When is a Cell Phone Like a Cow?
by Peggy Connolly

April 2008

Milking is nothing new for the people of Bangladesh. But now, villagers are milking technology rather than cows as part of a business strategy that has brought phone access to 100 million people in that country.

Based on micro-credit schemes that typically allow women to borrow small amounts of money to buy such things as milking cows to earn a living, the Grameenphone enterprise replaces the cow with a phone.

Founded in 1997, the company has grown to be the largest telecommunications company in Bangladesh with more than 17 million subscribers. It has created self employment opportunities for more than 250,000 and now provides telephone access to 100 million people in 60,000 villages. In 2006 the company's net profits were $250 million—after contributing $300 million to the government in taxes and fees.

Grameenphone founder Iqbal Quadir delivered the closing keynote speech at the 2008 International Corporate Citizenship Conference with a powerful address reinforcing the bottom of the pyramid approach to economic development. Quadir condemned conventional foreign aid models claiming they typically benefit centralized governments at the expense of the poor. Decentralizing economic and political power is the solution to alleviating poverty, he said, using the Grameenphone model to prove the point.

"The key point to focus on is not what people need, but how we can raise their income," he said. "Because then we can activate their brains." He closed with some thought-provoking advice: "Don't try to make money in the name of the poor people. Don't try to make money from the poor, make money with the poor. That's what I do. "

Iqbal Quadir gave up a career as an investment banker in New York to launch the venture in his native country of Bangladesh in partnership with the Norwegian telephone company Telenor and the Grameen Bank. His passion is finding new ways to create economic opportunities for poor people. No longer associated with Grameenphone, Quadir continues to develop economically sustainable ways for people to adopt technologies they can use to produce, distribute, and generate income.

"I think there is something to learn from the traditional aid model," Quadir told the audience of business executives. "We think governments need to provide economically viable services, but actually companies can do that, and government must subsidize companies to serve the poor? Actually, companies pay taxes to the government. Poor countries need aid? Business raises resources far more than aid. I would say Grameenphone has raised the GDP of Bangladesh through several measures, which is much bigger, several times bigger, than the total amount of aid Bangladesh receives."

This amazing social entrepreneur and philanthropist is also the founder and executive director of the Legatum Center for Development and Entrepreneurship at MIT. This center supports "bottom-up" enterprises to create social, political and economic change. He believes that technological empowerment strengthens democratic forces and makes economies more equitable and progressive. Iqbal is currently adapting this model to projects involving electricity, potable water, and marketing information.

Economic and political success, in the most basic form, according to Quadir, is best fostered by decentralization. "Economic development has to be of the people, by the people, for the people, which means decentralization," said Quadir. "… and if you give money to governments, they centralize, more statism is promoted, more corruption spreads and all the other bad things happen."

His vision that "connectivity equals productivity" was radical 15 years ago as he launched his venture. Quadir admits it wasn't easy to find successful models in his early days. "Telecommunications was always seen as a result of progress, not as a means," Quadir said. "Rich countries had more, poor countries had very little and so they didn't quite see that this is a means of getting there." Using the Grameen Bank as a model, Quadir worked with the bank's founder Mohammed Yunnus who won the Nobel Peace Prize in 2006.

'I suddenly realized that a cell phone can be a cow, too, because if somebody buys a phone and assuming there is a network, then this can be a business for her, but it becomes a phone for the whole community," said Quadir. "So I went back to the bank and I said, 'Look, I think the cell phone can be a cow.' They thought, 'This is a little crazy, but it's logical, somewhat logical.'"

View a video of Quadir's keynote presentation. (Members and conference participants only; login required)

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