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Bloomberg
May 6, 2003

News Feature
By Gavin Serkin

Aga Khan Seeks Profit in Afghan Tourism, Tajik Mountain Farms

Tashkent, Uzbekistan May 6 (Bloomberg) -- The Aga Khan, known for his portfolio of racehorses and investments in luxury Italian hotels, is looking to impoverished countries in Central Asia for profits.

The Aga Khan Fund for Economic Development, a for-profit arm of the philanthropic Aga Khan Development Network, is rebuilding a $25 million hotel in the Afghan capital of Kabul and providing loans to mountain farmers in Tajikistan. It also has a 30 percent stake in the Kyrgyz Investment Credit Bank, which provides the funding for most of Kyrgyzstan's infrastructure projects.

The holdings are a far cry from the Aga Khan's past personal investments in the luxury Ciga SpA hotel chain and the Italian island resort of Costa Smeralda. Central Asia, where one in every three people earn less than a $3 a day, has the potential to spur economic growth by building on its ``Silk Road'' heritage and taking advantage of its location between Europe and Asia, he said in an interview.

``It's essentially about developing entrepreneurial capability in the developing world,'' the Aga Khan said on the sidelines of a business forum in Tashkent, Uzbekistan.

Born in Switzerland, raised in Kenya and educated at Harvard, Prince Karim IV succeeded his grandfather as Imam in 1957 at the age of 20. The title bypassed his father, Aly Khan, who received press coverage as the third husband of actress Rita Hayworth.

Central Asia

Today, the Aga Kahn prefers to be known for his work encouraging economic development. Contributions come from the Aga Khan's personal fortune and donations from Ismailis, whose communities span about 25 countries in Western and Central Asia, Africa, the Middle East, North America and Western Europe.

The spiritual leader of the Shia Imami Ismaili Muslim community and revered as a direct descendent of the Prophet Muhammad, the Aga Khan has channeled millions of dollars into poor communities, mostly in regions of Africa and the Middle East where Ismailis live.

His attention is increasingly turning to Central Asia, where nations shedding a legacy of Soviet rule have yet to build the market economies of their ex-communist neighbors in Eastern Europe, eight of which will join the European Union next year.

Aside from philanthropic ventures, ranging from sponsoring a world concert tour by cellist Yo-Yo Ma and his Silk Road Ensemble to United Nations-backed programs to combat the drugs trade, the Aga Khan's for-profit arm seeks to create viable businesses in the region.

Trade Restrictions

Worldwide the fund invests in more than 90 companies with assets of more than $1 billion and 15,000 employees spanning 15 countries, according to the Aga Khan Development Network's Web site.

Encouraging entrepreneurship in Central Asia, which had been under communist rule for most of the last century, is just one challenge in creating successful ventures here, the Aga Khan said, after addressing 3,000 business leaders, government officials and journalists gathered for the European Bank for Reconstruction and Development's annual conference in the Uzbek capital of Tashkent.

Among the biggest hurdles are government restrictions on trading between the countries, he said.

``Central Asia is still well situated to play an important role between Europe, China and the Indian sub-continent,'' said the Imam. ``That role will be more important and have greater impact if the countries of the region can find ways to develop their economies and resources on a cooperative basis rather than as individual nations.''

The Aga Khan's younger brother, Prince Amyn, is overseeing reconstruction of the Soviet-era Hotel Kabul, which dominates a busy junction in the city center and overlooks Zanegar Park.

Reviving Tourism

The first phase -- refurbishing 110 of the 184 rooms -- is scheduled to be completed in October. A health spa, a shopping area and suites for banquets and conferences will follow.

The project's success rests on the revival of tourism in the war-torn capital, Prince Amyn has said.

The Aga Khan isn't the only investor staking money on a tourist boom. Chicago-based Hyatt Corp. is building a Hyatt Regency in Kabul.

``We're committed to developing further in the cities of this region,'' said Kurt Straub, general manager of the Hyatt Regency in Bishkek, Kygyzstan. ``The key to investing here is to have a lot of persistence, an ear to the ground and a sound financial background to survive tough times like now.''

Like the Aga Khan, he too said he worries that the Central Asian nations' failure to encourage cross-border trade and tourism is destroying the region's economic potential. Instead of reducing the barriers, governments are increasing them, he said, with Uzbekistan introducing new trade-related tariffs this year. ``It's sad to see the countries closing themselves off.''

The presidents of Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan and Georgia underlined the need to open trade relations at the conference in Tashkent.

That would be just the start of the process of regional cooperation that the Aga Khan is seeking. The countries also need to build institutions together. And the Aga Khan is paving the way.

The Imam's latest philanthropic project in the region is creating a University of Central Asia, with a campuses planned in mountain regions of Kazakhstan, Tajikistan and Kyrgyzstan. The university will encourage its students to think on a regional basis, the Aga Khan has said.

``Why restrict cooperation to the commercial domain only?'' he asked delegates.

Last Updated: May 5, 2003 19:01 EDT

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