For all of us living in India, the computing and communications revolution seems very distant. Our computers cost too much, our phone calls cost too much, and high-speed means 64 Kbps. It is not surprising therefore that India still has only 5 million Internet users. The developing countries of the world (emerging markets) have all put together about 50-60 million Internet users, just about 1.5% of the combined population. If IT and the Internet are to make a big difference in the lives of the rest of the world, we need a low-cost computing and communications infrastructure: a mass-market Internet.
Why is this infrastructure important? The Internet is an equalizer – of information, of opportunities. By making information easily available, it allows for more transparent markets through the diffusion of knowledge. This means that farmers can get better prices for their produce not through middlemen but by connecting to the trading markets. Villagers living in coastal areas can get information on the weather, and thus take appropriate precautions in the event of storms. Craftsmen can take orders for handicrafts from all over the world via the Internet. Small and medium-sized businesses can go beyond just their limited geographical areas in search of opportunities.
The challenge lies in making this technology and the tools available to everyone. In doing so, it will be possible to raise the standard of living of people, and create opportunities for new enterprises. What is needed is the ability to think out of the box. In doing so, it does not just mean looking Westward for answers.
An interesting non-tech case study favouring the “Local Solutions for Local Problems” approach comes through the success of Grameen Bank in Bangladesh. Writes Mark Skousen in Forbes (November 15, 1999):
Grameen Bank is the brainchild of Muhammed Yunus, formerly an economics professor at the Chittagong University in Bangladesh. Yunus showed how to fight poverty–at a profit.
The Grameen Bank started in 1983 by lending amounts ranging from just $30 to $200 directly to poor people in Bangladesh. Applicants didn’t have to be able to read or write; no collateral or credit check was required.
The bank’s strategy was to lend money to entrepreneurs (or would-be entrepreneurs) who needed only a few dollars to buy supplies and tools. Borrowers might make bamboo chairs, sell goats’ milk or operate rickshaws.
By avoiding the usurious interest rates of local moneylenders–often 20% a month–many of these villagers finally broke out of poverty. Their small businesses grew, and thousands of borrowers now own land, a home (often using a $300 Grameen house loan) and even a cell phone (through Grameen Telecom).
By now, the Grameen Bank has made millions of these tiny loans, totaling $2.5 billion. Note that Grameen is a for-profit, private-sector bank that charges interest of 20% per year. Amazingly, Grameen’s loss rate is about 2%, largely because borrowers are bound together in small, local groups. If anyone in the group defaults, no one else may borrow more. That’s a powerful incentive.
So, can we, in the words of an MIT Media Lab project, create “Penny PCs”?