Debt-free Homes For the Poor

As the population around the world’s cities grows, and slums grow larger and more prevalent, the urgent need for affordable and decent housing becomes more pressing. The world’s megacities – like Buenos Aires, Argentina, where more than 13 million live in the metropolitan region – have to find a way to provide housing that is both cheap and does the minimum possible amount of harm to the environment.

About one-third of the world’s urban dwellers live in slums, and the United Nations estimates that the number of people living in such conditions will double by 2030 as a result of rapid urbanization in developing countries. Latin America is already the most urbanized region in the developing world.

“Throughout Latin America you have economies that are growing and doing well, but the way the economies are growing is actually generating more shanty towns,” said Erik Vittrup, senior adviser on Latin America and the Caribbean for the U.N. Human Settlements Program. “It’s a growth that is just generating wealth for those who (already) have it.”

How well people dwell is integral to their mental and physical health. Most squatters and slum dwellers live in makeshift homes made from whatever they can get their hands on. These dwellings are usually unsafe and vulnerable to fire, floods, and earthquakes.

But across the South, initiatives are proving it is possible to build good quality homes for the poor while avoiding burdening them with debt. Pioneering ways are being developed for the poor to build their own high-quality houses using recycled materials and environmentally friendly products.

In Colombia , Alejandro Salazar, a chemical engineer, professor at the Universidad del Valle (http://www.univalle.edu.co/english/) and innovator running several companies pioneering new building technologies using recycled waste, is building high-quality, inexpensive houses for the poor.  By combining free building materials recovered from waste, a government grant and the voluntary labour of the homeowners, Salazar’s company is able to build homes for the poor that don’t leave them with ongoing bank debt from mortgages.

Based in Cali, Colombia (http://gosouthamerica.about.com/od/cali/p/Cali.htm), his companies Ecoingenieria (product and material research and development), Ecomat SA (production of eco-materials using industrial waste and construction rubble), Constructora Paez, (social housing construction using eco-products) and Wassh SA (environmental management and transformation of dangerous solid waste into non-dangerous materials), are focused on pioneering new technologies for housing.

“Our company uses two basic technologies,” said Salazar. “The production of eco-materials from solid waste and demolition waste, and the implementation of an agile building system, which does not require skilled labour and is hand-transportable. All the pieces are produced in a prefabrication plant that uses the eco-materials.”

Salazar has found a way to provide homes quicker than existing NGOs – Popular Housing Organizations (OPV), as they are called – established to address homelessness in Colombia. The homeless poor are caught in a Catch-22: they need to have a formal job to receive homebuilding assistance from the government, and they usually can not save up enough money for a down payment on the home.

Salazar’s solution is to take the maximum grant given by the central government, which is US $4,730, and combine it with the recycled building materials and homeowners’ own labour. He says this allows a house to be built for roughly half the price of a similarly sized one that uses conventional materials: the eco-materials house costs around US $ 6,590, compared to US $12,000 using conventional materials. Land is often either donated by the municipality or the family already owns it. And in Salazar’s experience, the whole family chips in with the building: husbands, sons, brothers, fathers, wives.

The training takes just three days on eco-materials and a day in construction techniques for house building.

“To date, we have built with this method 306 houses,” said Salazar. “For the coming year, we expect to deliver around 500 houses or more. To build a house, after acquiring the land, we need three people working eight hours a day to build it in four weeks – all under the supervision of a workforce teacher and the supervision of an engineer or architect.

“The houses are designed by architects with the participation of the community or families. They do some workshops and the design conforms to their vision and expectation. In Colombia, there is an earthquake resistance code which is binding in law and provides detailed specifications of the materials, foundations, structure and roof.”

The pre-fabricated building materials are made from recovered waste from a wide variety of sources: ceramic red brick, coarse ash and fly ash, slag from steel, copper slag, porcelain insulators used for electrical power lines, nickel slag, sludge from sugar and alcohol plants and water treatment plants.

“The raw materials we use are industrial solid waste and demolition waste. It costs the industry a lot to throw away this waste,” Salazar said.

He said the biggest obstacle to the new homes is psychological: many people initially “tend to reject at first-hand the technology.”

“When visiting the factory and then visiting the homes – or model homes – they then compare it with a traditional house, and realize that the best eco-homes when finished meet the standards of Colombian earthquake resistance and are also cheaper,” he said.

Compared to using conventional building materials, the eco-materials reduce the cost of a new home. And the company still makes a profit from it!

