[House Report 108-459]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 108-459
======================================================================
MICROENTERPRISE RESULTS AND ACCOUNTABILITY ACT OF 2004
_______
April 2, 2004.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hyde, from the Committee on International Relations, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3818]
[Including cost estimate of the Congressional Budget Office]
The Committee on International Relations, to whom was
referred the bill (H.R. 3818) to amend the Foreign Assistance
Act of 1961 to improve the results and accountability of
microenterprise development assistance programs, and for other
purposes, having considered the same, reports favorably thereon
with an amendment and recommends that the bill as amended do
pass.
TABLE OF CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 7
Background and Need for the Legislation.......................... 8
Hearings......................................................... 17
Committee Consideration.......................................... 17
Summary of Amendments............................................ 17
Vote of the Committee............................................ 18
Committee Oversight Findings..................................... 18
New Budget Authority and Tax Expenditures........................ 18
Congressional Budget Office Cost Estimate........................ 18
Performance Goals and Objectives................................. 20
Constitutional Authority Statement............................... 20
Section-by-Section Analysis...................................... 20
New Advisory Committees.......................................... 24
Congressional Accountability Act................................. 24
Federal Mandates................................................. 24
Changes in Existing Law Made by the Bill, as Reported............ 24
Dissenting Views................................................. 37
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Microenterprise Results and
Accountability Act of 2004''.
SEC. 2. FINDINGS AND POLICY.
Congress finds and declares the following:
(1) Congress has demonstrated its support for
microenterprise development assistance programs through the
enactment of two comprehensive microenterprise laws:
(A) The Microenterprise for Self-Reliance Act of
2000 (title I of Public Law 106-309; 114 Stat. 1082).
(B) Public Law 108-31 (an Act entitled ``An Act to
amend the Microenterprise for Self-Reliance Act of 2000
and the Foreign Assistance Act of 1961 to increase
assistance for the poorest people in developing
countries under microenterprise assistance program
under those Acts, and for other purposes'', approved
June 17, 2003).
(2) The United States Agency for International Development,
the agency responsible for implementing microenterprise
development assistance programs authorized under sections 108
and 131 of the Foreign Assistance Act of 1961 (22 U.S.C. 2151f
and 2152a), is not presently organized to adequately
coordinate, implement, and monitor such programs, as evidenced
by the late submission by the Agency of the report required by
section 108 of the Microenterprise for Self-Reliance Act of
2000.
(3) The Comptroller General, in a report dated November
2003, found that the United States Agency for International
Development has met some, but not all, of the key objectives of
such microenterprise development assistance programs.
(4) The Comptroller General's report found, among other
things, the following:
(A) Microenterprise development assistance
generally can help alleviate some impacts of poverty,
improve income levels and quality of life for borrowers
and provide poor individuals, workers, and their
families with an important coping mechanism.
(B) Although studies and academic analyses funded
by the United States Agency for International
Development have found that microenterprise activities
generally serve the poor clustered around the poverty
line, few loans appear to be reaching the very poor.
(C) Microenterprise development assistance programs
of the United States Agency for International
Development have encouraged women's participation in
microfinance projects and, according to data of the
Agency, women have comprised two-thirds or more of the
micro-loan clients in Agency-funded microenterprise
projects since 1997.
(5)(A) The Comptroller General's report recommends that the
Administrator of the United States Agency for International
Development review the Agency's ``microenterprise results
reporting'' system with the goal of ensuring that its annual
reporting is complete and accurate.
(B) Specifically, the Administrator should review and
reconsider the methodologies used for the collection, analysis,
and reporting of data on annual spending targets, outreach to
the very poor, sustainability of microfinance institutions, and
the contribution of Agency's funding to the institutions it
supports.
SEC. 3. MICROENTERPRISE DEVELOPMENT ASSISTANCE.
Chapter 2 of part I of the Foreign Assistance Act of 1961 (22
U.S.C. 2166 et seq.) is amended by inserting after title V the
following new title:
``TITLE VI--MICROENTERPRISE DEVELOPMENT ASSISTANCE
``SEC. 251. FINDINGS AND POLICY.
