Africans get upwardly mobile in cell phone boom

from CNN

A story on the Grameen Bank's mobile phone program. - Kale

By Lara Farrar

One afternoon late in 2002, Mukhsin Alhassan Kadir drove his taxi from the busy streets of Accra, the capital of Ghana, to a nearby market community to meet a man who wanted to trade a plot of land for two cell phones.

When he arrived, Kadir collected the papers for the land and handed over what would be the first telephones this man and his wife had ever had in their lives.

"During that time, everybody wanted to own a mobile phone, but it was not common to find them in this country," Kadir told CNN.

In less than a decade, cellphones, once the preserve of the very rich, are now ubiquitous in Africa and parts of Asia.

A device that's sometimes used as a fashion accessory in the West has become a lifeline for millions of people in the developing world.

In Ghana, Kadir's phone functions as a portable office that he takes on the road with him during his taxicab shifts.

"Sometimes I am in bed and a customer will call me and I will go and pick him up," said Kadir while driving a client down a highway on a recent morning in Accra. "It has helped my business a lot."

"There is nobody in Ghana who is not using a mobile phone," added Kadir, speaking to CNN on a late model Sony Ericsson that he ordered for around $220 from someone in Italy.

"Even a shoe shiner has his own mobile phone," he jokes.

Numbers from the International Telecommunications Union indicate that since the end of 2006, nearly 70 percent of those subscriptions have come from developing countries.

There are now almost seven million cellphone users in Ghana, up from only a couple hundred thousand subscribers in 2000. The continent's biggest users are in South Africa, with nearly 25 million subscribers, followed by Nigeria, Egypt and Morocco.

However, the figures are startling in the lesser developed and poorer African countries.

In the Democratic Republic of Congo, with a population of 60 million, there are just 10,000 fixed telephones but more than a million cellphone subscribers. While in Chad, the fifth-least developed country in Africa, cellphone usage jumped from 10,000 to 200,000 in three years.

"It truly is revolutionary," said Peter Gbedemah, CEO of the pan-African network service provider Gateway Communications. "Previously there were just simply no telephones or there would be a few phones around,"

"Now telephones are available for the masses, which is a relatively recent innovation in Africa."

Today, roughly half of the world's population has a cellphone subscription and they are being used in a way economists say could dramatically reduce poverty and improve the quality of life for some of the world's poorest people.

In the Philippines, the Grameen Village Phone Program enables very poor women to use microcredit to buy cell phones and sell the use of the phones to people living in their villages.

Pelagia Garcia not only makes money by charging members of her community to use her cell phone but also adds extra income by renting out the use of a small antenna that improves cell phone reception. Garcia charges about 15 cents per use.

A similar program also runs in Bangladesh and plans are underway for a similar scheme in Rwanda and Uganda.

Doctors are now able to send their patients text messages to remind them to take medication and fishermen use phones to determine which market will offer them the best prices for their catch of the day.

A lack of constant electricity has not stopped people using their cell phones either, rather a cottage industry of roadside vendors charging mobile phones with car batteries, has grown.

More than a million people in Kenya now use their cell phones to complete simple financial transactions via a mobile-banking service launched by Vodafone last year. The company has started a similar enterprise in Tanzania, Afghanistan and India.

"I think there is something quite fascinating going on here," Nick Hughes, head of international payment systems for Vodafone, told CNN. "If you give people the opportunity to connect and engage with the economy, they will do so."

A lack of reliable, fixed-line telephone infrastructure is one of the main reasons why cellphones have experienced such exponential growth in emerging markets over the past few years, Gbedemah explained to CNN.

The infrastructure, such as satellite receivers and cellphone towers, needed to support mobile technology is simply much easier and cheaper to install in developing countries than the more traditional networks common to the developed world.

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Micro Loans Foster Entrepreurship in Poor Countries

This is part of a Voice of America series on entrepreneurs throught the world. Micro credit and how it helps women is explored in the segment of the series. You can get to the other stories by clicking on the link at the bottom of this post. - Kale

By Barry Wood

The Grameen Bank in Bangladesh is a ground breaker. It lends almost exclusively to women. And its small business loans are almost always paid back.

Nobel Prize-winning Standard

Muhammad Yunus is the bank's founder and a hero in his country. Grameen was the first to lend on a grand scale to poor, aspiring entrepreneurs in the developing world. The venture into microcredit won Yunus and his bank the Nobel Peace Prize in 2006.

"It's fantastic news. We are all very excited about the good news. It excites everybody in Bangladesh and also the people who are involved in micro-credit around the world," Yunus said.

Melissa Carrier, at the University of Maryland, says Grameen's micro-financing has expanded the concept of entrepreneurship.

"Certainly Grameen Bank has given legitimacy to those kinds of micro-loans to local villagers," she noted. "And so the idea of entrepreneurship now is about doing for yourself. It's about raising chickens, and having cows, and knitting scarves and being able to feed your family."

Microlending in Kenya

Margaret Okoth runs a market stall in Nairobi, Kenya. She is benefiting from low-interest micro-loans from her village cooperative.

"(The cooperative) has recently increased its limit so that you can borrow 80,000 (shillings)," she said. "And if you take out that big a loan you'll really see your business grow."

In Kenya's post election violence, Okoth's stall was destroyed. But coop loans allowed her to rebuild - and also balance her business with her other job, as a wife and mother of 12.

Now, the Grameen model is being promoted by big lenders like the World Bank, in its discussions with developing countries.

African Issues

Dahlia Khalifa is a business specialist at the World Bank's International Finance Corporation. She says women in African countries face special issues.

"Often times we've seen, and there has been some research done especially in African countries, that women are not given the same consideration as men when they apply for a loan," she said.

That was the case in Egypt. Hoda Galal Yassa is one of Cairo's leading female entrepreneurs. She says women in the Arab world face a formidable barrier.

"Everybody looks at a woman...as a good secretary, a good assistant, maybe she can cook very well and make something from that," she said. "But to be a business woman, particularly in the industrial field, it wasn't easy or accepted easily by men."

Yassa started her detergent and other factories with funds from family members.

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[Comment] From microcredit to social entrepreneurship

from the Toronto Star

Haroon Siddiqui

Call him the Gandhi of our times.

