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Continued from previous page
Taking Microchips to Microcredit
IQBAL QUADIR
Iqbal Quadir, G'83, WG'87, was working for
an investment banking firm in New York City when an "a-ha!" moment hit him. It was 1993 and the company had recently
installed a network that freed employees from passing
their work around on floppy disks. Of course, that kind of
connectivity means a computer glitch can shut down a business
faster than the Federal Reserve can raise interest rates.
Just when Quadir's group was beginning to work more
productively, more creatively and faster, his computer network
crashed, virtually shutting him down with it.
For some reason, that wasted day reminded him of one
decades earlier in his native Bangladesh, back when the
country's war for independence raged. There were no telephones,
no reliable way to make contact from village to
village, and for a time, even the minimal boating access the
village relied on was shut down.
One day, his parents sent their son on a 10 kilometer
walk to another village with a pharmacist. They needed
medicine. But after walking all morning, 13-year-old Iqbal
arrived to find the pharmacist gone, off to a town where he
could replenish his medical supplies. Back the boy walked, a
wasted day. All for lack of a telephone to call ahead.
Sitting in front of his disconnected computer in New York
22 years later, a realization dawned: If connectivity meant productivity,
then it must be a weapon against poverty. That started
the wheels turning on an amazing micro-lending partnership
that eventually would bring 200,000 phones to Bangladeshi villages
through GrameenPhone, serving 80 million people with
an average of 400 people using each of those phones.
Back in 1993, a tight deadline loomed. Quadir quickly
learned of the Bangladesh government's plans to issue cellular
phone licenses in 1994. That gave the budding entrepreneur
just a year to gather investors and develop a solid strategy to
bring phone service to a country where on average only two
telephones existed per 1,000 people. Worse, virtually none
of the nation's 100 million rural inhabitants had access to a
phone. That kind of luxury was generally reserved for the 20
million people living in urban areas.
That's when Quadir's Wharton education kicked in. After
his undergraduate years at Swarthmore College, known
mostly for its liberal arts focus, Quadir says Wharton was
his first real introduction to business. Second, the school instilled
in him a belief that business is an effective solution to
problems faced by societies. And perhaps most importantly
he learned that putting your money in the right places would
lead to progress—and profits. In other words, putting money
into a venture didn't mean spending it—it meant setting
up an infrastructure that would return even more money
while advancing people's lives. It's the simplest of concepts,
of course. Business people just call it investing. But this basic
realization changed Quadir's outlook.
"It's a very important part of my growth," he says.
Getting back to the telephone distribution problem,
Quadir had limited resources. He needed to convince other
people and institutions to ante up. He partnered with
Grameen Bank, a trusted institution in Bangladesh that already
specialized in micro-lending in some 35,000 villages.
Quadir proposed that Grameen make $200 loans to
women who would use the money to purchase phones, then
sell fellow villagers airtime. The fees would allow the women
to pay back their debt to the bank and support themselves
and their families. Quadir also convinced Telenor, the
Norwegian telephone company, to invest in his company
and build the network.
"In a way, I was a little chimpanzee who convinced these
gorillas of my idea," Quadir says.
It's an interesting footnote that Grameen works almost
exclusively with women on these loans. It found that these
enterprising women are significantly more likely than men
to pay back their loans. This has also worked well for the
phones. Bangladeshi men go away from home to work, and
the women left behind are the ones calling out to check on
them. If a woman needs to make such a call, she is generally
much more comfortable knocking on another woman's door
to use the phone than going to a man's house.
GrameenPhone has become a raging success financially. A
group of Americans who backed him originally—his friends
like Joshua Mailman, Phil Villers, and Ben Cohen—collectively
put in $1.65 million and got $33 million back eight
years later selling their stake. In addition to the 200,000
phones distributed to villagers, GrameenPhone installed
another 6 million throughout Bangladesh. Competitors have
added an additional 4 million units since the government issued
its licenses, and Quadir predicts that within a year, the
companies will double the number of available telephones
from 10 to 20 million.
That kind of connectivity, he says, makes the country
much more attractive to other capital investments.
Selling his own shares in GrameenPhone made Quadir,
47, financially independent, and he's using that status to
build other socially conscious ventures. He created a foundation
in America dedicated to development in Bangladesh.
Each year the foundation awards the applicant with the
best idea a $25,000 prize. Quadir also recently served as
Entrepreneur in Residence at Wharton, completed a visiting
professorship at Harvard University, and in January co-
founded a program in development entrepreneurship at the
Massachusetts Institute of Technology. He describes the new
venture as a hub for students interested in entrepreneurship
in developing countries or in low-income communities in
the United States.
And Quadir himself is never far from his next big idea.
Currently, he is working to install mini-power plants
that use cow dung as fuel to provide electricity. Although
Bangladesh is rich in natural gas, there is little infrastructure
to distribute it.
So far, experiments in two villages succeeded in providing
20 households with electricity for six months. The next
hurdle is a big one, however. While Nokia jumped at the
chance to distribute their phones for Quadir's first project,
the generators he needs for his second effort are not yet in
mass production.
No doubt they will be when Quadir is finished.
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