The Blue Sweater: Bridging the Gap between Rich and Poor in an Interconnected World

306 Pages·2009·0.63 MB·English

by  Jacqueline Novogratz

JACQUELINE NOVOGRATZ gave up a career on Wall Street for a chance to
change the world and pursue a life of adventure. Trained as an international
banker and development expert, she founded Acumen Fund in 2001. Together,
she and Acumen Fund have pioneered a “third way”—called patient capital—
between venture capitalism and traditional charity, one that seeks to effect real
change in countries where the average citizen lives on less than $4 a day. This
new approach regards people living on limited incomes not as passive victims
but as potential customers and budding business people in their own right.
Prior to Acumen Fund, Jacqueline founded and directed the Philanthropy
Workshop and the Next Generation Leadership program at the Rockefeller
Foundation. She also founded Duterimbere, a microfinance institution in
Rwanda. She began her career in international banking, and is currently on the
advisory boards of Stanford Graduate School of Business and Innovations, a
journal published by MIT Press. She is a Henry Crown Fellow at the Aspen
Institute and a Synergos Institute Senior Fellow, as well as a frequent speaker at
international conferences, including the World Economic Forum, the Clinton
Global Initiative, and TED. In 2009, Jacqueline was named one of the “Top 100
Global Thinkers” by Foreign Policy magazine and one of the “25 Smartest
People of the Decade” by The Daily Beast. She holds an MBA from Stanford
University and a BA in economics and international relations from the
University of Virginia.

My family helped make me who I am . . . and they join me in
dedicating this book to our larger family, those countless millions
around the world who lack money and security but possess dignity
and an indomitable spirit. For their time is coming, and this story is
for them.
CONTENTS
PROLOGUE
1. Innocent Abroad
2. A Bird on the Outside, a Tiger Within
3. Context Matters
4. Basket Economics and Political Realities
5. The Blue Bakery
6. Dancing in the Dark
7. Traveling without a Road Map
8. A New Learning Curve
9. Blue Paint on the Road
10. Retribution and Resurrection
11. The Cost of Silence
12. Institutions Matter
13. The Education of a Patient Capitalist
14. Building Brick by Brick
15. Taking It to Scale
16. The World We Dream, the Future We Create Together
ACKNOWLEDGMENTS
READER’S GUIDE
SUGGESTED READING
INDEX
PROLOGUE
T
hey say a journey of a thousand miles begins with a single step. I took mine
and fell flat on my face. As a young woman, I dreamed of changing the world. In
my twenties, I went to Africa to try and save the continent, only to learn that
Africans neither wanted nor needed saving. Indeed, when I was there, I saw
some of the worst that good intentions, traditional charity, and aid can produce:
failed programs that left people in the same or worse conditions. The devastating
impact of the Rwandan genocide on a people I’d come to love shrank my dreams
even further. I concluded that if I could only nudge the world a little bit, maybe
that would be enough.

But nudging isn’t enough. The gap between rich and poor is widening across
the world, creating a dire situation that is neither socially just nor economically
sustainable. Moreover, my work in Africa also taught me about the extraordinary
resilience of people for whom poverty is a reality not because they don’t work
hard, but because there are too many obstacles in their way. One very sick child
or the death of a husband can wipe out a family’s savings and throw it into a
vicious cycle of debt that keeps those with the least in poverty forever.
It doesn’t have to be that way. Indeed, the idealism of my twenties has
returned in my forties, not simply from unfounded hopefulness, but from
optimism grounded in a deep and growing pragmatism. To address poverty in a
more insightful way, in 2001 I started a nonprofit organization called Acumen
Fund. We raise charitable funds, but instead of using the money for giveaways,
we make careful investments in entrepreneurs who are willing to take on some
of the world’s toughest challenges. The entrepreneurs we seek have the vision to
deliver essential services like affordable health care, safe water, housing, and
alternative energy to areas where governments or charities are often failing. We
measure our results in social as well as financial terms and share lessons and
insights learned with the greater world.

We’ve seen what can happen when an entrepreneur views the market as a
listening device that reveals how to tailor services and products to the
preferences of low-income people who are viewed as consumers, not victims.
The entrepreneurs are driven to build systems that can eventually sustain
themselves and, ultimately, serve a wide swath of the population.
The returns on such investments can be enormous. At Acumen Fund, we’ve
worked with an entrepreneur who built a company that provides safe water to
more than a quarter million of India’s rural poor, contrary to all conventional
wisdom that truly low-income people would never pay. We’ve supported an
agricultural products designer who has sold to more than 275,000 of the world’s
smallholder farmers drip irrigation systems that enable them to double their
yields and income levels. We’ve invested in a malaria bed net manufacturer in
Africa that now employs more than 7,000 people, mostly low-skilled women,
and produces 16 million lifesaving, long-lasting bed nets a year.

