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Mowlana Hazar Imam Featured on the Front Page of Forbes
His Highness the Aga Khan IV Forbes Global Cover Story - Business and Finance

                                                 May 31, 1999

The world wondered if young Prince Karim could fill the Aga Khan's shoes. Four decades
 later, the verdict is in.

 Venture Capitalist to the Third  World

 Cambridge, Massachusetts, 1957. Prince Karim, a 20-year-old Harvard undergraduate majoring
 in Islamic history, receives word that his grandfather, Sir Sultan Mahomed Shah, Aga
 Khan III, has died. Sir Sultan's will names young Prince Karim his successor as spiritual
 head of the world's Ismaili muslims. Millions of Ismailis (and gossip columnists) around the
 world are caught by surprise. Not passing the title to Prince Karim's fun-loving father, the
 dashing Aly Khan, once married to Hollywood's Rita Hayworth, is understandable. But could
 the shy young Prince Karim possibly lead millions of scattered Ismailis through Cold War
 dangers and into the new millennium?

 Today the doubts have been put to rest. As the Ismaili Shia Muslims' 49th imam, Prince
 Karim Aga Khan IV has not only helped his people. He has also changed the face of global
 philanthropy. Now 62, he was early among experts in Third World development to grasp
 that government handouts and multilaterally funded megaprojects often foster dependence,
 not self-reliance, in the people they're meant to help. To counter this danger, the Aga Khan
 has become a kind of venture capitalist to the Third World. Through his economic
 development institutions, he is increasingly taking equity positions in small-scale
 commercial enterprises. His goals: to reduce what he calls "aid dependence," and to spur
 sustainable economic development and individual self-reliance at the grassroots level
 in countries such as Tanzania, Pakistan and Tajikistan that otherwise don't have much
 hope of attracting high-profile foreign investors.

 "My sense is that people in developing countries want new ways to address the
 question of their economic and social well-being," the Aga Khan told FORBES GLOBAL
 in the course of a long interview at his secretariat in Gouvieux, outside Paris. "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 money for promoting social good."

 The international media, especially the British tabloids, have long slobbered over the Aga
 Khan's glittery lifestyle—his race horses and a yacht on the Costa Smeralda. The media
 hounds went to town on the Aga Khan's 1995 divorce from his British-born first wife, Princess
 Salma, and subsequent remarriage to Gabriele zu Leiningen, a 35-year-old German princess.

His Highness the Aga Khan IV His private life, however, is considerably less colorful than this tabloid image. Rejecting the
 one-ideology-fits-all strategies of collectivists and extreme laissez-faire types alike, the Aga
 Khan uses his resources to support and encourage communities and ventures across
 South and Central Asia and Africa—"in the context [he says] of their individual cultural,
 economic, and physical environments, to assume responsibility for actions which lead to
 long-term improvement in their health, their education, their incomes and their

 There are some 15 million Ismaili Shia Muslims scattered across 25 nations, with large
 communities in Bombay, Nairobi, Dar es Salaam and North America and Europe. Among Muslims,
 the Ismailis are known for their prominent doctors, lawyers, scientists, writers and other
 professionals. Deep in their faith is the notion that successful members of Ismaili communities
 should help provide for the needy members. For example, prosperous Ismaili communities
 are helping Ismaili refugees leaving Afghanistan start new lives abroad.

 Unlike other Shia Muslims, the Ismailis believe in the Islamic interpretation of a living spiritual
 leader—the Aga Khan—who traces his lineage directly back to the prophet Muhammad's
 cousin and son-in-law, Hazrat Ali. This assures that Islam adapts to the times. The Imam
 regularly sends his greetings and homilies to his congregation around the world. His photograph
 graces literally every Ismaili home, Jamatkhana (community center), school, hospital, factory.

 Consistent with their deep-seated notions of giving, the Ismaili communities regularly donate
 a portion of their wealth to their less fortunate brethren. Administered through a complex
 process centered around Ismaili Jamatkhanas, the contributions take many forms and flow
 through diverse channels. One way:In the Third World, community donations stay on the
 spot, helping to support local hospitals, schools and water purification projects. On top
 of this, every year many tens of millions of dollars are channeled to the Imamate for
 redistribution to worthwhile projects, with the wealthier Ismaili communities (and individuals
 within those communities) contributing disproportionately larger shares.