The Mahatma ended colonialism using non-violence. Nobel Laureate Muhammad Yunus is lifting millions out of poverty with microcredit (lending small amounts to the neediest). Now he's onto another revolutionary idea, "social entrepreneurship" (you invest not to make a profit but to do good, while still recouping your principal).

Yunus, like Gandhi, is humble in manner as well as dress: a simple long cotton kurta, shirt and vest. And wise, witty and patient.

When colleagues at his Garmeen (Village) Bank in Bangladesh grumbled that only 12,000 of the 100,000 beggars it lent money to had given up panhandling, Yunus responded: "Give them time; they are restructuring their business. They know which houses are good for begging and which ones are good for selling. They are into market segmentation."

The American-trained economics professor came to his calling by accident. In the 1970s, he loaned $27 to some destitute craftspeople, and witnessed two miracles: All used it well and none defaulted.

Garmeen Bank was born. Today, it lends about $1 billion a year (average loan: $160), to 7.5 million borrowers (97 per cent women), without collateral, and boasts a 99 per cent repayment record.

Garmeen inspired a worldwide microcredit movement. Toronto philanthropist Martin Connell was an early convert, establishing Calmeadow Foundation (I was once a director). On Monday, Connell had Yunus speak to Canadian philanthropists and bankers. There Yunus outlined his vision of a world without poverty.

"It's not utopian. The United Nations Millennium Goal is to reduce poverty by half by 2015. If the world believes that we can do that, it's just another step to eliminate poverty altogether."

When he called for more entrepreneurs to invest in socially responsible businesses, "people told me, `You are crazy. Why would anyone invest in a company that won't make money?' I said, `People are even crazier. They just give away their money.' Charity has only one life, whereas social entrepreneurship creates a cycle."

He got French food company Danone to make nutritional yogurt for Bangladesh kids. Garmeen gave local milk suppliers credit. The supply chain is working and Danone has recovered its investment.

Similar projects are underway with German, British and American companies.

Garmeen has 26 such enterprises. Among them: a mobile phone company (the largest in Bangladesh); a solar energy company (installing 7,500 home panels a month); and a clean water company.

He envisages a universe parallel to the capitalist free market: a new stock market for social businesses; a Social Wall Street Journal; business schools producing social MBAs.

Last year, he was urged to be a candidate for prime minister. The last two elected Bangladesh leaders, Sheikh Hasina and Begum Zia, both women but both facing corruption charges, had left a vacuum for the military to fill.

Yunus agreed but then withdrew. Why?

"I thought I'd form a corruption-free political party. I tried all my friends – professors, journalists, and business people. They all said, `No, it's a corrupt world.' And the ones who did want to join me were corrupt. So I gave up."

His fame has not saved him from being harassed at times at American airports.

As a Muslim, "you don't have an easy path. You are looked at differently. My name, Muhammad, doesn't make it easy ... But there are also lots of people of goodwill who are friends."

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Intel, Nobel Laureate to Bridge Tech, Finance Divides

from E Commerce Times

By Andrew K. Burger

Combining the technological prowess of a company such as Intel with the microfinance know-how of Nobel Laureate Muhammad Yunus, a joint venture between Intel and Yunus' Grameen Trust will begin making loans and sharing expertise with people in poor countries to help bridge the digital divide.

Intel Latest News about Intel and Grameen Trust are joining forces in an effort to bridge the financial and digital divides separating many of the world's most wanting from basic services and economic opportunities.

Joined via video link by Grameen Trust founder and 2006 Nobel Peace Prize winner Muhammad Yunus, Intel Chairman Craig Barrett announced that Intel Capital and Grameen Trust are forming a joint venture that aims to bring information and communications technology (ICT) and microcredit facilities to poor communities throughout the developing world.

"It turns out that information technology can follow on the work that Dr. Yunus did in Bangladesh. And in fact if you look, whether you're in Bangladesh or Bolivia or the remote areas of China or India, or even Malaysia, bringing technology in and allowing local rural residents to compete on an equal basis with those in urban areas is very, very important. If you've seen Dr. Yunus's book, Creating a World Without Poverty, he talks about this social concept," Barrett said.
Technology Providing Opportunities

Using the social business Over 800,000 High Quality Domains Available For Your Business. Click Here. model created and employed by Yunus in building Grameen Bank, the Intel-Grameen partnership aims to draw on Intel's expertise developing innovative information technology, as well as its financial resources, with that of Grameen in microfinance and community-economic development.

Grameen's microcredit and community development programs have reached some 7 1/2 million people in 73,000 villages throughout Bangladesh. The partners foresee a number of ICT-based services and entrepreneurship opportunities growing out of their nascent social business venture, according to Intel.

"Examples include remote villagers receiving medical attention through Internet connectivity, rural communities being able to order medicine locally instead of having to walk 10 miles to a hospital, and families being notified of monies received from relatives abroad," the company said.

"Both Intel and Grameen will invest funds and expertise into this joint venture. Intel will be investing through its venture capital group -- Intel Capital. Intel will also contribute with its technology expertise, and Grameen will bring in its extensive experience in creating economic development and income-generation opportunities at the village level to the joint venture," Kazi Huque, the joint venture's managing director, told the E-Commerce Times.

"The goal is to set up a nimble organization that can understand the social requirements and effectively deploy solutions locally. We will not be able to provide the exact amount of funding both parties invested into the joint venture."
Win-Win Proposition

The idea for the joint venture was conceived last September when Barrett met with Yunus in Bangladesh, Huque recounted. "At different times, we had talked internally within Intel on the use of microfinancing to make technology more affordable in the emerging countries. Separate from that discussion, Craig Barrett was in Bangladesh to launch the Intel World Ahead Program.

"During a meeting Dr. Yunus and Craig started a discussion on the concept of social business and how that could potentially apply for IT solutions targeted at the poor segment of the population. After a series of follow-[up] management meetings between Grameen and Intel, we agreed to form a venture where we would bring the expertise of both the companies for a common cause."

Coming together in common cause is a win-win situation for Intel, Grameen and the communities in developing countries it plans to work in. "Grameen's vision is to alleviate poverty. According to Dr. Yunus, this joint venture will create opportunities for poor people to rise above social and economic barriers. Technology-based services will provide the 'hand up' that people need to discover their full potential."

