Takaful insurance expands across East Africa amid awareness gaps

The growth reflects a market that became fully operational in 2023.

The rapid rise has been supported by operators such as First United Takaful and Zanzibar Insurance Corporation, alongside the entry of new players including Alibarakah Takaful Insurance.

“The increased competition has widened product availability and improved visibility of Sharia-compliant insurance products in the market,” reads part of the report.

However, a Takaful consultant, Sheikh Yasser Awadh, said the sector’s potential remains strong although it’s still constrained by limited awareness and investment.

He noted that many potential customers still do not fully understand how Takaful works, limiting deeper penetration beyond urban and formally insured populations.

He also pointed to international experience, particularly in Malaysia and Kenya where long-term policy support and wider adoption helped accelerate market maturity over several decades.

In Kenya, the Takaful segment is more established in structure but remains a niche within the wider insurance industry.

The sector began in 2011 with the entry of Takaful Insurance of Africa, which pioneered Islamic insurance offerings in the country.

While Kenya has a more developed insurance regulatory environment and wider financial infrastructure, Takaful remains a niche segment within a market where overall insurance penetration remains low at about 2–3 percent.

Growth is supported by a Muslim population estimated at 10–15 percent and the gradual expansion of Islamic financial products.

Industry observations suggest that overall insurance penetration in Kenya remains low, and Islamic insurance products account for only a small share of the market.

Growth has been gradual, supported by a growing but still minority Muslim population and increasing interest in ethical financial products.

Product diversification particularly in health and family Takaful, also remains limited, with many operators relying heavily on agency distribution and bancassurance channels.

Uganda represents the newest entrant into the East African Takaful landscape.

The Insurance Regulatory Authority of Uganda has recently introduced Takaful and Retakaful regulations, establishing a formal legal framework for Islamic insurance products.

While the move is expected to enhance financial inclusion and attract new segments of the population, the market is still at an early stage, with few operators and low public awareness.

Across the region, analysts say Takaful growth is being driven by increasing demand for ethical, risk-sharing financial solutions and broader efforts to deepen financial inclusion.

In Tanzania, industry stakeholders caution that strong growth figures could slow unless supported by aggressive public sensitisation and investment in human capital.

First United Takaful board chairman, Dr Kassim Hussein, said the industry’s long-term success depends on expanding outreach beyond formal financial institutions and reaching communities at the grassroots level, where financial literacy remains low.

“The challenge is taking the message from boardrooms to the streets, farms and fishing communities, proving that financial protection can align with people’s beliefs,” he said.

Dr Hussein said Kenya started earlier than Tanzania and by establishing Islamic windows and Islamic banking, where lenders require borrowers to have Takaful coverage before accessing loans, which helped the sector grow faster.

“Tanzania also has Islamic banks that require similar insurance arrangements, which is expected to further support the growth of Takaful in the country,” he said.

Despite the impressive growth rate, the Tira report does not paint an entirely rosy picture. A persistent lack of public awareness remains the sector’s biggest bottleneck.

Millions of Tanzanians who reject conventional insurance due to Riba (interest) and Gharar (uncertainty) simply do not know Takaful exists.

Sanlam General Insurance chief executive officer Mr Khamis Suleiman noted that Takaful operators are still operating cautiously, particularly in the early stages of market development.

“Companies are highly selective in underwriting, ensuring strict compliance with Sharia principles by avoiding sectors such as alcohol, gambling, tobacco and other non-permissible industries,” he said.

He added that insurers also carefully assess clients’ claims histories before entering contracts, as part of broader risk management and capital preservation strategies.