“Strengthening the Hands of Citizens”: Iqbal Quadir talks about the GrameenPhone Story
Mr. Iqbal Quadir, founder of GrameenPhone of Bangladesh is a well-known figure in the world of development. At a time when it was rare for private companies to invest in the rural markets of developing countries, Mr. Quadir did what few had done – he founded a company in 1997 that would invest and operate throughout Bangladesh, including its rural areas.
Speaking to Fletcher students and faculty on January 31 as part of the International Business Program Global Speaker Series, Mr. Quadir talked about his perspectives on development and the story of GrameenPhone.
Since its inception, GrameenPhone has grown into a multi-million dollar profitable venture. At the same time, the company remains a rare success story in bringing about significant development to rural Bangladesh and in empowering local women.
Mr. Quadir believes in a bottom-up approach to development instead of one that is guided from the top through government actions. A bottom-up approach entails empowering citizens by giving them more choices and the power to exert their choices. This is what will ultimately bring about development, he believes.
“Dispersion of power is progress and concentration of power is regress”, he asserts.
Mr. Quadir believes that the most effective tool for empowering people is technology. GrameenPhone was born out of this belief. “Technology can be incorporated into people’s lives in such a way that is economically sustainable”, he says. One of the greatest gifts of technology is connectivity-- the ability for people to connect with each other at a moment’s notice, and this is what formed the basis for the creation of GrameenPhone, Mr. Quadir adds.
Mr. Quadir was an investment banker in New York when the idea of GrameenPhone took hold of him. In 1993, he quit his job to return to his native Bangladesh. He had an idea that connectivity is productivity and firmly believed that increasing connectivity in Bangladesh would be a step towards development. Upon further research, he found empirical studies showing that the poorer a nation is, the higher will be the impact of additional phones on its gross national product (GNP). For very poor nations such as Bangladesh, increasing connectivity by even smaller numbers would have significant impact on their GNPs.
In 1993 Bangladesh had one of the worst records of telecommunications On average, there was one phone for every 500 people in the country, while in the rural areas, which was home to 100 million people, there were practically no telecommunications facilities. What Bangladesh had, however, was a wide network of branches of the micro-credit pioneer, Grameen Bank, which was serving millions of rural borrowers with excellent repayment records. Mr. Quadir decided to partner with Grameen Bank with the purpose of using its human-infrastructure to bring about a new telecommunications network within the country.
Mr. Quadir found that rural women were typically the clients of Grameen Bank. Women would use small loans to buy one cow and then sell the milk of this cow to the rest of the villagers. With the small profits they would make, they were able to repay their loans on time and continue their small businesses. Mr. Quadir decided that the cell phone was to replace the cow in this business model. He proposed to Grameen Bank that women be given loans to buy cell phones and village members could then use these phones at a small charge. This would increase the household income of women while broadening the telecommunication network of Bangladesh.
However, even though Grameen Bank was enthusiastic, Mr. Quadir still needed the support of a telecommunication company that would provide the technical know-how. Mr. Quadir spent over two years trying to convince large international telecommunication companies to invest in his idea, and was finally able to convince Telenor, a Norwegian company to enter the Bangladesh telecommunication market. Telenor and Grameen Bank came together in late 1995 and obtained a cellular license from the government of Bangladesh at the end of 1996. In 1997 GrameenPhone began its operations in Bangladesh.
Today GrameenPhone operates all over Bangladesh, including in the urban areas, and is a hugely successful business holding 60% of the market share of the country’s telecommunication business. In addition to Telenor and Grameen Bank, Asian Development Bank (ADB) and International Finance Corporation (IFC) have also invested in the company.
In 2005, about 200,000 local women were selling telephone services to villages and producing over $160 million in revenue for the company. According to recent data, women operating phones through GrameenPhone have a daily income of at least $2 a day from this business. In addition to helping women achieve economic self-sufficiency, the GrameenPhone network, which spans virtually the entire area of Bangladesh has brought Bangladeshi citizens closer to each other. Telephones, which were a rarity 15 years ago are now everywhere in urban areas, and very common in rural areas as well.
Mr. Quadir’s idea of development is shared by many in the field today, and some other countries are beginning to adopt the business model of GrameenPhone. It is widely regarded as a success in achieving the dual objectives of profits on investment while bringing about economic development and prosperity to a developing country.