Today's date:
Winter 2001

Microcredit and IT for the Poor

Muhammad Yunus
is the founder of Grameen Bank, which offers microcredit loans to the poor of Bangladesh.

Dacca, Bangladesh-Information technology (IT) is going to change the world dramatically, transforming the old into the new economy. Its real potential, however, lies in creating a "New Society"-a society that will allow everyone of its members unprecedented opportunities to unleash their creativity and ingenuity. If this potential can be realized, poverty can be overcome.

Poverty is not created by the poor people themselves. They don't lack anything intrinsically. They are endowed with the same human qualities as anyone else. People are poor because they do not get the opportunity to ever discover their own potential due to the social and economic barriers built around them.
Unlike any other technology in human history, IT has the capacity to remove these barriers around the single individual most effectively and sustainably.
However, the usual market forces cannot guide this realization. Despite well-intentioned declarations in the past, the number of people in extreme poverty has increased over time. Today it stands at 1.5 billion. Without social intervention, the digital divide that separates them from us-also a knowledge and opportunity divide-will only get larger.

It is for this reason that I propose the creation of an International Center for Information Technology to Eliminate Global Poverty.

At present, IT development is focused exclusively on business. To really make change, we need a parallel focus, not just extensions of business-related IT, to cover some ground in the "poverty area." IT has to be designed from the ground up, keeping the picture of a poor woman in front of the designer.

The designer has to start by asking himself/herself the question: What are her daily problems? How can my device/appliance help her find solutions to these problems?
The finished product will be a device which will be a constant companion to the user, the poor woman. The device will become her constant friend, philosopher, guide, business consultant, health, education and marketing consultant and trainer. It will be her "Aladdin's lamp." At the touch of the screen, or the voice command of a "magic word," the genie will come out of the lamp and help her find the solution she is looking for. Step by step, she'll come out of her own shell, discover her talents and take her family out of poverty. Her children will become the best friends of the IT genie.

FOOD, NOT MODEMS? | There is a commonly held view that IT is totally irrelevant for the poor. It is said to be too complicated for people who are generally illiterate, and it is too expensive. The poor, the argument goes, need food, not modems.
When we began our cell-phone company, Grameen Phone, the skeptics said: "You must be crazy to think of giving cell phones to illiterate poor women in the villages who never saw a conventional telephone in their lives. These women would not even know how to dial a number and, anyway, whom are they going to call?"

Today, everybody in Bangladesh looks at Grameen telephone ladies in the villages with admiration and some with jealousy. They are doing a roaring business selling telephone services to the villagers. When I asked one in the first batch of telephone ladies after they got into the business whether she has difficulty in dialing numbers, she challenged me to blindfold her and give her a number. If she failed to dial it correctly the first time, she would return the phone and get out of the business, she said. I was stunned by her confidence in her new-found skill.

Another Grameen company is setting up Internet kiosks in the villages and running them on a commercial basis. We are pleasantly surprised to see the response from the villagers in using the Internet and other computer services. Young people are signing up to learn computer skills for a fee.

In villages where electricity does not exist, solar panels are powering the cell phones and computers.

Together, microcredit and IT have the common capacity to empower poor people, particularly poor women. Dollars and cents cannot measure the dignity and self-reliance that they together have provided to poor Bangladeshi women.
Today we have 2200 telephone ladies in Bangladesh and can easily create 100,000 if only we can extend our network coverage fast enough. With 100,000 telephone ladies running their telecommunications businesses in Bangladesh villages, I can tell you Bangladesh will be a very different country than what it is today.

Imagine these telephone ladies using WAP phones and offering Internet services! I am absolutely sure they'll be successful in that business, too. A Grameen company, Grameen Communications, is launching a joint venture with Hewlett Packard to bring e-healthcare, e-banking and e-education through Grameen Digital Centers using our fiber-optic network. NEC of Japan is starting a program to fight infectious diseases using the same Grameen Digital Centers.

Whether the poor can afford IT, or not afford it, whether an illiterate person can handle IT or not, will depend not on the amount of investment needed by the poor or the complexity of operation of IT. It will depend on the appropriateness of the institutional environment around the poor and the rate of return on the investment they'll be making.

Microcredit can provide such an appropriate institutional environment by creating the possibility of small enterprises that can be made more efficient with the use of information technology.

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