It is my hope that through our micro-finance 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.

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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.

I would like to emphasis that micro-credit cannot be isolated from other elements of development. Education, improved health care services, and the other social service elements that bind a community together are also critical elements for human development. The creation of our new agency will strengthen the capacity to operate in a more strategic way and to help ensure the integration of all these elements and help create a virtuous circle of self-reliance…. [Video]

Trust in people. Trust in people. It’s an extraordinary phenomenon of development that the most powerful force is people changing their own environment. What they need in many cases is the wherewithal to change. But the will to change, very often the capacity to change well — because they live in that context — that’s an extraordinarily powerful force…. [Video]

Micro-credit 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. 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.

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. 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.

Loans to health and education can break down the barriers to access to those services for the poor [in large parts of Africa and Asia where government subsidies are limited].

… Summing up his aspirations for the new agency, the Aga Khan said:

It is my hope that through our micro-finance 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.

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