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Grameen Bank

Development Makes A Strange Bedfellow

"Bengali Friends" in  Bangladesh  by David Lazar.
Guest Post by Thomas Lasseau

There is an old Bangladeshi saying that goes, "you can't take out the trash without getting your hands dirty." On a previous visit to Bangladesh to work in microfinance in 2009, my fellow interns and I found ourselves staring into the twin barrels of a sawed-off shotgun, wielded by a man with a police badge, blue jeans and flip flops. We had rented ATVs to explore Cox's Bazar, the longest beach in the world, and this man was claiming, in screamed Bengali, that for this infraction we owed him a "fine."

After paying him off and returning from our adventure, an argument ensued with the owners of the ATVs about who should internalize the cost of the bribe. After much haggling, it was divided between our cost of rental and the owner's cost of doing business, but we still left suspicious of an even bigger con. Needless to say, on a national level, the World Bank recently declined to loan Bangladesh $2 billion to build a bridge on account of a $17 million dollar "fine" required to grease the gears of construction.

Although it's dangerous to generalize about poverty, conflict zones and authoritarian regimes, a delicately stated common theme appears to be the mismanagement and misappropriation of national assets. Counterproductive resource allocations are visible in the global struggles between squatters, landowners and developers, in the violent seizing and reseizing of Africa's diamond territories, and in the pilfering of aid money by corrupt bureaucracies.

I believe the Bangladeshi proverb rings true insofar as we have to make the initial assumption that the governance of communal resources in extreme economic and political conditions has "fallen into the wrong hands." The tragic result of this grand misallocation of capital is that the majority stakeholders on the other side of the table (or the sawed-off shotgun as the case may be) have every reason to hold on fast, unless we can change their incentives.

The success of any process of disarmament, reconstruction, regime change or wealth redistribution hinges on the incentives of its participants who have the most to lose (whether inherited or acquired). Consequently, unless forcing new incentives through revolution or armed intervention (neither the province of the planner), the war criminals and corrupt officials of the world are our necessary allies in the philanthropic cause. The obvious risk of this acknowledgement is that in forging these alliances we become partners in corruption and crime.

So if successful development work is necessarily transactional, this means that we, as development workers, must learn to trade in trade-offs. How can we structure the deal to keep our hands as clean as possible while still actually helping people? The collateral damage can be measured by the degree of opportunity for taking back what's being given away. The trick is to somehow work against, while working with, but not working for the kleptocrat or militia on the other side of the deal. The sensitivity of this balance is why so many development projects merely perpetuate the crippling inequities they set out to fix.

Extreme conditions are tough on the stomach in more ways than one. Working in them is fundamentally a question of amplitude. In my legal training, I'm being taught to represent my client's interests against hostile forces with friendly professionalism. This training in civility has been invaluable. Cultivating the level of clarity and compassion necessary to negotiate amiably, no matter the stakes, is a lofty goal. I'm still a long way away, but I approach it like a kind of yoga. It may take years to finally touch your toes, but every inch counts.

In building the multidisciplinary toolkit required for improving urban living, I've studied and worked in architectural design, green building, development economics, finance, governance, real estate and contract law. While I believe that each of these is an essential piece of the puzzle, the secret sauce that ultimately coheres these ingredients is the human element that isn't taught in school.

Good analogies for trying to improve the distribution of resources are at worst piratical parleys, and are at best legal representation in settlement negotiations. At best, your clients get damages and injunctions and the guilty party gets off the hook. At worst, you have to somehow pay the dictator more to go away than they can make by staying and oppressing (e.g. fire sale privatizations only benefitting the former regime and multinational capital).

The practical balance lies somewhere between these poles. The necessary alliances must be built on common ground. Building the common ground is where our work begins. The most violent and oppressive people in the world, whether acting from greed, hate, fear or desperation, are also human. We should start there, no matter how reluctant we may be to do so. We need to be able to make friends with the warlord before we can convince him to build sewers and hospitals instead of buying more guns.


