Beyond borders financing is increasingly shaped by the formation of new corridors between developed markets and emerging or frontier markets, particularly across Asia and Africa. In these markets, the issue is not simply whether capital is available, but whether trade, working capital and longer-term financing can be structured in a way that makes cross-border activity viable.

Anand Jha, global head of trade finance for financial institutions and regional head of trade lending for the Middle East and Africa at Deutsche Bank, said that this is the most relevant lens through which to view the discussion. The concentration of frontier and emerging markets sits largely in Asia and Africa, where new corridors are forming between developed and developing economies.

These corridors are driven by the requirements of multinational clients already banked in developed and major emerging markets. As these clients expand into markets such as Ethiopia, Ghana, Bangladesh or Sri Lanka, the need for financing follows. Market entry is therefore not driven by geographic ambition, but by client-led demand across trade and supply chain activity.

This gives beyond borders financing a practical dimension. It is not simply cross-border lending or foreign direct investment in isolation, but the ability to support working capital, core trade flows and supply chains in markets where risk is higher and execution conditions are less predictable. “If it is a well-structured transaction… capital is not really a constraint,” Jha said.

The constraint instead lies in how transactions are structured, whether the underlying activity is viable, whether the right counterparties are involved and whether risks can be distributed in a way that makes financing executable across jurisdictions.

Following clients into new corridors

Cross-border financing in frontier markets is driven primarily by client requirements as supply chains extend across multiple jurisdictions. As corporates expand sourcing and production into new markets, financing follows those corridors rather than being led by geographic expansion strategies.

These supply chains are increasingly distributed across frontier markets. While tier one suppliers are visible, deeper layers of the supply chain, including tier two and tier three participants, are often overlooked despite being critical to production.

Jha said, “When you can assure clients that their tier two and tier three suppliers are supported across the world, that is when you are truly delivering the value of a global bank.”

This shifts the basis of competition. Providing financing in core markets such as China, India or Singapore offers limited differentiation. The advantage lies in supporting clients across the full breadth of their supply chains, including in markets where banking support is scarce.

Coverage of approximately 75 frontier markets is achieved through relationships rather than physical infrastructure. Jha explained that this does not imply an on-the-ground presence, but rather “very solid relationship with the local banks” in those markets.

Local banks play a dominant role in these ecosystems. In several frontier markets, they account for the majority of trade finance activity and maintain the primary relationships with domestic corporates, supported by stronger local balance sheets and market knowledge.

Working through these institutions enables access to buyers, improves visibility on counterparties and allows financing to be structured within established local ecosystems. It reflects a deliberate approach of partnering rather than competing in markets where direct presence would be less effective.

Risk is distributed through partnership structures

Risk in frontier markets is managed through structuring and partnership rather than avoided altogether. Transactions are typically executed alongside local banks, insurers and multilateral institutions, reflecting a consistent approach of not operating independently in these markets.

Jha said, “In frontier markets, we provide financial solutions in partnership with local financial institutions, DFIs (development finance institutions), and multilateral organisations, underscoring that collaboration is central to how financing is extended in higher risk jurisdictions.”

He described three core risk components in these transactions—country risk, buyer risk, and seller performance risk—each allocated to the party best placed to manage it. “There are three risks: country risk, buyer risk, and seller performance risk,” Jha explained. “I can take the seller’s performance risk, because the seller is my client; country risk is typically best addressed by DFIs; and buyer risk mitigation sits with the local bank.”

This allocation reflects structural realities. Multilateral institutions and DFIs are positioned to take country risk given their involvement in economic policy and sovereign engagement. Local banks, with direct relationships and on-the-ground knowledge, are better placed to assess and absorb buyer risk.

The bank anchors its role around its own clients. Jha noted that “seller is my client,” adding that without that familiarity, “our hands and legs will be tight,” highlighting the importance of known counterparties in structuring transactions.

Selection of the underlying assets is equally critical. Financing decisions are driven by whether the goods are essential to the functioning of the importing country. As Jha noted, “We evaluate financing around essential goods—those that are strategically important for the country.”

