Rob Katz

GrameenPhone Obsolete? Fast Company Says Yes

Via Aman Bhandari’s Technology, Health, and Development Blog, a fascinating take on the 10th anniversary of the GrameenPhone program from Fast Company magazine:

But as it turns out, the [GrameenPhone] legend is far out of date. The proliferation and democratization of technology has bested the economics of microenterprise. In Bangladesh today, the only one making real money on GrameenPhone’s wireless service is–GrameenPhone.

I’ll be the first to admit being a major GrameenPhone booster, both here at NextBillion and back during the Digital Dividends years.? That said, this article isn’t surprising.? As mobile phones have become cheaper, they have become ubiquitous – even in places like Bangladesh.? What follows is basic microeconomics: as supply increases and demand remains stable, prices will go down.?

For GrameenPhone entrepreneurs (commonly known as “Phone Ladies”) a price drop can be catastrophic.? Remember, these phones are purchased on credit, and if their customer bases shrink, it can be difficult to pay back the loan.? You won’t hear default stories coming out of the Grameen Foundation, but they are real, as Courtland documented a few months back.There are many lessons to be learned from GrameenPhone, most of which are positive.? First, don’t underestimate the poor – especially rural, illiterate women, whose adaptability drives the program’s success.? Second, entrepreneurship plus revenue-generating technology can change lives – read the first few paragraphs of the Fast Company article, and it’s clear how GrameenPhone has changed lives.

But no single business model will work forever.? The process of creative destruction isn’t limited to Western, developed economies.? And even business-driven development experts can’t marry themselves to a single model and expect it to work year after year.

Check out the full article, and thanks again to Aman for the reference.