Islamabad, Pakistan, 11 March 2002 - President Pervez Musharraf today inaugurated The First MicroFinanceBank Ltd. in the presence of His Highness the Aga Khan, Imam of the Ismaili Muslims and Chairman of the Aga Khan Fund for Economic Development.

The Bank, the country’s first private financial institution dedicated to addressing the problems of endemic poverty, starts out with a capital of Rs.500 million contributed by the Aga Khan Rural Support Programme and the Aga Khan Fund for Economic Development

“Poverty is a problem whose import is ignored at great peril,” warned the Aga Khan. “Perhaps, the greatest lesson of the tragedy of conflict that has recently engulfed this region is the need to attack its true roots. These lie not in religion or in corruption, but rather in deprivation, poverty, exclusion and lack of opportunity – and therefore hope.” “The First MicroFinanceBank will be one amongst several efforts the Aga Khan Fund for Economic Development will make to address those root causes. “We are also actively reviewing the possibilities of initiating microfinance programmes in Afghanistan where we have begun discussions with international development agencies for potential partnerships.” Explaining the rationale underlying the creation of the Bank, the Aga Khan said “we firmly believe that the disadvantaged amongst us must be able to build a sound and secure future with dignity and pride – and not merely to survive.”

President Musharraf, in his remarks, situated “poverty alleviation” as one of the four strategic concerns that his government had outlined at its inception, the other three being economic revival, good governance and political restructuring. He went on to summarise the impact of the government’s efforts to date enumerating a series of initiatives in this regard, including the Khushali Bank and the Microfinance Social Development Fund. Expressing his appreciation for the establishment of The First MicroFinanceBank, President Musharraf pledged all his support and that of the government “for the common cause of building efficient microfinance intermediaries to retail affordable financial services to the poorest of the poor.”

The First MicroFinance Bank Ltd. will build upon two vast sources of experience. The Aga Khan Rural Support Programme’s highly successful microcredit and savings initiative has been serving some of the country’s poorest populations since 1982. Insitutions of the Aga Khan Development Network have provided financial services for more than sixty years through a range of entities from small savings and microcredit organisations to major commercial banks and insurance companies listed on national stock exchanges in Asia and Africa.

According to the Aga Khan, the Bank“seeks to marry entrepreneurship with capital formation. Whilst it will give people scope to expand their economic base, and over time, enable diversification beyond traditional small enterprises, through the discipline that it will seek to impose, the Bank will also endeavour to introduce good practices, ethical precepts and the highest standards of rectitude in the conduct of business.” “ Extending the experience of AKRSP,” he said, “we are hoping to create of this Bank, an institution that is ever respectful of the needs of the least fortunate.”

Commending the Pakistan Government for its recent efforts in turning around the economy, for its own microcredit initiatives and the commitment to addressing poverty evidenced by the Pakistan Poverty Reduction Strategy, the Aga Khan pointed to the need for a national commitment to creating sustainable livelihoods through sound fiscal policies that lead to the creation of jobs and assets, and the provision of a social safety nets.” “Also needed,” he said, “will be investments in health, education – especially techno-vocational training – and infrastructure development.”

The Bank will reach out to disadvantaged populations throughout the country not currently able to receive financial services in rural and urban areas. Specific emphasis on vulnerable groups, women in particular, is a governing principle of the institution. To ensure its sustainability, the Bank aims to fully cover its inflation-adjusted costs with its revenues. It will lend to individuals and groups as well as to microfinance institutions and financial cooperatives for on-lending to underserved populations. Savings will be mobilised from individuals, groups and institutions. Branches are expected to be opened in Rawalpindi and Karachi by June of this year. The Bank plans to have established about thirty branches at the end of the fifth year of operations. Mobile banking services will be provided extensively from all branches to allow increasing the outreach.

The Aga Khan, who is in Pakistan on an official visit at the invitation of the Government, is accompanied by his wife, the Begum Aga Khan and by his brother, Prince Amyn Aga Khan.

Notes: AKFED is the economic development arm of the Aga Khan Development Network (AKDN), a group of private, non-denominational development agencies seeking to improve opportunities and living conditions in specific regions of the developing world, especially Africa and Asia. Active in the fields of industry, financial services, tourism development and infrastructure in fifteen countries across South and Central Asia and sub-Saharan Africa, AKFED operates as a network of affiliates with more than 90 separate project companies employing over 15,000 people.

The Aga Khan Development Network (AKDN) is an international group of private, non-denominational development agencies and institutions that seek to empower communities and individuals, often in disadvantaged circumstances, to improve living conditions and opportunities. The mandates of the Network’s agencies and institutions range from architecture and culture to health, education, rural development and the promotion of private sector enterprise. Working in over 20 countries, the Network’s underlying impulse is the ethic of compassion for the vulnerable in society and its agencies and institutions work for the common good of all citizens, regardless of origin, gender or religion.

In Pakistan, the AKDN’s activities encompass the operation of an extensive system of schools and healthcare institutions, a renowned rural support programme, industrial and tourism development, cultural restoration, financial institutions and one of the region’s pre-eminent centres of higher learning and research.

For further information, please contact: The Information Office Islamabad, Pakistan Tel.: 2871088 Fax: 2871087

The Information Department 60270 Gouvieux, France Tel:+33.3.44.58.40.00 Fax:+33.3.44.58.11.14 E-mail: [email protected] Website: www.akdn.org