Somalia’s Central Bank begins licensing Takaful providers under a new Sharia-compliant insurance law passed in May 2025.
Somalia Opens Licensing for Sharia-Compliant Takaful Insurers
Mogadishu, July 13, 2025 — The Central Bank of Somalia (CBS) has officially launched the licensing process for Takaful service providers, a major step in formalizing the country’s Islamic insurance sector.
The move follows the adoption of the National Takaful Law in May 2025, designed to provide a legal and regulatory framework for insurance institutions operating in accordance with Sharia (Islamic law). Prior to this law, existing operators had been functioning in a regulatory grey area, without a formal licensing structure.
With the new framework, CBS aims to bring transparency, consumer protection, and investor confidence into the Somali insurance market. The bank emphasized that this reform aligns with efforts to modernize Somalia’s financial sector and attract investment from Islamic finance institutions in the Middle East, Asia, and the Horn of Africa.
Takaful, unlike conventional insurance, operates on mutual risk-sharing principles. Policyholders contribute to a pooled fund used to support members in times of need, ensuring full compliance with Islamic prohibitions on interest (riba) and gambling (maysir).
Analysts view this licensing drive as a landmark moment in deepening financial inclusion in Somalia, particularly in regions where Islamic financial practices dominate. However, challenges remain, including low consumer awareness, limited insurance literacy, and the need for robust dispute resolution mechanisms.
This initiative is expected to pave the way for Somalia’s first fully licensed Takaful operators by the end of 2025.
