Mogadishu, Somalia – The Central Bank of Somalia (CBS) has officially launched the licensing process for Takaful service providers, marking a significant milestone in the country’s journey toward establishing a robust, Shariah-compliant insurance industry.
Announced on Sunday, the initiative aims to regulate and formalize Islamic insurance services across Somalia, ensuring financial inclusion while aligning with the country’s predominantly Muslim population’s religious principles. Takaful, a cooperative system of Islamic insurance based on mutual assistance, is structured in accordance with Islamic law, prohibiting elements such as interest (riba) and uncertainty (gharar).
“This marks a key step toward building a sound and stable financial system that adheres to Shariah principles,” said the Central Bank in its official statement. “The licensing framework will provide legal clarity and investor confidence, and enhance risk protection for Somali businesses and families,” added the statement.
The CBS further noted that the launch follows extensive consultation with stakeholders in the Islamic finance sector, including scholars, financial institutions, and regional regulators. The licensing process will include detailed requirements on capital adequacy, governance, transparency, and compliance with Islamic jurisprudence.
The move is expected too open the market to domestic and international investors interested in Islamic insurance, particularly at a time when Somalia is working to deepen financial sector reforms, rebuild trust in financial institutions, and attract diaspora capital.
Somalia has no formal conventional insurance sector due to decades of conflict, but informal and community-based risk-sharing practices have existed. The CBS now hopes to transform these into structured and regulated institutions through the Takaful model.
Analysts view the licensing of Takaful providers as a signal of the growing maturity of Somalia’s financial system. It complements other recent reforms, including the introduction of mobile money regulations, strengthened anti-money laundering measures, and the promotion of Islamic banking.
The Central Bank is expected to release further guidance in the coming weeks, including application procedures and a schedule for review and approval.