Reviewer: Obinna Chilekezi, FCIB, FIIN, FWAII, FPRAM

Introduction: In the elementary study of insurance, we were taught that conventional insurance is different from wagering for various reasons among which was absence of uncertainty.

The critical minded students then knew this was not true, and on the part of the insuring public – to show their disbelief too, they would ask the insurance marketer supposing the loss did not happen what happens to the premium they have paid. Majority of us here know the answer to that query. It is this element of quasi-uncertainty in the insurance contract that adherents of Islam frown at, hence they prefer not to buy insurance products from the conventional market. In order to bring this set of people to the good family of risk protections that Africa through Sudan, as South Africa did with Critical Illness Insurance, gave the world Takaful insurance. The essence of this Sudanese gift is that majority of Moslems who would not have insured their risks as a result of their religious belief will now have a vehicle to do so.
What then do we mean by Takaful insurance? To me, Takaful insurance is a form of insurance that took its root from the mutual insurance that was developed during the industrial revolution whereby the policyholders are not only the owners of the insurance company but also share in the fortunes of their insurance company. This is the reason insurance students were taught that mutual companies are owned by the policyholders. Another quality that made Takaful to be different from mutual insurance is its being Shariah compliant. I may not be that right hence I will like to see the views of Islamic financially experts on the subject. In this light, Prof Abdel-Rahman Yousri (2009) had argued that Takaful insurance should be perceived as co-operative and mutual insurance. He further posited that it must be Shariah compliant hence Shariah is the religious law of Islam. This by implication means that if it is not Shariah complaint, it should not be permissible for Moslem adherents. Similarly, Mohd Fadzli Yusof, et al (2015) revealed that in the field of finance, Moslems have been called upon to create institutions that can provide services free of un-Islamic elements like interest (riba), uncertainty, unfairness and imbalance or injustice. These scholars agreed that Takaful insurance has been adopted worldwide as the generic name for Islamic insurance, following a proposal from Malaysia at the summit of heads of state of the eight (D8) development Islamic countries in Dhaka Bangladesh in 1998. At this juncture, it is important to note that the first Takaful Company to be incorporated, which was known as Islamic Insurance Company Limited, was established in Sudan in 1979. The first Retakaful was established in Saudi Arabia (although it was a combination of Takaful and Retakaful, the real Retakaful company was first established in Malaysia). There is process in place to establish Retrotakaful in line with the Retrocessionnaires in the conventional insurance markets among other developments in the Takaful insurance model.
Permit me, at this juncture, to observe that in Nigeria, Takaful insurance had a very humble beginning at inception before growing as it is presently is and, on its way, to mature as the proverbial mustard tree. Takaful insurance was introduced in 2015 with the release of the Takaful Operational Guidelines by the National Insurance Commission. The Noor Takaful Insurance following the release of this operational guideline became the first company to sell Takaful products in the country in 2016. It was later followed by Jaiz Takaful Insurance Plc, which this author was its first managing director and chief executive officer. Today, there are four Takaful insurance companies in the market with more waiting for a nod of approval from NAICOM so that they could operate in the market. These companies sell general and family Takaful products to willing Nigerians. It is equally to note that the introduction of this model of insurance distribution has helped to improve both insurance density and insurance penetration in the country. A review of the financial performance of these companies in 2020, for instance, showed that all the Takaful insurance companies earned a total premium of N4 billion while in 2022 only Noor Takaful surpassed the same amount and the present management account of the company showed that the company would earned up to N10 billion by the end of this financial year.
The above notwithstanding, it is not yet Uhuru for the Takaful insurance companies in West Africa. There is still some strong regulatory and operational challenges facing these operators. In this regard, both the regulators and operators should critically look at their models, distribution channels among others to ensure efficiency and effectiveness of operations of this model of insurance business. Mores so, there are a huge untapped market of Takaful in the region. This reminds me of the premise of Mohd Fadzli Yusof et al (2015) (op cit) which rightly proposed that for Takaful insurance to remain competitive, the operators would need to expand the market by way of introducing new products and innovations. They added that this is necessary as the need to satisfy the market is a cardinal principle in any business. They noted that Takaful cannot merely ‘sell’ or market itself on ‘Islamicity’ alone. Thus the marketability and Islamicity would certainly give Takaful the edge in terms of competition in countries that are predominantly Moslems.
The book
Evolution and Revolution of Takaful in West Africa and Beyond is a 160 paged book, published by Zamfa Enterprise. It has 14 chapters and written mostly in the form of a memoir by the author. The foreword to the book was written by one of Nigerian’s financial helmsmen in the person of Alhaji (Dr) Umaru Abdul Mutallab (CON), chairman of Jaiz Takaful Insurance Plc. In this foreword, Alhaji Mutallab revealed that the famous Islamic Jurist, Sheikh Muhammed Abdul permitted insurance practices by supporting that insurance transaction should be akin to al-Mudharabah (one kind of partnership business where one party provides the capital and the other party provides labour) financing technique. He added that however, insurance institutions based on indigenous means failed to develop, either during the Ottoman era, or in other periods during the history of other countries. Dr Mutallab concluded that this development acted as forerunners to the development of modern day Islamic financial institutions.
In his preface to the book, the author stated that Takaful refers to a mutual guarantee or assurance arrangement for any group of people facing similar risks or the danger of incurring unforeseen losses, to individually contribute a certain sum of money, which will be used to compensate any member of the group who suffers losses. Thus, Takaful is indeed a mutual agreement to assist one another by the participants who had contributed earlier into a common pool.
