Jacqueline Novogratz began her career as an international banker but soon, aspiring to change the world, joined a nonprofit women’s microfinance group that dispatched her to Africa. At the request of an official in Rwanda’s Ministry of Family and Social Affairs, she visited that country, at first to investigate the possibility of starting a credit program for women. A remarkable experience there inspired the title of her book, The Blue Sweater: Bridging the Gap between Rich and Poor in an Interconnected World, which tells the story of her work as an entrepreneur in the social sector. As a child in the 1970s, she had given the charity Goodwill Industries an old, blue sweater. In 1987, jogging through Rwanda’s capital, Kigali, she thought she saw a boy wearing it. She was right—it still had her name on the tag. For Jacqueline Novogratz, this encounter symbolized the idea that humanity’s “collective future rests upon our embracing a vision of a single world in which we are all connected,”¹ just as the blue sweater connected her, an American, with a kid in Rwanda.

Jacqueline Novogratz is now CEO of Acumen Fund, a nonprofit venture capital firm she founded in 2001 to invest in sustainable businesses that bring health care, safe water, alternative energy, and housing to the developing world’s low-income people. The excerpt below comes from Chapter 5 of The Blue Sweater.

An excerpt from The Blue Sweater

I wanted to see what it would take to make a business work in Rwanda. Honorata [a social worker] told me about a project she’d helped create for single mothers in Nyamirambo, the section of Kigali where lower-income people lived. Prudence [one of three women in Rwanda’s 60-member Parliament] whispered in my ear that the women were prostitutes. I shrugged, as it seemed to me the word was used too easily in Rwanda. Women who danced late at the same nightclubs I did could be labeled wanton or worse. “I’ve worked with them for years,” Honorata told me. “The women have such good intentions, and you will like them.”

The group, known as the Femmes Seules—or single women, code for unwed mothers—was one of many organized in part by Honorata’s Ministry for Family and Social Affairs. The women, among the city’s poorest, would gather for training and income generation. This group focused on a baking project and sewing dresses. In a moment, it was clear to me that “income generation” was a misnomer. Only one woman was sewing, the rest were sitting and waiting.

There were about 20 of them, identically dressed in green smocks. Bowing my head, I said hello: “Amakuru.” Faces lit up. In unison, the women responded “Imeza,” meaning “fine.” When one or two began talking to me in Kinyarwanda, I looked at Honorata and felt great relief when she began to translate. Any small effort to communicate on my part elicited gracious appreciation. The women applauded when I used some Swahili, for at least most of the Muslim women spoke that language.

A solid, affable-looking woman named Prisca stood in front of the group. While Prisca and I spoke French, the women stared. In Rwanda, children of the elites were taught French, but the poor learned only Kinyarwanda. Most of these women had spent only a year or two in school at most and couldn’t speak a word of French. They seemed to range in age from 18 to their late 20s and carried themselves with an air of innocence and simplicity. Their dresses could have passed for prison attire.

I asked Prisca to help me understand the baked-goods project. “It’s simple,” she said. “Each morning, several women come very early to prepare the day’s selection. It is always the same.” I would come to know that selection better than I wanted to: beignets (fried lumps of dough), batonnets (the same dough molded into sticks and fried), samosas, tiny waffles, and hot tea. The women would take the goods to the government offices in the middle of the morning and sell them for 10 francs each. They’d then come back with whatever cash they’d earned and give it to Prisca.

In concept, I liked the idea. I knew from experience at UNICEF² that people would get hungry by 10:30 or 11:00 in the morning because everyone arrived at work at 7:30 and didn’t have a break until lunchtime. There were no little stores selling snack foods, and people rarely brought treats from home. “How can I be of help?” I asked. Prisca answered, “The women are too poor. They earn too little money. They work every day, but the project is losing money.”

“How much do the women earn?” I asked. “Fifty francs a day,” Prisca responded—50 cents. “And most are raising multiple children.” “How much do you lose?” Prisca took out the ledger in which she recorded every franc spent, earned, and paid to the women. On average, the project was losing about $650 a month. “Who covers the losses?” I asked. “Two charities,” Prisca said. “But I don’t know how long they will renew our funding.”

