TEDGlobal 2005
Iqbal Quadir: How mobile phones can fight poverty
Filmed:
Readability: 3.2
589,394 views
Iqbal Quadir tells how his experiences as a kid in poor Bangladesh, and later as a banker in New York, led him to start a mobile phone operator connecting 80 million rural Bangladeshi -- and to become a champion of bottom-up development.
Iqbal Quadir - Founder, GrameenPhone
Iqbal Quadir is an advocate of business as a humanitarian tool. With GrameenPhone, he brought the first commercial telecom services to poor areas of Bangladesh. His latest project will help rural entrepreneurs build power plants. Full bio
Iqbal Quadir is an advocate of business as a humanitarian tool. With GrameenPhone, he brought the first commercial telecom services to poor areas of Bangladesh. His latest project will help rural entrepreneurs build power plants. Full bio
Double-click the English transcript below to play the video.
00:25
I'll just take you to Bangladesh for a minute.
0
0
3000
01:07
Before I tell that story, we should ask ourselves the question:
1
42000
3000
01:10
Why does poverty exist?
2
45000
2000
01:12
I mean, there is plenty of knowledge and scientific breakthroughs.
3
47000
5000
01:17
We all live in the same planet,
4
52000
3000
01:20
but there's still a great deal of poverty in the world.
5
55000
2000
01:22
And I think -- so I want to throw a perspective that I have,
6
57000
4000
01:26
so that we can assess this project, or any other project, for that matter,
7
61000
6000
01:33
to see whether it's contributing or --
8
68000
3000
01:36
contributing to poverty or trying to alleviate it.
9
71000
2000
01:38
Rich countries have been sending aid to poor countries for the last 60 years.
10
73000
5000
01:43
And by and large, this has failed.
11
78000
3000
01:46
And you can see this book,
12
81000
2000
01:48
written by someone who worked in the World Bank for 20 years,
13
83000
3000
01:51
and he finds economic growth in this country to be elusive.
14
86000
5000
01:56
By and large, it did not work.
15
91000
3000
01:59
So the question is, why is that?
16
94000
4000
02:03
In my mind, there is something to learn from the history of Europe.
17
98000
5000
02:08
I mean, even here, yesterday I was walking across the street,
18
103000
4000
02:12
and they showed three bishops were executed 500 years ago,
19
107000
4000
02:16
right across the street from here.
20
111000
2000
02:18
So my point is, there's a lot of struggle has gone in Europe,
21
113000
4000
02:22
where citizens were empowered by technologies.
22
117000
3000
02:25
And they demanded authorities from --
23
120000
3000
02:28
to come down from their high horses.
24
123000
3000
02:31
And in the end, there's better bargaining
25
126000
3000
02:34
between the authorities and citizens,
26
129000
3000
02:37
and democracies, capitalism -- everything else flourished.
27
132000
3000
02:40
And so you can see, the real process of --
28
135000
3000
02:43
and this is backed up by this 500-page book --
29
138000
4000
02:47
that the authorities came down and citizens got up.
30
142000
5000
02:52
But if you look, if you have that perspective,
31
147000
2000
02:55
then you can see what happened in the last 60 years.
32
150000
3000
02:58
Aid actually did the opposite.
33
153000
3000
03:01
It empowered authorities,
34
156000
1000
03:03
and, as a result, marginalized citizens.
35
158000
3000
03:06
The authorities did not have the reason to make economic growth happen
36
161000
3000
03:09
so that they could tax people
37
164000
3000
03:12
and make more money for to run their business.
38
167000
4000
03:16
Because they were getting it from abroad.
39
171000
3000
03:19
And in fact, if you see oil-rich countries,
40
174000
4000
03:23
where citizens are not yet empowered, the same thing goes --
41
178000
3000
03:26
Nigeria, Saudi Arabia, all sorts of countries.
42
181000
3000
03:29
Because the aid and oil or mineral money acts the same way.
43
184000
5000
03:34
It empowers authorities, without activating the citizens --
44
189000
4000
03:38
their hands, legs, brains, what have you.