 In 1931 the Ismailis celebrated Sir Sultan's 50th anniversary as Aga Khan by sending him
 his weight in gold. Twenty-five years later they sent the portly fellow his weight in
 diamonds. But these and other contributions belong to the Ismaili community, not the
 Imamate: the gold and diamonds were quickly pumped back into Ismaili communities. Prince
 Karim has stopped such weighing practices, but the wealth continues to flow into the
 Imamate's coffers and back out to Ismailis in need.

 The Ismailis do not expect their Imam to live like a monk. They do, however, expect him to
 make wise investment decisions. Simply put, the institution of the Imamate rests upon the
 Ismailis' continuing confidence in their Imam's vision and wisdom. This fact was no doubt at
 the forefront of Sir Sultan Aga Khan III's mind when he passed over his playboy son Aly Khan
 and tapped the studious Prince Karim to lead the Ismailis.

 Through the Aga Khan Foundation (see sidebar) and the Trust for Culture, the
 Imamate will distribute $85 million in outright grants for social development and cultural
 projects. In addition, the Aga Khan Development Network will disburse around $150
 million in direct equity investments this year, mainly through the $1 billion (assets) Aga Khan
 Fund for Economic Development (AKFED).

 Filtisac, in Côte d'Ivoire, West Africa, is a good example of the impact the Aga Khan hopes his
 investment activities will have. AKFED set up Filtisac in 1965 to provide jute bags for key
 Ivorian exports such as cocoa and coffee. In the last ten years, annual production of such
 bags has risen from 3 million to 18 million. The company—which employs 2,000 and expects
 revenues of $60 million this year—has expanded across West Africa.

 In 1992 Filtisac set up a subsidiary in France to manufacture and distribute large
 polypropylene bags; the company now also produces high-quality jute yarn that's used in
 carpet-making. Ordinary Ivorians can buy Filtisac stock on the Abidjan Stock Exchange.
 Filtisac employees have also been given special stakeholdings in the company. Peoples'
 capitalism, at its best.

 Tourism is another Aga Khan Development Network success. In Kenya and Tanzania,
 AKFED's Tourism Promotion Services Ltd. (TPS) is publicly traded. Aga Khan-funded companies
 have built three lodges in Kenyan game parks and reserves, and on the Mombasa coast. In
 1997-98, the company added three new lodges and a luxury tented camp in Tanzania's fabled
 Serengeti game reserve and a big hotel on the island of Zanzibar. AKFED is also developing
 tourism in Pakistan.

 In banking and finance, long-held ventures such as Kenya's Jubilee Insurance Company
 have been successfully replicated in Uganda and Tanzania. The Diamond Trust, a banking
 company, now trades on the Nairobi Stock Exchange.

 In India, the Aga Khan Network started the Development Cooperative Bank. Three years
 ago, the DCB was the first cooperative bank in India to be converted to a private sector
 commercial bank, giving shareholder status to its 55,000 customers.

 You don't have to be an Ismaili Muslim to participate in the Aga Khan Network. Consider,
 for example, the Frigoken Company. The Aga Khan established it with $5 million in 1994 in
 Kenya—where there's been an Ismaili community for a century—to assist non-Ismaili
 local African farmers to grow and can beans and export them to European supermarket
 chains. Frigoken provided seeds and fertilizers, as well as expert help, that enabled the
 farmers to increase yields and also cultivate crops on a year-round basis. In five years, the
 number of farmers associated with the company has grown from 100 to 21,000. The
 $12 million (revenues) company's success has meant that the number of local schools has
 grown, as have the number of health clinics in what were once deprived rural areas.

 How do the Shia Ismailis feel about the Aga Khan spreading their money to other,
 sometimes competing ethnic or religious groups? Apparently they feel no qualms. And
 for good reason. Lifting competing groups' boats increases the Ismailis' own sense of
 security in places like Uganda and Kenya, where demagogues can easily turn the
 ignorant poor against the relatively well-educated and well-off Ismailis.