``Congress finds and declares the following:
``(1) Access to financial services and the development of
microenterprise are vital factors in the stable growth of
developing countries and in the development of free, open, and
equitable international economic systems.
``(2) It is therefore in the best interest of the United
States to facilitate access to financial services and assist
the development of microenterprise in developing countries.
``(3) Access to financial services and the development of
microenterprises can be supported by programs providing credit,
savings, training, technical assistance, business development
services, and other financial services.
``(4) Given the relatively high percentage of populations
living in rural areas of developing countries, and the combined
high incidence of poverty in rural areas and growing income
inequality between rural and urban markets, microenterprise
programs should target both rural and urban poor.
``(5) Microenteprise programs have been successful and
should continue to empower vulnerable women in the developing
world. Such programs should take into account the risks faced
by women who are potential victims of severe forms of
trafficking and the need for assistance for women who become
victims of severe forms of trafficking, as provided for in
section 106(a)(1) of the Trafficking Victims Protection Act of
2000 (22 U.S.C. 7104(a)(1); Public Law 106-386).
``(6) Given that microenterprise programs have been
successful in empowering disenfranchised groups such as women,
microenterprise programs should also target populations
disenfranchised due to race or ethnicity in countries where a
strong relationship between poverty and race or ethnicity has
been demonstrated, such as countries in Latin America.
``SEC. 252. AUTHORIZATION; IMPLEMENTATION; TARGETED ASSISTANCE.
``(a) Authorization.--The President is authorized to provide
assistance on a grant basis for programs in developing countries to
increase the availability of credit, savings, and other services to
microenterprises lacking full access to capital, training, technical
assistance, and business development services, through--
``(1) grants to microfinance institutions for the purpose
of expanding the availability of credit, savings, and other
financial services to microentreprise clients;
``(2) grants to microenterprise institutions for the
purpose of training, technical assistance, and business
development services for microenterprises to enable them to
make better use of credit, to better manage their enterprises,
to conduct market analysis and product development for
expanding domestic and international sales, particularly to
United States markets, and to increase their income and build
their assets;
``(3) capacity-building for microenterprise institutions in
order to enable them to better meet the credit, savings, and
training needs of microentreprise clients; and
``(4) policy and regulatory programs at the country level
that improve the environment for microentreprise clients and
microenterprise institutions that serve the poor and very poor.
``(b) Implementation.--
``(1) Office of microenterprise development.--
``(A) Establishment.--There is established within
the Agency an Office of Microenterprise Development,
which shall be headed by a Director who shall be
appointed by the Administrator and who should possess
technical expertise and ability to offer leadership in
the field of microenterprise development.
``(B) Duties.--The Office shall coordinate and be
responsible for the provision of assistance under this
title.
``(2) Assistance through grants to eligible
organizations.--Assistance under subsection (a) shall be
provided through grants executed, approved, or reviewed by the
Office to eligible implementing partner organizations that have
a capacity to develop and implement microenterprise programs.
``(3) Review and approval.--With respect to assistance
under subsection (a) that is furnished through field missions
of the Agency, the Office shall be responsible for--
``(A) reviewing or approving each grant agreement
prior to obligation of funds under the agreement in
order to ensure that activities to be carried out using
such funds are efficacious, technically sound, and
suitable for the economic and security climate of the
country or region where the activities will be
conducted; and
``(B) approving microenterprise development
components of strategic plans of missions, bureaus, and
offices of the Agency.
``(c) Targeted Assistance.--In carrying out sustainable poverty-
focused programs under subsection (a), 50 percent of all
microenterprise resources shall be targeted to very poor clients,
defined as those individuals living in the bottom 50 percent below the
poverty line as established by the national government of the country.
Specifically, such resources shall be used for--
``(1) support of programs under this section through
practitioner institutions that--
``(A) provide credit and other financial services
to clients who are very poor, with loans in 1995 United
States dollars of--
``(i) $1,000 or less in the Europe and
Eurasia region;
``(ii) $400 or less in the Latin America
region; and
``(iii) $300 or less in the rest of the
world; and
``(B) can cover their costs in a reasonable time
period; or
``(2) demand-driven business development programs that
achieve reasonable cost recovery that are provided to clients
holding poverty loans (as defined by the regional poverty loan
limitations in paragraph (1)(A)), whether they are provided by
microfinance institutions or by specialized business
development services providers.