45
193000
4000
03:42
And if you agree with that, then I think the best way to improve these countries
46
197000
6000
03:48
is to recognize that economic development is of the people,
47
203000
3000
03:51
by the people, for the people.
48
206000
3000
03:54
And that is the real network effect.
49
209000
2000
03:56
If citizens can network and make themselves more organized and productive,
50
211000
4000
04:00
so that their voices are heard,
51
215000
2000
04:02
so then things would improve.
52
217000
2000
04:04
And to contrast that, you can see the most important institution in the world,
53
219000
5000
04:09
the World Bank, is an organization of the government,
54
224000
4000
04:13
by the government, for the governments.
55
228000
3000
04:16
Just see the contrast.
56
231000
2000
04:18
And that is the perspective I have, and then I can start my story.
57
233000
5000
04:23
Of course, how would you empower citizens?
58
238000
3000
04:26
There could be all sorts of technologies. And one is cell phones.
59
241000
2000
04:28
Recently "The Economist" recognized this,
60
243000
3000
04:31
but I stumbled upon the idea 12 years ago,
61
246000
5000
04:36
and that's what I've been working on.
62
251000
3000
04:42
So 12 years ago, I was trying to be an investment banker in New York.
63
257000
3000
04:45
We had -- quite a few our colleagues were connected by a computer network.
64
260000
7000
04:53
And we got more productive because we didn't have to exchange floppy disks;
65
268000
7000
05:00
we could update each other more often.
66
275000
4000
05:04
But one time it broke down.
67
279000
2000
05:06
And it reminded me of a day in 1971.
68
281000
4000
05:10
There was a war going on in my country.
69
285000
4000
05:14
And my family moved out of an urban place, where we used to live,
70
289000
3000
05:17
to a remote rural area where it was safer.
71
292000
4000
05:21
And one time my mother asked me to get some medicine for a younger sibling.
72
296000
3000
05:24
And I walked 10 miles or so, all morning, to get there, to the medicine man.
73
299000
7000
05:31
And he wasn't there, so I walked all afternoon back.
74
306000
3000
05:34
So I had another unproductive day.
75
309000
2000
05:36
So while I was sitting in a tall building in New York,
76
311000
3000
05:39
I put those two experiences together side by side,
77
314000
3000
05:42
and basically concluded that connectivity is productivity --
78
317000
3000
05:45
whether it's in a modern office or an underdeveloped village.
79
320000
5000
05:50
So naturally, I -- the implication of that is
80
325000
3000
05:53
that the telephone is a weapon against poverty.
81
328000
5000
05:58
And if that's the case, then the question is
82
333000
2000
06:00
how many telephones did we have at that time?
83
335000
4000
06:04
And it turns out, that there was one telephone in Bangladesh
84
339000
5000
06:09
for every 500 people.
85
344000
2000
06:11
And all those phones were in the few urban places.
86
346000
3000
06:15
The vast rural areas, where 100 million people lived,
87
350000
3000
06:18
there were no telephones.
88
353000
3000
06:21
So just imagine how many man-months or man-years are wasted,
89
356000
3000
06:24
just like I wasted a day.
90
359000
3000
06:27
If you just multiply by 100 million people, let's say losing one day a month,
91
362000
3000
06:31
whatever, and you see a vast amount of resource wasted.
92
366000
4000
06:35
And after all, poor countries, like rich countries, one thing we've got equal,
93
370000
3000
06:38
is their days are the same length: 24 hours.
94
373000
3000
06:41
So if you lose that precious resource,
95
376000
3000
06:44
where you are somewhat equal to the richer countries,
96
379000
3000
06:47
that's a huge waste.
97
382000
2000
06:50
So I started looking for any evidence that --
98
385000
4000
06:54
does connectivity really increase productivity?
99
389000
4000
06:58
And I couldn't find much, really, but I found this graph produced by the ITU,
100
393000
4000
07:02
which is the International Telecommunication Union, based in Geneva.
101
397000
6000
07:08
They show an interesting thing.
