Convergences

Sometimes life come together in kind of strange ways, but if you think about it you can kind of see the pattern. 

Earlier today I was writing about India and it's growing economy.  Earlier this week I was writing about Microfinance.  Now those topics are converging:

This years Nobel Peace Prize winner is Muhammed Yunus, a Bangladeshi Economist who founded the Microfinance movement 30 years ago when he founded the Grameen Bank. 

Then there are these two stories showing how very small applications of credit can make a huge difference in a persons standard of living.

From the Washington Post:

For India's Traditional Fishermen, Cellphones Deliver a Sea Change

By Kevin Sullivan

Washington Post Foreign Service
Sunday, October 15, 2006; Page A01

PALLIPURAM, India - Babu Rajan pointed off the starboard bow and shouted: "There! There!"

In choppy, gray seas four miles from shore near India's tropical southern tip, Rajan spotted the tinselly sparkle of a school of sardines. He ordered his three dozen crewmen to quickly drop their five-ton net overboard.

At dockside, workers unload sardines caught that day by the Andavan's crew. Before the ship arrived, the fish had been sold to a dealer via cellphone.

The article goes on to explain how access to information via cellphone has completely changed the way business is being conducted in the third world.

"This has changed the entire dynamics of communications and how they organize their lives," said C.K. Prahalad, an India-born business professor at the University of Michigan who has written extensively about how commerce -- and cellphones -- are used to combat poverty.

"One element of poverty is the lack of information," Prahalad said. "The cellphone gives poor people as much information as the middleman."

For less than a penny a minute -- the world's cheapest cellphone call rates -- farmers in remote areas can check prices for their produce. They call around to local markets to find the best deal. They also track global trends using cellphone-based Internet services that show the price of pumpkins or bananas in London or Chicago. [...}

Rajan said that before he got his first cellphone a few years ago, he used to arrive at port with a load of fish and hope for the best. The wholesaler on the dock knew that Rajan's un-iced catch wouldn't last long in the fiery Indian sun. So, Rajan said, he was forced to take whatever price was offered -- without having any idea whether dealers in the next port were offering twice as much.

Now he calls several ports while he's still at sea to find the best prices, playing the dealers against one another to drive up the price.

Rajan said the dealers don't necessarily like the new balance of power, but they are paying better prices to him and thousands of other fishermen who work this lush stretch of coastline. "They are forced to give us more money because there is competition," said Rajan

A similar story in told in the next article:

Cell Phone Turns Out To Be Grocer's Best Buy

By Kevin Sullivan

Washington Post Foreign Service
Saturday, October 14, 2006; 8:00 AM

NEW DELHI -- Just at 8 a.m., Devi Datt Joshi pedaled up to his usual spot under a shady tree, his three-wheeled bicycle cart piled high with fresh fruit and vegetables. Within minutes his customers were running knowing fingers over tomatoes, apples and radishes.

As Joshi weighed their purchases, his young assistant packed bag after bag of produce and set them aside in the shade. They were already spoken for -- in at least 25 orders Joshi had received the evening before on the cell phone that has transformed him from a worn-out, half-broke vegetable hawker to a well rested, well paid entrepreneur. [...]

in 2001, Joshi got a cell phone. He's still at the wholesale market by 3:30 a.m., but now he buys largely based on the orders phoned in the night before. He knows almost exactly how much he needs, which has virtually eliminated costly waste -- and he knows when to buy in bulk for parties and weddings. He said well over half of his business now comes in phone orders.

Now the convergence - Cell Phones are a very inexpensive piece of capital with low recurring costs that have demonstrated the ability to transform the way business is done for at least two people.  This transformation has lifted their families out of poverty, and that is the purpose of Microfinance, as I understand it. 

When people are more prosperous the economy as a whole grows and more people become more prosperous which leads to more economic expansion, which is what we are seeing in India now.

I'm not saying that cell phones are responsible for all of India's economic growth, but I am saying they are making a difference.

tags: Nobel+Peace+Prize, Microfinance, Economics, Poverty, Technology, Current+Affairs