Regional Disparities in Takaful Insurance Adoption in Nigeria: Evidence from Northern and Southern Regions

The study examines Takaful insurance penetration with a comparative analysis of the rate of adoption in Northern vs Southern Nigeria. The quantitative approach used a cross-sectional design, in which data were collected from 600 respondents (300 in the North and 300 in the South) between 2020 and 2024. Descriptive statistics, independent-samples t-tests, and Ordinary Least Squares (OLS) regression were employed to analyze the data. The findings indicated a moderate overall Takaful adoption rate of 42%, with a large regional difference: Northern Nigeria had a higher mean adoption rate (0.56) than Southern Nigeria (0.28). This difference was statistically significant, as verified by the independent-samples t-test (t = 7.21, p < 0.01), indicating that regional location is an important factor in adoption behaviour. Additional regression analysis indicated that the Northern region has an approximately 27.3 percentage-point increase in the likelihood of Takaful adoption (0.273, p < 0.01), even after controlling for income, awareness, education, and religious compatibility. Awareness (0.118, p < 0.01) and religious compatibility (0.164, p < 0.01) were identified as the strongest predictors of the control variables, with income and education also showing positive and significant relationships. The model had good explanatory power (R2 = 0.52), indicating that more than half of the variation in adoption is explained by the variables included. The results indicate that religious alignment is a potent motivator for adoption in the North, but economic and informational factors restrict dissemination, especially in the South. The study concludes that in Nigeria, Takaful insurance has great potential to promote financial inclusion, though there is a need for region-specific policy interventions, stronger awareness campaigns, and effective regulatory support to achieve wider market penetration.