Thomas Lasseau is currently a law student at the UCLA School of Law.   He previously worked with Grameen Bank in Bangladesh and studied economics and art at Brown University and the Rhode Island School of Design.  

Afghanistan: Communication & Development

Earlier today I was reading a blog entry by Peter Bergan, the CNN Security Analyst, about the improvements Afghanistan has experienced within the last couple years.  He highlighted various improvements in security, mine clearance, education, economic development, and refugee repatriation.  There was also a great deal of applause for the construction of a large, modern airport.

Reading this column initially made me cringe, as it brought to mind a story I once heard from my grandfather about an experience he had in Vietnam in the early 60's.  In short, the Americans had constructed a massive modern airport while the Russians provided instruction to the local population about better ways to fatten and breed chickens.  It doesn't take much thought to recognize why the general public, who could never see themselves ever riding in airplane, were more receptive to the Soviets.

However one additional point mentioned by Bergan was that "One in six Afghans now have a cell phone. Under the Taliban there was no phone system."  With a population of over 32 million people, this means that nearly 5.5 million people have access to cellular communication within this generally rural province.  While its likely that most Afghans remain uninterested in the new airport, with 5.5 million users in about 5 years, mobile phones are clearly a winner.

Certainly the expansion of cellular networks posits significant social benefits for the Afghan population. Prior to 2003, it was common for many villagers to have never once used a telephone. Now it is possible for this family-centric culture to maintain ties over greater distances. In addition, this cellular network may be a key component with the ongoing stabilization and development of the nation.

Cell phones and Security
One of the major benefits to arise from the establishment of mobile technology within Afghanistan was the capability for armed forced to locate Taliban insurgents by tracking phone signals within the countryside.  And lately, as mobile phones became more prominent throughout the public, individuals have been more willing to provide authorities with information regarding insurgent activity because this information can be provided anonymously.  Although Taliban fighters have made efforts to destroy cell towers, the general public has been frustrated as such destruction now interferes with their own lives.

Lessons from Grameen Phone
Established in 1996 by Iqbal Quadir, the founder and Director of the Lagatum Center for Development and Entrepreneurship at MIT, and Nobel Laureate Mohamed Yunus, the Grameen Phone company has served as the primary cellular phone provider within Bangledesh for the last 13 years.  In addition to standard phone services, Grameen Phone was further created with the intention of utilizing mobile technology as a tool for economic development.  Most notably, Grammeen established the program Village Phone,  assisting interested entrepreneurs in rural villages to sell telephone services to villagers.  Additionally, phones had been made available by means of micro-finance projects, while internet access could be acquired by means of community information centers.  With enhanced connectivity, individuals could better operate their own businesses, such as by determining the going market price in advance of goods delivery, or by knowing the upcoming weather conditions.  Individuals may also start businesses selling phone credit, mobile phones, or providing battery charging services

Capitalizing on Remittances
Nearly all migratory populations are dependent upon, or in some way participate within, the ongoing international flow of financial remittances.  As displaced families, unable to obtain sustainable incomes, remain dependent upon relatives and friends for financial assistance, it is obvious that cellular communications serve an important role within the stabilization of the Afghan economy.  With over 3.3 million displaced individuals within and outside of Afghanistan, the ability for these individuals to access  cellular technology now provides financial services well beyond the use of traditional money wiring services.

In the near future Afghans could utilize this technology to buy goods, pay bills, and move cash in the same manner found throughout the African continent.   By establishing bank accounts via mobile providers, Afghans will have the ability to secure their finances and easily transfer funds for the purpose of remittances by uploading purchased phone credit, transferring it to another account, and then exchanging that credit for cash or goods.

SWOT
Although increased cellular connectivity strengthens family ties, improves security, and could provide a means for future economic development, there are nonetheless major obstacles.  The prominence of low incomes and illiteracy greatly undermines the distribution and use of cell phones, yet with innovative programming by international agencies these problems may be mitigated.  Through the distribution of cell phones via micro-finance and entrepreneurial services, and in coordination with the further development of the nationwide education system - which has been noted as improving - the role of mobile communications may continue to serve an important role within the reconstruction of Afghanistan.