Daily Star
8 October, 2003

Pranay Gupte and
Jack Freeman
Special to The Daily Star
Lebanese news

Entrepreneur to the developing world

Aga Khan expands his investments in middle east .

One of world’s wealthiest men, leader of Ismaili Muslims focuses on local projects to enhance sustainable development

Prince Karim, Aga Khan IV, has been called one of the world’s wealthiest men and is a seasoned philanthropist, but he is doing more than giving his millions away in developing countries. The spiritual leader of 15 million Shiite Ismaili Muslims spread over 25 nations, the Aga Khan is changing the face of global philanthropy by establishing innovative ventures and providing microfinance for small-scale enterprises through economic development institutions.

Maintaining his special interest in Muslim countries, the Aga Khan has recently begun to expand his activities in the Middle East. A series of major historic conservation and urban redevelopment projects are under way in Cairo and new educational initiatives have been set up in the Gulf and in Lebanon. This past March, his Aga Khan Development Network began a micro-credit program in Syria, in conjunction with the Syrian Health Ministry and the governorates of Aleppo, Hama and Tartous. The objective, as in micro-credit schemes elsewhere, is to stimulate income-generating activities in poor areas and promote small-scale agricultural and industrial enterprises. In keeping with the Aga Khan’s intense interest in revitalizing Islam’s architectural heritage, the Network is involved in major restoration and conservation work in and around three historic citadels in Syria, enhancing significantly the potential for cultural tourism.

The idea is to spur economic development at the grassroots and lessen what the Aga Khan calls “aid dependence.” In the process, he’s making everyday people more affluent ­ or at least more self-reliant ­ in many developing countries. In this era of globalization when developing countries often seek overseas investment for mammoth industrial projects, the Aga Khan is encouraging the expansion of small-scale enterprises. “My sense is that at the present time there’s an increasing opportunity to achieve results,” the 66-year-old Aga Khan says.

“And my sense is also that people in developing countries want new ways to address the question of their economic and social well-being,” he adds. “What we’re saying through the Aga Khan Development Network is that the era of giveaways is gone. This is a time to enhance self-reliance, for grassroots groups to generate profits and use that money for promoting social good.” Prince Karim is astonishingly well acquainted with minute details of his enterprises. He cites the success of his Network’s banks and insurance companies in India and Pakistan; he points to hotel properties in Pakistan, mobile telephone and tourism projects in Afghanistan, and to power-generation and microfinance programs

in Tajikistan; he talks agribusiness and packaging in Kenya, and about plastic and jute bag manufacturing in Cote d’Ivoire. He speaks expansively about business opportunities in the less fortunate countries of the Middle East, including Egypt, Jordan, Morocco, Algeria, Lebanon and Yemen. Hundreds of thousands of jobs are being created in these and other countries, with a minimum of bureaucratic interference.

The Aga Khan is impatient with bureaucracies and the jargon they spew.

“Essentially our network has been people-driven, not dogma-driven,” he said during a wide-ranging interview at his home in Gouvieux, outside Paris. “The only thing that we are concerned with in the Network is improvement of the quality of life of people. And insofar as those goals are achieved, then I think that our initiatives would be considered positive. Now development is such a multi-faceted process that others will have other approaches to this. The new area we’re looking at now is culture as an area of development, for instance. That’s another issue that’s been in the cards for some years. But these are things which actually come from the field. They don’t come from bureaucrats sitting at headquarters and dreaming up projects.” You don’t have to be an Ismaili Muslim to participate in, or benefit from, the Aga Khan’s network. His approach to development is to encourage and enable the less fortunate, no matter who they are, to end their dependence on outside aid and take care of their own futures. While the Aga Khan Development Network does indeed disburse significant sums every year ­ $150 million in direct equity investments plus $85 million in outright grants in any given year ­ a high proportion of spending is directed to small but highly effective grassroots projects. Through the agencies of the network ­ financial institutions, insurance companies, schools, universities and tourist organizations, among others ­ the Aga Khan establishes working partnerships with local groups in Third World societies.

The Aga Khan’s network takes equity in enterprises in key sectors of national economies and helps fund projects of small-scale entrepreneurs so that they can they can generate money for themselves and the network.

The Aga Khan Fund for Economic Development (AKFED) pays dividends to the external shareholders of its project companies, reinvests its own gains in the countries where it operates and, indeed, is increasingly funding social development programs. The Frigoken Company is a good example of this approach. It was established in 1994 in Kenya ­ where there’s been an Ismaili community for a century ­ to assist non-Ismaili local African farmers to grow beans, can them and export them to European supermarket chains. The AKFED-funded company provided seeds, fertilizers and crop expertise that enabled the farmers not only to increase yields but also to cultivate crops on a year-round basis. In its first five years, the number of farmers associated with the company grew from 100 to 20,000. The company’s success has meant that the numbers of local schools and health clinics have grown in what had been deprived rural areas. Then there’s Filtisac in Cote d’Ivoire. The fund set up the company to provide jute bags for key Ivorian exports such as cocoa and coffee.

Within 10 years, annual production of such bags rose from 3 million to 18 million. The company has now expanded operations across West Africa and has branched out into production of high-quality jute yarn that’s used in carpet making.

In the former Soviet republic of Tajikistan, the Aga Khan is focusing on promoting agriculture and agribusinesses ­ not through the old collectivist communes and cooperatives but through giving loans, ranging from $100 to $5,000 apiece, to farmers and entrepreneurs. As a result, a new entrepreneurial class of shoemakers, pharmacists and shopkeepers is springing up, along with farmers who can take pride in owning their land and not slaving for some faceless state bureaucracy.

Tourism is another success story for the Aga Khan, particularly in Kenya and Tanzania. The Network’s Tourism Promotion Services Ltd. (TPS) is traded on the Nairobi Stock Exchange. Tourism has become a major generator of foreign exchange ­ and in some cases it’s actually overtaken such traditional foreign-exchange earners as tea and coffee. TPS operates 10 safari lodges in Kenyan and Tanzanian game parks and a luxury tented camp in the fabled Serengeti. The company also operates major hotels in Nairobi, on the Mombasa coast, on the island of Zanzibar and in Maputo, Mozambique. Like its East African properties, the Network’s six hotels in Pakistan operating under the Serena brand are opening up new markets. Wider prospects are being explored with the establishment of a luxury inn in Tajikistan and the renovation of a major hotel property in Kabul.

And then there’s banking and finance. Long-time ventures such as the Jubilee Insurance Company have been strengthened in Kenya, Uganda Tanzania and Mauritius. The Diamond Trust Bank trades on the Nairobi Stock Exchange. In India, the Aga Khan helped start the Development Credit Bank (DCB), which was originally a grassroots cooperative bank for the Ismaili community but has gone way beyond the roots of the community now. The First Microfinance Bank of Pakistan is a successful initiative being replicated in Afghanistan and Tajikistan.

The Aga Khan says that his emphasis on pushing rural development will be increased. The Middle East looms significantly in his plans.

“People often think that when you inherit an office that is a life office, you are simply a link in the chain,” he says. “And, yes, you therefore look at life somewhat differently than if you were, I suppose, a professional who moves around and is free to do what he wishes. In my case, my concern is that I would like the next Imam to have a structure and a system which enables him to be effective in the ethical and the human terminology of this institution. And that is the nature of what I seek.”