Aga Khan Fund for Economic Development

The Aga Khan Fund for Economic Development (AKFED) [http://www.akdn.org/agency/akfed.html (AKFED)] is the sole for-profit agency of the Aga Khan Development Network (AKDN) [http://www.akdn.org (AKDN)] and works in partnership with international organizations and governments to stimulate the private sectors of developing economies, with the aim of generating capital for investment into long-lasting and sustainable development initiatives. The agency’s operations include, but are not limited to, industry and tourism. Critical to the development process are goods and services including financial institutions, and infrastructure, such as power generation and communications, which together comprise some of AKFED’s initiatives.

Introduction

The Aga Khan Fund for Economic Development (AKFED) is one of eight agencies operating under the direction of the umbrella organization, Aga Khan Development Network (AKDN), founded and Chaired by His Highness the Aga Khan. Of these eight, AKFED is the sole for-profit agency, the purpose of which is to build high-performing institutions and to sustain long-lasting development projects in developing regions. [ [http://www.aku.edu/creport/chap5-6.htm Aga Khan University. "Aga Khan Fund for Economic Development (AKFED)." The Future of the Aga Khan University: Evolution of a Vision.(14 October 2007).] ] The agency works to build infrastructures that support economic development. Its major investments include the Financial Services, Industrial Promotion Services (IPS) [http://www.akdn.org/agency/akfed_indpromo.html (IPS)] , and Tourism Promotion Services (TPS) [http://www.akdn.org/agency/akfed_tourpromo.html (TPS)] , . These initiatives span improvements in banking, electricity, agriculture, hotels, aviation, and communications linkages. [ [http://www.akdn.org/agency/akfed.html#intro Aga Khan Development Network. "Overview." AKFED: Improving Infrastructure in the Developing World.(14 October 2007).] ]

In conjunction with the governments of certain developing countries, AKFED operates to promote the private sector. [ [http://www.diamondtrust-bank.com/open/about_us.htm. Diamond Trust Bank [http://www.diamondtrust-bank.com (DTB)] . About Us.(15 October 2007).] ] Through the support of industries, the agency aims to bolster the participation of developing regions in market economies. In addition, essential to sustaining development initiatives is a stable human resource bank from which to draw support. To this end, AKFED provides training in administrative, managerial and marketing skills with the aim of fostering locally owned enterprises. Where capital is unavailable, the agency provides the initial investment for companies through the use of microloans. [ [http://simplelink.library.utoronto.ca/url.cfm/32019 "Power: Burkina Faso." Africa Research Bulletin: Economic, Financial and Technical Series 44, no. 7 (2007): 17502B-3B.(22 October 2007).] ] As a for profit organisation AKFED however conducts its businesses as a standard employer with ups and downs associated with financial results.

Financial Services

Operating in East Africa, Central Asia and South Asia, AKFED supports the creation of financial institutions including banks and insurance groups within these regions. The agency is a major supporter of corporate activity and is a prime lender for local business both in Bangladesh and the Kyrgyz Republic where it founded the Kyrgyz Investment and Credit Bank (KICB). [ [http://simplelink.library.utoronto.ca.myaccess.library.utoronto.ca/url.cfm/32023 Saralaeva, Leila. "Building Self-reliance in Kyrgystan." Choices 11, no. 3 (2002): 9-11.(22 October 2007).] ] One of the agency’s earliest holdings was the Diamond Trust Bank of Kenya, founded in 1930, the aim of which was to use locally generated funds to create loans for small business and the construction of homes. [ [http://simplelink.library.utoronto.ca.myaccess.library.utoronto.ca/url.cfm/32027 "Uganda: Diamond Trust becomes commercial bank." African Business, December 1995, 35.(22 October 2007).] ] Soon after, Jubilee Insurance Group joined the agency’s banks in East Africa. In India, the agency became an important shareholder for the Development Credit Bank Ltd. In 2004, AKFED acquired holdings in Pakistan’s largest private-sector financial institution, Habib Bank Limited (HBL). [ [http://www.habibbankuk.com/HabibUK/ Habib Bank Ltd. "Welcome." Habib Bank UK (15 October 2007).] ] By stimulating the corporate sector in the regions where it operates, the agency generates capital for the purpose of reinvestment into services essential for development.

Industry

AKFED operates in conjunction with private donors, international economic organizations and individual governments to address constraints and hindrances to development. Working primarily in Africa and Asia, the agency encourages the growth of industry and infrastructure in order for developing regions to generate the capital necessary for investment into AKFED’s many projects and more generally, for a country’s growth.

Since the 1960’s, the agency has supported a group of enterprises under the Industrial Promotion Services (IPS), each of which was conceptualized to spur investment and increase activity in the corporate sectors of developing countries. However with the international climate largely favouring countries with export-oriented economies in place of popular import substitution industrialization (ISI), IPS adjusted its approach. [ [http://go.worldbank.org/VK29BTTX20 Lederman, Daniel. "Export promotion agencies : what works and what doesn't." Research and Data. The World Bank.(15 October 2007).] ] The changes would include an emphasis upon privatization and the agency embarked on its goal with a new approach in the 1980’s. Private enterprises and entrepreneurs became generators for capital investment into agribusiness and infrastructure, both crucial to the development process. [ [http://simplelink.library.utoronto.ca.myaccess.library.utoronto.ca/url.cfm/32037 Bonaccolta, John. "After the Fall." Far Eastern Economic Review 167, no. 31 (2004): 60-61.(22 October 2007).] ]

Food and Agriculture

In the domain of food and agriculture, IPS facilitates agricultural extension to farmers, in order to make possible their participation in global markets. Using a participatory programme of education and technical skills training for farmers, IPS supports the rural economies of developing countries by facilitating exports to developed regions. For the initial costs of such production until harvest revenues are generated, microloans are provided to farmers by non-profit agencies of the AKDN. In addition to microfinance and education, the agency works to improve the health and sanitation conditions of its beneficiaries, and considers employee welfare to be of paramount concern, providing equitable opportunity between genders and making child-care provisions for its employees. [ [http://www.swissinvestforum.ch/downloads/S1_agroprocessing/2-Godde%20AKFED%20SIF.pdf Swiss Invest Forum. "Aga Khan Fund for Economic Development." Swiss Invest Forum.(22 October 2007).] ]

Infrastructure

Within the IPS, AKFED operates in conjunction with international economic organizations, private donors and individual governments to resolve issues of electricity and water supply, as well as communications infrastructure.

