Introduction

GrameenPhone is a commercial operation providing cellular services in both urban and rural areas of Bangladesh, with approximately 40,000 customers. GrameenPhone was founded by three visionaries: Iqbal Quadir, an investment analyst who saw the role that telecommunications connectivity can play in poverty reduction within Bangladesh and who developed the concept in partnership with Muhammad Yunus, the founder of the Grameen Bank, and Khalid Shams, Deputy Managing Director of the Grameen Bank. Through their efforts in establishing operating and investment partnerships, investment in GrameenPhone began with initial funding of $125 million USD, including a $50 million loan from International Finance Corporation, Asian Development Bank and Commonwealth Development Corporation in Britain.

A pilot programme of GrameenPhone, in collaboration with the micro-credit facilities of the Grameen Bank through a wholly owned subsidiary called Grameen Telecom, is enabling women members of the Grameen Bank's revolving credit system to retail cellular phone services to rural areas. This pilot project currently involving 950 Village Phones and phone operators providing telephone access to more than 65,000 people. Village women access micro-credit to acquire digital GSM cellular phones and subsequently re-sell phone calls and phone services within their villages. Grameen Telecom staff have announced that when its programme is complete, 40,000 Village Phone operators will be employed for a combined net income of $24 million USD per annum. [View a short video clip featuring Grameen Bank president Muhammad Yunus - 1.36M]

Advancing telecommunications for rural development has become a key focus of many development agencies such as the Canadian International Development Agency (CIDA), The World Bank, the International Telecommunications Union, and the Food and Agriculture Organization of the United Nations. It is clear that the world is in the midst of a telecommunications revolution and that telecommunication plays a vital role in the social, political, and economic development of every country. In rural areas where isolation and poor infrastructure services are often the norm, telecommunications can play an extremely important role in enhancing rural social and economic development.

While there is clear evidence of increasing spending on telecommunications enhancement in developing countries, there still exists a large gap between investments in urban centres and investments in rural regions of developing countries. Despite emerging evidence to the contrary, many telecommunications investors continue to believe that rural telecommunications investments are not profitable. At the same time, rural development planners remain relatively unexposed to information about the potential of telecommunications to assist in social and economic development efforts and thus they seldom incorporate rural telecommunications infrastructure and application components in their planning.

The rural social and economic development impacts of telecommunications investments have seldom been analyzed at the micro level. Likewise, experiments and innovations in approaches to rural telecommunications investment and applications are poorly documented. Grameen Telecom's Village Phone programme provides an excellent example of ways to combine rural development with telecommunications investment. Unfortunately, the methodologies used in establishing GrameenPhone's rural coverage, and the resulting impacts and lessons learned, have been poorly documented.

Grameen Telecom's Village Phone programme serves as an effective case study for CIDA and its partners to learn more about how private sector development (PSD) in the telecom sector can make a significant contribution to poverty reduction. The Village Phone programme also provides an opportunity for CIDA and its partners to review innovative strategies for incorporating targeted, micro-level PSD in the telecom sector within project design.

CIDA's Policy on Poverty Reduction states that CIDA will promote participatory approaches for building networks and involving governments in improving approaches to poverty reduction. This method includes enabling people to realize their own capacities and goals through participatory processes, contributing to donor coordination mechanisms, and supporting capacity building and institutional strengthening of various groups and organizations. It also includes implementing policies and programming to address the gender-poverty nexus. Documentation of the impacts of Grameen Telecom's Village Phone programme and its innovative approach to poverty reduction will provide CIDA and its partners with valuable learning and case study materials that can contribute to CIDA's own poverty reduction strategy.

CIDA's Poverty Reduction Project in Asia has recently begun a year-long process "with staff and a variety of CIDA partners, to help the Branch better understand the complexities of poverty, determine lessons learned from poverty focused projects in the field and develop a new poverty reduction strategy." This Multi-Media Evaluation Case Study evaluation of GrameenPhone is intended to help CIDA and its partners gain a better understanding of the strengths and weaknesses of the Village Phone model, and help catalyze discussion on possibilities for replicating aspects of the approach in other parts of Asia and the world.

CIDA's Policy for Private Sector Development in Developing Countries addresses the need to expand access to non-financial services, as well as capital available to micro-enterprises and small and medium-sized enterprises (SMEs). According to this policy, "access to modest financial and non-financial services and other forms of micro-enterprise support are key to reducing poverty - providing the poor, particularly women and the often-overlooked informal sector, with greater opportunities for self-employment and stabilized livelihoods during difficult times." Documentation of the evidence of the Village Phone's impact on village enterprises will assist CIDA and its partners to analyze the kinds of interventions required to achieve positive impacts and assess the potential for replication of similar interventions in other rural regions of developing countries.

The Multi-Media Case Study materials presented here can easily be integrated within CIDA's poverty reduction dialogues in both face-to-face and electronic modes. This report is "mirrored" in print format, on a web site, and on a CD-ROM, and is accompanied by a short video documentary. As will become evident to the reader, the multi-dimensional nature of Grameen Telecom's Village Phone programme in Bangladesh is best described and analyzed in a "hypertext" context where the relationships among different "portraits" of the Village Phone programme can be illustrated. Readers of this report will, at times, find repetition, as there are units that are naturally linked to related information in other Sections. Although a print version of this report is available, a multi-media format is the most appropriate means of capturing and sharing this story, incorporating video clips, photographs, and links to key resources and web sites.

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