A very interesting opinion piece in the Jan. 29 Wall Street Journal notes that both the Nobel Prize winner in economics (Edmund Phelps) and peace (Muhammad Yunus) highlighted the impact of entrepreneurship in their Nobel addresses. “Phelp’s Prize” by Amar Bhide, a professor at Columbia University, and Carl Schramm, president of the Kauffman Foundation, picks at the open wound between plain-old entrepreneuers and social entrepreneurs. I basically agree with them, but I also beg to differ as I think they compare apples and oranges. (I don’t link to the article because I don’t have a subscription to wsj.com.)

Of the 35 winners in economics, 28 never mentioned the word “entrepreneur.” Phelps mentioned it 17 times–more than the total over the previous 19 years! Yunus mentions it 6 times. Twenty-three mentions in two Nobel speeches has to be a record. But it is almost as if the laureates had a different dictionary in front of them when choosing their words.

Phelps talks about a transformative entrepreneurship that is central to capitalism, by sparking growth of small businesses that become large commercial operations; Yunus talks about microloans that don’t involve economies of scale or lead to significant new enterprises. The writers ask, ” Can turning more beggars into basket weavers make Bangladesh less of a, well, basket case?”

Well, no–but. It’s a false dichotomy–and the writers know it. They note Bangladesh’s export-oriented garment industry as being “larger and more productive than individual craftsman,” which is true, as a way of saying that it is better to provide venture capital to growing businesses than seed capital to individuals. They also note that government reforms, such as those that are now propelling Vietnam to new heights, are more important than microloans. But because the Bangladesh government is intractably backward and corrupt and anti-private business, does that mean that Yunus’s loans are a bad thing? I think the writers are reacting to the hoopla rather than the reality.

I am not an unabashed proponent of microloans, because I agree with the writers that while they may lift individual families out of poverty, they do not scale an economy. But I do not think microloans are a bad thing–how could they be? Some, such as Alexander Cockburn in The Nation (“The Myth of Microloans”), paint microloans as the devil incarnate, due to farmer suicides in India.

To me, the issue is clear: Capital that helps people raise a cow and escape poverty is as good as capital that helps start an Apple Computer. Yes, there’s a difference of scale. But there’s also a difference of context. The two sources of capital are not comparable–one’s in America, one’s in Bangladesh. But that doesn’t mean they’re not both productive.

And what about microloans that help build a GrameenPhone, the largest and most successful business in Bangladesh? It would not have been built without microloans that allowed distribution into rural villages, because Grameen Bank would not have backed the project. Does that not count? The authors cannot take a potshot at Yunus’s track record without examining his full portfolio.Â

Straw-man arguments are not compelling. It’s not either-or. Let’s deal with the facts on the ground–and celebrate entrepreneurs and capital that builds businesses of all kinds.

The Anwarul Quadir prize of $25,000, administered by the Center for International Development at Harvard’s Kennedy School, is open to anyone and any idea in the world. The prize will be awarded for the essay that points to the most innovative approach for improving the social and economic development of low- and middle-income people in Bangladesh. The essay must show how the idea will be put into practice, garner support, and who or what type of institution (government, private business, NGO, etc.) will carry it out. Essays must by received by June 30, 2007. For more information, see the contest website at Harvard’s Center for International Development.

Essays will be judged by four Harvard professors (two men, two women) and the winner will be selected in October 2007. The prize will be awarded in January 2008 in Dhaka, Bangladesh, at a conference heralding innovation–past, present and future– in Bangladesh.

The number of mobile subscribers in Bangladesh grew by more than twelve million, or 120%, in 2006, to stand at 22 million at the end of the year, according to the Telecommunications Regulatory Commission. The regulator reported that the country’s five cellcos signed up 2.56 million new subscribers in December alone.

Doubling (or bettering that) the number of cell phone subscribers has become the standard throughout the developing world, so let’s project another doubling in 2007, which would bring the number of subscribers to 44 million. That’s nearly one cell phone for every three people. Before GrameenPhone started service, Bangladesh counted one phone for every 500 people. That’s night and day–a whole new country.

Market leader GrameenPhone ended the year with 10.76 million GSM customers after adding nearly 5.22 million in 2006, Aktel acquired 3.93 million new subscribers to take its total to six million, Banglalink’s user base grew by 2.61 million to 3.64 million, and the sole CDMA operator CityCell reached nearly one million customers from 440,000 at end-2005. State-run Teletalk acquired nearly 400,000 customers in 2006, whilst the sixth mobile licensee, Warid Telecom, is expected to launch commercial GSM services by April.

