1 Family Takaful In Africa Hesham Abdel Shakour

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

3 According to both Encyclopedia Britannica and World Book Encyclopedia, Islam is the largest religion in Africa, followed by Christianity. A quarter of the world's Muslims live in Africa. These are about million. Africa harbors the highest percentage of Muslims (52.39%) 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. AFRICA

4 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. Birth & Progress of Takaful in Africa 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 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.

5 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. 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. This is a factor mostly attributed to lack of regulatory environments, low purchasing power and poor perception of insurance in general in these markets. Birth & Progress of Takaful in Africa

6 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  about 180 Takaful Companies almost 46 countries around the world  200 Takaful windows ( conventional players offering takaful)  20 Re-takaful Players Global Takaful

7 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 Is there a potential for Takaful? The development of Takaful companies is complimentary to the establishment of Islamic banks. This creates a trust in the Islamic economy which increased the need for shariaa compliant financial derivatives such as Takaful

8 The African family has a high dependency ratio - only a few members of the family work and take the burden of the rest. Family is the basic social order in the African societies This obligation is not merely social but a socio -cultural and socio -economic obligation to aid in the welfare of the different families…. SolidarityTakaful Solidarity ………………………. Takaful 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. Is there a potential for Takaful?

9 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 clarity transparency 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 transparency with the welfare of members at heart coupled with surplus sharing and distribution. Is there a potential for Takaful?

10 Mitigating misconceptions about Takaful 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 Misconception The truth is

11 Takaful Challenges Limited investment vehicles Lack of skilled resources Lack of harmonized regulations Global awareness So what are the Challenges??

12 A New Dawn in Africa 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. Takaful maybe small in Africa, but small can be big 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