102
403000
3000
07:11
That you see, the horizontal axis is where you place your country.
103
406000
4000
07:15
So the United States or the UK would be here, outside.
104
410000
3000
07:18
And so the impact of one new telephone,
105
413000
3000
07:22
which is on the vertical axis, is very little.
106
417000
5000
07:27
But if you come back to a poorer country, where the GNP per capita is,
107
422000
3000
07:30
let's say, 500 dollars, or 300 dollars,
108
425000
3000
07:33
then the impact is huge: 6,000 dollars. Or 5,000 dollars.
109
428000
7000
07:40
The question was,
110
435000
1000
07:41
how much did it cost to install a new telephone in Bangladesh?
111
436000
4000
07:45
It turns out: 2,000 dollars.
112
440000
4000
07:49
So if you spend 2,000 dollars, and let's say the telephone lasts 10 years,
113
444000
3000
07:52
and if 5,000 dollars every year -- so that's 50,000 dollars.
114
447000
3000
07:55
So obviously this was a gadget to have.
115
450000
4000
07:59
And of course, if the cost of installing a telephone is going down,
116
454000
5000
08:04
because there's a digital revolution going on,
117
459000
2000
08:06
then it would be even more dramatic.
118
461000
3000
08:10
And I knew a little economics by then --
119
465000
3000
08:13
it says Adam Smith taught us that specialization leads to productivity.
120
468000
3000
08:16
But how would you specialize?
121
471000
3000
08:19
Let's say I'm a fisherman and a farmer.
122
474000
4000
08:23
And Chris is a fisherman farmer. Both are generalists.
123
478000
6000
08:29
So the point is that we could only -- the only way we could depend on each other,
124
484000
4000
08:33
is if we can connect with each other.
125
488000
3000
08:36
And if we are neighbors, I could just walk over to his house.
126
491000
5000
08:41
But then we are limiting our economic sphere to something very small area.
127
496000
4000
08:45
But in order to expand that, you need a river,
128
500000
3000
08:48
or you need a highway, or you need telephone lines.
129
503000
2000
08:50
But in any event, it's connectivity that leads to dependability.
130
505000
5000
08:55
And that leads to specialization.
131
510000
2000
08:57
That leads to productivity.
132
512000
2000
08:59
So the question was, I started looking at this issue,
133
514000
4000
09:03
and going back and forth between Bangladesh and New York.
134
518000
2000
09:05
There were a lot of reasons people told me
135
520000
4000
09:09
why we don't have enough telephones.
136
524000
3000
09:12
And one of them is the lacking buying power.
137
527000
2000
09:14
Poor people apparently don't have the power to buy.
138
529000
3000
09:17
But the point is, if it's a production tool, why do we have to worry about that?
139
532000
3000
09:20
I mean, in America, people buy cars,
140
535000
3000
09:23
and they put very little money down.
141
538000
3000
09:26
They get a car, and they go to work.
142
541000
3000
09:29
The work pays them a salary;
143
544000
3000
09:32
the salary allows them to pay for the car over time.
144
547000
3000
09:35
The car pays for itself.
145
550000
1000
09:36
So if the telephone is a production tool,
146
551000
3000
09:39
then we don't quite have to worry about the purchasing power.
147
554000
3000
09:42
And of course, even if that's true, then what about initial buying power?
148
557000
5000
09:47
So then the question is, why can't we have some kind of shared access?
149
562000
5000
09:52
In the United States, we have -- everybody needs a banking service,
150
567000
4000
09:56
but very few of us are trying to buy a bank.
151
571000
3000
09:59
So it's -- a bank tends to serve a whole community.
152
574000
4000
10:03
So we could do that for telephones.
153
578000
3000
10:06
And also people told me that we have a lot of important primary needs to meet:
154
581000
5000
10:11
food, clothing, shelter, whatever.
155
586000
3000
10:14
But again, it's very paternalistic.
156
589000
2000
10:16
You should be raising income
157
591000
3000
10:19
and let people decide what they want to do with their money.
