Islamic Banking

Overcoming Takaful’s challenges

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Omar Sheikh, CEO, Takaful Africa, on how his institution is working towards a better future for Islamic finance in Kenya

editor's pickMonday 05, November 2018

What are the biggest challenges that Takaful Africa has faced since its beginning?


Being a pioneer, the company encountered various hurdles on its quest to enter the market, which has been dominated by conventional insurance for over five decades, since the country achieved independence.


Legislation was one of the biggest challenges faced until this year. Although the government welcomed the Takaful concept and licensed it, there was a marked absence of laws recognizing Takaful in the country’s insurance acts. This exposed the Takaful concept to risks, since the concept could be discontinued in the absence of laws governing it.


Limited opportunities for investment was another major challenge faced. Since the market was one tailor-made for conventional finance in general, Takaful faced issues in this area. We were thus locked out from many of the areas such as Treasury bills and bonds.


We also faced human resource issues. Staff conversant with Takaful was not available at the beginning, and this posed a great challenge in finding insurance personnel trained in Takaful. We hence had to resort to internal training and capacity building in order to build our staff.


There were also challenges of market penetration. We had difficulty reaching out to non-Muslim customers who believe that Takaful is only for Muslims, thus mainly limiting our market to Muslim customers only.


How have you overcome those challenges?


There has been a concerted effort to have Takaful in the government’s insurance acts, which has now been achieved. This will provide opportunities for filling gaps in the laws, thus providing more opportunities for the growth of Takaful.


With our effort to raise the capacity of our human resources, we have invested heavily in the training of our staff, which is composed of both Muslims and non-Muslims. This is because we consider skills as key and then train them on the Takaful concept. This worked for us.


To overcome the challenges of market penetration, we have had various media campaigns to popularize the Takaful concept, as well as forums to educate intermediaries. However, it still remains a challenge.


What lessons have you learned about customers in Kenya?


They are really demanding and expect quick service. They also want quick claim settlements, and expect every claim to be paid and push for it incredibly hard.

What are the main challenges facing the broader Islamic finance community in Kenya today?


Mainly, there is a lack of adequate legislation for banks and insurance companies. Though both have been recognized in some way, there are still grey areas facing both.


Following the fall of three banks in Kenya in 2015, there is a perception that small and young organizations are not very safe, and as a result, customers tend to be more comfortable with larger companies. Customers love the Islamic concept, however, and continue supporting its institutions.


What are your plans to tackle those challenges?


To overcome the challenges arising from the gaps in legislation, we shall continue to engage with the regulators and the relevant stakeholders to close up and enhance those gaps with a view of unlocking the full potential of Islamic finance in the country.


To win the hearts of customers and give them a better perception of Islamic finance, we will continue to engage them through the media, customer forums, direct engagement and relationship management, among other things.



TAGS : takaful africa, kenya

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