This is closely linked to repayment behaviour. Even in stressed conditions, countries prioritise scarce foreign currency for critical imports. Payments for pharmaceuticals, energy, and other essential goods are typically preserved, reflecting their importance to economic stability.

Transactions are therefore structured around essential goods, supported by local banks and multilaterals and anchored on counterparties already within the bank’s client base.

Financing begins with trade flows and expands with comfort

Entry into frontier markets typically begins with short-term trade finance, before expanding into more complex structures as familiarity with local counterparties and operating conditions increases.

Jha explained that market entry is driven by client demand. Corporates indicate where they intend to expand and financing follows those requirements. “The requirement actually comes from there,” he said.

The initial product offered is core trade finance, primarily supporting the importation of essential goods such as pharmaceuticals, agricultural products and energy. These transactions are typically structured using letters of credit.

Jha highlighted that this approach is particularly relevant for transactions linked to essential goods. This reflects repayment prioritisation in these markets, where scarce foreign currency is directed towards critical imports that form “the backbone of the country.”

As relationships develop, the scope of financing expands into supply chain finance, including export-linked structures where performance risk is taken on buyer-side counterparties.

With further comfort on the country and counterparties, financing extends into more structured solutions, including export credit agency-backed facilities and longer-tenor lending. This progression is not linear, with “some tuning” required at each stage.

Capital efficiency is driven by structuring and distribution

Capital deployment in frontier markets is determined by how transactions are structured and how risk-weighted assets (RWAs) are managed.

Jha emphasised that return on capital is central. He said, “return on capital is super critical… and it is directly influenced by RWA.”

Well-structured transactions reduce RWA density, improving capital efficiency. “If it is a well-structured transaction… your RWA reduces,” he noted.

This makes risk distribution essential. Without it, exposures would accumulate on the balance sheet and constrain further activity. Jha said, “if there is no distribution, then these assets would consume huge amount of RWA.”

Risk is therefore shared across multiple participants, with the bank taking primary exposure while secondary and tertiary risks are distributed to investors, insurers and multilateral institutions.

Many structures are also self-liquidating, with underlying trade flows repaying exposures over relatively short tenors. In this context, capital is not the limiting factor. “If somehow you are able to box the risk… capital is not really a constraint,” Jha said.

Execution risk limits the ability to scale

Execution risk in frontier markets is high and often driven by factors outside the control of financing institutions, making it difficult to build scale in a conventional way.

Jha illustrated this through the example of Ethiopia, where investments in textile exports became unviable following changes in international tariff regimes. The same production infrastructure was subsequently repurposed for the manufacture of solar panels. This volatility is structural. “Policies will change, corridors will change, the supply chain will change,” he said.

As a result, transactions cannot be approached as part of a linear scaling strategy. “Every transaction you will have to watch and then take your call,” he noted, emphasising that each opportunity must be assessed on its own merits.

The implication is clear. “It’s very difficult to achieve scale,” given the speed at which underlying conditions can shift.

In this environment, structuring and selection take precedence. Financing remains anchored to essential commodities and executed in partnership, rather than through large, concentrated exposures.

Trade flows expand as volatility reshapes corridors

Global volatility reshapes trade flows and creates new corridors rather than reducing activity.
Jha observed that disruptions tend to increase trade volumes. “If there’s more volatility then trade volume will only go up,” he said, adding that “trade always finds its way… like water.”

This reflects the essential nature of trade, which continues to meet underlying demand regardless of political or economic conditions.

As corridors shift, financing follows. This requires banks to remain aligned with client activity and responsive to changes in sourcing and production.

Jha highlighted the importance of staying close to anchor clients, noting that “it is very important to be close to the stronger party in the supply chain.” These clients provide early visibility into shifts in trade flows and production strategies.

At the same time, responsiveness must be balanced with discipline. Institutions must “always check your risk appetite” while adapting to changing conditions.

The implication is not expansion, but discipline. In frontier markets, financing is not constrained by capital, but by the ability to structure, select and distribute risk effectively across constantly shifting trade corridors.