As geopolitical shifts open new trade corridors and diversification drives infrastructure and industrial investment. Banks across Africa and the Middle East are under growing pressure to fund longer-tenor, more complex transactions while meeting stricter global capital rules. MENA Banks are opting for credit insurance.
At GTR MENA 2026 in Dubai, AU Group highlighted a fast-emerging constraint: regulatory capital. The challenge is intensifying as cross-border trade accelerates across the Gulf and new corridors link Asia, Africa and the Middle East.
Recent data shows the pace of expansion. Intra-GCC merchandise trade reached a record $146 billion in 2024. Up nearly 10% year-on-year, with re-exports alone rising more than 19%. The broader GCC trade finance market is already estimated at about $50 billion. It is supported by diversification strategies and rising cross-border activity.
Meanwhile, the UAE recorded non-oil trade of roughly $817 billion in 2024, up 14.6% year-on-year.
Capital Efficiency Becomes a Strategic Priority
These shifts are increasing demand for longer credit terms, multi-market exposures and complex counterparties. All of which consume significant regulatory capital.
“Banks across Africa and the Middle East are at a turning point. Trade is expanding, opportunities are growing, but capital buffers are not infinite.” Said Aurélien Paradis, CEO, AU Group Middle East & Africa. “Capital relief is no longer a technical option; it is a strategic imperative.”
“When structured properly, credit insurance frees up regulatory capital, strengthens balance-sheet ratios and enables banks to redeploy capacity into new lending without compromising credit discipline.”
Credit Insurance Gains Traction as a Capital Tool
Capital-relief structures allow banks to reduce risk-weighted assets by transferring credit risk to highly rated third parties, typically through credit insurance or synthetic risk transfers.
In mature European markets, banks using credit insurance have released 20–30% of regulatory capital tied to insured portfolios, freeing capacity for new lending, particularly to SMEs.
For Gulf banks expanding trade finance across Africa and Asia, these tools offer a regulator-recognized path to strengthen capital ratios, support larger transactions and navigate Basel III and IV requirements.
Paradis noted the strategic shift underway: “MENA Banks are moving from using credit insurance defensively to treating it as a proactive capital strategy. That transition will shape the next decade of trade finance growth across the region.”
