The West African Insurance Institute School in Banjul's Kotu South area provides educational academic programmes for staff working in the insurance industry of The Gambia. Recently, demand dictated that it should offer courses in Takaful. Prince Mike Ikupolati, its Director General, explains why.

Prince Mike Ikupolati, who is passionate about eliminating unethical practices in insurance, knew it was time to introduce courses on Takaful when he saw that Africa was beginning to embrace the concept. "We decided to introduce a Takaful programme to the institute. Today you can learn at least the basic, introductory aspect of Takaful being taught as part of the programmes at the institute. We're also researching to develop more programmes; one such programme is highly involved in the understanding of Takaful. We have been looking at Malaysia and the Middle East to find out how it works and how it benefits people."

EASY SELL

Ikupolati, originally from Nigeria, explained that The Gambia was one of the first English-speaking countries to be home to a Takaful company. Takaful Gambia remains The Gambia's sole operator, however Ikupolati expects this won't be the case for long. "Those involved are currently growing, so other players can see that it is profitable," he said. "Other companies will be coming soon.

"In The Gambia, Takaful has been highly accepted. It's [Takaful Gambia] has been going about three years now and they've been breaking even. This year they were able to share profits among the participants. It's a wonderful thing for The Gambia. The Gambia is about 90 per cent Muslim, so Takaful is not difficult to sell."

Unlike many other regions, insurance is also not a difficult sell in The Gambia, which has a high insurance penetration rate, albeit concentrated in urban areas. "In The Gambia there is a very high awareness as to the value of insurance. So the penetration is considerably higher than in some of the other West African countries. In The Gambia, insurance holders are around 1.5 million; but that 1.5 million is concentrated in Banjul, where around 60 per cent of The Gambia's population live. The awareness of insurance within the Banjul metropolis is very high, and that's why we're able to support it. Currently we have 11 insurance companies - both Takaful and non Takaful - operating in The Gambia and they are all doing wonderfully well."

Conventional insurers have also been enviously eying Takaful's growing popularity, and many are planning to open windows. Ikupolati explained this has led to his classrooms becoming fuller. "Of course - we have a lot of participants - we have so much demand. It isn't only Takaful insurance, but conventional insurers are considering Islamic windows, so they need to train their staff in Takaful so they have the capacity to offer an Islamic option. It is a concept that is widely accepted and I'm sure that conventional insurance will not allow Takaful companies to have all of the talent!" he said.

HUMAN RESOURCES

The Gambia is keen to home grow its human capital and not rely on an imported workforce, which is why the West African Insurance Institute started offering courses in Takaful once it saw its popularity. "We have the West African Insurance Institute and we have introduced courses so we can build capacity for Takaful. We also send our staff out to places like Malaysia to learn. But the basic understanding and skill required is obtained from the West African Insurance Institute," Ikupolati said.

ReTakaul, however, will continue to be outsourced for the foreseeable future. "It requires a huge capital, and unless the Government of The Gambia can give it the support it will be difficult to set up ReTakaful for so many reasons," Ikupolati said. "It would not be economical; the fund capital required would not be there and there are too few insurance companies in The Gambia to support the huge capital required.

"Currently, what we do is take ReTakaful from abroad because insurance is an international business. So you can give ReTakaful business to those countries which we expect to support Africa's Takaful industry. Currently we are looking to Malaysia and other Asian countries for our ReTakaful. We are hoping that when the industry is developed enough in Africa we will be able to shift our ReTakaful back to the continent, but that won't be any time soon."

However, while The Gambia's Takaful industry is taking off Ikupolati explained it is not quite so easy in other parts of Africa. "The problem that we have in Africa is that African countries are divided in to three: there are those with predominantly Muslim populations; those predominantly non Muslim; and a few others that are 50/50," he said. "For nations with a 50/50 Muslim/non Muslim population, it is difficult for Takaful to penetrate because there is resistance and both sides are equally strong. That's why in Nigeria the first Takaful company was only set up in 2011.

"However, in countries with a Muslim majority population, like in The Gambia, there was no difficulty for the Government to support the establishment of Takaful. The Gambian Government is strongly behind the development of Takaful - and that is a wonderful advantage. So we have the backing of the Government, the people and we have the knowledge so I am sure Takaful will continue to grow in The Gambia."

NIGERIA STRUGGLES

The same, sadly, cannot be said for Ikupolati's home country. "If you want to sell a new concept to people, it should not have been brought out in the way Nigeria did," he said. "You see, before the current Governor of the Central Bank of Nigeria we had Charles Chukwuma Soludo, who was a Christian and was developing Takaful, and no one raised an eyebrow. But when the new Governor came, he brought it out as if it was a Muslim concept; and people went against it. They didn't understand the concept.

"We are trying to say that Islamic finance is something that anybody can benefit from. The concept is actually very basic and can be accepted by anyone. If the Governor of the Central Bank can look at it in that way it will be easier for Takaful, and indeed Islamic finance, to penetrate Nigeria. As it is today, because of the suspicion surrounding the topic and the nature of Nigeria as a country it's very difficult."

However, Ikupolati believes that as soon as Nigeria embraces the Takaful model the industry will spread throughout the whole of Africa. "Once Nigeria embraces the Takaful model all of the smaller countries can be assisted to also embrace the same concept. That is where the future of Takaful lies in Africa. In The Gambia, conventional insurance has been around so long people are used to it, so it will take a long time for a shift to happen, but eventually the shift will come."

Although regulatory frameworks, accounting standards, awareness and research, among other things, are lacking in Africa's Takaful industry, Ikupolati believes that Takaful will eventually thrive in what he believes to be its spiritual home. "If it is well practised and followed according to its true principles it [Takaful] is people-oriented. It's based on mutuality - mutual protection, cooperation and responsibility and this is the fundamental belief of the masses - that we should be our brother's keeper. The Qur'an says that Islam is like a building where one part of the building supports the other, and we should live together as brothers and support each other. Because of the mutuality concept of Takaful, it is beneficial to all, so it is something that should be accepted by the whole of Africa." 

© Islamic Business and Finance 2012