The joint venture aligns with the goals of Intel's World Ahead program, Huque noted, to use technology to improve education and healthcare Latest News about healthcare and spur economic development.

"It's a unique opportunity to be the first technology company in the world to test the variability of the social business model, injecting the discipline of capitalism and do good. Ultimately, this is about helping connect the next billion people, which is a key part of Intel's growth strategy," Huque said.
Testing the Social Business Model

The joint venture will be set up as a separate entity with the aim of implementing ICT solutions that address very specific social problems, Huque explained.

"The goal is to use ICT to provide specific services that target the poor population segment and would provide social benefits. We also believe that to sustain such solution, there needs to be a local entrepreneur earning a livelihood from such services and therefore has a vested interest. Project selection would therefore need to meet such guidelines, but at the end of the day, it's the technology, financials, individual incentives and social benefit that must align," Huque continued.

As altruistic as the venture's aims are, the intricacies and challenges associated with carrying out ambitious social and economic development projects have proven substantial, and have created backlash against organizations.

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Concept for world's poor aids richest nation on earth

from CNN

NEW YORK A bank operating on a concept that has lifted thousands of people out of grinding poverty in the developing world has set its sights on helping the poverty-stricken in America.

The Grameen Bank rose from humble origins in the impoverished South Asian country of Bangladesh to win the 2006 Nobel Peace Prize. It offers small loans to let poor people start their own businesses, a concept known as microlending.

With the threat of a looming recession, the subprime mortgage meltdown and tougher standards by lenders, poor Americans deemed unworthy of credit by commercial banks now have somewhere to turn.

The bank's concept is simple. Credit is a basic human right, says founder Muhammad Yunus. Offer even a small credit and a person will work out how to best use it to break free of poverty.

Last month, Grameen Bank opened a branch in New York City's Jackson Heights, an immigrant enclave just miles from the global center of finance, Wall Street.

It hopes to expand it to other parts of the country soon.

"People will say this can work any place -- in any city in the United States -- if it worked right here in New York City," Yunus said.

It certainly helped Elizabeth Tordoya, a Bolivian immigrant, who opened a store last year but needed an additional $3,000 to add to her inventory.

Because of her weak credit score and limited English skills, she had trouble securing a traditional bank loan.

"Our customers are really people who are the unbanked in the United States," said Ritu Chattree, vice president of Grameen America. "There are about 25 million people in the U.S. with no relationship with a conventional bank. And so the only access they can get to credit are predatory loans at rates of 300 to 400 percent a year."

Judged by gross domestic product, the United States is the world's richest nation, according to World Bank figures. Its $13.1 billion in GDP -- the value of all goods and services a country produces -- is nearly three times as much as the second-richest nation, Japan.

Yet 36 million Americans live in poverty, according to U.S. census figures from 2005.

Grameen charges borrowers like Tordoya about 15 percent a year and does not require collateral. It does not make its borrowers sign a legally enforceable contract, but rather models its business on trust.

But the bank demands something else: Borrowers are required to put a part of the money in savings. And they can't simply mail in payments.

Instead, they commit to weekly group meetings, with each member helping the other meet their payment goals.

"We do the same as we do in Bangladesh," Yunus said. "Five-member groups, weekly meeting. We show support for each other, help each other to stay afloat, work on the problems that you face together."

The bank said its recovery rate is more than 96 per cent.

The loans range from $500 to $3,000. By mid-April, Grameen said it had loaned out more than $350,000 to more than 165 borrowers in New York.

Yunus' pioneering microlending concept began about three decades ago when the American-educated economist returned home.

While touring of villages on the outskirts of the university where he taught, he talked to villagers who told him that they had borrowed from money-lenders -- but found themselves unable to climb out from under a mountain of debt because of high interest rates.

Yunus realized that the sum they needed was minuscule -- sometimes less than $30. Half of Bangladesh's 133 million people live on less than $2 a day.

He lent $27 to 42 villagers out of his pocket to help them buy tools and equipment to start their own businesses. They promptly repaid him.

Emboldened, Yunus began Grameen Bank ("rural bank"). The concept caught fire. The model has been replicated in more than 60 countries.

More than $6.5 billion in microloans have been disbursed to 7 million poor people across the globe, the bank says. Ninety-seven percent of the borrowers are women.

Experience has shown that women are more likely to repay loans, the bank says. They are also likely to direct earnings toward their family's needs, rather than their own.

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Professor Muhammad Yunus and The Green Children to Open First Grameen Eye Hospital in Bangladesh on May 12, 2008

from Earthtimes

The first Grameen Green Children Eye Hospital, projected to perform 50,000 eye examinations and 10,000 cataract operations annually, will be opened by 2006 Nobel Peace Prize laureate Professor Muhammad Yunus and the Hon'ble Adviser, Incharge of Ministry of Health and Family Welfare, Bangladesh at 4:00 PM on Monday, May 12.

The international pop music duo Milla Sunde and Tom Bevan of The Green Children raised $500,000 from donations and CD/DVD sales for the first eye hospital in Bangladesh. The two highly talented musicians are committed to working to raise funds for a second eye hospital that will require a total of about $1 million to complete.

The Grameen Green Children Eye Hospitals, modeled after the highly successful Aravind eye hospitals in India, will be structured as social business enterprises described in the new book by Professor Yunus, Creating a World Without Poverty: Social Business and the Future of Capitalism. The Aravind system in India currently does 1.7 million examinations and 250,000 operations a year.

Once the first eye hospital fully operational, it will work to become self-sustaining gradually and perform a projected 50,000 eye examinations and 10,000 cataract operations per year.

Both hospitals will charge patients based on their ability to pay, with wealthier clients charged at a normal rate and the poor at subsidized. Everyone will receive the same high-quality treatment. While all patients will be expected to pay something, no one will be denied care. Those with no funds will be asked to pay later, when they can and at free of charge in extreme cases.

The key to the success of the model is a system that delivers very high quality and standard eye care services at an affordable cost by using high volume and having highly trained technicians doing most of the examination and preparation work so that ophthalmologists can focus on the operations. The model has been so successful in India that representatives of some of the leading medical schools in the United States have visited Aravind to bring some of the lessons learned back home.

A rising international band, The Green Children recently signed to the world's largest music label, Universal Music Group. The duo comprises Milla Sunde from Norway and Tom Bevan from England. Their debut record with Universal Records will be launched later this year. In addition to their flourishing music career, Tom and Milla have been working for several years with the foundation they jointly established.

