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A bottom-up plan to turn Bangladesh's economy upside-down

Iqbal Quadir wants to help the rural poor

Email|Print|Single Page| Text size + By Omar Sacirbey
Globe Correspondent / March 24, 2008

Colonization, war, and natural disasters have wrought havoc upon Bangladesh, but Henry Kissinger and George Harrison, quips Iqbal Quadir of Lexington, did the most damage to the country of his birth. The former US secretary of state's infamous description of the South Asian nation as an "international basket case" and the former Beatle's legendary Concert for Bangladesh in 1971 saddled the war- and flood-ravaged land with an unshakable reputation as hapless and dependent on handouts for survival.

"That has been very damaging to us," said Quadir, who is the executive director of MIT's Legatum Center for Development and Entrepreneurship. "Because the country is a so-called basket case, investment never came to us."

Quadir, 49, doesn't dispute that Bangladesh has its troubles but rejects the notion that Bangladeshis need to be rescued by rich countries. On the contrary, said Quadir, Bangladeshis are as innovative and hard-working as anyone but until recently have lacked the means to unleash their entrepreneurial spirit and rise from poverty. He proved it with his own company, GrameenPhone, which became the largest cellphone company in Bangladesh largely by selling its phones on credit to poor rural women who in turn rented phone minutes to neighbors, making money for themselves while providing a public service.

This "bottom-up" approach to development, Quadir believes, can work anywhere in the developing world. At the Legatum Center, he is helping a growing crop of entrepreneurially minded students do for other poor countries what he did for Bangladesh.

Although Quadir has spent most of his life in America and considers himself an American, he values his Bangladeshi roots, knows the country's history, cuisine, and literature, and speaks his native tongue with his children.

"I happen to be Bangladeshi, which is why I had some emotional reason to think about it seriously. I know where the shoe pinches," he said. Nevertheless, Quadir is driven less by Bangladeshi patriotism than sympathy for the poor. "I'm motivated by creating a level playing field for the world so that the weak have a chance."

When Bangladesh revolted against Pakistan in March 1971, Quadir and his family fled his hometown of Jessore to escape the ensuing war and roamed the country until the fighting ended with an independent but devastated nation. A decade later Quadir graduated from Swarthmore College with honors and went on to the Wharton School and then Wall Street, where he earned an investment banker's salary.

But even mighty Wall Street, he learned, was vulnerable to the same obstacles that kept societies like Bangladesh from developing. When his firm's computer network went down one day in 1992, the communications breakdown meant he couldn't do his job. It was then that he realized that people in Bangladesh, with no telephones, faced a similar problem. Quadir spent the next few years cobbling together a consortium of banks, telecoms, and other investors willing to risk money and reputation on his idea of creating a cellphone company that would cater to Bangladesh's rural poor.

If the idea sounds reminiscent of the micro-loan industry pioneered by Muhammad Yunus, who won the 2006 Nobel Peace Prize for his work, it's because Quadir was partly inspired by his fellow Bangladeshi whose Grameen Bank helped finance GrameenPhone. While Yunus envisioned poor women using his micro-loans to buy assets such as a cow and then selling the milk for profit, Quadir saw the cellphone as a cow. Today, 11-year-old GrameenPhone counts 16 million subscribers, including 250,000 rural "phone ladies" who rent their phones to millions of others.

While Quadir has no aversion to wealth, he far prefers creating businesses to managing them.

"What drives him is not making money or building a business but solving problems," said Nicholas Sullivan, author of "You Can Hear Me Now," which documents GrameenPhone's rise. "Once he thinks a problem has been solved, he's more driven to go onto the next thing, and apply what he's learned with problem A to problem B."

Quadir gave up his managerial duties at GrameenPhone and in 2001 joined Harvard's John F. Kennedy School of Government before finding his next cow two years later. Through a Cambridge-based company he calls Emergence BioEnergy Inc., Quadir is helping develop a generator that produces one kilowatt of energy, enough to power 70 energy-efficient light bulbs. The generator, about half the size of a washing machine, will also have a dehydrator for drying produce and medicinal plants, and runs on cow dung, which Bangladesh has plenty of. Quadir hopes to sell the generators to rural villagers whom he expects will put the machines to entrepreneurial uses.

"There's no magic here - that's how complex economies develop," Quadir said.

It's this kind of thinking that convinced Firas Ahmad, a Kennedy School graduate who was taught by Quadir, to pass up several secure and high-paying consulting jobs and work for his former teacher at his unusual energy start-up.

"He had a completely different way of teaching and looking at problems. Most of the classes at the Kennedy School were based on doing problem sets, homework, and reading," said Ahmad, a Pakistani-American. "But his was based on totally changing the way you think about a problem."

Critics argue that micro-finance and entrepreneur training have done little to lower poverty, and that investment should go into factories that employ many people. Factories have a role in development, Quadir agrees, but that makes little sense in rural areas, where people are dispersed and transportation is difficult.

Despite the skeptics, Quadir and his handful of Legatum colleagues have attracted a new generation of bottom-up believers. In one recent class, students presented business plans for socially responsible yet profit-minded projects. One team was developing a cellphone that could detect cataracts and send the diagnoses to otherwise out-of-reach hospitals. Another aspiring entrepreneur laid out her plans for an inexpensive motel chain for Kazakhstan, where lodging-less highways force travelers to spend nights in their cars.

As entrepreneurship and development become increasingly intertwined, Quadir is cautiously optimistic that, along with technology, they can be used to reduce poverty.

"I think it's possible to have technologies that empower individuals, from a business point of view. That's the Western value that we should spread," he said. "The best way poor people can come out of their poverty is to get on the global highway, not on some dirt side road."

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