158
594000
4000
10:24
But the real problem is the lack of other infrastructures.
159
599000
3000
10:27
See, you need some kind of infrastructure to bring a new thing.
160
602000
5000
10:32
For instance, the Internet was booming in the U.S.
161
607000
3000
10:35
because there were -- there were people who had computers.
162
610000
3000
10:38
They had modems.
163
613000
2000
10:40
They had telephone lines, so it's very easy to bring in a new idea, like the Internet.
164
615000
4000
10:44
But that's what's lacking in a poor country.
165
619000
3000
10:47
So for example, we didn't have ways to have credit checks,
166
622000
2000
10:49
few banks to collect bills, etc.
167
624000
5000
10:54
But that's why I noticed Grameen Bank, which is a bank for poor people,
168
629000
3000
10:57
and had 1,100 branches, 12,000 employees, 2.3 million borrowers.
169
632000
7000
11:04
And they had these branches.
170
639000
2000
11:06
I thought I could put cell towers and create a network.
171
641000
5000
11:11
And anyway, to cut the time short -- so I started --
172
646000
4000
11:15
I first went to them and said,
173
650000
3000
11:18
"You know, perhaps I could connect all your branches and make you more efficient."
174
653000
3000
11:21
But you know, they have, after all, evolved in a country without telephones,
175
656000
4000
11:25
so they are decentralized. I mean, of course there might be other good reasons,
176
660000
5000
11:30
but this was one of the reasons -- they had to be.
177
665000
2000
11:32
And so they were not that interested to connect all their branches,
178
667000
4000
11:36
and then to be -- and rock the boat.
179
671000
2000
11:38
So I started focusing. What is it that they really do?
180
673000
4000
11:42
So what happens is that somebody borrows money from the bank.
181
677000
3000
11:45
She typically buys a cow. The cow gives milk.
182
680000
4000
11:49
And she sells the milk to the villagers, and pays off the loan.
183
684000
4000
11:53
And this is a business for her, but it's milk for everybody else.
184
688000
5000
11:58
And suddenly I realized that a cell phone could be a cow.
185
693000
2000
12:00
Because some way she could borrow 200 dollars from the bank,
186
695000
4000
12:04
get a phone and have the phone for everybody.
187
699000
3000
12:07
And it's a business for her.
188
702000
3000
12:10
So I wrote to the bank, and they thought for a while, and they said,
189
705000
4000
12:14
"It's a little crazy, but logical.
190
709000
2000
12:16
If you think it can be done, come and make it happen."
191
711000
4000
12:20
So I quit my job; I went back to Bangladesh.
192
715000
3000
12:23
I created a company in America called Gonofone,
193
718000
3000
12:26
which in Bengali means "people's phone."
194
721000
3000
12:29
And angel investors in America put in money into that.
195
724000
2000
12:31
I flew around the world.
196
726000
2000
12:33
After about a million -- I mean, I got rejected from lots of places,
197
728000
3000
12:36
because I was not only trying to go to a poor country,
198
731000
3000
12:39
I was trying to go to the poor of the poor country.
199
734000
2000
12:41
After about a million miles, and a meaningful --
200
736000
4000
12:45
a substantial loss of hair, I eventually put together a consortium, and --
201
740000
3000
12:48
which involved the Norwegian telephone company,
202
743000
4000
12:52
which provided the know-how,
203
747000
3000
12:55
and the Grameen Bank provided the infrastructure to spread the service.
204
750000
6000
13:01
To make the story short, here is the coverage of the country.
205
756000
4000
13:05
You can see it's pretty much covered.
206
760000
3000
13:08
Even in Bangladesh, there are some empty places.
207
763000
3000
13:11
But we are also investing around another 300 million dollars this year
208
766000
4000
13:15
to extend that coverage.
209
770000
3000
13:20
Now, about that cow model I talked about.
210
775000
3000
13:23
There are about 115,000 people who are retailing telephone services
211
778000
6000
13:29
in their neighborhoods.
212
784000
2000
13:31
And it's serving 52,000 villages, which represent about 80 million people.