``(d) Support for Central Mechanisms.--The Administrator should
increase the use of central mechanisms through microenterprise,
microfinance, and practitioner institutions in the implementation of
this title.
``SEC. 253. MONITORING SYSTEM.
``(a) Establishment.--In order to maximize the sustainable
development impact of assistance authorized under section 252(a), the
Administrator of the Agency, acting through the Director of the Office,
shall establish a monitoring system that meets the requirements of
subsection (b).
``(b) Requirements.--The requirements referred to in subsection (a)
are the following:
``(1) The monitoring system establishes performance goals
for the assistance and expresses such goals in an objective and
quantifiable form, to the extent feasible.
``(2) The monitoring system establishes performance
indicators to be used in measuring or assessing the achievement
of the performance goals described in paragraph (1) and the
objectives of the assistance authorized under section 252.
``(3) The monitoring system provides a basis for
recommendations for adjustments to the assistance to enhance
the sustainability and the impact of the assistance,
particularly the impact of such assistance on the very poor,
particularly poor women.
``(4) The monitoring system adopts the widespread use of
proven and effective poverty assessment tools to successfully
identify the very poor and ensure that they receive adequate
access to microenterprise loans, savings, and assistance.
``SEC. 254. DEVELOPMENT AND CERTIFICATION OF POVERTY MEASUREMENT
METHODS; APPLICATION OF METHODS.
``(a) Development and Certification.--
``(1) In general.--The Administrator of the Agency, in
consultation with microenterprise institutions and other
appropriate organizations, shall develop no fewer than two low-
cost methods for eligible implementing partner organizations to
use to assess the poverty levels of their current or
prospective clients. The Administrator shall develop poverty
indicators that correlate with the circumstances of the very
poor.
``(2) Field testing.--The Administrator shall field-test
the methods developed under paragraph (1). As part of the
testing, institutions and programs may use the methods on a
voluntary basis to demonstrate their ability to reach the very
poor.
``(3) Certification.--Not later than October 1, 2004, the
Administrator shall, from among the low-cost poverty
measurement methods developed under paragraph (1), certify no
fewer than two such methods as approved methods for measuring
the poverty levels of current or prospective clients of
microenterprise institutions for purposes of assistance under
section 252.
``(b) Application.--The Administrator shall require that, with
reasonable exceptions, all eligible implementing partner organizations
applying for microenterprise assistance under this title use one of the
certified methods, beginning not later than October 1, 2005, to
determine and report the poverty levels of current or prospective
clients.
``SEC. 255. AUTHORIZATION OF APPROPRIATIONS; ADDITIONAL AUTHORITIES.
``(a) Authorization of Appropriations.--There are authorized to be
appropriated to the President to carry out this subtitle $200,000,000
for fiscal year 2005 and such sums as may be necessary for fiscal year
2006.
``(b) Additional Authorities.--(1) Amounts appropriated pursuant to
the authorization of appropriations under subsection (a)--
``(A) may be referred to as the `Microenterprise
Development Assistance Account';
``(B) shall be allocated to the Office, and upon approval
by the Director of the Office, may be reallocated to field
missions of the Agency in furtherance of the purposes of this
title;
``(C) are authorized to remain available until expended;
and
``(D) are in addition to amounts otherwise available for
such purposes.
``(2) Notwithstanding any other provision of law, amounts made
available for assistance for microenterprise development assistance
under any provision of law other than this title may be provided to
further the purposes of this title. To the extent assistance described
in the preceding sentence is provided in accordance with such sentence,
the Administrator of the Agency shall include, as part of the report
required under section 258, a detailed description of such assistance
and, to the extent applicable, the information required by paragraphs
(1) through (10) of subsection (b) of such section with respect to such
assistance.''.
SEC. 4. MICROENTERPRISE DEVELOPMENT CREDITS.