Six hundred and fifty dollars a month to keep 20 women earning 50 cents a day. You could triple their incomes if you gave them the money. It was a perfect illustration of why traditional charity too often fails: well-intentioned people gave poor women something “nice” to do and subsidized the project until there was no money left. This is a no-fail way to keep people in poverty. I wondered aloud why the charities didn’t get tired of keeping the enterprise going. How would this survive in the long term? How would the women change their circumstances? Prisca shrugged. “People get by.”

“Prisca, that’s not enough,” I said. “No,” she said, visibly embarrassed, “it isn’t.” I was foolish to start with criticism. This is where so many Westerners fail: after a quick appraisal, we’re ready to tell people in low-income communities not only what’s wrong with what they’re doing but also how to fix it. I apologized and tried again: “Could you be selling more? Could you cut costs?” They already had, Prisca explained; “it is easier to find more people to buy than to cut costs.” “I’ll make a deal with you,” I said. “If we drop the charity and run this as a business, I’ll help make it work.” I held out my hand. “Are you OK with this?”

Prisca lifted her left eyebrow. When she took my hand, she emphatically responded “Sana,” meaning “very much” in Swahili. Our goals would be those of any business: to increase sales and cut costs. We’d start tomorrow and turn this project into a real enterprise.

I started early next morning. The women greeted me warmly. Without a common language, we communicated through gestures and sprinkled words of French or Swahili. While the women prepared for the morning, I reviewed the books more thoroughly than I had the previous afternoon. The bakery had a long way to go, but the feeling of starting something that had a chance of changing people’s lives invigorated me. The world had written off this little group, yet they had a chance to do something important for themselves, and maybe they would change perceptions of what the poorest women are capable of accomplishing.

Because we started with 20 women, it made sense to expand our revenues quickly to cover costs. Rather than convince our few current customers to buy more doughnuts, we needed to increase the number of people we served. The only way I could think of achieving this was to target agencies and institutions with enough employees to make it worth our while to visit.

I asked Prisca to translate: “who will volunteer to come with me and speak with ambassadors and agency directors to see if they will offer our bakery services to their employees?” Twenty faces turned downward. “Don’t worry,” I said. “I’ll do the talking, but you need to learn to market.” No movement. Consolata made the mistake of glancing up. I chose her. “What do you normally say to people in the offices when you want to sell to them?” I asked her. “Normally, I don’t say anything,” she nearly whispered. “I just walk through the government agencies and everyone knows what I’m carrying.”

We visited five embassies and most UN agencies that first long day. Though Consolata said little, we made progress. After the French Embassy agreed to invite the women to their offices the next morning, I gave her a strong hug and, after a moment of shock, she hugged me back. We arrived at Nyamirambo exhausted, both of us content; we had doubled the number of customers.

The next morning, I found the women hard at work, cooking doughnuts in a traditional wok-like pot over an open fire, producing a lovely melody to accompany the crackle of hot oil shimmying as the lumps of dough hit the pan. By 8:00 AM, others began arriving to clean, help with cooking, and organize the freshly made goods. I watched Josepha and the others choose their selections. They would walk into the street and disappear into a crowded minibus. For at least some, the new day took courage, for they were going to embassies and other places they’d never been before.

Sales jumped in the first week, but not as much as they should have. Something was wrong with our inventory accounting. We didn’t make enough money in relation to what had been prepared. When the women returned and gave us the cash they’d earned, Prisca and I couldn’t account for more than a third of the goods produced. My heart sank with the knowledge that women were stealing. We were putting so much goodwill into this—into them. Didn’t they owe us accountability?

Not from their perspective. One woman had told us she’d sold 10 products, but by our calculations she had taken 23. She was eating a lot of doughnuts or selling them and keeping the money. I was crushed; Prisca was more sanguine, reminding me that a number of women were being completely honest.

The women were testing my mettle. We couldn’t count on their being honest out of appreciation alone—they’d seen too many like me come and go. The bigger question was how to fix the immediate problem and then create the right incentives for the business to sustain itself long after I’d left. The existing bookkeeping system lacked accountability. No one noted how many goods each woman took in the morning.

