ITU: Micro-funding could aid telecom development

HONG KONG--Microfinancing is in the spotlight at the ITU Telecom World show here, as the global telecom community looks at ways to better leverage technology to improve the quality of life in developing nations.

In the opening ceremonies of the global ITU show, Muhammed Yunus, Nobel Peace Prize winner, said his Grameen Bank will partner with the ITU, Cisco Systems, Qualcomm and a newly formed consortium, Enclusion, to launch a virtual global “ICT Empowerment Network.” The goal is to use micro-credit financing, or very small targeted loans, to help put technology in the hands of those in developing nations who can use it to generate economic activity and improve quality of life.

In a pre-show event, one ITU official who strongly backs micro-financing said the digital divide is a symptom of the economic divide but it can be addressed by the telecom industry in ways that boost national economies and enable entrepreneurship in developing nations, a leading International Telecommunications Union official told a press gathering in advance of the ITU Telecom World 2006 event here this week.

Reza Jafari, a member of the ITU Telecom Board and chairman of the ITU World 2006 Forum Advisory Committee told a NetEvents audience Friday that the proliferation of Internet Protocol, broadband and digital technologies have made it more important than ever to “live on the right side of the tracks” where access to information technology is concerned. The telecom industry is “missing the boat” by not capitalizing on opportunities to address economic development issues, he said.

“The digital divide is a symptom, the economic divide is the cause,” Jafari said. “To take care of the digital divide, we have to take care of the economic divide--it is a vicious cycle” with the two sides “interfering and interacting with each other.”

For example, making less expensive wireless technology available is enabling new kinds of entrepreneurship in developing countries, Jafari said.
In India, handset costs have decreased from 16 rubies in 1997 to less than half a rubie in 2006. “As a result, they are adding one million users a week to the user community,” Jafari said. In South Africa, low-cost handset units increased mobile subscribers by 58%, he said, and the handsets “are no longer personal communication tools, they are business tools.”

“Mobile communications and teledensity have contributed positively to the quality of life” by increasing life expectancy, lowering infant mortality rates,
creating jobs and improving the standard of living, Jafari said. He cited research which shows that increasing teledensity has a greater impact on gross domestic product than even improvements in primary and secondary education.

For the technology industry, including computing and telecom, to continue to aid in the improvement in quality of life in developing nations, Jafari said, the private sector must work more closely with regulators, policy makers, customers, the civil society and even the media to generate “strong leadership with integrity to gain each other’s trust and promote mutual interests and an ongoing dialogue,” he said.

In his speech delivered as part of the opening ceremonies for ITU, Yunus said he was grateful to the ITU for helping advance the cause of addressing issues of poverty and disenfranchisement by enabling people in developing nations to take charge of their financial future. Yunus pioneered microfinancing, through which small sums of money are loaned to people in developing nations to enable them to establish their own businesses or other economic opportunities.

Jafari said he used a $500 family loan to launch his own multimillion dollar business. Because labor and other costs are low in developing nations, lowering the cost of communications technologies and enabling microfinancing can provide economic advantages beyond the value of the money loaned, Jafari said.