In Paraguay, Elsa Zaldivar is using recycled plastic, cotton netting, corn husks, and loofah sponges (http://en.wikipedia.org/wiki/Luffa) to make cheap, lightweight construction panels for housing. This has a double benefit: it makes for cheap housing and it is good for the environment.

“That’s very important in Paraguay,” said Zaldivar, “because we’ve already reduced our original forest to less than 10 percent of the national territory.”

Zaldivar got her experience working with people in the impoverished area of Caaguazú, where in the past she helped with the building of toilets and making stoves. She found that involving local people in this work made a huge difference: “They told me: ‘Now we feel like we’re people with dignity.’”

She encourages local women to grow loofah – a plant that once flourished but was being ignored. While the fruit is edible she was more interested in the crusty sponge that is left over when the plant is dried. The women started a cooperative selling loofah sponges, mats and slippers. But there was a lot of waste in the process, with a third not suitable for export. She then came up with the idea to use the loofahs for wall and roof panels for cheap housing.

Along with industrial engineer Pedro Padros, she developed a way to combine loofah with plastic waste. Padros invented a machine to melt the recycled plastic and mix the molten plastic with loofah, vegetable fibres and chopped corn husks. It has produced a building panel that is lighter and easier to move around than lumber or brick. With a grant from the Inter-American Development Bank, design improvements have been made and the cost-per-panel brought down from US $6 per square meter. It is now competitive with the cost of wood panels. The great thing about the panels is that they can be recycled again when they wear out, completing the cycle.

“To have a decent home liberates people,” said Zaldivar.

By David South, Development Challenges, South-South Solutions

Published: January 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Kenyan Bank Helps the Poor and Gets Rich

Good quality banking services are a basic building block to rising incomes. Yet the poor across the South are often overlooked and denied access to savings accounts and loans.Many low-income people are openly discriminated against as ‘bad risks’ by banks, and denied the sort of banking services middle and higher income people take for granted. Yet it is a myth that the poor do not have money or do not wish to save and invest for their future or for business.

The so-called Bottom of the Pyramid (BOP) – the 4 billion people around the world who live on less than US $2 a day – are being targeted by a wide range of businesses. Indian business consultant and professor CK Prahalad (http://en.wikipedia.org/wiki/C.K._Prahalad) , the man who coined the term BOP, has gone so far as to claim this is a market potentially worth US $13 trillion, while the World Resources Institute puts it at US $5 trillion in its report, “The Next 4 Billion” (http://www.nextbillion.net/thenext4billion).

A Kenyan commercial bank has proven it is possible to target the BOP and become successful doing it; so successful that they have seen off foreign rivals and were voted Kenya’s third most respected company.

By offering Kenya’s poor people savings accounts and microloans, Equity Bank (http://www.equitybank.co.ke/) has captured 50 percent of the Kenyan bank market. It now has more than 3 million customers and 2.8 million account holders and opens 4,000 new accounts a day.

Its chief executive officer, James Mwangi, said Equity Bank built its success by doing the opposite of what other banks have done – it doesn’t target the middle and upper classes, but the “the watchmen, tomato sellers and small-scale farmers”.

The Kenyan banking sector in the past was dominated by foreign banks. But by investing in the 46 percent of the population who still live below the food poverty line, Equity has become the third most profitable bank in the country. Its approach was once considered odd. Most of the bank’s borrowers work in the informal sector and have few assets to use as collateral for the loans. So Equity uses what it calls ‘social collateral’. This includes a mix of measures: in some cases, account holders join together to guarantee a person’s debt. Even more unusually, women offer their matrimonial beds as security – it would be shameful for a woman to admit her bed has been taken to pay for the debt.

“For us it’s psychological security. Nobody wants to be excommunicated and lose their inheritance,” said Mwangi.

“By focusing on the previously excluded, Equity has revolutionized the banking sector,” James Shikwati, a director of Kenyan think tank the Inter Region Economic Network (http://www.irenkenya.com/), told The Guardian newspaper. “It has forced the multinational banks to change their business strategies.”

Started in 1984, the bank was still insolvent by 1994, when Mwangi joined as an accountant. Things were looking grim as Kenya’s economy was in a slump and foreign banks like Barclays were closing branches outside big centres.

Mwangi and other Equity Bank managers realized there were millions of low-paid poor in Kenya – all BOP – but who wanted to save and borrow but had nowhere to go.