Private enterprises in the form of power plants have been a major project of the agency, through which it invested in the largest plant within sub-Saharan Africa, Azito Energy. The project’s counterpart in Kenya, is Mombasa’s Tsavo Power plant. In neighbouring Uganda, the agency is working to establish the critical Bujagali Hydro Power Project. Currently, the agency is working to establish the Pamir power plant in Tajikistan, the aim of which is to reinvigorate the country’s economy and resolve electricity inadequacies. [ [http://go.worldbank.org/8JIDEMVT60 The World Bank. "Tajikistan Pamir Private Power Project." Bringing Power to the Poor in the Pamirs.(16 October 2007).] ]

AKFED’s first telecommunications initiative is known as Indigo, a GSM mobile phone project based in Tajikistan. [ [http://www.akdn.org/agency/akfed_indpromo.html Aga Khan Development Network. "Industrial Promotion Services." AKFED: Improving Infrastructure in the Developing World.(14 October 2007).] ] An important aspect of the reconstruction and development process, the agency embarked on its second mobile phone initiative in Afghanistan. Today the country’s company, Roshan has expanded to create over 500 jobs for the country. [ [http://www.akdn.org/agency/akfed_indpromo.html Ibid.] ]

Tourism Development

The Tourism Promotion Services, known as TPS, aims at creating sustainable tourist attractions in underdeveloped communities. Paying attention to cultural values as well as environmental issues, TPS creates a wide variety of tourist facilities that generate sustainable community capital, stimulate local economic growth and promote positive investment opportunities. [ [http://proquest.umi.com.myaccess.library.utoronto.ca/pqdweb?did=11804975&sid=1&Fmt=4&clientId=12520&RQT=309&VName=PQD "A Touch of Spice." African Business, May 1997, 24-25.(22 October 2007).] ]

Under the brand name Serena, TPS constructs and maintains a multitude of resorts, hotels and other tourist attractions that serve to stimulate local economic growth through increased employment, development of a skilled workforce, increased productivity of local businesses (particularly in the design and craft spheres) and the general development of given areas. In all of these aspects, emphasis is placed on the active employment and input of the local community.

In regions that are neglected by commercial tourism corporations, TPS aims to develop facilities that meet the international standards for hospitality, accommodation and service. [ [http://wbln0018.worldbank.org/IFCExt/spiwebsite1.nsf/38483564a2649e7385256d2300255137/244f0ed81c1a80c485256d1e005ab2de?OpenDocument The World Bank. "Kabul Serena Hotel- Environmental Review Summary." International Finance Corporation Projects.(16 October 2007).] ] Attention to such factors further promotes economic growth as well as the potential for local business development within less-frequented regions.

While seeking to stimulate economic growth and generate sustainable capital, TSP aims at protecting and maintaining the local environment. [ [http://wbln0018.worldbank.org/IFCExt/spiwebsite1.nsf/38483564a2649e7385256d2300255137/244f0ed81c1a80c485256d1e005ab2de?OpenDocument Ibid.] ]

Media Services

Aga Khan founded the Kenya’s major media service, the Nation Media Group in 1960. [ [http://www.nationaudio.com/kenyapolitics/info/nationmedia.html Nation Media Group. "Historical Perspective." About.(16 October 2007).] ] In the year’s leading up to Kenya’s independence, Nation Media’s predecessors, Taifa and Nation newspapers, served as vehicles of independent opinion. Today, the group operates nation-wide newspapers in English and Kiswahili languages, as well as radio and television stations. At present, the group has expanded to serve Uganda and Tanzania also. [ [http://www.cnn.com/2007/WORLD/africa/08/16/aga.khan/index. Smith, Sylvia. "Aga Khan visits Africa to see results of initiatives." CNN International, 2007.(16 October 2007).] ]

Aviation Services

The Aviation division of the foundation is dedicated to providing support to the existing aviation infrastructure, which serves to support various projects of economic development. [ [http://www.akdn.org/agency/akfed_aviation.html Aga Khan Development Network. "Aviation Services." AKFED: Improving Infrastructure in the Developing World.(14 October 2007).] ] By providing worker training, investment knowledge and general management guidance, the division seeks to strengthen existing airline companies and provide them with efficient equipment and resources. [ [http://www.proquest.com.myaccess.library.utoronto.ca/ Far Eastern Economic Review, "Poised for Take-Off." November 14 1991, 64.(October 16 2007).] ]

In areas such as Mali and Uganda, the division supports previously existing airlines by increasing fleet size and reviving currently non-functional companies in order to provide much-needed air support for the development projects within the region. In addition, the multiple airline companies of AKFED are connected through a network known as “Group Celestair”, which serves to collectively increase the efficiency and scope of support for the various airlines throughout the region. [ [http://www.proquest.com.myaccess.library.utoronto.ca/ Ibid.] ]

Presently, AFKED is currently considering possible airport management opportunities at a multitude of locations.

References