The low penetration of insurance services in the rapidly developing economies of east Africa will be one of the drivers of the growth of Takaful in the region in 2012, a senior analyst at Swiss Re has said.
John Karanu, senior market underwriter EMEA for Swiss Re, told The Islamic Globe that growing economies in the region, averaging 5% per annum in the last few years, are creating a new middle class that needs and is able to afford, insurance. The burgeoning east Africa Takaful sector means that there is an opportunity to choose between Islamic and conventional insurance.
Planned changes in the financial regulations of Senegal, Kenya, Nigeria and South Africa that will allow for the issue of Sukuk are set to fuel a rebound in the international Sukuk market, a market that has been declining since 2008. The latest Global Sukuk Market report released by the International Islamic Financial Market (IIFM) indicates that Africa accounted for only 0.3% of global Sukuk issuances in the decade ending December 2010, all of which came from Sudan with some miniscule activity in The Gambia. The report also claimed international Sukuk issuances dropped from $13.8bn in 2007 to $5.3bn in 2010 which IIFN attributed to a lack of confidence from corporate issuers.
A conventional insurance agency in Kenya has converted to become a fully-fledged Takaful firm, offering only Islamic insurance products, because of what it said is the rising demand for Shari'ah compliant financial services in Kenya.
Al Wataniya Insurance Company said it is now offering more than a dozen Takaful products on behalf of Takaful Insurance for Africa, East Africa's only stand-alone Takaful company, which started operations in January this year.
First Community Bank (FCB) has introduced an Islamic-compliant unit trust underlining the growing list of Islamic products targeting the Muslim market.
The firm has received approval from the Capital Markets Authority (CMA) to rollout the fund, which will make selective investments in equities, government bonds and real estate options that are Sharia-compliant.
Takaful Insurance of Africa, the first fully Shari’ah-compliant insurance company in Kenya, has been licensed and launched in Nairobi.
The company, the first Takaful operator in East Africa, was founded in 2008 and registered by the Kenyan industry regulator, Insurance Regulator Authority, this month. It is backed by the Cooperative Insurance Company of Kenya.
Africa’s Islamic finance industry needs to overcome negative perceptions among non-Muslims to successfully expand into predominantly Christian sub-Saharan Africa, an industry leader said on Tuesday.
Northern Africa is largely Muslim and countries such as Egypt and Sudan have offered Islamic banking for decades.
Now some lenders are looking to expand into sub-Saharan nations, such as Uganda which is 80 per cent Christian.
Kenya has made adjustments to its banking sector to let Islamic finance institutions set up and prosper, the governor of the Central Bank of Kenya (CBK) said on Monday.
Njuguna Ndung’u — whose statement was read to a conference in Nairobi — said Islamic finance had the "overwhelming support" of Kenya’s Muslims and non-Muslims, but as a regulator CBK faced challenges in encouraging the niche market.