Global Insurance is on its way to becoming the first company to launch Takaful, an insurance product that is as required by Shariah law.

Global started the process of obtaining a license from the National Bank of Ethiopia (NBE) to launch the service by filing a request this month, which is pending approval. The company plans to start the service in a window-based Wakala model. It has a plan to provide the service mainly in the major cities, including Addis Abeba, Dire Dawa, Harar and possibly Jimma.

The firm started the process of getting the license following a proclamation that was legislated this January to allow the service for the first time. Takaful depends on members of a community who contribute a certain sum of money into a pool to support each other during times of hardship including loss or damage. Takaful covers health, life and general insurance.

Before starting the process to introduce the service to the local market, Global has conducted rigorous research with the AlHuda Centre of Islamic Banking & Economics, said Asseged Gebremedhin, deputy CEO of Global.

Established in 2005 and headquartered in the United Arab Emirates with two regional offices in Pakistan and South Africa, AlHuda also supported Global by conducting a feasibility study.

The feasibility study examined the possibility of providing the service in Ethiopia, identified potential market areas, and suggested strategies to penetrate the insurance market, according to Asseged.

Global and Alhuda have been working on the project for the past year, according to Ahmed A. Sherief, chairperson of the board of directors of Global, which had 109 million Br of gross written premium in the last fiscal year. Its paid-up capital also reached 136 million Br.

Asseged explains that there is a need for the service.

"A lot of effort has been exerted to start the service," he said.

The service was allowed after Prime Minister Abiy Ahmed (PhD) came to power. The Prime Minister also gave consent to the financial institutions to launch full-fledged, interest-free banking services.