Today, I believe more strongly than I did as a young woman that we can end
poverty. Never before in history have we had the skills, resources, technologies,
and imagination to solve poverty that we do now. I’m also a believer because
I’ve seen that fundamental change is possible in a single generation.
My grandmother Stella was born in 1906. Her parents lived on a farm in
Burgenland, Austria’s wine region on the border with Hungary, and came to live
in a little town called Northampton, Pennsylvania—like so many other
Austrians, Czechs, and Hungarians—to seek their fortune. They couldn’t afford
to care for Stella, so when she was 3 years old her parents sent her back to
Austria with her little sister, Emma, promising to bring their daughters to the
new country as soon as they could manage it.

For more than a decade, the two girls were trundled from family to family,
never fully belonging. They lived the lives of domestic servants, were sometimes
abused, and each was allowed to wear her one pair of shoes only on Sundays.
They were given no real education except how to work hard, believe in God, and
keep looking forward.
The women of my grandmother’s generation expected to start birthing
children as soon as they married, do manual work outside the home for income,
and take care of all household matters. My grandmother toiled under oppressive
conditions as a pieceworker in a textile factory, cooked all day on Sunday, and
waited until the men had eaten before she sat. And she never, ever complained.
She buried three of her nine children before they were 5 years old, went to
church every day, and had a beautiful, shy laugh accompanied by downcast eyes.
I would come to see that same smile on so many women on the African
continent.

In America, my grandparents raised 6 children, who then brought another 25
individuals into the world. My cousins and I stand on the shoulders of our
grandparents and people like them who never asked for handouts, but supported
one another and shared suffering and, through hard work and determination,
gave their children better futures in a country that assured them hope and
opportunity, if nothing else.
Today, poor people the world over are seeking opportunity and choice to have
greater dignity in their lives—and they want to do it themselves, even if they
need a little help. Today we have the tools and technologies to bring real
opportunities to people all across the world.

The time has come to extend to every person on the planet the fundamental
principle that we hold so dear: that all human beings are created equal. Rather
than seeing the world as divided among different civilizations or classes, our
collective future rests upon our embracing a vision of a single world in which we
are all connected. Indeed, maybe this notion of human connection is the most
important—and complex—challenge of our time. Markets play a role in this
vision, and so does public policy. So does philanthropy. We all play a role in the
change we need to create.
But where to start? Like so many young people with skills today, my desire to
contribute to changing the world a quarter century ago wasn’t matched by a
proper game plan: I had no idea how to do it. I was a middle-class kid who paid
my way through university. Pursuing a nonprofit life seemed like an enormous
challenge at the start, and I didn’t know anyone at the time who did the kind of
work I craved. Almost all of my role models were characters in books—or dead.

So I did what I now tell young people to do: I started where I could and where
I was given a chance. This book is about my journey, one taken with gusto, if
not always with wisdom. Indeed, as I look back at the adventurous young
woman who left banking to pursue a life focused on a more global, connected
vision, I see someone with guts, education, and skills, but also someone who had
to learn time and again that those factors alone don’t always lead to success.
This book is for people who do not seek easy solutions or insist on a singular
ideology for the world. It is for individuals who care less about the amount of
money people earn and more about whether they can access basic services and
live with the freedom and dignity that are their inherent rights as human beings.
It is for readers who seek simple truths while recognizing that today’s problems
are complex and often require equally complex solutions.

My own path has challenged even my most basic assumptions. Going to
Africa for the first time only to meet with threats of voodoo and poisoning made
me question an outsider’s role in development. Seeing a group of women with
whom I had worked for years both suffer as victims and act as perpetrators in the
Rwandan genocide made me reconsider the very nature of what it is to be
human. Watching the Berlin Wall fall, which resulted in a widespread belief in
the “victory of capitalism,” while also experiencing the cruelty an unbridled
capitalist system can inflict on the very poor made me seek alternative solutions
that could include all people in the opportunities presented by a global economy.
Meeting and working with some of the world’s wealthiest individuals made me
explore the role of philanthropy and private initiative in bringing about large-
scale change, especially when it comes to poverty.
My story is really composed of the stories of others, the extraordinary people
who have shaped my life. They came from all corners of the world—a
Cambodian monk and an elder American statesman; a man who lived his entire
life in a mud hut in Africa and a president of the Rockefeller Foundation;
Kenyan women dancing in a hut; a little girl who’d lost her home in Pakistan;
and a genocide survivor who fought back to claim her life again with just 4 liters
of milk. Each of these individuals and so many more have given me an
incredible education about the human capacity to overcome enormous obstacles,
how alike we are in the most fundamental ways, and that what is most important
is our individual and shared sense of dignity. To a person, these unforgettable
individuals, many of whom endured impossible suffering, never lost their sense
of life or humor.

It is from them that I gained the confidence and sense of possibility that
sustained me. They allowed me to believe we could—and therefore must—
create a world in which every person on the planet has access to the resources
needed to shape their own lives. For this is where dignity starts. Not only for the
very poor, but for all of us.