Bangladesh - Grameen: Village Phone Project - Sustainable ...

Bangladesh
Grameen: Village Phone Project
Winner of the GSM in the Community Award at the global GSM Congress (2000)
Winner of the Economic Development Award (2004) , The Tech Museum Laureats i .
No ICTs led development success story is complete without mentioning the Grameen Bank’s (Now a part
of the larger Grameen Foundation enterprise) Microfinance and Village Phone Programme in Bangladesh.
Grameen Bank was founded in 1976 in Chittagong, Bangladesh, by Dr. Muhammad Yunus, a Nobel
Peace Prize Winner and renowned economist. The Banks primary business is to make small loans
(Average USD 160) to finance entrepreneurial ventures and the cottage industry, mostly to rural women.
Over the years the Bank has established 2,468 branches covering more than 80,000 ii villages of
Bangladesh. In 1994, a US based native Bangladeshi entrepreneur named Iqbal Quadir approached the
bank to use its micro credit mechanism to establish a nationwide telecommunication network to serve the
rural areas. Quadir’s idea was based on the premise that in developing countries access to communication
service is extremely challenging for the rural poor. The governments and industries have little incentive to
invest in the high cost infrastructure to serve the unprofitable rural areas. As a result, millions live without
the ability to contact people beyond their local villages. Bangladesh served as an ideal test case as, in
1994, 97 % of the households were without telephone access. It was not uncommon for villagers to travel
for two days to make a phone call. In 1997, due to telecommunication liberalization policy by the
Government of Bangladesh, Grameen Bank, along with Quadir’s US Based company Gonophpone and
Norway’s telecommunication giant Telenor, won a cell phone license as a for profit entity called
Grameen Phone Limited (GP). Village Phone (VP) idea was instantly born in the shape of Grameen
Telecommunication, which is not for profit concern and holds 35% shares of the Grameen Phone,
wherein Grameen Bank’s micro credit clients, mostly women (123,790 men vs. 2,246,340 women) iii ,
were given loans for the purchase of a Global System Mobile (GSM) phone to launch their own public
phone business, thereby earning enough revenue to repay the loans taken from the Grameen Bank.
To become Village Phone operators, prospective operators have to be a Grameen Bank member for the
last two years, possess a record of timely repayment, have a house that is centrally located and have
electricity at home to recharge the cell phone batteries. Air time is provided at a subsidized rate as
Grameen Telecommunication buys airtime in bulk from sister concern Grameen Phone, but the operators
are allowed to set their own market rates for selling the product, however GT provides a standard rate
guide so the operators do not price themselves out of the market. If an operator charges significantly more
than the market rate than the GT may put in another competitor to reduce rates. GT also runs a support
system, where in it tracks the business pattern of the operators and offers training assistance wherever it
feels lack of business skill is hampering progress.

‘According to Bayes et. al. (1999), phone-owning households were confirmed to be poorer than the
villagers in general, regardless of whether land ownership or per capita income was used as a measure.
The income derived from the VP was reported to be about 24% of the household income on average; in
some cases, it was as high as 40%.On average, the VP operator earns an income of 14,400 Taka or
roughly $300 USD per year from providing telephone services. This exceeds the average per capita
income of Bangladesh ($286 USD) by $14 USD’. Bayes et. Al. (1999) also studied the pattern of callers.
Most of the callers had relatives abroad and consequently 86 % of calls were made to discuss remittance
issues and social calls. Only 8 % of the calls were made for business, which was a disappointment for the
project managers as they expected the VP to generate business, however, as per Bayes (1999) the value of
social calls in terms of quality of life is immeasurable.
Many studies have been conducted to find out the impact of VP on women. Gender issues in the Village
Phone programme of Grameen Telecom focused on the following types of questions:
1. How does the VP enhance a woman’s condition in her household and her status in a village
2. How does the VP differ from other Grameen Bank loans in terms of empowering women
3. What impact does a VP have on a village woman’s daily routine
4. Are there differences in usage patterns when the VP is operated by a man
‘When a GTC Village Phone is placed in a woman’s home, there seems to be a good match between the
technology and the times and places that are open and socially acceptable to women in rural Bangladesh.
A portable phone can go where the Village Phone operator goes, or she can deliver it directly into the
hands of another woman in the village. The VPs have created a “phone culture” among women by
enabling them to have access to a communication tool that they might otherwise be culturally excluded
form using. The Village Phone operators and female users have shown rural societies that women can
easily gain the skills and capacity to run a VP and that women have just as many reasons to use
telephones as do men. In rural Bangladesh, if the only phone locally available is in the hands of a male
VP, or in a market-area PCO operated by a man, then the percentage of female users is likely to be small.
Research showed sites where VPs were operated by men only 6.25% of Grameen Bank member phone
users were recorded as women. In comparison, where the operators were female, 82% of the Grameen
Bank member phone users were recorded as women. The latter is, of course, expected given the high
proportion of Grameen Bank members who are women, but this fact only highlights the differential
access afforded by VPs operated by men. Surveys have found that the Village Phone Operators become
socially empowered as they earn an income, gaining participation in family decisions in which, in rural
Bangladeshi society, women usually have no say iv .
The VP programme has enabled women to participate in generating income for the family in a less
physically demanding way. The convenience has encouraged more women to take up VP phone operation
as a profession. Being revenue earners for the household elevates their status within the house and enables
them to participate in the decision making at home. A Canadian International

Development Agency (CIDA) commissioned study v in Bangladesh concluded that the Grameen
Village Phone program yields “significant positive social and economic impacts, including relatively
large consumer surplus and immeasurable quality of life benefits.
References :
D. Richardson, R. Ramirez, and M. Haq "Village Phone Program in Rural Bangladesh: A Multimedia
Case Study,"(TeleCommons Development Group, 2000).
Bayes, A. (1999) "Telecom: Insight into a Grameen Bank initiative." The Daily Star, 4 April
Bayes, A., von Braun, J. & Akhter, R. (1999) Village pay phones and poverty reduction:Insights from a
Grameen Bank initiative in Bangladesh. Information and Communication Technologies and Economic
Development. vol.8
Nevin Cohen (2001) What Works : Grameen Telecom’s Village Phones , A Digital Dividend Study by
the World Resources Institute.
Grameen Foundation USA (2005) Village Phone Replication Manual ‘Creating sustainable access to
affordable telecommunications for the rural poor.
Ryan Stanley (2005) Village Phone – A Tool for Empowerment, Grameen Foundation USA Publication
Series
http://www.grameenfoundation.org/ Acessed 07 th July 2009.
i http://www.techawards.org/laureates/stories/index.phpid=77 , Accessed 07 th July 2009.
ii "Grameen Bank At a Glance". Grameen Communications. October 2007
iii iii D. Richardson, R. Ramirez, and M. Haq "Village Phone Program in Rural Bangladesh: A Multimedia Case
Study,"
(TeleCommons Development Group, 2000).
iv World Resources Institute, 2002

v D. Richardson, R. Ramirez, and M. Haq "Village Phone Program in Rural Bangladesh: A Multimedia Case Study,"
(TeleCommons Development Group, 2000).