KAMPALA — President Yoweri Museveni is expected to launch Uganda’s first Islamic insurance firm today, marking a significant expansion of the country’s Sharia-compliant financial ecosystem.
The launch of Tamini General Insurance, a subsidiary of the Salaam Group, takes place during an Iftar dinner organized by the Office of the National Chairman. The move comes nearly two years after the Financial Institutions (Amendment) Act 2023 legalized Islamic banking and finance in Uganda, following the earlier 2024 debut of Salaam Bank.
Islamic insurance, known as Takaful, operates on the principles of mutual cooperation and shared responsibility. Unlike conventional insurance, which relies on risk transfer, Takaful participants contribute to a collective pool to protect one another against loss.
Mohamed Bahdon, chairman of the Tamini Group, said the firm aims to bridge a critical gap in a country where insurance penetration remains below one percent. He noted that a significant portion of the population has historically avoided traditional financial services due to religious or ethical objections to interest and gambling-like uncertainty.
The Takaful model prohibits interest (riba), excessive uncertainty (gharar), and gambling (maisir). Michael Mande, CEO of Salaam Bank Uganda, explained that the system allows for the return of a portion of the premiums to policyholders if no claims are made during the year.
Under the Mudaraba profit-sharing model used by the firm, management retains 30 percent of the fund as a fee for operations, while the remainder stays in the pool. When no risks are registered, the surplus is invested in Sharia-compliant ventures, with profits shared among the participants.
Mariam Nalunkuma, manager of corporate affairs at the Insurance Regulatory Authority (IRA), said the model’s emphasis on fairness and transparency appeals to a broad demographic beyond the Muslim community. She noted that Takaful operators are required to establish Sharia supervisory committees to ensure all investments meet ethical standards.
Islamic scholars have welcomed the development as a long-overdue solution for the faith-based community. Sheikh Hafithu Walusimbi, a scholar at the Islamic University in Uganda, said that while conventional insurance leaves policyholders with no claim to their premiums if an event does not occur, Takaful ensures participants remain part of the excess pool.
The introduction of Takaful aligns Uganda with global financial markets in the United Kingdom, South Africa, and Singapore, which have already integrated Islamic products. Beyond insurance and banking, the Capital Markets Authority is also reportedly advancing plans to introduce Sukuk, or Islamic bonds, to further diversify Uganda’s financial instruments.