“Banking was the only industry in Kenya led by supply rather than demand,” said Mwangi. “There was no ‘bottom of the pyramid bank’.”

While absolute poverty in Kenya has declined in recent years, inequality remains high. The population of 37 million people make on average a per capita income of US $580.

By 2003, as the economy picked up, Equity Bank gained 256,000 account holders. It now has 100 branches across the country and 500 automatic teller machines (ATMs). It uses armoured trucks to go into rural areas so that the people can receive banking services. While traditional banks require pay slips and utility bills as proof of a person’s address before letting them open an account, and charge high monthly fees, Equity only requires an identity card.

Within just one year, the bank saw the number of account holders jump to 600,000. Mwangi likes to say that the bank’s competition is the bed mattress, since most people have never had a bank account before. Most savers have around US $148 in their savings account.

The bank’s micro credit operation makes loans of less than US $7 and gives borrowers a few months to repay them.

The bank claims loan defaults are less than 3 percent on 600,000 outstanding loans – the banking industry average is 15 percent.

It keeps its transaction costs down by using the latest in information technology. These efficiencies enabled the bank to earn pre-tax profits of more than US $40 million in 2007.

Equity does face competition, as its success attracts mainstream banks into the BOP market.

In Africa these days, banking is hot: a South African research and analysis company BMI-TechKnowledge (http://www.bmi-t.co.za/) in a report identifies a boom in banking services across Africa. In particular, South Africa, Botswana, Namibia, Angola, Mauritius, Tanzania, Kenya, Ghana, Nigeria, Egypt and Morocco – all have seen surges in profit and services as a result of improving banking regulations and political conditions.

Mwangi isn’t worried, however, since the number of people still without bank accounts is huge. Equity Bank is expanding its operations into Uganda, Rwanda and Sudan.

Elsewhere, mobile phone banking in Kenya is proving highly successful. Equity has a service, but so does Safaricom with M-PESA (http://www.safaricom.co.ke/index.php?id=745). Customers can deposit, transfer and withdraw money using their phones. Over 4 million are now using the service.

By David South, Development Challenges, South-South Solutions

Published: January 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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Rammed-Earth Houses: China Shows how to Improve and Respect Traditional Homes

The pace of change across the South has been blistering. Over the past decade, the overall population has moved from being primarily rural to majority urban. In the process, rural communities have suffered, as they have seen their young and ambitious leave in droves seeking a better life in cities.

More than 200 million Chinese farmers have moved to cities in recent years. It’s easy to see why. Chinese farms are tiny, with the average rural household farming just 0.6 hectares. And incomes are low compared to the cost of living: average annual income was just US$606 in 2007, a third of city salaries.

But it is possible to improve the quality of life in rural areas and in turn boost economic fortunes.

In China, projects that upgrade homes to modern standards while respecting traditional designs and architecture are breathing new life into rural communities. A return to the age-old technique of using earth as the principal building material is saving energy and keeping house costs low.

The tradition of packing earth to build a wall dates back to some of the earliest stretches of the Great Wall of China in 220 BC.

Currently it is estimated that half the world’s population-approximately 3 billion people on six continents – lives or works in buildings constructed of earth.

This traditional building technique is being used in the reconstruction effort to build new homes after the May 12, 2008 earthquake in Sichuan Province. The earthquake left millions of people homeless in the country’s worst natural disaster in 30 years, and has made low-cost but efficient house building critical.

In western China, villages have been entirely rebuilt from scratch. The application of research and science to the traditional designs – roofs in the pagoda style, with buildings arranged around courtyards – enabled the development of homes that are energy efficient to run, and are more hygienic and earthquake safe. In Yongren County of Yunnan Province, over 7,000 mountain dwellers were moved to better farming land and over 2,000 homes were built in the new village of BaLaWu. Over 30 of the homes were built using rammed earth by the Xi-an team.

“The original homes had very low living quality,” said team member Hu Rong Rong of the Green Building Research Centre of Xi’an University of Architecture and Technology (http://www.xauat.edu.cn/jdeg/about.html), which oversees building of the new homes. “The architecture layout of the indoor space and courtyard was not reasonable. In the courtyard the areas for living, raising livestock, storing and processing crops were mixed up. The indoor environment was not comfortable. It was cold in the houses during winter and hot during summer. Most of the rooms lacked natural lighting and were dark in the daytime.

“In the poor areas, many people still live in earth houses because of the low cost. However, most of the earth houses have low living quality.