(a) Transfer.--Section 108 of the Foreign Assistance Act of 1961
(22 U.S.C. 2151f) is hereby--
(1) transferred from chapter 1 of part I of the Foreign
Assistance Act of 1961 to title VI of chapter 2 of part I of
such Act (as added by section 3 of this Act); and
(2) inserted after section 255 of the Foreign Assistance
Act of 1961.
(b) Redesignation.--Title VI of chapter 2 of part I of the Foreign
Assistance Act of 1961 is amended by redesignating section 108 (as
added by subsection (a)) as section 256.
(c) Conforming Amendments.--Title VI of chapter 2 of part I of the
Foreign Assistance Act of 1961 is amended--
(1) by inserting after the title heading the following:
``Subtitle A--Grant Assistance'';
(2) by inserting after section 255 the following:
``Subtitle B--Credit Assistance''; and
(3) in section 256 (as redesignated by subsection (b))--
(A) in the matter preceding paragraph (1) of
subsection (c), by striking ``Administrator of the
agency primarily responsible for administering this
part'' and inserting ``Administrator of the Agency'';
and
(B) in subsection (f)(1)--
(i) by striking ``section 131'' and
inserting ``this part''; and
(ii) by striking ``2001 through 2004'' and
inserting ``2005 and 2006''.
SEC. 5. UNITED STATES MICROFINANCE LOAN FACILITY.
(a) Transfer.--Section 132 of the Foreign Assistance Act of 1961
(22 U.S.C. 2152b) is hereby--
(1) transferred from chapter 1 of part I of the Foreign
Assistance Act of 1961 to title VI of chapter 2 of part I of
such Act (as added by section 3 of this Act); and
(2) inserted after section 256 of the Foreign Assistance
Act of 1961 (as added by section 4 of this Act).
(b) Redesignation.--Title VI of chapter 2 of part I of the Foreign
Assistance Act of 1961 is amended by redesignating section 132 (as
added by subsection (a)) as section 257.
(c) Conforming Amendments.--Title VI of chapter 2 of part I of the
Foreign Assistance Act of 1961 is amended--
(1) by inserting after section 256 the following:
``Subtitle C--United States Microfinance Loan Facility''; and
(2) in section 257 (as redesignated by subsection (b))--
(A) in subsection (b)(3), by striking ``2001 and
2002'' and inserting ``2005 and 2006'';
(B) in the matter preceding subparagraph (A) of
subsection (d)(1), by striking ``the fiscal year 2001''
and inserting ``each of the fiscal years 2005 and
2006''; and
(C) by striking subsection (e).
SEC. 6. MISCELLANEOUS PROVISIONS.
Title VI of chapter 2 of part I of the Foreign Assistance Act of
1961 (as added by section 3 of this Act and amended by sections 4 and 5
of this Act) is further amended by adding at the end the following new
subtitle:
``Subtitle D--Miscellaneous Provisions
``SEC. 258. REPORT.
``(a) In General.--Not later than December 31, 2005, and each
December 31 thereafter, the Administrator of the Agency shall submit to
the appropriate congressional committees a report that contains a
detailed description of the implementation of this title for the
previous fiscal year.
``(b) Contents.--The report shall contain the following:
``(1) The number of grants provided under section 252, with
a listing of--
``(A) the amount of each grant;
``(B) the name of each implementing partner
organization; and
``(C) a listing of the number of countries
receiving assistance authorized by sections 252.
``(2) The results of the monitoring system required under
section 253.
``(3) The process of developing and applying poverty
assessment procedures required under section 254.
``(4) The percentage of assistance furnished under section
252 that was allocated to the very poor based on the data
collected using the certified methods required by section 254.
``(5) The absolute number of the very poor reached with
assistance furnished under section 252.
``(6) The amount of assistance provided under section 252
through central mechanisms.
``(7) The name of each country that receives assistance
under section 256 and the amount of such assistance.
``(8) An estimate of the percentage of beneficiaries of
assistance under this title who are women, including, to the
extent practicable, the percentage of these women who have been
victims of sex trafficking, as well as information on efforts
to provide assistance under this title to women who have been
victims of severe forms of trafficking or who were previously
involved in prostitution.
