By Katherine Walraven for APCNews JOHANNESBURG, South Africa,
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APCNews Book Review
Nicholas P. Sullivan’s You Can Hear Me Now: How Microloans and Cell Phones are Connecting the World’s Poor to the Global Economy
In 1993, Bangladesh was considered a no-go zone by foreign investors who were not only put off by floods, but also its overwhelmingly rural population, prohibitive levels of corruption, and bureaucratic red tape. Foreign direct investment in the country totalled USD 3 million that year. Last year, according to the World
Bank, it multipled to over USD 800 million, three quarters of which feeds the telecommunications industry.
How did foreign investment skyrocket in such a short period of time? The answer lies in the story of GrameenBank, if we are to believe Nicholas P. Sullivan, author of You Can Hear Me Now: How Microloans and Cell Phones are Connecting the World’s Poor to the Global Economy.
GrameenPhone
Sullivan’s book, published in February 2007, uses GrameenPhone to illustrate inclusive capitalism – an economic model that in his own words, “is sweeping the developing world”. As Sullivan explains in his book, this form of capitalism “spreads wealth as it creates wealth” and “empowers the poor as it generates returns for investors.” Information technology is particularly hospitable to inclusive capitalism because people at all levels of society can use it to heighten productivity, and it creates income opportunities as it spreads, this book explains. GrameenPhone alone has created, directly and indirectly, approximately 325,000 income opportunities, lifting those at the bottom of the pyramid out of poverty while bridging the digital divide. And it is still growing.
GrameenPhone is the starkest example of inclusive capitalism, and Sullivan devotes just under half of his book to its story. He follows founder Iqbal Quadir who, in 1993, convinced that “connectivity is productivity”, abandons his job as a venture capitalist in New York and moves home to Bangladesh to bring phones to the masses in a country with but one phone for every 500 people. Determined to reach the poor and in need of capital, Quadir approaches Muhammad Yunus, the man behind the Grameen Bank, for support. After four years of hard work, GrameenPhone is born, providing the bank’s first borrowers with phones that the women manage to generate income and becoming the country’s biggest cell phone provider.
The story’s vilain
The story’s villain is Bangladesh Telephone and Telegraph Bureau (BTTB), the government body with a near monopoly over the fixed line telephone system. Not only does BTTB exclude the poor by serving only major urban markets (and inefficiently so, with more than a million applications for phone service on file and wait times reaching 27 years if applicants refuse to pay bribes). It also persistently thwarts competition, making GrameenPhone’s development an uphill battle, Sullivan’s book recounts.
BTTB’s ineffectiveness and stalwart opposition to market competition support Sullivan’s main argument that entrepreneurship provides a more effective route to developing countries’ economic development than aid, which often strengthens the economic power of corrupt and ineffectual governments. While foreign aid is mainly channelled to cities and does not reach the poor, “private investment is breathing life into economies long stifled by corrupt, aid-drunk governments,” writes Sullivan. This is taking place through what Sullivan refers to as the “external combustion engine” and its forces of information technology, native entrepreneurs trained in the West, and foreign investors.
External combustion
The second part of the book reports on how the external combustion engine is being successfully replicated in other areas of the global south. In Africa, for example, the sale of prepaid calling cards is a USD 3 billion business employing more than 200,000 indigenous entrepreneurs. Sullivan also explores the growing mobile-banking, or m-banking, industry, and the symbiotic relationship between cell phones and personal finance. And, he moves beyond cell phones by outlining Quadir’s current efforts to bring electricity to rural Bangladesh, suggesting the vast possibilities of applying the external combustion engine to promote inclusive capitalism while addressing unmet human needs.
You Can Hear Me Now is a well researched, engaging, and compelling account of a an entrepreneurial approach to business and development. Sullivan succeeds in balancing economic theory, history, humour, and personal experiences in a volume that is equally informative and inspiring. While Sullivan focuses mainly on the benefits of spreading information technology through the external combustion engine at the expense of potential drawbacks, such as electronic waste, his book showcases a development model that makes the future in some areas seem a little brighter.
Related interview with author Nicholas P. Sullivan: "IT spreads throughout society at all levels, and is not concentrated in the hands of a few"
