Technology for Poverty Alleviation:
Rural Phones Service Is Profitable In Poor Countries
poor countries, most people, in all about half the world's population-still
live in rural areas. Village phone service is rare, Internet service
non-existent and poverty widespread. In Bangladesh, for example,
90 percent of the country's 68,000 villages have no phone service
of any kind and average annual income is less than $ 200 per person.
It might not sound like a promising commercial telecom market, but
appearances can be deceiving.
1997, Grameen Phone has provided commercial cellular services
in Bangladesh, operating primarily in urban areas. A subsidiary,
working with the micro-finance organization Grameen Bank, now provides
cellular phone service in rural areas via local entrepreneurs, usually
women. Each local entrepreneur owns and operates a cell phone that
typically serves an entire village. Villagers pay for phone calls
in cash, by the minute. Grameen Bank helps by lending the entrepreneur
money to buy the phone and collecting payments from them for phone
usage on behalf of Grameen Phone.
shared access village phones are very profitable, generating revenues
that now average $1,200 per year per phone, more than three times
as much as the company's urban phones. Each phone serves an average
of nearly 70 customers - in effect, tapping the buying power of
a whole village. Per phone revenues have more that doubled in two
years of service. A study by the Canadian International Development
Agency shows that the village phones also have a big social impact.
For villages, access to phones often substitutes for a trip to Bangladesh's
capital Dhaka, that could take days and cost many times as much
as the call. Villagers also use phones to find out current market
prices for their crops, arrange remittances from family members
working abroad, and obtain urgent medical help.
it works in Bangladesh, how about in rural areas elsewhere? If phone
and perhaps Internet services can be provided profitably to rural
communities through shared access, then opening up such regions
to commercial telecom competition may be an effective way of stimulating
rural development and providing significant social and economic
benefits to impoverished areas. The business opportunity also
seems large enough to stimulate private investments, becoming the
phone company and the Internet service provider for nearly half
Micro finance -With Digital Technologies
loans in their modern form were pioneered by the Grameen Bank to
provide a source of credit for poor people in Bangladesh. Today
more than 1,000 micro finance institutions offer micro loans between
$150 and $ 500 to five million clients in poor rural communities
or urban slums spread across Africa, Asia and Latin America. Yet
relatively few poor people have access to micro loans, only about
five percent of an estimated 500 million potential borrowers worldwide.
Major reasons are inefficient practices and the resulting high costs
of processing loans and keeping records. Few if any micro finance
institutions are profitable, so they cannot tap banks or capital.
may change this picture is the advent of digital tools to automate
transactions and increase efficiencies. Imagine a loan officer travelling
from village to village equipped with mobile data entry device similar
to that used by FedEx delivery personnel transmitting loan data
over wireless and a central computer. Micro finance institution
operating in Mexico are now testing the palm pilots equipped with
simple accounting software for their loan office and many such groups
are introducing computerized accounting systems.
AFRICA operates in six East African countries where half the population
subsists on less than $1 a day. PRIDE link a base of 100,000 clients
to financial services information, and markets. It has developed
its own banking software to manage micro loans and small savings
accounts and to automate administrative tasks. The group is now
experimenting with magnetic cards and information kiosks that allow
even illiterate clients to access their accounts and check loan
balances while cutting costs. PRIDE software will enable it to bundle
together loans from tens of thousand of its clients and resell them
to commercial banks, opening up capital markets to finance expansion.
Founder Jonathan Campaign points out that micro finance can benefit
from the same emerging Internet based technologies that are forcing
retail bankers everywhere to rethink their business model. These
include tools like data mining, customer service and support software,
and customer relationship management applications. PRIDE, for example,
hopes to work with partners to build an Internet based virtual "back-office"
and provide tools that are easier for poor clients to use, all with
the intent of making access to financial services as widespread
as the traditional African drum.
from:The Business Week, December 18, 2000.