Nigeria: Promising prospects for nascent takaful market
Source: Middle East Insurance Review | Jan 2025
Though takaful contributions currently represent 1% to 2% of the insurance market, the future is promising, considering the average annual growth rate of over 34% in contribution generated by the segment in the last four years, said Nigeria insurance commissioner Olusegun Omosehin.
The National Insurance Commission (NAICOM) was collaborating with other regulators in Nigeria to develop more shariah-compliant investment opportunities for takaful and other non-interest financial institutions in Nigeria, Mr Omosehin said.
He said that since issuing the operational guidelines in 2013, the commission had licensed five takaful operators, with takaful gradually gaining acceptance, according to local media reports.
He added that NAICOM had been instrumental in promoting the growth of the takaful industry in Nigeria through several initiatives, including the implementation of risk-based capital system which affords takaful operators more relaxed minimum capital requirements; qualification criteria for new entrants into the takaful market in Nigeria and most importantly, market conduct and enterprise risk management guidelines for takaful and retakaful operators to ensure best practices and effective risk management.
Furthermore, several stakeholder engagement and education workshops had been conducted to raise awareness and educate the public about takaful and its benefits. “We continue to collaborate with international standard setting organisations like the Islamic Financial Services Board and Accounting and the Auditing Organization for Islamic Financial Institutions to provide requisite regulatory guidelines, technical training and support for the industry, among other initiatives.” He pointed out that Islamic finance in Nigeria is growing rapidly. The sector accounts for approximately 2-3% of Nigeria’s total financial market, valued at $3.8bn. Sukuk dominates the market at 59.3%, followed by non-interest banks at 39.8%, and Islamic funds and takaful at 0.9%. M