The National Insurance Commission (NAICOM) has emphasized the shortcomings of conventional financial systems in addressing the complex risks faced by individuals and communities, advocating for the adoption of Islamic finance as a viable alternative.
This perspective was shared at the second African Takaful and Non-Interest (Islamic) Finance Conference in Lagos. The event, themed “Islamic Finance and Takaful: Building Resilience in a Volatile World,” explored how Islamic finance could contribute to mitigating economic, environmental, and social challenges in Africa.
A Vision for Resilience in Financial Systems
Speaking at the conference, NAICOM’s Commissioner for Insurance, Olusegun Omosehin, represented by Deputy Commissioner (Technical), Dr. Usman Jankara, highlighted the innovative edge of Islamic finance. Dr. Jankara noted that while traditional financial systems struggle to address diverse risks, Islamic finance stands out for its ethical foundations and commitment to social responsibility.
READ MORE: Why Nigeria is Attending the Arab-Islamic Summit – Government Statement
“Islamic finance transcends conventional financial products,” he said. “It is a holistic system designed to promote fairness, transparency, and shared risk while encouraging socially and environmentally conscious investment decisions.”
This comprehensive approach, he added, aligns well with today’s demands for sustainable and ethical financial solutions.
Growth and Market Insights
Dr. Jankara revealed that the Islamic finance sector in Nigeria is witnessing rapid growth, spurred by increasing demand for Shariah-compliant financial services. Currently, the sector accounts for 2–3% of Nigeria’s financial market, valued at approximately $3.8 billion.
The market composition is dominated by Sukuk (Islamic bonds), which represent 59.3% of the total share, followed by non-interest banks at 39.8%. Islamic funds and Takaful (Islamic insurance) make up the remaining 0.9%.
Nigeria’s Islamic financial industry comprises:
- Four non-interest finance banks
- Five Takaful companies
- 15 microfinance institutions
- 10 non-bank financial institutions
The Role of Takaful in Islamic Finance
Central to Islamic finance is the concept of Takaful, which stands in contrast to conventional insurance. Instead of risk transfer and reliance on interest, Takaful operates on principles of mutual cooperation, shared responsibility, and risk-sharing.
This model offers a unique advantage in building financial resilience, particularly in a world grappling with economic volatility, environmental crises, and societal shifts.
Expanding the African Market
NAICOM underscored the need for innovative financial solutions to foster growth in Africa’s financial landscape. The regulator believes that Islamic finance has the potential to strengthen the continent’s market by addressing diverse challenges with ethical and socially inclusive approaches.
As the demand for Shariah-compliant products continues to rise, Islamic finance is poised to play a transformative role in reshaping Africa’s financial future, fostering stability, and promoting sustainable development.
