful portion of trade finance to priority development activities identified by MIGA.

These include countries that may benefit from support from the International Development Association (IDA), fragile and conflict-affected situations (FCS), and sectors and businesses that are critical for inclusive economic growth. The focus is on small and medium enterprises (SMEs), agriculture, healthcare and water related projects.

Its aim is to make financing more available to companies and financial institutions that may be at a higher risk of accessing trade financing, but are significant to local economies and employment.

The officials emphasize development objectives.

Junaid Kamal Ahmad, MIGA Vice President of Operations, asserted that trade finance is a key pillar of economic development, as it is the “working capital of the nations” and plays a vital role in job creation, economic inclusion and better livelihoods in MIGA member countries.

The collaboration with Deutsche Bank would leverage MIGA's goal of tapping private-sector funds to supplement development financing with the bank's global trade finance expertise and its broad network of offices internationally, he said.

The programme is part of the bank's strategy of strengthening its partnerships with the World Bank Group, multilateral development banks and development finance institutions, said Gerald Podobnik, Global Co-Head of Deutsche Bank's Corporate Bank.

The targeted risk sharing mechanism is useful for financing international trade, in addition to facilitating international trade and overall economic development, it can be used to increase the capacity of trade finance in markets where still a substantial demand exists, Podobnik said.

The $1 billion platform is the latest indication of the increasing partnerships among multilateral institutions and commercial banks to fill the financing gaps in developing economies. The initiative will leverage on the public sector guarantees and private sector banking know-how to increase access to trade finance and mitigate investment risks and foster economic resilience in underserved markets.

The partnership also continues the World Bank Group's work to catalyse private investment for sustainable development, while making sure that companies, financial institutions and governments in frontier and emerging markets can access the financing they require to engage in international trade.