The Green Children Foundation supports microcredit, education and healthcare and is focused on engaging young people in supporting positive and effective solutions to conquer world poverty. For further information, please visit http://www.thegreenchildren.org/.

In 2006, The Green Children made their second trip to Bangladesh to film a music video for their song "Hear Me Now," which tells the story of a successful women borrower of Grameen Bank. This video has been used in fundraising for the eye hospitals and will receive a world wide release later this year.

Grameen Bank, and the concept and methodology of microcredit that it has elaborated through its 30 years of work, have contributed to enhancing the chances of peace by reducing poverty. Grameen Bank Project was founded by Professor Yunus in the village of Jobra, Bangladesh, in 1976. In 1983 it was transformed into a formal bank under a special law passed for its creation. It is owned by the poor borrowers of the bank who are mostly women. It works exclusively for them. Borrowers of Grameen Bank at present own 94 per cent of the total equity of the bank. Remaining 6 percent is owned by the government. Dr. Yunus and the Grameen Bank jointly received the Nobel Peace Prize in Oslo, Norway, in December 2006.

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Professor Yunus and Grameen Bank

from the Korea Times

By Ali Hamid Khan

Professor Yunus and his Grameen Bank, of which he is the founder and managing director, have given a tremendous boost to the image of Bangladesh and also given the world a new vision, a new concept to tackle the most formidable and destructive problem nagging Bangladesh and most parts of the world; deep-rooted and pervasive poverty gnawing away at the world's economic and social stability and harmony.

The project started in Jobra (a village adjacent to Chittagong University) and neighboring villages from 1976 to 1979. With the central bank's sponsorship and support of the nationalized commercial banks, Tangail district (a district north of Dhaka, the capital city of Bangladesh) was brought under this project in 1979.

The bank's positive impact on its poor and former poor has been documented in many independent studies carried out by external agencies including the World Bank, the International Food Research Policy Institute (IFPRI) and the Bangladesh Institute of Development Studies (BIDS).

The origin of the bank can be traced back to 1976 when Yunus, head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor.

The Grameen Bank Project came into operation with the following objectives: (i) Banking facilities for the poor, (ii) eliminating the influence of money lenders, (iii) creating employment opportunities for the unemployed, (iv) bring disadvantaged, mostly women into an organizational form to help them manage and understand themselves and (v) reverse the age-old vicious circle of low income, low saving and low investment into a virtuous circle of higher income, credit, investment and higher income and savings.

The project was extended to several other districts in the country after its success in Tangail. In October 1983, the project was transformed into an independent bank by government legislation.

The interesting part is that the rural poor, whom it serves today, own the bank. Borrowers of the bank own 90 percent of its shares, while the government owns the remaining 10 percent.

The Grameen Foundation uses micro-finance and innovative technology to fight global poverty and bring opportunities to the world's poorest people.

A global network of micro-finance partners has already reached over 2.7 million families in 22 countries.

Yunus has given us a plan to successfully fight deprivation and poverty destroying the efficacy of the Bangladesh. He has told us in compelling terms that the poor cannot be ignored and their well-being is linked with peace and turning away from them would be immoral and disastrous.

Their poverty can be removed if we so choose; it is only a matter of choice and conviction. He strongly believes that the availability of the financial sector to the poor can help them reclaim their lives and contribute in overall development by pursuing their small enterprises, adding to bigger development on national basis.

He has proved that they can be turned into a viable and strong force by giving them the opportunity.

They can succeed in changing their lot; consequently, the world would be a safer, happier and better place to live.

The world not only listened to him but also honored him, along with the bank he founded, with the highest and most prestigious award in the world ― the Nobel Peace Prize. He was awarded this honor in October 2006.

Today he is a much-talked personality worldwide.

Due to his relentless hard work and his belief in the potential of the poor, he evolved a new system, offering funds to the poor to work on their small projects to turn around their lives.

Positive changes started becoming more and more visible and tangible, penetrating every village and town in Bangladesh and even transcending borders to reach out and touch the lives of people in different countries.

Yunus has also proved that Bangladesh has potential and resources and its people are hard working and peace loving. They can change their lives and have a positive impact on the world as well.

The professor has proven that there is a way out of the labyrinth of poverty, and society can develop so the poor can become proactive forces, instead of struggling endlessly to make ends meet.

He translated his vision very successfully and today a vast section of the world can benefit from his concept.

He has carried his message beyond his country's borders and helped others to benefit from this new mechanism.

Loans to the poor without financial security was taboo in the financial sector but Yunus belied everyone by bringing into the fold of his bank the poorest of the poor and gave them financial support, from which most would have shrunk away, to establish small businesses to help them find a respectable place in society.

From modest beginnings three decades ago, Yunus has developed micro-credit into an important instrument in the struggle against poverty.

He started with a few dollars and never looked back. The poor, instead of being a liability, are now are considered a vibrant force to be reckoned with.

Single-mindedly and with determination, he carried on his crusade and after a long and arduous odyssey has come to the point where it is touted as a solution to poverty.

Yunus worked not for personal glory, accolades or panegyrics but to set the poor free from the shackles of poverty, to work for their emancipation and also bring them into nation-building activities.

He knew peace and the poor are strongly linked and it is imperative to build a society where there is economic equality so that the people can enjoy peace and posterity can benefit from the stability as a result of a new social order.

The Norwegian Nobel Committee awarded the Nobel Peace Prize for 2006, divided into two equal parts, to Yunus and the bank for their efforts to create economic and social development.

Peace can only be achieved if the majority of the population can be helped to live a life free from poverty.

Poverty is the main retrograde in the way of a lasting and complete peace. If a nation is living a life free from want, democracy and human rights can be achieved and consolidated so that the new generation can continue unhindered.

The bank has moved away from conventional banking practices and given loans to the poor without collateral. This relationship between banker and borrower is based on mutual trust, accountability, participation and creativity.

The bank is based on reaching out to the poor disregarding their financial strength and credibility and uses this form of credit as a cost effective weapon to fight poverty.

Yunus taught us that it is wrong to discard the poor. They must be given the opportunity to grapple with their problems and this has surely paid off dividends in a large way; so much so that the world has noticed and started replicating his concept to fight poverty.

