Entrepreneur Iqbal Quadir’s restless mind makes
connections that add up to innovation. A broken computer network
brought back memories of a wasted day in his youth and put him on
a path to creating a company to help the poorest of the poor in
his native Bangladesh. Equating a cell phone with a cow secured
the support he needed to make his dream a reality.
Now a Fellow at the Center for Business and Government
and lecturer at the Kennedy School, Quadir hopes to bring the lessons
he learned in the villages into the Kennedy School classroom and
show his students how the poor can be a country’s greatest resource
and a company’s ideal customer.
The vision for GrameenPhone, the largest telephone
company on the Indian Subcontinent in terms of subscribers, was
born one New York afternoon in early 1993, when investment banker
Iqbal Quadir found himself stalled when his company’s computer network
“I started thinking about when I was younger,” Quadir
said “We had moved out of the city to a remote village to escape
the 1971 war in my country. One day my mother sent me from our village
to another for medicine. It took all morning to walk the 12 kilometers,
only to find that the medicine man wasn’t there. I spent all afternoon
walking back. I never forgot that unproductive day.
“Now sitting idle, I realized that connectivity
is productivity. Bangladesh has 68,000 villages and 100 million
rural people without telephones. So, how many million people were
wasting how many days being unproductive because there was no connectivity?”
Quadir put all his investment banking skills into
trying to convince investors that bringing mobile phone service
to the poorest of the poor was a sound investment. To help connect
him to his customers, he approached Grameen Bank of Bangladesh,
initially, as a possible client. One of the largest microfinance
banks, Grameen Bank was a decentralized institution whose 1,200
branches gave small $100-$200 loans to over 2 million customers.
At first, the bank showed little interest in becoming involved in
a telecommunications venture, because its success lie in the face-in-face
relationships its loan officers develop with borrows, not on existing
on potential electronic outreach.
“I couldn’t get them to look at the idea until
I focused on what they really do: They promote self employment,”
Quadir said. “A woman borrows $100 to buy a cow. The cow gives milk
and now you have a business. She sells the milk in the village,
stands on her own two feet and pays back the loan,” he explained.
“So I went to them and said ‘a cell phone can be
a cow – it can be a business! Someone can operate the phone and
the village can have the service and she can pay off the phone and
make a living.’ They said, that’s interesting but you must prove
it can be done by doing it,” he said. “That was the inspiration.
The rest was perspiration.”
Plenty of perspiration went into convincing Telenor,
the Norwegian Telephone Company, to finance the project now that
Quadir had access to Grameen Bank’s customer base. But the partnership
that resulted, Quadir said, is an example of what can be done if
the vision of an entrepreneur can be linked to the resources of
a large, established company.
“In my view, you need both the entrepreneur and
the multinational companies to join together. Somebody has to nurture
the idea and make it palatable like I did, but to make it happen,
sufficient resources are necessary,” he said.
The result was a service that marries the need for
profit with the desire to advance public values.
“It’s completely commercial,” Quadir said. “There’s
no charity involved. But at the same time, income is rising in the
connected villages. It’s time we look at poor people as an important
resource, not a liability.”
Grameen phone gives the village entrepreneurs, who
are mostly women, a 50 percent discount on the $200 average monthly
usage by each phone. The women charge their village customers the
full rate and pocket the difference, which, according to Quadir,
averages about $2 a day after costs. The program works mostly with
women who have proven themselves to be good borrows with the bank
and have loan repayment rates as high as 97 percent.
“For a country where the per capita income is about
$1 a day, that’s good money,” he said. “And she can still raise
“Ownership is key,” Quadir said. “We’re using a
fundamental capitalist rule of ownership: You protect what you own.
This isn’t the same as putting up a payphone somewhere.”
GrameenPhone now has about 400,000 subscribers and
7,000 villages have adopted the program. Since each village has
about 1,500 people, Quadir's idea has given “connectivity” to about
10 million people. Villagers are using the phones to get the best
price for their crops, find work in neighboring villages and keep
in touch with their families who have moved away. Quadir’s idea
is being copied in Indonesia and India and Haiti is looking at possible
applications in that country as well.
“It’s an incredible juxtaposition to see an ultramodern
phone in an ultra-nonmodern village. It’s opposites in the extreme,”
he said. “At the end of the day, what we can claim is that we have
taken the digital revolution to the poorest people in the world.”
Now Quadir takes his revolutionary ideas into the
classroom and incorporates them into his lectures for his fall class
“Technology and Economic Development.” He will also teach a course
in the spring term. Tracing the history of technology’s effect on
economic development, Quadir adds some of the firsthand knowledge
he gained as an entrepreneur, an innovator and a newly-minted expert
in the workings of third world bureaucracy.
“I went to Bangladesh to do this project but I came
back with an understanding of what holds a country back,” he said.
“Now, I’m trying, as someone who has fought in the trenches to bring
my experience to light and be a soldier in the battle to create
better understanding. These are some of the ideas I’m trying to
bring to my class.
“What I’m trying to show is the real problem developing
countries have is poor governance. The government itself is still
trying to develop, just like the country,” he said. “We give aid
to governments, reducing their need to listen to the people. Typically,
poor people are marginalized, unable to ask for anything and the
only time you hear them is if they riot in the streets. The way
we distribute aide increases the power of central governments in
underdeveloped countries,” he said.
“When there’s a flood in Bangladesh, we try to
drop food on the villages from the air, but the muscleman gets it,
not the poor. The strong can take what they want from the weak,”
Quadir said. “So why don’t we wade through the mud and make sure
the right person gets it? Because it’s not convenient for us to
give it that way. So we do what we need to do to get that pat on
the back, irrespective of whether it actually works. Checks and
balances only happen from the bottom. Empowering the poor can give
rise to the necessary checks and balances. It can give them a voice.”