Cows To Cellphones, The Grameen Way

Circa 1994. Sixty-eight thousand villages. No telephones. The existing telecom service provider (state-owned, of course) is not interested in providing telephones in the villages.

Cut to 1998. One private company intends wiring up the villages to the national telecom network within five years.

Welcome to Bangladesh and GrameenPhone (GP). A sister organisation of the famous Grameen Bank, GP is improving the lifestyles of villagers in one of the worlds poorest countries.

In case visions of archaic, dusty fixed-line telephones spring to mind, sample this: GP is Bangladeshs largest cellular services provider with 22,000 subscribers. Says Iqbal Z Quadir, director, external finance: Right now, we have 50 villages connected to the GrameenPhone cellular network. This, we think, will grow to 5,000 by the end of next year.

GP is 51% owned by Telenor of Norway, with Grameen Telecom (an affiliate foundation of sorts of the Grameen Bank) holding 35%, Japans Marubeni 9.5% and Gonofone of the US 4.5%.

The four promoters have pumped in $40 million equity and brought in debt worth $10 million. Another $10 million from banks and lenders completes the $60 million invested in the project. The project cost is expected, however, to climb to $100 million by this year-end, by when it is expected to break even.

Heres how the project works. Grameen Bank (which sanctions $33 million loans daily) purchases cellphones in bulk and offloads them to rural folk. Ninety-four per cent of these buyers are women. A credit package is put together in each village by the local bank representative, enabling women to pick up the phones at less than $300 each. GPs tariffs, which are not regulated by the government, are set at four taka a minute for local calls among the lowest in the world. The long distance tariffs are yet to be notified by GP but are expected to be much less than the 29 taka per minute now charged for a 300 km call.

The beauty of the GP model: women make a profit of about $2 a working day. Or, more than $520 a year double Bangladeshs per capita income. The Grameen Bank had been financing the purchase of cows by the women. In the GP experiment, we have replaced the cow with a cellular phone, quips Quadir.