As of December 2006, the bank has 6.91 million borrowers, 97 percent of whom are women.

With 2,319 branches, the bank provides services in 74,462 villages, covering more than 89 percent of villages in Bangladesh.

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Small Loans, Significant Impact

from the Grameen Bank

After Success in Poor Nations, Grameen Bank Tries New York

By Robin Shulman
Washington Post Staff Writer

NEW YORK -- "Señoras!" calls the banker, summoning her borrowers to attention at their first loan-repayment meeting.

The small-business borrowers -- day-care providers, clothing sellers, jewelry makers -- crowd into the living room where their children are napping, eating cereal and watching TV.

They are part of a nascent lending program created by Muhammad Yunus, a Bangladeshi economist who won the 2006 Nobel Peace Prize for developing the Grameen Bank, which uses micro-loans to help eradicate poverty in developing nations.

But these women are not in Bangladesh, they are in Queens. They are among the first 100 borrowers of Grameen America, which began disbursing loans in January. This is the first time Grameen has run its program in a developed country.

"I just want to live a little better, and one day own a little house or something," said Socorro Diaz, 54, a borrower who sells women's lingerie and jewelry. "I'm trying to change my life. Bit by bit."

Grameen America, which offers loans from $500 to $3,000, hopes to reach people like her, part of the large segment of poor Americans without access to credit, said Ritu Chattree, the vice president for finance and development.

They are bakers who can only buy enough eggs and milk for a day's work because they cannot afford a restaurant refrigerator to store ingredients. They are vendors who borrow money daily to rent a cart. They are hair salon owners who take out loans every time they need to buy shampoo.

They often use pawn shops, or fall prey to check-cashing stores, loan sharks, and payday lenders, which can charge interest rates of 200 or 300 percent, Chattree said.

"You think this is normal, because you grew up with it," said Yunus of such high-interest lending in a recent interview with the Financial Times. "This is an abnormal situation, because of the problem with the financial system, so we have to adjust the financial system."

His adjustment begins with this experiment in the immigrant neighborhood of Jackson Heights, Queens.

Three groups of five borrowers attend the meeting in the apartment of Jenny Guante, 40, who makes silver and gold jewelry and runs a home day care. Some are making weekly loan payments; the largest payment is $66 on a $3,000 loan. Guante, the group's chairwoman, counts the money carefully before passing it to Alethia Mendez, the Grameen staff member who serves as community banker and center director.

"I've known these people forever," said one borrower in the roomful of immigrants from the Dominican Republic. "We grew up together. We went to school together around the corner."

That bond helps people make payments, said Chattree. If one woman is having trouble repaying a loan because, say, her husband is sick and she has to care for him and the children, another of her group might pitch in to help with child care. Loan disbursements for the whole group are slowed if one person defaults, she said.

After the meeting, as several women drift off into the kitchen with a calculator to discuss their plans, 10 new prospective borrowers stop by the apartment.

The program began in 1974, when Yunus lent $27 to a group of poor villagers and realized that even small amounts could make transformative differences. He set up the Grameen Bank, which has since disbursed about $6 billion in tiny loans to about 7.4 million Bangladeshi micro-entrepreneurs, mostly women in businesses such as street vending and farming.

In Bangladesh, Grameen also functions as a savings bank, makes college and housing loans, and operates projects in areas such as telecommunications, yogurt production and solar energy.

The problem with capitalism, Yunus says, is its distinction between companies pursuing profit and charities pursuing good. His bank model operates with corporate efficiency, but pumps profits back into social objectives.

The borrowers in Queens are following Grameen's self-sufficient model in the developing world.

But Yunus acknowledges that the United States is different from the seven countries where Grameen operates its loan programs, or the dozens of others where Grameen has offered technical advice.

Here, there is more regulation, so a person cannot just set up a cart and sell cakes without a permit.

The welfare system discourages income-generating activities, Yunus says. "If you earn a dollar, that dollar is to be deducted from your welfare check. If you want to quit welfare, then you lose your health benefits," he told the Financial Times.

Rules for setting up a bank are cumbersome for a micro-operation, and Yunus has met with the head of the Federal Reserve and members of Congress to discuss creating more flexible legal frameworks.

Grameen America will break even when it has 20,000 borrowers, Chattree said, a scale she expects to achieve in three to five years.

That is something that no American micro-lender has achieved, said Michael Chu, a specialist in micro-finance at Harvard. "In general, the feeling is that micro-finance doesn't work in the States," said Chattree, even though many groups, including some aided by the Grameen Trust, have followed the Grameen model.

Other micro-lenders and academics say that if anyone can spark discussion on the issue, Grameen can.

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Bangla pride, America’s envy

from the Calcutta Telegraph

Washington, Microcredit pioneer Grameen Bank of Bangladesh, which has dared to finance the poor in the shadow of Manhattan’s skyscrapers, is finding that it has to beg or borrow in order to expand its work in the US.

The Third World bank has dented Wall Street’s self-esteem by lending $145,000 to immigrants in New York’s largely Indian retail business district of Jackson Heights since the beginning of this year.

But it is finding that a complete absence of microcredit laws in the US is coming in the way of giving more loans to those in America who have no access to regular commercial banks. Their number is estimated at close to 30 million. Another 45 million people in this country have only partial access to commercial banking, according to academic estimates here.

This correspondent was with several bankers from Chicago at a lunch in honour of commerce minister Kamal Nath the day Financial Times recently broke the story about Grameen Bank lending in New York.

One banker choked on his food and was incredulous that a bank from poor Bangladesh would have the temerity to hand out loans in America, that too in New York.

Another, who is director of a bank in recognition of his long service in the US Federal Reserve, could hardly contain his anger and argued that it was illegal under American banking laws for an organisation like Grameen Bank to engage in banking activity here unless it had gone through a cumbersome process of permissions.

That process could take years — and sometimes prime ministerial intervention — as two Indian banks, which recently got permission to open in New York, have learned from their experience.

In several interviews to the New York media in the last few weeks, Nobel Peace laureate Muhammad Yunus, the founder of Grameen Bank, conceded as much. The problem, he explained, was that US laws were suited to create financial giants like Citibank, not for institutions like his.

