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His Highness the Aga Khan today announced the expansion of a new generation of financial products and services to help some of the world's most vulnerable populations. The Aga Khan Agency for Microfinance (AKAM), a new institution created specifically for this purpose, will deliver innovative services including micro-insurance, small housing loans, savings, education and health accounts, and support for small entrepreneurs seeking to develop businesses related to restored cultural assets. The Agency will be part of the Aga Khan Development Network. The Aga Khan was joined at a news conference announcing the launch of the Agency, by Jim Wolfensohn, President of the World Bank.
'Microcredit has helped millions of poor people in developing countries, but they remain at the mercy of a death or serious injury of a family member, the loss of a crop or livestock, or a natural disaster such as the recent tsunami,' said the Aga Khan, who is the 49th hereditary spiritual leader (Imam) of the Shia Ismaili Muslims and founder of the Aga Khan Development Network (AKDN). 'The assets of borrowers, accumulated through great effort over many years, can be destroyed overnight. Families are then forced to make the same difficult climb out of poverty a second or even a third time.

'By creating a wider range of better targeted products such as micro-insurance, the poor will have the ability to protect their assets. Other products such as savings accounts, education and housing loans will help them improve their quality of life,' explained the Aga Khan.

He said the new Agency will have greater collective capacity to understand the needs of the poor and to develop new products, to provide greater training for employees and customers and to expand into new markets.

'For example, we have found that restoration and improvement of cultural assets in a community can have as powerful an impact on development as a new road or bridge,' he said. 'But the poor living adjacent to these cultural assets need access to micro-finance, and to advice, to help them take full advantage of new opportunities that result, such things as greater neighbourhood tourist traffic.'

Mr. Wolfensohn said: 'Microfinance has a demonstrated, powerful impact in improving the livelihood of the poor, and a crucial role in reducing poverty. Access to financial services for the poor is a critical condition for the attainment of the Millennium Development Goals.'

Recognising the central role of women, Mr. Wolfensohn stressed the need to support microfinance for poor women entrepreneurs. 'We must do more to increase women's access to credit,' he said. 'A Bank study of successful micro-credit programmes for women in Bangladesh , for example, has shown that - with a loan as small as $100 to a poor woman to develop her own business - she helps to double family income and, indeed, can lift her family out of poverty after five years.'

The Aga Khan noted that small loans for education and for health services can help lower the barriers to access to these services for the poor in large parts of Africa and Asia where government subsidies are limited.

The programmes of the Aga Khan Agency for Microfinance, which currently operate in several countries including Afghanistan, Burkina Faso, Egypt, India, Kenya, Kyrgyz Republic, Mozambique, Pakistan, Syria and Tajikistan, are designed to 'graduate' the ultra-poor beyond subsistence while reducing their vulnerability to unforeseen events such as family crises or natural disasters. Next year the programmes will be expanded into India, Kazakhstan, Mali and Zanzibar .

The agencies of the Aga Khan Development Network have been involved in microfinance for over 60 years, starting initially with small-scale micro-credit schemes for the poor. The new Geneva-based non-profit agency, which brings together programmes formerly operated by the Aga Khan Foundation and other agencies, is already working with a number of partners, including: The World Bank Group, the European Commission, the U.S. Agency for International Development (USAID), the Canadian International Development Agency (CIDA), Kreditanstalt für Wiederaufbau (KfW) of Germany, the Norwegian and Netherlands Trust Funds, and the Japanese Social Development Fund.

The Agency's programmes operate in both rural and urban settings, and in a variety of cultures. They have helped returning Afghan refugees start and expand businesses. Residents of one of the poorest districts in old Cairo, Darb al-Ahmar, have used housing credits to improve their homes and small loans to expand production of local goods, such as lamps, furniture and floor tiles. In South Asia indentured workers have been helped in breaking the grip of multigenerational debts and liberating themselves from perpetual servitude to abusive money-lenders.

Credits have also enabled Tajik farmers to increase yields of critical foodstuffs and entrepreneurs to open vegetable processing plants, hardware stores, pharmacies and bakeries. In Syria modest financial aid has helped farmers to acquire machinery, livestock and fertilizer, and created cottage industries, handicrafts and tourism-related facilities.

Summing up his aspirations for the new agency, the Aga Khan said, 'it is my hope that through our microfinance programmes we will eventually create a virtuous circle of income generation in which the poor -- half of the world's population -- will break out of their economic and social exclusion and achieve a level of self-reliance that allows them, in turn, to help those less fortunate.'

The launch of the new Aga Khan Agency for Microfinance and its extension of microcredit to include these broader services coincides this year with the United Nations International Year of Microcredit.

Note to journalists: for interviews or additional information, please contact:
Sam Pickens, Information Officer
Aga Khan Development Network
1-3 Avenue de la Paix
1202 Geneva, Switzerland
Tel: +41 22 909 7277
Mobile: 078 661 8714
Fax: +41 22 909 7291
Website: www.akdn.org

The Information Department
Aiglemont
60270 Gouvieux, France
Tel: +33.3.44.58.40.00
Fax: +33.3.44.58.42.79
E-mail: information@aiglemont.org
Website: www.akdn.org

NOTES
The Aga Khan Development Network is a group of private development agencies working to empower communities and individuals, often in disadvantaged circumstances, to improve living conditions and opportunities, especially in Africa and Asia. The agencies' mandates range from the fields of health and education to architecture, culture, rural development and the promotion of private-sector enterprise. They collaborate in working towards a common goal - building institutions and programmes that can respond to the challenges of social, economic and cultural change on an ongoing basis. Active in over 30 countries in Europe, Asia, Africa and North America, the Network's underlying impulse is the ethic of compassion for the vulnerable in society. Its agencies and institutions work for the common good of all citizens, regardless of origin, gender or religion.

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