Family Takaful In Africa

1. Family Takaful In Africa Hesham Abdel Shakour

2. AFRICA A continent once known more for witchcraft than worship has become a stronghold - and a flash point - for the world’s two largest religions, • Islam and Christianity

3. AFRICA According to both Encyclopedia Britannica and World Book Encyclopedia, Islam is the largest religion in Africa, followed by Christianity. • Africa harbors the highest percentage of Muslims (52.39%) A quarter of the world's Muslims live in Africa. These are about 423.5 million. Northern Africa is heavily Muslim and southern Africa is mostly Christian and the two religions meet in a 4,000-mile belt from Somalia to Senegal.

4. Birth & Progress of Takaful in Africa Takaful as practiced in the sixth century (Christian Era A.D. and +50 Hijrah) actually evolved from tribal practices of mutual assistance dating back to pre Islamic times. • There are several examples in pre-Islamic history whereby families, tribes or related members throughout the Arabia peninsula pooled their resources as a mean to help the needy on a voluntary and gratuitous basis. Although it is widely acknowledged that Takaful (mutual cooperation) existed among Communities and early Muslims in different forms, Takaful as we know it today started in the Sudan in 1979.

5. Birth & Progress of Takaful in Africa Despite being considered as the birth place of Takaful (by virtue of origin in Sudan), the development of Takaful in other African countries has been slow. • This is a factor mostly attributed to lack of regulatory environments, low purchasing power and poor perception of insurance in general in these markets. • Nonetheless the huge Muslim population in some of the countries, growth in technology and economies and the ideal principles of Takaful is predicted as a revolution in this emerging markets and is thus projected as a big growth field for Takaful players and concept in general.

6. GlobalTakaful From this humble beginnings Takaful has grown to become a phenomena in the global economies with : • an estimated premium of USD 8.9 Billion in 2010 . • about 180 Takaful Companies almost 46 countries around the world • 200 Takaful windows ( conventional players offering takaful) • 20 Re-takaful Players

7. Is there a potential for Takaful? The development of Takaful companies is complimentary to the establishment of Islamic banks. What happened in the Islamic banking and finance during the world economic crisis? While conventional banking is largely debt based, and allows for risk transfer, Islamic banking, by contrast, is asset based, and centers on risk sharing. Islamic banks contributed to financial and economic stability during the crisis, given that their credit and asset growth was at least twice as high as that of conventional banks In view of their robust growth during the crisis, Islamic banks will likely take a growing market share in the future This creates a trust in the Islamic economy which increased the need for shariaa compliant financial derivatives such as Takaful

8. Is there a potential for Takaful? Family is the basic social order in the African societies The African family has a high dependency ratio - only a few members of the family work and take the burden of the rest. • When the family suffers from the stresses and strains as a result of a disability or loss of the family leader, other family members, neighbours and friends feel obliged to step in to support in one way or another to do so . • Traditions and culture embedded these values amongst the tribes. • This obligation is not merely social but a socio -cultural and socio -economic obligation to aid in the welfare of the different families…. • Solidarity……………………….Takaful

9. Is there a potential for Takaful? Takaful Products are not exclusive to Muslims The right product and pricing could attract any customer irrespective of their origin or faith. • Through effective and efficiently priced products that identify and meet the needs of the low end and the poor people, Takaful is short-cut to progress and improves livelihoods of the low income earners • The concepts of Takaful thus are the same as with insurance, where the bottom line is not profits for shareholders and poor servicing of claims but one of clarity and transparencywith the welfare of members at heart coupled with surplus sharing and distribution.

10. Mitigating misconceptions about Takaful The truth is Misconception Products only Relevant to Muslims Covers large investor base, Muslims and non Muslims Products are too complicated Only difference is the Shariaa screening process Restricted global market 50% of SP500 is Shariaa Compliant Performance drag Asset based, risk sharing mechanism

11. So what are the Challenges??

12. A New Dawn in Africa Takaful maybe small in Africa, but small can be big Takaful and tailor made products of MicroTakaful have the great potential to significantly contribute to growth of the African economies and support to the masses. It appeals to many irrespective of their religious believes. It is in harmony with anything good we want to do for these societies

13. Thank You