Momodou Musa Joof, CEO of Takaful Gambia, spoke to Islamic Business & Finance about laying the foundations for Takaful in The Gambia
Takaful Gambia began operations in 2008, and it remains the sole Takaful operator in West Africa. Any form of insurance is regarded with deep suspicion in the Muslim country, where penetration rates remain less than one per cent. It wasn't until Joof went to Malaysia that he learned about a more ethical alternative, which he thought would be an easier sell than conventional insurance.
"I was a conventional practitioner who had 14 years experience when I travelled to Malaysia to do a master's programme, where I became interested in learning about Takaful," explained Joof. "When I was told about Islamic insurance I was surprised, as I thought insurance was a profit-making body. Then they explained that Takaful operates on Shari'ah principles. So I asked the International Islamic University that I attended to arrange for a work placement. I went to Takaful Malaysia - the first company."
Joof's prejudice against conventional insurance was so deeply rooted that he was cynical about the concept of Takaful, leading him to scrutinise it mercilessly. "I was granted the privilege of being shown round all technical departments [of Takaful Malaysia], with a suspicious mind - I was sure something about Takaful was hidden as it was too good to be true. When I finally realised that what they were doing was not only Islamic but ethical business, especially with mutual guarantees and profit sharing, I decided to write my dissertation on Takaful."
BRINGING IT HOME
Joof was so impressed with the concept that he was determined to bring it home to Africa. "In the process of writing my dissertation, the OIC Summit brought my President to Malaysia. I was privileged to meet him and he gave me the challenge to come home and contribute to national development. I gave him a counter challenge by asking him to pass the law for Takaful, because it was too good for me to leave behind, if we claim to be 95 per cent Muslim in Gambia."
The President accepted the challenge, offering to support Joof financially while he paved the way for a Takaful industry in The Gambia. Joof returned to The Gambia in 2005, where the Central Bank of Malaysia gave him the tools to teach Takaful regulation. "I sent a copy of my thesis to the President and a copy of the laws given to me by the Central Bank of Malaysia - they were very generous and gave me a copy of their regulations," said Joof.
Joof was careful to send the regulations directly to the President, fearing conventional insurance companies would find a way to block it if it went through the normal channels. As it was, by the time the conventional insurers found out about it, the President had already formed a task force committee to review Malaysia's regulations and adapt them to establish Takaful in The Gambia.
By December 2006, the draft was ready and it was to be sent to the cabinet for ministers to debate on. "I endeavoured to see about 90 per cent of them to give them a one-on-one explanation on the benefits of Takaful to the nation," said Joof. "It was then sent to parliament for debate. I gave a presentation to parliament before they passed the bill, and they were convinced that it was ethical. The bill should have been presented to the House of Parliament by the Minister of Finance, but because of the importance the President attached to it, it was presented by the Vice President of Gambia!"
NEW BEGINNINGS
The bill was passed in 2006, and Joof had the fresh challenge of starting a Takaful operation. "Then I went all out to look for shareholders; I went to the Islamic Development Bank, I went to neighbouring Nigeria and Ghana, and ended with 11 individual shareholders from The Gambia. This is the only insurance company, even among conventional companies, that is 100 per cent owned by Gambians," he said.
But would The Gambia buy the concept? To emphasise Takaful's ethical appeal and differentiate it from its unpopular conventional cousin, Joof explained, "The first year profit sharing, we went to eight high schools where we selected three students from poor families, and we paid for their fees from the Zakat. The second year, we went to an organisation for the visually impaired and ordered a consignment of rice, sugar and dates. The third year, we gave a consignment of rice and sugar for the flood victims of 2009. There has never been a time from 2009 where we have not distributed over $1.5 million on profit sharing. Our claims turnaround settlement is within a week."