“After we finished the project, through our design, the living quality was improved very much. The dwellers were satisfied with their new houses.”

Land reform in China has brought more hope to the country’s 750 million rural poor, many of whom live on less than US$1 a day. It is hoped that giving the rural poor more control over their lives will bring an improvement in agricultural production, food security and economic prosperity. Reforms also mean the poor have more secure land rights.

Hu said gaining the trust and buy-in of the villagers was critical to the success of the project.

“We built the first home as a demonstration. After we finished, the villagers could experience the advantages of the new home. Most of them decided to use our design and they could choose the one they liked from several proposals.”

Poverty is a big problem in the villages. Incomes are very low, at 2000 RMB per year (US $290). Hu said “families were given a house-building allowance of 8000 RMB (US $1,160) to meet the cost of building materials – and the land was free for them to use.”

“The villagers built the houses by self-help. We helped them to design and build the houses for free,” Hu said.

The houses are pioneering in using natural sources to provide light, heat, waste disposal and gas for cooking and heating.

“We used natural material like earth as a main building material to get good thermal mass and also to reduce CO2 emission,” Hu said.

“We designed a simple family sewage-purge-pool and marsh-gas-well system to reduce pollution and get energy from wastes.”

Using rammed earth has a long history in China. Across Western China, there are many buildings constructed with rammed earth. And using earth has many advantages when resources are scarce or expensive: “Earth buildings avoid deforestation and pollution, and can achieve low energy costs throughout their lifetime,” said Hu.

“With living standards increasing, more and more people would like to use burned bricks and concrete to build new houses, which will consume more energy and bring pollution,” said Hu.

But like any technology, the application of modern science and environmental knowledge to the traditional designs, can reap huge improvements in the quality of the homes and comfort levels. And win people back to the benefits of rammed earth dwellings.

“Building with earth materials can be a way of helping with sustainable management of the earth’s resources,” said Hu.

And Hu is adamant the new, environmentally designed homes respect the wisdom of traditional design.

“The new earth house design should consider the local culture. It should be proved that both the house style and the construction technique can be accepted by the users.”

By David South, Development Challenges, South-South Solutions

Published: December 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Model Indian Villages to Keep Rural Relevant

 

The world’s rush to urban centres is the great challenge of the 21st century. In 2007, the world became a majority urban place. The consequences of this shift can be seen in the blight of urban poverty, with its slums and squalor, environmental degradation, and rising social tensions. But there are people working on keeping rural areas relevant and pleasant places to live. These rural advocates see a vibrant countryside as part of the solution to the world’s plethora of crises.

In India, a pioneering initiative is reviving impoverished rural villages. Drawing on self-organizing methods used in India since 1200 BC, the Model Village India (www.modelvillageindia.org.in) is based around India’s democratic system of Panchayats: a village assembly of people stemming back to pre-colonial times.

“Decentralizing is necessary if development is to reach the grassroots,” said the concept’s founder, Rangeswamy Elango, a head of the village of Kuthampakkam, 20 kilometres (12 miles) from the bustling city of Chennai, and one of the 12,600 Panchayats in the Indian state of Tamil Nadu.

While all villages have the ability to use the Panchayat system to improve their lives, few are making the most of this system. The model villages are about showing other villages the true power they have at their disposal. And that with a plan and determination, they can increase their income and improve their quality of life, attracting more money from government and other sources to do so.

The concept has now expanded to 30 model villages. At its core it is about being positive, eschewing griping about problems and instead getting down to work to solve them.

“We demonstrate the basic infrastructure, sustainable housing, food security,” said Elango. “If the government is not bothering, maybe through the local people’s efforts, we can try to demonstrate a variety of development models.”

As India’s economy has boomed, its small towns and villages have withered. Home to the majority of the country’s population, they are in crisis, with declining populations and high suicide rates. India’s urban slums are where people are going – they are growing 250 percent faster than the country’s population. India is a country in danger of neither having a viable rural economy, nor viable cities, but just vast tracts of slums.

Originally left out of the first draft of India’s constitution, Panchayats became legitimized in 1992. They are now elected in every one of the 260,000 villages in India. If they use them, the local Panchayats have extensive powers to transform the destiny of a village, with control of budgets, and decision-making power on how services are to be delivered. This ranges from the provision of clean water, to burying the dead and building roads. The trick is in getting people to realize the power they wield over their destiny and how it can transform their economic situation.