The political crisis in Bangladesh is worsening, with the country in a “state of emergency” and the head of the caretaker government having stepped down. (See “Bricks, sticks and bullets” from Jan. 8th.) It now seems that elections scheduled for Jan. 22 may not take place. Textile exporters, one of the country’s biggest industries, have noted a huge drop in orders. New foreign investors are holding back. Telenor, the biggest existing foreign investor, is sitting pretty. Cell phone companies thrive in times like these.

The crisis is not new, and not complex, and has roots going back 30 years. It’s the tale of two women who hate each other (probably with good reason). Here’s a great AP story that clearly describes the subtext to the chaos in the streets of Dhaka.

Nobel Peace Prize winner Muhammad Yunus gave a great speech (Yunus spells out nation’s rosy future) in Feb. 2006 citing the need for new blood in Bangaldeshi politics. He was right.

As the book rolls off the press and nears publication date (Feb. 2), an early proof has garnered early reviews.

Library Journal (no access without subscription):

“This book offers valuable insights about the use of cell phones and technology-based investments to generate wealth and demonstrates that entrepreneurship may be more fruitful than aid. This valuable work can be effectively integrated into public administration, global business, and human resource academic courses.”

Caroline Geck, Kean Univ. Lib., Union, NJ

Next Billion.net (by Rob Katz)

“…This a history of sorts, about how Iqbal Quadir came to launch GrameenPhone.  Sullivan doesn’t claim to offer new or different strategies to engage BOP [bottom of the pyramid] markets; he simply sets out to tell the tale of an expat Bengali and his innovative phone company.  You Can Hear Me Now is well-written and very engaging, as the author enjoyed good access to some of the stories’ major players.  A smart manager can learn from GrameenPhone without being led by the hand, and Sullivan’s storytelling and analysis open up the case in a way that we haven’t before seen.  The book’s out next month; in the mean time, check out his blog.”

World Bank: Private Sector Development blog (by Christine Bowers)

“…the first half of this book tells the GrameenPhone story, the second is a grab-bag of other technology initiatives, including many players in the m-banking world. If the Nobel Prize win peaked your interest in all things Grameen, buy a copy when it comes out next month. In general, I’m not too sure that a book is the best format for telling these stories – hard to give substantive coverage to a field that moves so quickly in time. Fortunately, Nick also has a blog.”

Thanks to all for their interest and attention.

The news out of Dhaka, Bangladesh these days leading up to January 22 elections is not good. (See the Daily Star for the latest.) The Awami League opposition party has announced its intent to totally boycott the elections and stage crippling strikes (hartals) that have turned violent. The police and military have been given carte blanche by the caretaker government to arrest without warrants. Bricks, sticks and rubber bullets are flying on both sides. I experienced a minor version of this last April, when I was huddled in a hotel room for three days to avoid flying bricks. Thank God for cell phones–at least people can talk when they’re holed up.

People of every stripe are fed up with this nonsense, which has been going on for five years (or 35, depending on how you count). Constant hartals are a huge drag on the economy. One of the poorest countries in the world, the Bangladesh economy has been growing between 4%-6% for the last five years. Without political strife, the economy would be growing much faster. Last spring, World Bank vice president Praful Patel noted that that the country loses 3-4% of GDP every year due to hartals. Looked at from a different perspective, he said the growth rate would be 2-2.8 percentage points higher if corruption were reduced to the level of the least corrupt countries. That is, the growth rate of Bangladesh, which was carved out of India in 1947, could track more closely to India’s–but it doesn’t.

The village-phone scheme pioneered by GrameenPhone in Bangladesh has been successfully implemented in Uganda and Rwanda by South Africa’s MTN, and in the Philippines by Globe Telecom. The common thread to these replications is consulting advice from the Technology Group at Grameen Foundation USA.

After several years working out the kinks and writing manuals to ease implemenation, Grameen Foundation has now released a Village Phone Direct kit, which it sells to microfinance institutions around the globe. The kit includes:

• Nokia mobile phone with earpiece
• External booster antenna for areas without strong mobile signal coverage
• Custom designed cables to connect the phone to the antenna and the recharging equipment such as a automobile battery or a solar panel

To complete the Village Phone Equipment Kit for the microfinance client, a SIM card and prepaid airtime, which can be purchased through regular outlets.