The GiveWell blog ran some disappointing news yesterday. They took a look at the Grameen Foundation’s village phone program. The village phones program is much beloved; it’s been highly touted as an effective way to lift people out of poverty. The foundation gives a loan to an entrepreneur (usually female), who then rents the phone to people in her village. It gives her a new source of income, and provides access to telecommunications for her village.
Here’s the problem; it doesn’t seem to work. The phones aren’t that useful to the people living in the villages. Having access to the phone had “absolutely no impact of the phones on trading activity or availability of goods in local markets” and very small (non-significant) impacts on profits and measures of well-being (school enrollment, consumption of meat, etc.).
They also don’t provide significant income to the phone owners. “Their hours worked rose significantly both for their new phone business and for their already-existing businesses, but their profits and wages paid did not rise…” In other words, the phones were a bad investment.
Combined with the recent studies finding that microfinance doesn’t have the hoped-for impact on poverty, we’re rapidly running out of magic bullets.