``(9) Any additional information relating to the provision
of assistance authorized by this title, including the use of
the poverty measurement tools required by section 254, or
additional information on assistance provided by the United
States to support microenterprise development under this title
or any other provision of law.
``(10) An estimate of the percentage of beneficiaries of
assistance under this title in countries where a strong
relationship between poverty and race or ethnicity has been
demonstrated.
``(c) Limitation.--The content of the report required by this
section shall be produced by the Office established under section
252(b)(1), and shall be made available for free electronic distribution
through such Office.
``SEC. 259. DEFINITIONS.
`` In this title:
``(1) Administrator.--The term `Administrator' means the
Administrator of the Agency.
``(2) Agency.--The term `Agency' means the United States
Agency for International Development.
``(3) Appropriate congressional committees.--The term
`appropriate congressional committees' means the Committee on
International Relations of the House of Representatives and the
Committee on Foreign Relations of the Senate.
``(4) Business development services.--The term `business
development services' means support for the growth of
microenterprises through training, technical assistance,
marketing assistance, improved production technologies, and
other related services.
``(5) Director.--The term `Director' means the Director of
the Office.
``(6) Eligible implementing partner organization.--The term
`eligible implementing partner organization' means an entity
eligible to receive assistance under this title which is--
``(A) a United States or an indigenous private
voluntary organization;
``(B) a United States or an indigenous credit
union;
``(C) a United States or an indigenous cooperative
organization;
``(D) an indigenous governmental or nongovernmental
organization;
``(E) a microenterprise institution;
``(F) a microfinance institution; or
``(G) a practitioner institution.
``(7) Microenterprise institution.--The term
`microenterprise institution' means a not-for-profit entity
that provides services, including microfinance, training, or
business development services, for microentreprise clients in
foreign countries.
``(8) Microfinance institution.--The term `microfinance
institution' means a not-for-profit entity or a regulated
financial intermediary that directly provides, or works to
expand, the availability of credit, savings, and other
financial services to microentreprise clients in foreign
countries.
``(9) Microfinance network.--The term `microfinance
network' means an affiliated group of practitioner institutions
that provides services to its members, including financing,
technical assistance, and accreditation, for the purpose of
promoting the financial sustainability and societal impact of
microenterprise assistance.
``(10) Office.--The term `Office' means the Office of
Microenterprise Development established under section
252(b)(1).
``(11) Practitioner institution.--The term `practitioner
institution' means a not-for-profit entity or a regulated
financial intermediary, including a microfinance network, that
provides services, including microfinance, training, or
business development services, for microentreprise clients, or
provides assistance to microenterprise institutions in foreign
countries.
``(12) Private voluntary organization.--The term `private
voluntary organization' means a not-for-profit entity that--
``(A) engages in and supports activities of an
economic or social development or humanitarian nature
for citizens in foreign countries; and
``(B) is incorporated as such under the laws of the
United States, including any of its states, territories
or the District of Columbia, or of a foreign country.
``(13) United states-supported microfinance institution.--
The term `United States-supported microfinance institution'
means a financial intermediary that has received funds made
available under this part for fiscal year 1980 or any
subsequent fiscal year.
``(14) Very poor.--The term `very poor' means those
individuals--
``(A) living in the bottom 50 percent below the
poverty line established by the national government of
the country in which those individuals live; or
``(B) living on less than the equivalent of $1 per
day.''.
SEC. 7. REPEALS.
(a) Foreign Assistance Act of 1961.--Section 131 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2152a) is hereby repealed.
(b) Public Law 108-31.--
(1) In general.--Section 4 of Public Law 108-31 (22 U.S.C.
2151f note) is amended by striking subsection (b).
(2) Conforming amendment.--Section 4 of Public Law 108-31
is amended by striking ``(a)'' and all that follows through
``Not later'' and inserting ``Not later''.
SEC. 8. REFERENCES.
Any reference in a law, regulation, agreement, or other document of
the United States to section 108, 131, or 132 of the Foreign Assistance
Act of 1961 shall be deemed to be a reference to subtitle B of title VI
of chapter 2 of part I of the Foreign Assistance Act of 1961, subtitle
A of title VI of chapter 2 of part I of such Act, or subtitle C of
title VI of chapter 2 of part I of such Act, respectively.