In chapter one of the book, the author showed some insights into Takaful business models. The author observed here that Takaful is based on Shariah’s premise that individuals should fulfil their responsibilities through cooperating among themselves so as to protect each other. The author also added that the word Takaful came from Arabic word Kafala which means joint guarantee to participating members.
This chapter also revealed that Islamic finance has been in The Gambia for more than 20 years with the establishment of the Arab-Gambia Islamic Bank. It also important to note that it was in 2007 that the government of the Gambia through the Central Bank granted approval for the development and inclusion of Takaful in the country’s financial system to foster the growth of the financial sector.
Chapter two of the book examined the Gambian insurance market before the introduction of Takaful insurance. It posited that the penetration of insurance (that is contribution of insurance to the country’s GDP) was low. There is hope however that with the advent of Takaful model in the country there would be some improvements of not only insurance penetration but also insurance density in the future.
Chapter three was on Takaful research literature [sic] whereby the author discussed some of the developments of studies in Takaful insurance globally. Chapter four is on the laying of foundation of Takaful business in The Gambia. In this chapter the author discussed the contributions of some individuals to the development of Takaful insurance in The Gambia, starting from the former president, Prof Dr Alhaji Yahya AJJ Jammeh, the former Vice President, Dr Isatou Njie-Sady, the Gambian Parliament, the Islamic Development Bank, and of course – the personal contributions of the author too.
A structural challenge is the focus of chapter six. In this chapter, the author looked at the structural challenges that Takaful operators could face in the market. He used the experiences he gathered from the Gambian, Zambian and Nigerian markets to highlight the difficulties that a Takaful insurance company could encounter while in operation. He notes and I quote:
“In my case at the earliest stage of establishing Takaful Gambia Limited, my competitors in the conventional insurance domain took advantage of the risk element involved in conventional insurance to blackmail my novel Takaful business model …
The misconceptions spread by some practitioners and operators in the conventional insurance sector were in a bid to destroy the survival or success of my Takaful development mission in The Gambia. They claimed and peddled rumours that Takaful contains elements of usury (riba) as it involves an exchange of money for money with an additional amount…”
This is now past. Takaful companies have not just come to stay but also to become major players in the insurance markets of this region. This is being seen by the number of such companies sprouting up in the region – starting from The Gambia, to Nigeria and now Ghana is warming up to join the race. This is not just an African thing; it is a global development; there are Takaful insurance companies in the UK and some other European countries now. One of the subjects for qualification of the Chartered Insurance Institute of London today is teaching courses in Takaful insurance.
Chapter seven is on a critical marketing challenge and apt marketing model for the novel Takaful business. Chapter eight discusses the initiated anti challenge measures, performance and progress of Takaful business in the region. Chapter nine examines the explosion of Takaful business, from The Gambia to other African countries by the author. In this chapter, the author notes that Takaful in the Gambia has shown a proven track record of growth. He acknowledges that its revenue grew by five-fold in its first four years of existence. He also notes that clients of this insurance model were both Muslims and non-Muslims alike. Noting that the Muslim patrons bought the products because of their “[shying] away from conventional insurance due to religious reasons” p.84. The non-Muslim Gambia on their part, according to the author, bought the product as the “tasting [of] Takaful products for the first time, have been and are being attracted by the ethics and ‘fairness’ of Takaful products and the benefits offered to policyholders in terms of profit-sharing” p.84.
Chapter ten is on the author’s experience taking Takaful to Zambia and Nigeria. Chapter eleven on the lessons to learn from Takaful practices in Africa. Chapter twelve on the future of Takaful. In this chapter, the author notes that with the growth of Takaful in West Africa and other parts of Africa, Takaful is already well-established components of the financial sub-sector of their respective economies. He also acknowledges that there is still unrealised potentials for Takaful companies in Africa.
Chapter thirteen is on the author’s selected press interviews, titled: Talking to the Media across borders. Chapter fourteen which incidentally is the last chapter is on the honours received by the author as reported by the media. The book ended with some documentations as appendices.
The Author
Momodu Musa Joof is a well-known and respected insurance practitioner not just in The Gambia but in most other African countries. He is one of the leading proponents of Takaful insurance in the Continent having served as Managing Director and Chief Executive Officer of Takaful companies in The Gambia, Zambia and Nigeria. He is a leading consultant on Takaful in Africa and beyond.
Joof has a Master’s in Business Administration from Malaysia where he had not just studied the theory of Takaful but also gained practical experience of the subject. With his Malaysian experience, he decided to domesticate Takaful insurance business in Africa and this he has successful done as a person. And with the publication of this book, Joof had further enriched the practice of Takaful in Africa. Evolution and Revolution of Takaful in West Africa and Beyond is no doubt a first of its kind. With this publication, Joof has done what the late Prof Joe Irukwu did in the Nigerian market with his Insurance Law in Nigeria published in 1967 – thus becoming the first Author on Insurance in conventional insurance in West Africa.
Conclusion
Takaful insurance has come to stay in Africa. This is a welcome development which will help in improving both insurance penetration and insurance density in the country. There is need however for the strengthening of this insurance business model through legislations as is the case in Malaysia (see Aliyu, Ahmad & Sandabe, 2021). Also, there is need for empirical studies on the impact of this model in the region.
On the part of the book, Joof has set a pace and others are following. At this juncture, it is important to note that the book that won the prestigious African Insurance Organisation Book Award this year was a book on Takaful written by an Ethiopian. This is clear evidence that Takaful is on its way to rule the African insurance airwave!
At this juncture, I think it is more appropriate to commend Momodou Musa Joof for not just being a pacesetter but also for given us this book on Takaful. This is a book that every insurance practitioner should endeavour to read.