There’s an interesting story about Bangladesh’s Grameen Bank in Financial Express. The story is inspired from a book called “You Can Hear Me Now” by Nicholas Sullivan, in which he writes how microloans and cell phones are connecting the world’s poor to the global economy.

I’ll share the story of Grameen phone from Financial Express first. You can read a presentation (pdf) about Grameen by its founder here. For more about Iqbal Quadir’s current work at MIT Entrepreneurship Center follow this link.

The idea of GrameenPhone was conceived by 36-year-old Manhattan-based venture capitalist Iqbal Quadir in 1993. It was triggered when his computer network crashed, leaving him unproductive. Concluding that connectivity is productivity, the Wharton business graduate returned soon after to Bangladesh to launch a phone service.

At that moment the country had one of the lowest teledensities in the world with one phone for every 500 people. What followed were years of struggle, frustration and failures. Anything that could go wrong went wrong. The government, funding agencies and investors were not easy to convince. He himself worked out of his home and car without any salary for years. The Grameen Bank, too, took its own time to get on board. Why cannot a cellular phone be like a cow? A business plan built on this argument managed to convince Yunus finally.

Then there was no looking back.The next crucial step was negotiating a partnership between nonprofit Grameen Bank and Norway-based for-profit Telenor and the service was up and running in 1997. Today GrameenPhone has 10 million subscribers, connects 100 million people through 2,50,000 phone ladies, who buy phones on microloans from the Grameen Bank and lease air time to villagers to make a living after paying off their loans. Today a phone lady earns on an average $750 a year, which is double the average annual income of a Bangladeshi. GrameenPhone has revenues of $1 billion and annual profits of $200 million. In 1999, Quadir left GrameenPhone and Bangladesh for the US to teach what he had succeeded in doing at the grassroots back home. He has also come up with the concept of invisible leg to explain how technological innovations influence economies.

GrameenPhone’s success in bridging digital divide and generating profits is not an exception, though. It has been demonstrated earlier also that connectivity increases GDP in poor countries and eradicates poverty. While econometric research by the London School of Business has shown that 10 phones per 100 people add 0.6% to the GDP of a country, the United Nations estimates that 0.6% growth cuts poverty by 1.2%.

More about the author and the book: 

Author Nicholas P Sullivan embellishes the unusual Bangladeshi success story with such facts and figures in You Can Hear Me Now, which pans out not only vertically, but also horizontally to capture the big story with its smaller sub-plots.The GrameenPhone story is located on the larger global telecom map dotted by other profitable digital divide bridging initiatives like Celtel in Africa, MTN and Vodacon in South Africa, Orascom in the Middle East and South Asia, and Smart Communications and Globe Telecom in the Philippines. Last year’s Nobel Peace Prize winner Muhammad Yunus, India’s telecom ambassador Sam Pitroda, Celtel chairman Mohamed Ibrahim Mo and social venture capitalist Joshua Mailman also keep on walking in and out of the story, offering their insight on the initiative.

Concluding that an external combustion engine can catalyse bottom-up development to fuel economic growth, the author elaborates, “The engine comprises three forces: information technology, imported by native entrepreneurs trained in the west, (and) backed by foreign investors.” Emphasising that information technology and private investment are better than ineffective foreign aid to corrupt regimes, the author makes a case for out-of-the box thinking by the private sector to tap business opportunities in developing countries, provided by four billion people living on less than $2 at the bottom of the pyramid.

Advertisements