Village Pay Phone Project

As I am basically finished writing my Master thesis (hopefully my supervisor thinks like that too), I would like to introduce some papers that I found interesting and insightful.

This first on is “Village Pay Phones and Poverty Reduction: Insights from a Grameen Bank Initiative in Bangladesh” and is actually a classic.  It was written by Abdul Bayes (Professor of Economics, Jahangimagar University, Dhaka, Bangladesh), Joachim von Braun (Director at the Center for Development Research, Bonn, Germany) and Rasheda Akhter (Researcher, Jahangirnagar University, Dhaka, Bangladesh) in 1999 for the Center for Development Research (ZEF) in Bonn.

I deals with the impact of the Village Pay Phone project of the Grameen Bank on the social and economic situation in the villages in Bangladesh where the project was implemented.

In the following a short summary of the paper:

The situation in Bangladesh 1999:

Village Pay Phone Lady - picture taken from Jeevs Sinclair

Village Pay Phone Lady - picture taken by Jeevs Sinclair

  • 80% of the population live in rural areas
  • 47% of the population live below the poverty line
  • Overall there is only few basic infrastructure

The telecom sector in Bangladesh:

  • 0.26 fixed lines per 100 people
  • Calls are expensive
  • Only 20% of calls are completed successfully
  • There are many complaints

Mobile phone operators entered the market some years ago and leapfrogged the fixed-line subscriptions almost immediately. The reason for this was also the competition between seven operators.

Village Pay Phones:

  • Based on an idea of the Grameen Bank
  • Provide mobile phones to the rural poor
  • Four international partners built an NGO and acquired the license for GSM
  • VPPs were only given to women with certain attributes
  • Call fees and the overall procedure were fixed

Phone owners were usually found to be poorer but socially more conscient than the phone users. Most of the people that made phone calls were non-poor (three-quarters) and male (two-third). Problems were for a lot of users the low connection quality which resulted in a wish for lower rates

The effects of Village Pay Phones:

Economic effects:

  • The VPP owners  gain a net profit of ~270 which accounts for about 1/5 to 1/4 of total income
  • The profit was mostly spent to installment payments, education and saving
  • The alternatives for VPPs would have involved transport costs
  • The consumer surplus is therefore quite high and for the poor it is higher than the not-poor
  • Farmers gain more money because they know about market prices
  • Supply of goods became smoother as the market can be better analysed with more information
  • Foreign exchange has been made more transparent
  • Livestock keepers are better informed of possible diseases and how to cure them
  • Poverty was reduced and people have more to eat
  • Dealing with disasters was made easier due to more communication

Socio-cultural effects:

  • Empowerment of women – more decisions are taken by women alone, mobility was raised
  • The owners of VPPs gain higher social status
  • Phone owners have more knowledge and confidence

.

So overall it can be said, that the whole project was a big success story and this guy has really earned his Nobel Prize. For the whole article I may refer to Google Scholar.

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Village Pay Phone Project
was published on 28.11.2008 by Florian Sturm. It files under south asia
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One Response to “Village Pay Phone Project”

  1. Martin Konzett Says:

    very good florian! keep publishing insights from your thesis! cheers