"IT spreads throughout society at all levels, and is not concentrated in the hands of a few"

By Katherine Walraven for APCNews JOHANNESBURG, South Africa, 25 April 2007

APCNews interview with 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’

APCNews: What inspired you to write You Can Hear Me Now?

I was writing about business and entrepreneurship in the U.S. Then I worked for Inc.com, which attracted a lot of foreign interest, and I began looking at ways to export American-style entrepreneurship. I then met Iqbal Quadir at the International Conference on Financing for Development in Mexico and heard the GrameenPhone story. I got to know Quadir over a couple of years while he was teaching at Harvard before deciding to do the book.

APCNews: The book is very well researched. Can you briefly talk about the steps that you took in conducting research?

I went to Bangladesh twice, both for ten to fourteen days, and talked with many at Grameen Bank and GrameenPhone, went to the villages, and basically got a sense of how important phones had become in such a poor country. I also spent a lot of time researching the impact of cell phones. The book took about eighteen months to complete.

APCNews: How much time did you spend in rural areas, speaking to the poor about how cell phones were affecting their lives and livelihoods?

With the assistance of an interpreter, I made three or four trips to the villages and met with several “phone ladies” who were certainly benefiting from the phone business. However, my story focused on the level of the foreign investors coming into a country dominated by foreign aid and starting a large-scale business that was creating wealth and income opportunities.

APCNews: Can you explain your metaphor of the “external combustion engine” and why it is particularly important for developing economies?

It is in contrast with the “internal combustion engine”. That is, in say, the Silicon Valley, California, where a local entrepreneur might get local money to develop or apply a technology. In a country like Bangladesh, there is not this culture of entrepreneurship, the ease of starting a business, the local capital markets, or the technology for internal combustion. The forces of combustion come from the outside. But, as capital markets develop and business spawns business, you begin to see the creation of an internal combustion engine, as in India now. For me, the external combustion engine was a way to model the difference between private investment and foreign aid.

APCNews: Yes, a major theme of your book is that “private enterprise creates wealth and job opportunities and is a quicker route to a poor country’s economic development than aid.” Why? And, why is this particularly true in a country like Bangladesh?

Because aid has been concentrated in the hands of a few – primarily government officials – who use it for projects in the capital city, but don’t distribute the funds to the countryside. Also, much foreign aid is actually recycled back to donor countries in the form of contracts for engineers and consultants, for example, rather than being used to create jobs in the receiving country. Bangladesh has long been dependent on aid, and the government has done little to promote business development.

APCNews: How do you feel about the role of NGOs and non-profit organisations in promoting economic and social development?

They are generally quite effective because a) they are not government by definition; b) they are very focused on specific problems; and c) they are usually on the ground rather than running operations from afar. The only issue with NGOs and non-profits is that they have no accountability to the bottom line. They should act as catalysts to unleash markets and local entrepreneurs who can keep solving the problems without the need to raise money. There is nothing like the idea of going out of business if something is not working to make people develop more efficient models for long-term sustainable social and economic development.

APCNews: The second major theme is that “information technology is the best product that foreign money can import.” Why is IT such a promising sector for foreign investment and economic development?

Technology in particular has been effective in creating job opportunities because it spreads so quickly. It is in high demand and the way to distribute it engages local populations as part of the supply chain, thus creating income opportunities as well as distributing an empowering tool of production. It also improves all the time, getting faster and cheaper, and is used in increasingly creative ways. But the number one reason is that IT spreads throughout society at all levels, and is not concentrated in the hands of a few.

APCNews: Grameen Bank’s founder, Muhammad Yunus, says that “Grameen Bank has an impact on the poor, GrameenPohne on the entire economy.” Can you speak to this?

GrameenPhone, for all it does in poor villages where there were once no phones, also functions as a regular phone company in cities, and gives business a tool that improves efficiency. It helps everyone. Also, because it has attracted competitors, and because GrameenPhone wants to keep growing and improving its network, it is attracting more and more foreign money, much of which has been reinvested in the country, into cell towers, etc. Finally, because technology has been shown to add 0.6% to a country’s gross domestic product (GDP) for every ten phones per 100 people, GrameenPhone is simply increasing the overall rate of growth and income in the country.

APCNews: What impact has GrameenPhone had in Bangladesh?

It has increased GDP, attracted foreign investors, delivered an empowering tool throughout the country, and connected Bangladeshis to outside markets, relatives overseas, and each other. In many ways, GrameenPhone and its competitors are helping turn Bangladesh into a modern country! And it led to the development of wireless broadband internet connections, which wouldn’t have happened without phones coming first.

APCNews: Do you think that GrameenPhone contributed to the fact that foreign investment is taking over official development assistance?

Yes! It is almost exclusively responsible for that. The only other sector attracting foreign investment is the garment industry, but that alone would not have done the trick.

APCNews: Now, the economic and social benefits of information and communication technology are well established. At the same time, IT can have dire consequences for the environment. Is GrameenPhone doing anything to ensure that old phones are managed in an environmentally sustainable way so that they do not contribute to the growing volume of electronic waste?

This is a question I get asked a lot, and I’m sorry to say that I have no idea. My focus was almost exclusively on the benefits and not on the potential downsides.

APCNews: With all of the bells and whistles incorporated into cell phones these days, they can perform many of the same functions as computers, and are more affordable and environmentally friendly. Do you think that the expansion of cell phones in developing countries can and should be promoted over that of computers?

Yes. Cell phones are cheaper, easier to use, and a precursor to computers. Cell phones give people a sense of the possibilities of connections and messaging and, in five years, the cell phone will have the computing power of today’s desktop. However, computers probably have a more important role in education, as I don’t see how cell phones could be used effectively in a school environment. So, maybe it’s not either or, but a little bit of each for different circumstances, with people using computers when they are comfortable and the cost justifies the return.

Related news article: ‘Gold in the mud’ unleashed through ‘inclusive capitalism’?

Photo: Nicholas P. Sullivan
Photo by Janice Fullman


Author: —- (Katherine Walraven for APCNews)
Contact: katwalraven at gmail.com
Source: APCNews
Date: 04/25/2007
Location: JOHANNESBURG, South Africa
Category: Development Resources