213
786000
6000
13:37
And these phones are generating
214
792000
4000
13:41
about 100 million dollars for the company.
215
796000
3000
13:44
And two dollars profit per entrepreneur per day, which is like 700 dollars per year.
216
799000
5000
13:53
And of course, it's very beneficial in a lot of ways.
217
808000
2000
13:55
It increases income, improves welfare, etc.
218
810000
3000
13:58
And the result is, right now, this company is the largest telephone company,
219
813000
4000
14:02
with 3.5 million subscribers,
220
817000
3000
14:05
115,000 of these phones I talked about --
221
820000
2000
14:07
that produces about a third of the traffic in the network.
222
822000
5000
14:12
And 2004, the net profit, after taxes --
223
827000
4000
14:16
very serious taxes -- was 120 million dollars.
224
831000
4000
14:20
And the company contributed about 190 million dollars to the government coffers.
225
835000
5000
14:26
And again, here are some of the lessons.
226
841000
2000
14:28
"The government needs to provide economically viable services."
227
843000
2000
14:30
Actually, this is an instance where private companies can provide that.
228
845000
3000
14:33
"Governments need to subsidize private companies."
229
848000
3000
14:36
This is what some people think.
230
851000
2000
14:38
And actually, private companies help governments with taxes.
231
853000
3000
14:41
"Poor people are recipients."
232
856000
2000
14:43
Poor people are a resource.
233
858000
3000
14:46
"Services cost too much for the poor."
234
861000
2000
14:48
Their involvement reduces the cost.
235
863000
4000
14:52
"The poor are uneducated and cannot do much."
236
867000
3000
14:55
They are very eager learners and very capable survivors.
237
870000
3000
14:58
I've been very surprised.
238
873000
2000
15:00
Most of them learn how to operate a telephone within a day.
239
875000
3000
15:03
"Poor countries need aid."
240
878000
3000
15:06
Businesses -- this one company has raised the --
241
881000
3000
15:09
if the ideal figures are even five percent true, this one company
242
884000
5000
15:14
is raising the GNP of the country much more than the aid the country receives.
243
889000
5000
15:19
And as I was trying to show you, as far as I'm concerned,
244
894000
3000
15:22
aid does damages because it removes the government from its citizens.
245
897000
5000
15:27
And this is a new project I have with Dean Kamen, the famous inventor in America.
246
902000
4000
15:31
He has produced some power generators,
247
906000
3000
15:34
which we are now doing an experiment in Bangladesh,
248
909000
4000
15:38
in two villages where cow manure is producing biogas,
249
913000
3000
15:41
which is running these generators.
250
916000
4000
15:45
And each of these generators is selling electricity to 20 houses each.
251
920000
3000
15:48
It's just an experiment.
252
923000
4000
15:52
We don't know how far it will go,
253
927000
1000
15:53
but it's going on.
254
928000
2000
15:55
Thank you.
255
930000
1000
ABOUT THE SPEAKER
Iqbal Quadir - Founder, GrameenPhoneIqbal Quadir is an advocate of business as a humanitarian tool. With GrameenPhone, he brought the first commercial telecom services to poor areas of Bangladesh. His latest project will help rural entrepreneurs build power plants.
Why you should listen
As a kid in rural Bangladesh in 1971, Iqbal Quadir had to walk half a day to another village to find the doctor -- who was not there. Twenty years later he felt the same frustration while working at a New York bank, using diskettes to share information during a computer network breakdown. His epiphany: In both cases, "connectivity is productivity." Had he been able to call the doctor, it would have saved him hours of walking for nothing.
Partnering with microcredit pioneer GrameenBank, in 1997 Quadir established GrameenPhone, a wireless operator now offering phone services to 80 million rural Bangladeshi. It's become the model for a bottom-up, tech-empowered approach to development. "Phones have a triple impact," Quadir says. "They provide business opportunities; connect the village to the world; and generate over time a culture of entrepreneurship, which is crucial for any economic development."
Iqbal Quadir | Speaker | TED.com