“The village-level local governments are constitutionally important bodies,” said Elango, “but the way it is implemented is not good. The system is unable to deliver the goods to the people.”

The model village approach has revived once-declining villages plagued with high unemployment, chronic alcohol abuse, and domestic violence. The residents are involved in the building of new and healthier homes, providing clean drinking water, waste facilities, education services – including an academy dedicated to teaching the skills and lessons leaned by the villagers to other villages – and even trying to break down the barriers between people because of India’s caste social hierarchy.

“Instead of having a big college, this is a practical people’s model,” Elango said. “It is not done by an academic but by a layman. The learning is spontaneous and emotional.”

Elango is driven by making his village a model that works, and in turn, becoming a magnet for others wishing to improve their lives and their villages.

Elango’s village was not able to support itself with its two crop harvests a year and the villagers resorted to illegal alcohol production instead to make a living. Despite being well connected by highway with nearby Chennai, the village was socially and economically dying.

Like a spreading ink spot, the concept is to create a network of like-minded villages that act as self-reinforcing positive role models, spreading the prosperity and stability outwards. The “Network Growth Economy Model” is a direct challenge to the “special economic zones that benefit only capitalist owners,” said Elango.

Ambitious, Elango is hoping to draw in 2,000 villages over the next 10 years, until a tipping point is reached, and the model explodes across India.

A native of the village, Elango became saddened by the community’s decline, including widespread domestic violence against women. The booming city of Chennai’s prosperity had not rippled out to the village, and it was still lacking good infrastructure and sanitation. A trained chemical engineer, he was elected the President of the Kuthambakkam Panchayat in 1996, and set about using his engineer’s perspective to draft the village’s five-year plan from 1996 to 2001.

But the budget was tight. And he had to turn to innovative solutions: recycling building materials, conserving water and reducing electricity consumption. But the resourcefulness paid off, and the state of Tamil Nadu provided the money to upgrade roads, drains, build a community centre, child care facilities, 200 low cost toilets, and work sheds for the village’s industries. By the end of 2001, most basic needs were being met. He then turned to providing good quality housing for the villagers still living in thatch huts.

He has used the “Network Growth Economy Model” to tackle the unemployment and low incomes. It works like this: rather than buying food and other products from outside the village, the villages band together to establish industries to provide those products to each other. This creates jobs and increases income by keeping the wealth within the network of villages, rather than it benefiting far-away companies. The new businesses include Thoor dhal processing, dairies, soap making, bakeries, ground nut oil production, and leather making.

“India was strong when this model was in place – we had strong villages,” said Elango. “Globalization’s trickle down is not working for India.”

By David South, Development Challenges, South-South Solutions

Published: November 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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Mobile Phones: New Market Tools for the Poor

Bangladesh’s poor can now buy and sell goods and services with their mobile phones, thanks to a Bangladeshi company’s pioneering mobile phone marketplace. The company, CellBazaar, serves as a useful role model for other Southern entrepreneurs and companies looking to develop and market mobile phone applications for the poor that really help them.

CellBazaar is simple to use: A user begins the process by texting the word “buy” to short message (SMS) code 3838. They then are offered a list of all the items for sale and scroll through them to find what they want. When they have found something, they send another SMS. In response, an SMS comes back telling the seller’s phone number. And from that point, business is underway between the buyer and the seller.

“It’s a far more efficient way of finding things. In the past you have to go to newspapers, magazines, and find the best match,” founder Kamal Quadir told MobileActive.

The categories run from used cars and motorcycles, to new laptops, agricultural products like corn, chickens and fish, educational tutors, jobs, and places for sale and rent.

Quadir said he had the idea for CellBazaar when he was a graduate student at MIT, the Massachusetts Institute of Technology in the United States.

“I was surrounded by technologically sophisticated people,” he said. “I saw all this technological possibility and heard one top-notch scientist mentioning that a very cheap mobile phone had the same capabilities as a NASA computer in 1968. A country like Bangladesh has 35 million NASA-type computers, and most importantly, they’re in people’s pockets.”

Quadir saw all this power going to waste, and realized how business was being held back by the lack of information. Absence of market intelligence – or what is available for sale and what is a good price – was a big impediment to more profitable and efficient business transactions.

Quadir first created the idea at MIT Media Labs and eventually signed a contract with GrameenPhone. CellBazaar launched in July of 2006, and, after a year of beta testing, the team started to actively market the service in August 2007.