Loans in the US are also tightly controlled by three credit reporting agencies which have a stranglehold, often counterproductive, on borrowers.

A developed-country diplomat posted to North America, who wanted to buy a Jaguar car paying the entire cost in cash, was recently denied the sale because the transaction had to be cleared by credit reporting agencies even though there was no credit involved.

The agencies would not clear him because he did not have enough “revolving credit accounts”.

Grameen Bank is moving gingerly to tackle a mountain of these problems that stand in its way of helping the needy in New York.

A joint media release by one of the credit reporting agencies, Experian and Grameen America, the local offshoot of the Bangladeshi bank, says they will work together to navigate the choppy waters of credit in the US.

“This reporting will enable Grameen America’s borrowers to establish their credit files and will provide the foundation for building the borrowers’ credit scores allowing access to financial services previously not available,” the release said.

Yunus said in his interviews that he had met the chairman of the Federal Reserve, the US equivalent of the Reserve Bank of India. Ben Bernanke was very sympathetic, but Yunus said authorities here get very scared the moment there was any talk about changing the laws.

The banker to the poor in Bangladesh said his bank is allowed to give loans in the US, but cannot accept deposits, so the normal banking recourse to funds is closed to it.

Yunus said he was looking at charities, foundations and so on to get money to loan to small entrepreneurs, mainly women in New York’s Jackson Heights.

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Doing Well by Doing Good?

from The Wall Street Journal

The cellphone is a hot tool in rural projects. Firms hope profits follow.
By CRIS PRYSTAY

One day in mid December, Subhash Arve stood in his grape field, just outside the village of Boregaon in the Western Indian state of Maharashtra, fretting over whether it was time to spray the first crop of the season with a growth hormone. So he whipped out his mobile phone.

The phone's software, loaded on by Tata Consultancy Services Ltd., prompted him to click various icons and answer some simply worded questions to indicate what variety of grapes he was growing, when he had pruned his vines and what type grafts he had used. It also instructed him to take four or five photos with the phone's camera. He then keyed in a code, and, minutes later, the details of his crop and photos of the grapes popped up on a computer screen at the Maharashtra Grape Growers Association in Pune, 220 kilometers away.

A reading from a soil-analysis sensor planted in the village by Tata Consultancy and a local weather forecast also appeared on the screen. A scientist at the association then sent Mr. Arve the answer he sought, via brief text message: Spray now, and use gibberellic acid, a plant hormone that regulates growth and is tricky to apply. Too little or too much can damage the crop. The scientist recommended an exact amount.

Mumbai-based Tata Consultancy began piloting the cellphone-based crop-advisory service in Mr. Arve's village in October. The information-technology consulting arm of the Tata Group, which has interests in steel, telecommunications and financial services, hopes the project will spearhead its push into rural markets.

But this project is about far more: The mobile phone is now one of the hottest development tools world-wide. Nongovernmental organizations see cellphones as a way to bolster incomes of the world's poor, while corporations eyeing untapped rural markets hope new mobile-phone services can boost rural incomes and corporate revenue at the same time. South Asia, where mobile-phone use is rapidly growing, has become a test bed.

Reuters Group PLC is piloting a service in India called Reuters Market Light, providing information on crop prices in local markets to farmers, helping them decide to which market in their area they should take their produce on any given day to get the best price. That service, which was offered free to farmers in a few regions in Maharashtra under a pilot program last year, was rolled out state-wide in October as a commercial service. Reuters is looking for telecommunications partners to take the service India-wide next year.

In one of the earliest efforts to recognize the cellphone's potential, Grameen Bank, the Bangladesh-based pioneer of microcredit in remote regions, and Grameen Foundation, a separate entity in New York, have helped introduce "village phone" programs in 10 countries, setting up 300,000 women in tiny villages with mobile phones that each woman rents on a per-call basis to her neighbors.

On another front, several organizations, including the University of California, Berkeley, are testing literacy courses that can be delivered to rural residents over the mobile phone, some with game-like learning.

"Mobile phones are a pretty important tool for development. I'd put it up there, just behind education and public heath, in the importance to economic growth," says Leonard Waverman, a professor of economics at London Business School who has studied the impact of telecommunications on economic growth and productivity.

Although as few as 4% to 5% of rural Indians have cellphones, about 50% of new customers are expected to come from rural areas over the next two to three years, according to estimates from BhartiAirtel Ltd. in India. The expanding number of phones helps raise rural incomes in some simple ways. It makes carpenters, weavers and plumbers more reachable by their customers, and it gives better information to farmers and fishermen about where to sell their harvests.

A Harvard University economist's study on the impact of mobile-phone usage among fisherman in Kerala, India, found that the variation in fish prices in Kerala dropped to 15% from 70%, and the wastage of each daily catch to near zero from 5% to 8%, after 2001, by which time most fishermen and traders were using cellphones to coordinate with traders in various markets to determine to which port they would deliver their daily catch. The fishermen's profits increased an average of 8%, even as the price paid by consumers for fish dropped 4%.

A study of the village-phone project in Bangladesh by the Canadian International Development Agency showed that people in towns where a mobile phone is available saved up to eight times the money they would have spent to travel elsewhere to use a phone or talk to another person. The savings can be used for improved nutrition, education or reinvestment in a business.

Specialized software and information services, like the one that Tata Consultancy is piloting, add momentum to the development trend. The company hopes its service will address a host of problems faced by rural farmers. Not only do many have to guess which market is best for selling their crops, they struggle to use modern fertilizers and pesticides. Many are illiterate so can't read instructions. Poor infrastructure, meanwhile, makes it difficult for government agencies to offer education and advice to every farming community.

The consulting firm has designed its software to use icons and simple instructions in local dialects to get around the literacy problem. Besides connecting farmers with local crop experts at government research institutions and universities, Tata Consultancy plans to offer other information, like daily crop prices from local markets, train and bus schedules, and regional job postings.

"If we are able to create meaningful applications for the Indian farmer, the potential is huge," says K. Ananth Krishnan, Tata Consultancy's chief technology officer. There are more than 200 million people in India who work in the agricultural sector, and are still underserved by mobile companies, he says.