"Africa has fully embraced the fair concept of Takaful," said Joof. "The notion has always been that insurance is useless. They take your money, they do not settle your claims and you get nothing back. So when a concept such as Takaful, where it says that your contribution serves to cover your risk, as well as an investment into the profitability of the organisation then it is bound to appeal to Africans, because Africans have always been too caring and sharing with extended families, so one person earning would cover a lot of dependents and their lives. The concept is highly welcomed."
GOING GLOBAL
So enamoured is Joof with the concept of Takaful, he now jets around the world preaching its benefits. "I am now very much privileged to travel around the Continent to help other countries," he said. "Nigeria invited me in September to review their laws for them. I just came back from Kenya, and I've also been invited to Djibouti. I've been speaking at the International Takaful Summit in London for two years, and this is my first attendance to the World Takaful Forum."
So what is his advice for countries hoping to develop a Takaful industry? "For countries that are interested in Takaful, I would always advice that the regulators must see that there is fair play, and then Takaful's significance will be enormous," he said.
This is especially true of Africa, which houses a young, growing Muslim population. "The global financial crisis is less evident in Africa," said Joof. "There are so many opportunities on tap. The economies are mostly just recovering so there is continuous growth. These aren't saturated markets - these are new avenues."
That said, in some African countries an industry which seemingly favours one religion may not be welcomed. According to Joof, Takaful must be marketed as ethical, not religious, if it is to succeed in all markets.
"I am aware of unfortunate situations in Nigeria where you have inter-religion conflicts; we don't have that in Gambia," said Joof. "There are hardly any Muslim families in Gambia that do not have a Christian member, and there are hardly any Christian families in Gambia that do not have a Muslim member. So we are living harmoniously; as my President said, we are for the same destination but on different routes. There is no cause for hatred - we love and support each other. The majority of my customers are Christian; Takaful is more ethical than religious."
COMMUNICATION PROBLEMS
Marketing Takaful in any form remains a big issue for the industry. "My biggest challenge - which is universal - is creating awareness," said Joof. "The more people who get to know about the concept of Takaful the more they will shy away from conventional practice because of its ethical values
"The biggest challenge is creating awareness which will always be very expensive; when you go by radio, television - it costs a lot of money. These are issues that have to be addressed to actually see the establishment of Takaful in Africa; ReTakaful companies, as well as the IDB, regulators, central banks, must all come together to create awareness and educate. They need to invest in Islamic finance institutions that would produce skilled Islamic finance practitioners. In practice, the writer of a conventional company is not doing anything different from Takaful. At the writing level, the exercise, the process is the same. It is only the mindset of senior management that needs to be different."
Joof explained that conventional insurance companies are also giving them another challenge. "Their strategy for continued survival was price wars, where they undercut prices," said Joof. "It is a challenge to educate and create awareness with the regulators - there has to be parameters. For a risk of $28 million, you cannot charge $10,000; one company charges $4,000 and, ridiculously, one company was charging as little as $800. How can you pay a claim of $28 million out of $800? It is out of proportion. This is the challenge we are faced with and must educate the regulators to take care of."
However, conventional insurers undercutting prices does not seem to be putting Gambian consumers off Takaful. Currently, Takaful Gambia is enjoying a 25-30 per cent market share, and Joof believes this will grow with awareness. "Insurance penetration was so low, because there were only conventional insurers and, being 95 per cent Muslim, the population did not want it. But with Takaful we are gaining Muslims so we expect within the next 10 years we will be looking at a higher figure."
So what are Takaful Gambia's initiatives to tempt more of The Gambia's population away from conventional insurance? "Among our vision is to focus on creating family insurance - at the moment we are general," said Joof. "Also, our medical insurance portfolio is growing so fast that we are interested in building our own private hospital."
And surely, as awareness grows, more Takaful companies will crop up for a slice of Takaful Gambia's impressive market share? "We are expecting more Takaful companies in Gambia and in West Africa, but we would have enjoyed the privilege of pioneering the concept," said Joof.
© Islamic Business and Finance 2013
