The Village Phone Constituency in Bangladesh. A Case of a Sustainable e-Inclusion Enterprise
Alfonso Molina (2006)
The UN Millennium Goals have set challenging targets to humanity to improve the
living conditions of millions of excluded people. This has resulted in a search for experiences that are pioneering the innovative use of ICTs to combat exclusion. The ‘holy grail’ is ‘sustainable enterprises,’ i.e., those ventures that are able to continue growing and creating wealth and employment following their emergence into the world. This paper examines how sustainable e-inclusion enterprises, the Village Phone Constituency (VPC), are making a difference in rural Bangladesh.
The VPC, formed of the Grameen Phone Joint Venture, shareholders, the Grameen Bank and Village Phone operators are able to provide mobile telephone services to rural customers. Through the Village Phone Programme, an innovative value chain, they are able to purchase bulk airtime at a discounted price. This value chain has made it possible to mobile telephony to tend of millions of people in Bangladesh.
The benefits of the experience of mobile telephony have been reported in a number of case studies. Key benefits include:
Substantial reduction of cost of communicating information, associated with savings of time and transport costs, as well as with more timely and speedy conveyance of information. Costly absence of productive members can be avoided, thus generating important savings on the direct and opportunity costs of travelling away from home.
Better access to information helps improve both villagers’ productivity and prices for their goods. In general there is a better and more efficient market pricing for villagers’ products and inputs, associated with an increase in villagers’ bargaining power vis-à-vis middlemen (who lose their information advantage), and a decrease in sharp swings in demand, supply and prices of commodities.
Major reduction of the risks involved in remittance transfers, and possibility of obtaining accurate information about foreign currency exchange rates.
The technology serves to link regional entrepreneurs with each other and their clients, bringing more business to small enterprises.
Better and less costly access to health – villagers can contact clinics, doctors and ambulances in a timely manner, especially important in emergency situations such as natural disasters.
Helps reinforce kinship bonding, particularly in poor families where people are working abroad (e.g., more than five million Bangladeshis live in the Middle East and Malaysia), but also among villagers and relatives that live in Dhaka or other villages..
Women users feel comfortable using Village Phones because the phone operators are typically female and the phones are in their places of business, thus women can go unescorted by a male relative.
The “bottom of the pyramid” (BOP) approach recognises that there is a valuable market at the tier 4 of the global market pyramid. The development of the BOP market is associated with the creation of the capacity to consume by Tier 4 people. This can be pursued in a variety of ways that improve both the purchasing power of the potential consumers (demand) and the multinational companies’ (MNC) product/service offer so as to match this purchasing power. On the first account, MNCs can help release spending power by:
reducing the poor’s cost of living through the displacement of expensive intermediaries and suppliers
by improving income generation through the creation of jobs (not necessarily in the MNC-s payroll) or self-employment (micro-entrepreneurs)
by stimulating access to credit.
On the second account, the MNCs offer must take into account that the available purchasing power of BOP people has specific cash-flow characteristics: low, available for short time,geographically scattered (in rural areas). Therefore, the MNCs offer must be:
affordable (without sacrificing quality)
accessible (taking account of the poor’s living location and workpatterns)
immediately available to satisfy a buying decision.
This in turn will call for innovative purchase schemes, single-serve packaging,
aggregating demand and other inventive ways to respond to the cash-flow patterns of the
poor. BOP authors, however, do not argue just for the existence of appropriate purchasing
schemes, or unit packaging, or credit facilities, which is something that has existed for a long time in Tier 4 markets. The key is selling to the poor and helping them improve
their lives by producing and distributing products and services in culturally sensitive,
environmentally sustainable, and economically profitable ways.
The author argues however, that there is an aspect that the BOP approach seems to underplay. This is the issue of the length of time of sustained investment required before getting a pay back. |
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