The consulting firm, which began work on a prototype of its cellphone-based crop-advisory program two years ago, sees the effort as "applicable to a whole range of countries," Mr. Krishnan says. So far, Tata has provided the special cellphones to about 50 farmers in one village, monitoring how well they manage the phones and ironing out kinks. It is in the process of providing phones to another set of farmers, and aims to have pilot programs running in three different villages, with about 2,000 farmers participating, by March.

There are hurdles. Navigating a complex phone menu is a challenge, so the high illiteracy rate is a big hurdle. Tata Consultancy uses icons primarily to guide participants through the process of sending queries. But the farmers have to be somewhat literate, because some of the prompts are in text.

Meanwhile, obtaining localized price information from many markets is labor intensive for the service provider. Tata Consultancy has built up a network of volunteers, such as government agricultural institutions and nongovernmental organizations. Rolling its program out nationally may require going beyond volunteers to paid positions, which would boost the cost.

The price of the handsets also must be kept low, no small feat. As with other phones already sold in poor rural areas, they generally must be sturdier than those sold in cities, with higher audio levels to overcome noise in market places, longer battery lives and quicker recharge times. The design also must protect electronic components from the heat. Tata Consultancy's phones also must contain a camera and specialized software. The firm is considering the concept of co-branding the phones with companies that want to advertise to farmers, like fertilizer or seed companies, to keep the cost down.

Reuters believes providing local price information is a viable business. The company, whose main clients are financial institutions and newspapers, set up Market Light as part of its "innovation program," a unit designed to explore new business ideas. Reuters Market Light hired 45 people who visit 50 local markets in Maharashtra each day to observe transactions and get a price range on eight different crops, plus four journalists who write stories relevant to the local agricultural community. The company is offering a text-message service that is delivered through local mobile-phone network carriers. Farmers get price information from markets within a six-hour travel distance of their farm, local weather forecasts and news that may affect prices of their crops.

Reuters offered the service free for part of last year, but now charges 175 rupees, or roughly $4.50, for a three-month subscription. "Our business model tells us that theoretically this is cost effective," says Amit Mehra, managing director of Reuters Market Light. "We want to see that transmitted into real numbers on the ground. That began in October; we're in the process of proving it."

Bharti Airtel is piloting distance-education and telemedicine projects over the phone, and plans to conduct a pilot study in a Himalayan village, in partnership with the State Bank of India, on a service that will allow customers to transfer money through text messaging to people without bank accounts.

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GLOBAL: Even simple tech helps reduce poverty

from IRIN

JOHANNESBURG, 13 January 2008 (IRIN) - Asia's "green revolution" is a dramatic example of how even modest technological advances in developing countries have helped boost incomes and reduce the number of people living in poverty, according to the World Bank's Global Economic Prospects 2008 report, subtitled Technology Diffusion in the Developing World.

The principal technologies involved in the green revolution, which doubled cereal production between 1970 and 1995, were pesticides, irrigation and synthetic nitrogen fertiliser - which had long been available in industrial countries - along with the development of high-yielding varieties of maize, wheat and rice.

"Even though the impact of the green revolution on the poor was initially a source of controversy, by the late 1990s it was clear that poor people had reaped substantial benefits from higher incomes, less expensive food, and increased demand for their labour," said the report.

New technological developments on a large range of fronts, from agriculture to electronics and medicine have helped reduce the number of people living in poverty from 29 percent in 1990 to 18 percent in 2004, but the gap between rich and poor countries is still huge, and the capacity of the developing countries remains weak.

"Technological progress increased 40 to 60 percent faster in developing countries than in rich countries between the early 1990s and early 2000s," said Andrew Burns, Lead Economist and main author of the report. "Nevertheless, developing countries have a long way to go, given that the level of technology they use is only one-quarter of that employed in high-income countries."

Innovations now spread much more quickly between countries: in the early 1900s, new technology took over 50 years to reach most countries; today it takes about 16 years.

Technology covers a broad range of interpretations in the report, from using sawmill waste to produce carbonised briquettes for household cooking, which can increase access by the poor to fuel while reducing deforestation, to rainwater collection systems, which can greatly improve access to clean drinking water and reduce the incidence of diarrhoea, a major cause of infant mortality.

It also notes the impact of newer technologies, like mobile phones, which have allowed some forward-thinking financial institutions in sub-Saharan Africa to extend cheap financial services to the poor, for example, in South Africa; the Equity Bank in Kenya has outfitted a series of vans with laptops and telecommunications facilities to act as mobile banking units, and has also designed flexible savings mechanisms with emergency loan facilities.

Migrants aid tech boom

"Rising trade and investment contacts with high-income countries, often facilitated by migrant groups, have been central to technological progress in developing countries," said Uri Dadush, director of the World Bank Development Prospects Group.

An émigré from Bangladesh working in the financial sector in the United States returned to help create the Grameen Phone network and make mobile phones available to poor people in remote villages, the report noted.

"Through its successful Village Phone Programme, the network has provided business opportunities to some 260,000 village phone operators, mostly poor rural women. Grameen Phone now has 15 million customers, more than 10 times the maximum potential client base initially estimated by Bangladesh Telecom."

Dadush added, "To continue catching up, countries need to strengthen educational achievement, governance, basic infrastructures, and links to migrant groups." Three-quarters of low-income countries have 15 or fewer personal computers per 1,000 people, and a quarter have fewer than five.

The authors urged governments to strengthen domestic technology dissemination channels as a high priority. These include transport infrastructure and the capacity of applied research and development agencies to orient themselves to local markets through improved outreach, testing and marketing.

Weak basic infrastructure systems also limit the range of technologies that can be employed in many countries. Policies should ensure that critical enabling services such as roads and electricity are widely available, whether delivered by the private or public sector. In sub-Saharan Africa, just 8 percent of the rural population has access to electricity.

Ineffective or uneven access to quality education also restricts ability to exploit technologies, and the World Bank report urged countries to invest in education.

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Grameenphone Will Seek Acquisitions to Drive Growth

from Bloomberg

Grameenphone Ltd., the Bangladeshi mobile-phone company founded by Nobel Peace Prize laureate Muhammad Yunus, said it may buy other operators as competition intensifies from rivals including Orascom Telecom Holding SAE.

``We are always seeking to extend our footprint,'' Chief Executive Officer Anders Jensen said in an interview yesterday in Macau. The six wireless carriers operating in the country are ``two to three too many,'' he said.