 Like a Silicon Valley venture capitalist, AKFED looks at its equity stakes in small-scale entrepreneurial projects as future sources of
 new money that can be reinvested in the businesses and, eventually, fund new
 projects. For example, dividends from successful ventures have helped the Aga Khan network
 expand its activities in the former Soviet republic of Tajikistan, where almost one million
 Ismailis are being exposed to Western ways for the first time. There the Aga Khan is focusing
 on promoting agriculture and agribusinesses. Not through the old collectivist communes and
 cooperatives but through making loans to farmers and agri-entrepreneurs. In the last
 three years, more than 600 loans ranging from the equivalent of $100 to $5,000—big money in
 the local context—have been made. As a result, in addition to farmers who take pride in
 owning their land rather than slaving for some faceless state bureaucracy, a new
 entrepreneurial class of shoemakers, pharmacists and shopkeepers is springing up to
 serve the needs of the newly prosperous community.

 As he channels resources to local entrepreneurial ventures, the Aga Khan is also
 reordering his own personal portfolio. (In his own right, he has a substantial personal
 fortune.) His much-publicized involvement with the 3,400-hectare Costa Smeralda resort in
 Sardinia is ending, although he retains a minor interest in property development there. His
 Sardinia hotels are now owned by U.S.-based Starwood. He has a big shareholding in
 Meridiana, the biggest private airline in Italy, but is likely to gradually divest his holding.

 One business the Aga Khan will expand is his media business in Kenya. In the early 1960s he
 founded The Nation, a daily and Sunday newspaper based in Nairobi and distributed
 throughout in Uganda, Kenya and Tanzania. Several satellite publications have since been
 added. A recent survey showed that The Nation enjoys 23 readers per copy—in excess
 of 4 million readers a day. (The daily print run is around 200,000, but street vendors rent the
 paper out for the equivalent of 7 U.S. cents for a few hours of reading time.)

 Do you want to invest in this growing Third World media franchise? You can: Since 1973,
 The Nation Group has traded on the Nairobi Stock Exchange. Stock market capitalization:
 $72 million as of May 7. There are now some 8,000 small shareholders in the company; the
 Aga Khan retains 45%. Gerard M. Wilkinson, an Irishman who serves as the Aga Khan's
 principal media adviser, says a move into broadcast media is imminent. "And broadcast is
 music and entertainment as well as news and education," says Wilkinson.

 At 62, Prince Karim is still a relatively young Imam. He's the leader of the Ismaili community
 until he dies. Most likely one of his two sons will succeed him. Prince Rahim, 28, is executive
 director of the Aga Khan Fund for Economic Development. Prince Hussein, 25, is involved in
 the Trust for Culture. Twenty-nine-year-old Princess Zahra looks after the network's health
 and education programs, with a particular emphasis on the concerns of women. The Aga
 Khan has also brought in some professional managers, such as Tom Kessinger, former
 president of Haverford College in the U.S.; he runs the Aga Khan's Trust for Culture.

 As Aga Khan for life, Prince Karim has the rare luxury of being able to take a truly long-term
 view in the ventures he backs:

 "When you inherit an office, which is a life office, you are simply a link in the chain. And
 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. Now some things are impossible to
 achieve. I well know that. And if that is the case, I simply have to try and move the issues
 forward as much as I can. The next Imam will then decide how he wishes to handle the
 issues. But, it is the continuum which is at the back of my mind. And that's why perhaps my
 time dimension appears different than it might for other people. If I have to wait 12, 15, 20
 years to achieve goals which I think are important, I will wait 12, 15, or 20 years.
 "What I can tell you," he adds, smiling at the Ismailis' growing roster of thriving commercial
 businesses, "is that I have a higher level of comfort today than I would have had four
 decades ago."

An entrepreneur in the poverty industry
Prince Aly Khan - Famous Legionnaire featured in Forbes. ALI KHAN, son of Aga Khan III, served in Syria from       1938-1939. Having the Son of God marching in the unit must have been a morale booster.
His Highness the Aga Khan - Birthday Tribute

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