‘Taka­ful In­surance – Not Ex­clu­sively for Mus­lims’

Diplomat East Africa - - Economy -

Has­san Bashir, Founder and CEO Taka­ful In­surance of Africa (TIA), ex­plains the think­ing be­hind Is­lamic in­surance and why the highly popular fa­cil­ity is all about hon­esty and trust. ROBIN OBINO re­ports

DIPLO­MAT EAST AFRICA: What led to the launch of Taka­ful In­surance? HAS­SAN BASHIR: There was a need for the ser­vice. I have been in­volved in the in­surance in­dus­try since 1997, and it was some­thing that I had be­come aware of. For my MBA, I re­searched cus­tomer be­hav­iour across the Kenyan in­surance in­dus­try, and what came out were ev­i­dence of dis­sat­is­fac­tion and a need for hon­esty and ethics in the in­surance prod­ucts and ser­vices. I came across a lot of peo­ple who did not have in­surance, or if they did they only had the ba­sic statu­tory amount. They said that they did not feel com­fort­able with some as­pects of in­surance – that it did not ac­com­mo­date their re­li­gious be­liefs – and some peo­ple said they felt con­ven­tional in­surance was a bit like gambling.

Q: What is the dif­fer­ence be­tween con­ven­tional in­surance and Taka­ful?

A: The big dif­fer­ence is that con­ven­tional in­surance is a risk­trans­fer model, whereas taka­ful is a risk-shar­ing model. In the case of taka­ful, it’s more like a joint fund, where the company and share­hold­ers are paid a por­tion of the pre­mi­ums. The risk re­mains partly shared and col­lec­tively based on all those tak­ing part in the scheme. At the end of the in­surance pe­riod there is a pay-out, not a ‘no-claims bonus’, more of a div­i­dend.

Q: Why did you choose Kenya, which has a rel­a­tively small Mus­lim pop­u­la­tion?

A: I started in Kenya be­cause I am Kenyan. This is the mar­ket I know. I saw there was an open­ing in the mar­ket here that needed to be sealed. I agree there are big­ger mar­kets, like Nige­ria or Ethiopia, but that means there is po­ten­tial to grow. Six months ago we opened an of­fice in So­ma­lia. We have made ex­pres­sions of in­ter­est in Uganda, Dji­bouti and Tan­za­nia, so we have big plans. Q: Is taka­ful only for Mus­lims? A: Not at all. Our prod­ucts are not ex­clu­sively for peo­ple of the Mus­lim faith. We can serve any­one, and we do. Ini­tially, peo­ple thought it was only for Mus­lims, but now around 15 per cent of our client base is non-Mus­lim and we are grow­ing.

Q: How do cus­tomers per­ceive Is­lamic fi­nan­cial ser­vices in gen­eral?

A: Some peo­ple in our com­mu­nity are ill-in­formed. I’ve been asked – di­rectly to my face – “If some­one de­faults on pay­ments, will their hands be chopped off?” Peo­ple are only like this be­cause they do not have all the in­for­ma­tion, so it is our job to ed­u­cate them. There are sen­si­tiv­i­ties, which I can un­der­stand, but I be­lieve eco­nomic de­vel­op­ment will help change minds. Ex­trem­ism thrives in spa­ces where there is poverty and lack of ed­u­ca­tion, and where peo­ple are des­per­ate and have noth­ing to do and no means of earn­ing a liveli­hood. But I be­lieve that Is­lamic fi­nance can bring pos­si­bil­i­ties to many peo­ple by help­ing them get em­ploy­ment and ac­cess to fi­nance.

Look at what we are achiev­ing with the in­dex-based live­stock taka­ful. We are con­tin­u­ously ed­u­cat­ing peo­ple and es­pe­cially pas­toral­ists so that they un­der­stand that the cover is in line with their re­li­gious sen­si­tiv­i­ties. This is to cush­ion them against the harsh weather so that they can sus­tain their liveli­hoods de­spite the droughts that may oc­cur from time to time. In the long run, this will an­swer the ques­tion you asked about the neg­a­tive per­cep­tions about Is­lamic fi­nance.

Q: What is your take on the fu­ture of Is­lamic fi­nance in Kenya?

A: Kenya wants to be­come an Is­lamic fi­nance hub in the East and Cen­tral Africa re­gion, and it is well placed to do so. We are look­ing at launch­ing a Sukuk later this year since fixed in­come, in­ter­est bear­ing bonds are not per­mis­si­ble in Is­lam. Sukuk se­cu­ri­ties are struc­tured to com­ply with the Is­lamic law and its in­vest­ment prin­ci­ples, which pro­hibit the charg­ing, or pay­ing of in­ter­est. This is gen­er­ally done by in­volv­ing a tan­gi­ble as­set in the in­vest­ment, such as by giv­ing par­tial own­er­ship of a prop­erty built by the in­vest­ment company to the bond owner

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