Acquiring other operators will give Grameenphone, controlled by Norway's Telenor ASA, more airwave spectrum to accommodate its target of adding 7 million users a year. The Dhaka-based company has a 61 percent share of a market where less than one in five of the 150 million people own a mobile phone.

Bangladesh is ``attractive because it has low penetration and a high growth rate,'' said Paul Budde, managing director of telecommunications researcher Paul Budde Communication Pty. in Bucketty, New South Wales. ``In a fast-growing market, there's room for four to six competitors.''

Bangladesh had 28.5 million mobile users at the end of June, compared with 15.4 million a year earlier and about 1 million in 2002, Budde said. Bangladesh is expected to have 50 million mobile subscribers by the end of 2008, he said.

Peace Prize

Yunus and the Grameen Bank were jointly awarded the Nobel Peace Prize in a December 2006 ceremony in Oslo for advancing social and economic development by giving small-business loans to the poor.

The Dhaka-based bank's so-called microcredit system has spread to impoverished communities around the world since its inception in 1976. The lender makes most of its loans to women and serves tens of thousands of villages in Bangladesh.

Yunus, who studied in the U.S., returned to Bangladesh in 1972, according to the Nobel Prize Web site. In 1976, driven by the sights of poverty and famine in his home country, Yunus decided to lend $27 to 42 craftsmen and told them they could pay the money back when they could afford to, the site said.

Grameen Telecom Corp. started the phone company with the aim of bringing services to 100 million villagers in Bangladesh, according to the Web site.

Grameen Telecom owns 38 percent in GrameemPhone, while Telenor, the largest phone company in the Nordic region, owns 62 percent, according to the Bangladeshi carrier's Web site.

Rising Competition

Closely held Grameenphone faces rising competition as Cairo- based Orascom, the Middle East's largest wireless operator, and Singapore Telecommunications Ltd. invested in mobile-phone operations to tap demand in Bangladesh.

In the nation, mobile-phone calling rates may fall to about 1 cent a minute as operators offer discounts to lure users, CEO Jensen said in the interview. Grameenphone plans to encourage users to make more calls and introduce services such as Research in Motion Ltd.'s Blackberry device to increase average spending from less than $5 a month, he said.

Grameenphone invested about $300 million in each of the past three years to meet demand, former chief executive officer Erik Aas said in June. Jensen, previously an executive at the Swedish unit of Fornebu, Norway-based Telenor, replaced Aas in September.

``If we get additional spectrum, we will be more willing to invest,'' said Jensen. Grameenphone may otherwise slow capital spending as equipment purchases alone can't create enough new capacity, he said. The company has almost 16 million users, Jensen said.

2008 IPO?

Grameenphone may complete a share listing on the Dhaka stock exchange next year, Jensen said. The proposed stock offering will be the biggest in Bangladesh, he said.

``There is strong interest from the owners for the IPO,'' said Jensen. ``There are practical things such as whether the Dhaka Stock Exchange can handle a deal of this size.''

The company has about 260,000 subscribers on its Village Phone Program, which it runs jointly with Grameen Telecom and Grameen Bank, according to the carrier's Web site. The 10-year-old project offers loans to villagers to buy handsets, which are then used in the community as pay phones, earning the operators income.

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Priority to Women in Bangladesh Effort To Eradicate Poverty

from Bernama

By Jenny Lanong

KUALA LUMPUR, 20 Jun (Bernama) – Oppression from money lenders, family problems and unequal opportunities between the rich and the poor have been identified as the main factors that contribute to poverty among the countries in the South.

Various measures to eradicate poverty have successfully been undertaken by the governments of these countries to reduce the level of poverty.

In his presentation ‘The Experience of Grameen Bank’ at the forum on Poverty Eradication: Sharing Experience and Lessons Learnt Among South Nation, organised by the South-South Information Gateway (SSIG) here Tuesday, Grameen Bank (GB) Vice President A.S.M Mohiuddin said that efforts to eradicate poverty in Bangladesh are focused mainly on the women folk.

For the women of Bangladesh, oppression may come in the form of being divorced, an exhortative dowry, family pressure or an abusive husband. In Bangladeshi, the wife is the last person to partake of any meal in the family.

Politically, socially and economically, Bangladeshi women need assistance and funding to improve the quality of their lives, he said.

In view of this, GB was established to provide financial assistance to the poor in Bangladesh. GB is a bank by the poor for the poor.

“97 percent of borrowers are women and the borrowers own 94 percent equity in the bank with the remaining 6 percent held by the government” he added.

The bank provides mortgage-free loans to borrowers who are given the option of either making weekly repayments or a flexible repayment schedule of their proposal.

GB provides credit facilities such as of term loans, flexible-loans, housing loans, study loans while a scholarship program have been established for the children of shareholders.

According to Mohiuddin, under GB’s scholarship program, daughters are given priority.

The loans have enabled the construction of 646,137 houses for the poor and funded the tertiary education of 17,113 students.

GB’s efforts have proven successful at improving the quality of life for the poor in Bangladesh, he added.

In the three decades of its existence, GB has managed to improve the socio-economic standing of Bangladeshi women.

In 2001, 42 percent of borrowers stood above the poverty level and in 2006, the percentage has increased to 63.6 percent, he said.

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China invites Bangladesh's Grameen Bank for microcredit system trial

from Yahoo News India

By ANI

New Delhi, Bangladesh's Nobel Peace Prize winner, Muhammad Yunus, will be working with the Chinese government to bring his Grameen Bank lending system to rural China within a year.

Yunus said China had invited him to begin a trial of the "microcredit" system, which specializes in making loans of 100 dollars or less, in one of three remote locations of the country.

The test could lead to expansion of the program throughout the country, reports China Daily. In Yunus's native Bangladesh, Grameen Bank has provided collateral- free loans to five million people - 96 percent of them women - since 1976.

Yunus and Grameen were awarded the Nobel in October for their achievements in reducing poverty. Grameen is also noted for its loan repayment rate of more than 98 percent. Yunus said China already had more than 100 separate microcredit programs, but they had attracted only about 100,000 customers over the past 12 years.

As of now, China has given Grameen permission for the market test, and invited Yunus to select "a difficult spot" so that he could prove the value of the system. The Chinese trial is expected to begin with fewer than 50,000 borrowers, said Yunus.

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