CellBazaar can also be accessed through its website. This has the advantage of making what is a very local market an international market.

Partnering with GrameenPhone, Bangladesh’s leading telecommunications service provider with more than 18 million subscribers, had its advantages. With 60 percent of the Bangladesh market, “their network is larger than others,” Quadir said.

Just as web applications like Google and the powerful social networking website Facebook (www.facebook.com) transformed the way people work and socialize, so CellBazaar has needed to encourage a change in behaviour for it to work. At first, people didn’t think they had anything worth selling, or that they could use the text messages to connect to a marketplace.

“In the past, a rural village person couldn’t even imagine that they wanted to sell something and the whole world would be willing to buy it,” Quadir said. “The biggest challenge we have is people blocking that audacity and courage.”

To date, over 1 million people have used the service out of a country of 150 million people. “Fundamentally the real issue is about changing people’s patterns,” he said. “But once they learn how to use it, people start doing it really frequently.”

The CellBazaar experience also shows how critical clever marketing is to business success. The company has been marketed through tastefully designed stickers placed in the windows of cars, taxis and microbuses — ubiquitous and continuous publicity for low cost.

CellBazaar also has launched educational booklets for four target audiences: villagers and farmers, the elderly and retired, young professionals, and tech-savvy teenagers. There are detailed booklets for those who want step-by-step instructions, as well as short leaflets for customers who want to carry a “quick guide” in their pocket.

CellBazaar launched its first television campaign during the Muslim festival of Eid in 2007. The ads featured a newspaper seller called Shamsu Hawker, and show how he begins a new career buying and selling used televisions with the help of CellBazaar. The advertisement’s unusual setting on a train, as well as positive imagery of Bangladesh, created a sensation among TV viewers. The character “Shamsu Hawker” has become a nationally recognized icon and popular cultural figure.

As the service grows, the demographic that uses it has also expanded. “Young people were the early adopters,” said Quadir. “Initially urban people used it more, because we didn’t market very aggressively. Word of mouth spread faster because of the higher concentration of people in cities. But now it has spread to rural areas as well.”

CellBazaar has won many awards for its innovation in social and economic development.

The ambitious Quadir wants to expand CellBazaar into East Africa, Eastern Europe, and South Asia. Unlike the web, CellBazaar has to make deals with local mobile phone providers. He can’t just offer the service through the internet. “The Internet belongs to everybody — like highways and like fresh air,” said Quadir. “Mobile networks are privately owned.”

“So far the operators we have worked with have been very good,” he said. “We are very selective in terms of what operator we work with.” As CellBazaar looks to expand, Quadir is focusing efforts on places that have high mobile penetration rates and low web penetration. “We’re looking at any place that has less internet. No matter how good the application is, having internet and high computer penetration doesn’t help us,” he said. “And mobile is everywhere.”

The same lesson is being learned around the world. A study of grain traders in Niger found that “cell phones reduce grain price dispersion across markets by a minimum of 6.4 percent and reduce intra-annual price variation by 10 percent.” According to the study, “The primary mechanism by which cell phones affect market-level outcomes appears to be a reduction in search costs, as grain traders operating in markets with cell phone coverage search over a greater number of markets and sell in more markets.”

Mobile phones are now the fastest growing consumer product in history. Portio Research estimates that between 2007 and 2012 the number of mobile subscribers will grow by another 1.8 billion, mostly in emerging economies like India and China.

Informa Telecoms and Media estimates mobile networks now cover 90 per cent of the world’s population – 40 per cent of whom are covered but not connected. With such reach, finding new applications for mobile phones that are relevant to the world’s poor and to developing countries is a huge growth area. It is estimated that by 2015, the global mobile phone content market could be worth over US $1 trillion, and basic voice phone calls will account for just 10 per cent of how people use mobile phones.

Leonard Waverman of the London Business School has estimated that an extra 10 mobile phones per 100 people in a typical developing country, leads to an extra half a percentage point of growth in GDP per person.

The experience in the Philippines has shown that the best way to drive fast take up of mobile phone services is to offer something very practical and connected to personal income.

“The most significant lesson learned so far,” said Shawn Mendes, lead author on the report, The Innovative Use of Mobile Applications in the Philippines: Lessons for Africa, “is that m-Banking, rather than more altruistic applications such as m-Health and m-Education, has delivered the greatest benefits to people in developing countries.”

By David South, Development Challenges, South-South Solutions

Published: October 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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