Prisca and I stayed up late crafting a simple system that would ensure accountability and reward individual behavior as well as group success. In the morning, we delivered a stern talk about how we were all in this together. If there were profits, everyone would share in them. If there were losses, everyone’s pay would be reduced. The women would be paid a base wage and earn a commission on sales. The success of this venture would become the responsibility of the women themselves.

We still had work to do in breaking the charitable-project mentality. Every Friday we gathered for a combination of Business 101 and pep talk. Often I would ask the women to play roles. “Consolata, I’m sitting next to you on the minibus, feeling hungry. Can you sell me something before I get off the bus?” When Prisca translated, the room erupted with giggles. Prisca smiled her oh-poor-you-who-have-so-much-to-learn smile. “Why?” I asked. “Because women do not just ask strangers to buy things on buses,” she said with an air of exasperation. “Why not?” The women burst out laughing again. Prisca explained, “Because it is not polite”—a euphemism for “it is not done here.”

Prisca said kindly, softly, “Jacqueline, you are so American. Here, women won’t look someone in the eye, won’t talk to someone they don’t know. You have to accept it.” “I know that, Prisca, I do,” I said, exasperated. “I just want to give the women a chance. I have never unquestioningly accepted the status quo, so why should we do that in Rwanda, where change can be good?” “I understand you,” Prisca said, “but change is slow here. You have to give the women time.”

“OK, watch this,” I said. Grabbing a bucket filled with little doughnuts and waffles and samosas, I marched up to the street. Standing out front, I talked to the people passing by and in no time sold ten doughnuts, more than some women sold all day. Then I turned around with a flourish, marched into the room, and took a bow. The women clapped and chortled. Prisca held her face in her hands and shook her head. “Jacqueline, no one will say no to a tall American girl selling them things on the streets of Nyamirambo!”

But I would not acquiesce. To increase sales, I ran competitions to see who could sell the most (no one would participate). I held training sessions on how to treat customers (the response was tepid at best). I continued the pep talks every Friday and reminded the women that we were going to create a real bakery. Prisca would translate and the women would smile patiently and sales began to improve. Finally, something was working.

Within several months, the project was profitable. The women were coming to work on time and, though they still weren’t enthusiastic salespeople, more and more institutions signed up for deliveries. The women began to see—for the first time in their lives—a correlation between the effort they put into work and the income they earned. They began to believe the organization could succeed and that they would play a key part in that success.

Still, for every two steps forward, there was often one back. One afternoon, I received a call from a friend who had expected the women to deliver an order for a party; nothing had arrived. Prisca informed me that none of the women on duty had shown up. We learned they’d all gone to the funeral of a friend. That Friday, we called a meeting. We talked about promises made and kept. “We’re not telling you not to go to the funeral,” Prisca told the women, “but there are enough of us here that you can find a replacement for yourself if you can’t work. This is your business.”

One morning I walked into the offices at UNICEF and was told by a frantic office assistant that “everyone in the city is suffering from eating the baked goods.” “What do you mean by ‘suffering’?” I asked. “You know,” he said, “they are having pains in their stomach.” I called the embassies and government offices to apologize and promised to take care of the problem.

I approached the women cooking. “Everyone is sick with the runs,” I said. “Did you do anything differently?” They shook their heads. I asked to see what they were preparing. The smell was stale, sour, rancid. “When did you last change the cooking oil?” I asked. “Oh, never,” Josepha answered gleefully. “We have been adding just a little more each day. We are keeping costs low so we can have more profit.” Next lesson: quality control.

Despite the bumps, within a few months we had cornered the snack market in Kigali, expanding beyond fried dough. I still did too much of the marketing, but in time the women gained the confidence to venture into stores to replenish orders. Within eight months or so, the women were earning $2 a day. Few people earned that kind of money in Rwanda, certainly not women. For the first time, their incomes allowed them to decide when to say yes and no. Despite the failures and setbacks, the little bakery continued to flourish under Prisca’s leadership. It operated for a long time after I left—until the genocide destroyed so much of what was beautiful.

The story of the bakery was the transformation that comes with being seen, held accountable, succeeding. I had the privilege of watching the women acquire a sense of dignity once they were given tools for self-sufficiency. I discovered the power of creating a business with real accountability. And I learned, maybe most important, to listen with my heart and not just my head.