Nyala Insurance S.C. is the latest firm to announce plans to join Takaful, a Sharia-compliant form of insurance business. It has hired AlHuda Centre for Islamic Banking & Economics, a UAE-based insurance and banking consultant, to conduct a feasibility study to implement Takaful.

It is a risk-sharing insurance scheme whereby clients contribute to a pool of funds that are considered premiums in conventional insurance terms. The pool of funds is then used to cover payments in the event of any unfortunate circumstances in accordance with Islamic laws. Takafulhas been gaining popularity in Ethiopia, with Global Insurance pioneering in the industry last year. More insurance companies are jumping on the bandwagon, with firms such as Nile Insurance and Ethiopian Reinsurance (Ethio-Re) having inked similar deals with AlHuda.

In February this year, AlHuda CEO, Zubair Mughal, and Ethiopian Reinsurance CEO, Fikru Tsegaye, entered into a Memorandum of Understanding (MOU) in Addis Abeba, hoping to promote the Takafuland Re-Takafulindustry in the East African and Ethiopian insurance markets.

Several others, such as Hibret, Awash and Oromia insurance firms are also waiting on the wings.

The National Bank of Ethiopia (NBE), in charge of supervising insurance activities, issued a directive last year governing Takafulwindow services' business. The directive requires insurance companies to apply for permits from the central bank and submit their feasibility studies.

Nyala Insurance is the latest in the line of firms interested in capturing a market segment that wants risk-sharing insurance services, according to Yared Molla, CEO of Nyala Insurance.

"It's not to be fashion-forward," he told Fortune.

Nyala Insurance, the highest capitalised firm with 530 million Br in capital, plans to conclude the feasibility study by July and apply for approval to begin operation in the coming fiscal year, Yared disclosed.