Exploratory Study on the Introduction of Takaful Insurance in Ghana

The increasing growth trend of Takaful insurance over the years, especially in Africa, has attracted the attention of state institutions within the continent to explore how its adoption can help in diversification of insurance products as well as deepening insurance penetration. This study, therefore, aims to investigate the demand condition as well as suggest a road map in respect to enabling frameworks for the introduction of Islamic (Takaful) insurance in Ghana as the country makes a move towards its adoption and integration in the pool of insurance offerings. The study adopted a dual approach of assessing the necessary enabling frameworks qualitatively and determining the potential drivers of the patronage of Takaful insurance quantitatively. Insight was drawn from the enabling frameworks of Malaysia and Nigeria in proposing and defining the enabling framework for Ghana. Convenience and snowball sampling were used concurrently to arrive at a sample of 321 participants that were used to, among other things, determine how the demand for Takaful insurance will be influenced by compatibility, relative advantage, and product features. The study found that the participants’ knowledge of Islamic insurance does not go beyond its shariah compliance and avoidance of riba and Gharar. The study further found a positive and significant relationship between relative advantage, product features, and compatibility and potential demand. Recommendations were made to the effect that, supplementary Takaful guidelines be issued without amending the existing insurance regulations. The study also recommends that, beyond the financial target of boosting premium and deepening insurance penetration, microtakaful schemes should also be prioritized to cater to the insurance needs of low-income earners, small businesses, and blue-collar job workers who would otherwise be left without any insurance cover.