The Aga Khan's micro way

Spiritual leader, billionaire racehorse owner and philanthropist Prince Karim Aga Khan IV is breaking new ground in the field of microfinance. In late February the 49th hereditary imam of 20 million Ismaili Muslims set up an innovative nonprofit organization dedicated to broadening the range of financial products available to the world's poor. "The poor in the developing world require access to just about every kind of financial product that individuals or small-enterprise owners require in the developed world," the 67-year-old Aga Khan says.

The new, Geneva-based Aga Khan Agency for Microfinance, which expects to have about $60 million in credit on its books by the end of the year, won't stop at traditional small-business loans. It will also deliver microinsurance, micromortgages, micro­education loans and micro­savings accounts to people in 20 developing countries in Africa, Asia and the Middle East. In Pakistan, for example, where the Aga Khan's 25-branch First MicroFinance Bank was founded two years ago, a fee of less than 5 percent of a loan's value is tacked on to repayments to help provide health insurance for farmers or owners of small businesses, protecting them from losing their livelihoods if they fall ill.

The new agency will be run by Jacques Toureille, 58, a former World Bank finance expert who was tapped to help the Aga Khan Development Network better run its microfinance business in 2001.

Although Toureille hopes to boost AKAM's funds by roughly $20 million a year, his main goal is to set an example and encourage for-profit banks to follow the Aga Khan's lead. As Toureille explains, "We will have the biggest impact if we can prove that the poor are bankable across a wide range of financial products."