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1-Page Summary of The Blue Sweater

Overview

After just three years on Wall Street, Jacqueline Novogratz realized that she wanted to do more good in the world. She left her promising job to try and help people suffering from poverty in Africa.

In the beginning, she was a naive Westerner who didn’t know much about what people in developing countries need. However, after working with them, she realized that experts often assume they know what poor people really want or need when they don’t. Aid and charity frequently don’t go to those who need it most.

When traveling to developing countries, the author realized that people there are looking for dignity and accountability. They don’t want handouts; they want help with their own projects. When she went to Rwanda, Kenya and Tanzania among other places, she saw that making people accountable for what they do leads them to succeed more often than when they’re given aid without any responsibility.

It’s actually harder to give away money than it is to earn it in the first place. A man named Innocent was anything but innocent when he gave his friends a large sum of money, and development aid can work better if you demand that the recipient pays back your donation.

Big Idea #1: Local women play a vital role in eliminating poverty in developing countries.

People in the West have tried various approaches to help people in the developing world. They’ve given them aid and charity, but those efforts haven’t worked very well. One reason for this is that they weren’t directed at women. In many communities, it’s women who decide how money is spent, so giving aid to them would be a better strategy than giving it to men or families as a whole.

When she wanted to help people in Rwanda, Novogratz found that micro-credit loans were made available to the poor who couldn’t get bank loans. She soon discovered that many women from developing countries took out these small business loans to expand their businesses. Their businesses mostly involved selling vegetables like tomatoes and onions.

Duterimbere was very successful because it let local women decide where the money should be spent. This was different from the prevailing logic in the aid industry, which dictated that experts should direct aid and locals would have little say.

Duterimbere found that micro loans for poor communities effectively helped them rise out of poverty, but many women were not paying back the loans.

Novogratz found a way to make borrowers more accountable.

Big Idea #2: In order to lift people out of poverty, you have to make them accountable.

Many people who are poor face a frustrating situation. They can’t get bank loans, because they aren’t considered to be good enough for the loan. But without a loan, they can’t start an enterprise that would help them earn money.

Poor people are often unable to get loans because they’re perceived as being irresponsible. Micro-credit has proven that this is not the case, however. The key to getting poor people to pay back their loans is accountability. Duterimbere (a micro-lender) was able to raise its repayment rates by instituting a system of accountability into its loan program.

When the company first started, it had a hard time collecting on its loans because women didn’t see any reason to pay back their loans. They figured that if they were backed by rich Westerners, then they would just write off their small loans.

For example, one woman claimed that she couldn’t pay back the loan because her rice stock had been stolen. However, when a Duterimbere representative visited her house, they found a huge sack of rice hidden in her home. The borrower clearly didn’t want to pay back the loan and thought it would be easy to get away with not paying it back.