BANGLADORE, India-Bangladesh is one of the world’s least-developed countries, and most of the rural heartland lacks roads and electricity, as well as telephones. For its 140 million people, Bangladesh has just 500,000 phones, nearly all in the urban centers of Dhaka and Chittagong.
Grameen Telecom Co. (GTC), based in Dhaka, estimates the nation’s teledensity to be around 0.41 per 1,000, which makes it one of the 10 least-developed nations in Asia. Network digitization is a mere 44 percent, and the number of pay phones is less than 3,500.
Cellular phones are an alien concept to most people in Bangladesh. Dhaka-based Pacific Bangladesh Telecom, a joint venture between the government and Hutchison Telecommunications Ltd., Hong Kong, started offering cellular services three years ago, but as of early this year it had only about 5,000 customers, mostly wealthy business people.
It was Muhammed Yunus who figured out a way to take cellular to the masses.
Yunus founded Grameen Bank some 20 years ago in Bangladesh to give non-collateral loans of as little as US$50 to the poor-mostly women-to help them start their own small businesses.
He now has transferred this micro-loan concept to cellular. GTC, the new fully owned subsidiary of Grameen Bank, runs a project to extend cellular service to rural villages. It grants US$430 loans, primarily to women, to set up businesses with a mobile phones selling airtime to others in their villages.
GTC is a 35-percent shareholder in Dhaka-based Grameen Phone Ltd. (GP), which won a 15-year license for nationwide cellular services in November 1996 and launched GSM (Global System for Mobile communications) services in March 1997. GP provides the cellular service for the GTC rural project. The other shareholders in GP are Telenor of Norway, 51 percent; Marubeni of Japan, 9.5 percent; and U.S.-based Gonofone, 4.5 percent.
Aisha Begum is a typical Bangladeshi Muslim woman who took advantage of Grameen Bank loan four years ago. Almost destitute, she borrowed US$100 to buy two cows. Today, she has a grocery store, four cows, 36 chickens and a lot of prestige in her village, located just outside Dhaka.
Now she is taking advantage of Yunus’ new project and borrowed the $430 for a cellular phone. She is repaying the loan at a rate of US$3.50 a week. Calls cost her four taka-8 cents-a minute, and she charges five taka, taking the difference as profit. She said she made about US$4.50 a day in the first three days she had the phone.
“Since I got my phone, the entire village has come in batches to see it and use the facility,” Begum said. The business “may give me the … prosperity I need to raise my children and give them good education.”
The beauty of the micro-loan model: Women make a profit of about US$2 a working day and more than US$250 a year-double Bangladesh’s per-capita income.
“The Grameen Bank had been financing the purchase of cows by the women,” said Iqbal Z. Quadir, director-external finance for GP. “In the [Grameen Phone] experiment, we have replaced the cow with a cellular phone.”
Grameen Bank purchases cell phones in bulk and sells them to rural folk; about 94 percent of these buyers are women. A local bank representative in the village puts together a credit package, enabling the women to pick up the phones at less than US$300 each.
With its project, GTC is planning during the next five years to provide GSM 900 MHz cellular mobile phone service to 100 million rural inhabitants in 68,000 Bangladeshi villages, financing 50,000 members of Grameen Bank to provide pay-phone service and providing direct phones to potential subscribers.
Said Quadir: “Right now, we have 50 villages connected to the Grameen Phone cellular network. This, we think, will grow to 500 by the end of next year. Grameen Phone is not only for the poor. It also will sell its service at commercial rates, supplementing the government phone company that has placed only 500,000 phones in a country of 120 million people.” Officials admit that some applications for phone lines have been pending for a decade.
“Grameen Phone” may have been born in Bangladesh, but soon is likely to join international cellular jargon. Indian operators, too, seriously are looking at the rural pockets where, despite the fact there’s an impressive line-up of consumer appliances such as color TVs, frost-free refrigerators, scooters and even modern cars, many people have yet to make their first phone call.
