Iqbal Quadir Upends Development

Iqbal Quadir founded Grameenphone in Bangladesh in March 1997. Eleven years later the for-profit business has gathered 20 million subscribers and sparked a telecom boom: Bangladesh now has at least six mobile operators and nearly 30 million subscribers, and the Grameenphone model is being replicated in much of developing Asia and Africa.

By promoting economic activity and widening access to markets and jobs, Quadir believes the telephone has increased his country's gross domestic product more than millions in foreign aid - a triumph that has become his guiding principle.

"In some ways, Grameenphone created me," said the 50-year-old, who has since launched a handful of not dissimilar enterprises. "I developed the sense and perspective on what developing countries need: companies that are inclusive."

To that end, Quadir's latest creation is the Legatum Center for Development and Entrepreneurship at the Massachusetts Institute of Technology, a newfangled incubator for the business ideas of budding developing world entrepreneurs. It welcomed its inaugural group of fellows in fall 2008 and just might change the way we see development.

"At the end of the day," Quadir said, "poor countries develop because their people are put on the global economic highway."

If that's the case, Legatum's inaugural class of 12 fellows has just entered the on ramp. All are current or incoming MIT students, chosen for their entrepreneurial potential.

"There are proxies for entrepreneurialism," said Michael Maltese, the Legatum Center's managing director, speaking of the selection process. "We look for leadership qualities and whether they created anything, such as a community-based organization."

Candidates must also offer at least the seeds of a business plan, which, in partnership with MIT's Sloan School of Management, the center will nurture.

"The Legatum Center aims to take half-baked business ideas and complete the baking process," Maltese said.

Amy Banzaert is developing an alternative charcoal made from sugar cane waste to provide clean cooking fuel in underdeveloped regions. Adnan Shahid will work an incubator for mobile technologies businesses in Pakistan. Natalia Maya Ortiz hopes to improve productivity and market access for Colombian farmers.

"Over 60 percent of Colombia's population is rural, and the main livelihood is agriculture," Ortiz said.

Production there is inefficient, Internet access minimal and markets are local, she noted. The result is that few farms are self-sustaining.

"Rural people many times don't have knowledge and skills to use Internet or information services," she said. "My idea is to provide training for new technologies and skills as a means to improve competitiveness and production."

The center will help Ortiz develop that idea, via a scholarship and its informal curriculum.

"It's not a school, and it's not an academic program," said Maltese, comparing the Legatum program to the Rhodes scholarship, which rides on top of academic studies. The fellows will attend monthly meetings with Quadir and sit-downs with prominent figures in development and entrepreneurship.

The goal is to prepare the fellows for success upon departure.

"By the time they complete the fellowship they will be at that stage that they could make a very good pitch to investors and hopefully get startup money to launch their business," said Maltese, adding that U.S. investors have shown interest in Legatum, which plans to link them with graduating fellows.

Legatum's deep-pocketed backer revealed his interest last year. New Zealand billionaire investor Christophive Chandler is so reclusive that when he is listed by Forbes magazine as one of the world's richest he is represented by a dark silhouette because no public photo of him exists. But the 48-year-old Kiwi met Quadir in mid-2007, listened to his idea and invested $50 million via his development firm, Legatum Global Development.

"Legatum made the investment in the center for two reasons," LGD Managing Director Alan McCormick said in an e-mail. "First, because MIT is one of the world's leading academic institutions and has a long history of producing new business ventures. Second, because Quadir is the living embodiment of enterprise and development, an investment banker who utilised a readily available technology - cell phones - to have a profound effect on the life of Bangladesh's poor."

McCormick sees great potential in the center, which will expand to award 40 fellows over the next few years.

"We'd like to see a dramatic shift in the recognition that enterprise solutions provide the most effective and sustainable path out of poverty - not because we say so, but because the work that the Legatum fellows are undertaking is practically and demonstrably effective," McCormick said. "The intersection of technology, business and development is the future of sustainable development, and its home is at the Legatum Center."

The center is founded on that philosophy, rooted in Quadir's experiences with Grameenphone in Bangladesh. Quadir, who lectured in technology and economic development at Harvard before moving to MIT in 2005, regularly gives a presentation in which he points out that $650 billion in aid to sub-Saharan Africa since 1960 has led to very little growth. He argues that top-down and foreign-devised development plans widen the power gap between the people and the authorities in developing countries. The answer, Quadir says, is bottom-up, technology-based entrepreneurship-for-profit businesses that foster innovation and competition and empower people to improve their lives.

"I think it is a great idea," said Vijaya Ramachandran, senior fellow at the Center for Global Development, a nonprofit think tank based in Washington, D.C. "My research and work done by various scholars on African and Asian development shows that investments in education have a high payoff in terms of entrepreneurship - particularly in terms of expanding skills and building business networks."

This perspective is not new. In his 1999 bestseller, "The Lexus and the Olive Tree," New York Times columnist Thomas Friedman said, "Entrepreneurship is the most potent force for uplifting countries." New York University economist William Easterly, one of the first to point out that aid and development programs often do more ill than good, has long argued that development professionals should assist homegrown entrepreneurs like Quadir.

Such ideas are mostly alien to the highest rungs of academia.

"Hopefully we will create enterprises around the world in developing countries," Quadir said. "In addition, we could make a dent in that thinking of the classic development approach, and in order to make that dent it helps to be at a respected university."

Ortiz agrees.

"The center is an ideal place to gain a lot of knowledge and skills about entrepreneurship," the 25-year-old said. "People from developing countries, like me, we could never study or receive education like we could get at MIT, so if I didn't have help of people like Legatum I couldn't make my dream come true."

Fast facts
Name: Legatum Center for Development and Entrepreneurship at MIT
Founded: 2008
Mission: To train developing world entrepreneurs and develop their ideas.
Headquarters: Cambridge, Mass.
Founder and director: Iqbal Quadir
Employees: 4
Opportunities: Fellows must be from the developing world, and enrolled at or planning to attend MIT.

-- posted to devex.com, 15 Sept 2008.

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