Grameen Bank - Village Phone Wins Petersberg Prize
Interview: Muhammad Yunus, Grameen Bank
July 08, 2004

Muhammad Yunus and Alan Rossi

DG: We will start off with the question that is on everyone’s mind - how do you intend to use the 100,000 Euros from the Petersberg Prize? Dr Yunus: Our idea is to create a separate fund and then use this fund to develop some innovative work involving the Grameen borrowers but not necessarily the telephone ladies. It will probably have something to do with internet, telecom or information technology.

We would like to keep this money separate and not let it get dissolved into the bigger funds of the Grameen Bank. Currently I don’t have any specific projects in mind but I will ask for ideas from my colleagues. We would like to try out something new and different.

DG: Why did you specifically target women for the village phones project?

Dr Yunus: Grameen Bank has 3.5 million borrowers and ninety five percent are women. So Grameen Bank projects always involve women. Even if we didn’t have this large numbers of women at the Grameen Bank we would still focus on women. It makes a lot more difference when you lend to the women in the household rather than the men. Most of the abuses to women in Bangladesh happens since she cannot tell anyone about her problems because of the taboos in the family regarding what you can and cannot say. But once they have a telephone in their hands and a support organization they can call when they need help, they don’t necessarily have to rely on their friends, family and neighbors. We provide our telephone ladies the numbers of the Prime Minister of Bangladesh, the Ministry of Women’s Affairs, as well as, the local police station.

The telephones not only help women to gain financial independence but it also helps to empower young girls in the family. In addition the women gain respectability because of her ability to use modern technology.

DG: How did you address big challenges like lack of electricity and low levels of education?

Dr Yunus: Education is usually not a barrier. Once the women realize that this can bring financial gain they can quickly learn the numbers. To overcome the lack of electricity we used solar power. It is quite a simple solution and is not tagged to anything. All you need is a simple piece of solar panel which costs less than the phone.

DG: In your book “Banker to the Poor” you mentioned that you envision the telephone ladies to start up their own one stop communications center with e-mail, fax, internet etc. How much progress have you made in that respect?

Dr Yunus: We have tried fax machines. It works but it turns out to be quite expensive. The fact is rural people don’t use fax machines frequently enough. It is so much easier to talk than read. The fax machines also proved to be too expensive and it was difficult to recover costs. Although this was technologically feasible it was not financially viable. You need to develop lots of other enterprises in rural areas before there is a demand for fax. We did not want to get into a project where we subsidized the business. For instance the village phones project is extremely successful financially. Every month the 60,000 telephone ladies pay crores of takas as telephone bills. We are also thinking about internet. But again this is expensive as mobile phone costs are quite high. When voice over internet protocol (VoIP) opens up in Bangladesh the rates will go down sharply. This will make internet services in rural areas a very competitive business. This is a question of national level decision making.

DG: Following the widespread success of microfinance initiatives are commercial banks more willing to lend to the poor?

Dr Yunus: No. Microfinance is a very different kind of business and commercial banks are often not interested in it. There are some banks that lend money to NGOs which in turn lend to the poor. Commercial Banks don’t know the business of microfinance very well and they often feel nervous about it. However, in the last few years the number of micro-credit institutions worldwide has grown tremendously. During the last Micro-credit Summit we made a pledge to reach out to 100 million of the poorest families by 2005. By the end of 2003 we crossed the half way mark and helped 65 million borrowers. Next year is the International Year of Microfinance and we would like to have as many organizations as possible support our campaign. This is a great opportunity because microfinance is a key tool for addressing the Millennium Development Goals.

DG: What is usually the fate of the micro enterprises that start off with Grameen funding?

Dr Yunus: Usually they start very small and grow over time. It often depends on the management capacity of the individuals involved. Often Grameen borrowers choose to keep their businesses small because they are not comfortable handling a bigger business. We have some young and energetic borrowers who are keen on expanding their business. We frequently provide additional funding along the way. Although we don’t provide training we sometimes facilitate it by informing our borrowers where they can acquire it.

DG: Besides the village phones project what are some other initiatives of the Grameen Bank?

We have internet kiosks and radio links to connect. We have a company dedicated to solar energy for household use and the initiative is spreading gradually. We are trying to bring radio, television and telephones to rural areas by introducing this alternative source of energy. We are also trying out other things like providing photographers with digital cameras and enabling document exchange. Among other things we were trying to computerize land records but we could not proceed very far since we did not have much government support.