Purpose and Summary
The purpose of ``The Microenterprise Results and
Accountability Act of 2004'' (H.R. 3818) is to authorize
microenterprise development assistance for foreign countries
for the fiscal years 2005 and 2006, and to establish important
reforms to promote accountability and effectiveness of such
programs, as administered by the U.S. Agency for International
Development (USAID).
H.R. 3818 will consolidate a variety of existing
microenterprise authorities of the Foreign Assistance Act of
1961 (including sections 108, 131, and 132) into a single new
title VI in chapter 2 of Part I of such act.
The legislation will also place responsibility for carrying
out the new title with a re-established ``Office of
Microenterprise Development Assistance'' within USAID.
Currently, microenterprise programs are designed and managed
primarily by the various field missions of the Agency, guided
by a small work unit that receives data from the field and
provides technical assistance when requested, but that has
minimal oversight with respect to the efficacy or
appropriateness of such programs.
The reforms of H.R. 3818 were prompted by a recent report
of the General Accounting Office, dated November 2003, and by
Committee oversight on the Agency's implementation of
microenterprise development programs.
Background and Need for the Legislation
Congress has demonstrated its support for microenterprise
development assistance programs through the enactment of two
important laws during the 107th Congress and the 108th
Congress: The Microenterprise for Self-Reliance Act of 2000
(title I of Public Law 106-309; 114 Stat. 1082) and Public Law
108-31 (an act entitled `An Act to amend the Microenterprise
for Self-Reliance Act of 2000 and the Foreign Assistance Act of
1961 to increase assistance for the poorest people in
developing countries under microenterprise assistance program
under those Acts, and for other purposes', approved June 17,
2003). The latter bill authorizes microenterprise assistance
through fiscal year 2004.
Microenterprise development assistance is one of the great
success stories of the United States foreign aid program.
USAID, the agency responsible for implementing microenterprise
development assistance programs authorized under sections 108
and 131 of the Foreign Assistance Act of 1961 (22 U.S.C. 2151f
and 2152a), recognized many years ago the potential of this
development approach as a way of boosting incomes for the poor.
USAID has been a leader in building an industry which today
reaches millions of poor microentrepreneurs, many of whom have
worked their way out of poverty as a direct result of USAID's
support.
Microenterprise is a development tool that consistently
receives broad bipartisan support from Congress. Members have
enthusiastically embraced such programs because of a consistent
track record of results.
Microenterprise programs are popular in part because they
provide loans for poor entrepreneurs in the developing world to
help them start-up and expand their own small businesses.
Microenterprise programs also build financial institutions to
assist microentrepreneurs over the course of their lives, in
business and society.
Microenterprise has been seen as an effective means of
empowering the poor and expanding their economic earnings
potential, as well as the business and social networks that
provide security in the face of crisis. It is based on a
``hand-up,'' rather than a ``hand-out'' philosophy.
Microenterprise allows poor people to protect, diversify
and increase their income sources, and thus access a path out
of poverty and hunger. It is an obvious fact that the large
numbers of poor living on less than a dollar a day must
increase their household income in order to alter the tide of
global poverty and achieve the Millennium Development Goals.
What is less obvious is that unlike the developed world, most
of employment in the developing world is generated through
self-employment.
The Consultative Group to Assist the Poorest (CGAP) draws
on data from around the developing world that demonstrate how
millions of microenterprise clients are able to make business
investments to increase their household incomes, build assets,
improve the health of their families, keep their children in
school and reduce their economic vulnerability to crises such
as civil conflict and HIV/AIDS.
Not only do microenterprise clients provide for themselves
and their families, they often employ several employees and
make a significant contribution to developing trade in their
local economies. The most common form of business in
microenterprise is local trading. Trading between villages,
secondary towns, and cities, is fundamental to developing a
consumer market in a developing country and building a
foundation for trade with international markets.
The success of microenterprise development programs has led
to an understanding of the importance of an even broader range
of financial services for poor and very poor people. Such well-
established programs as microbusiness loans and training have
now been successfully augmented to incorporate a range of
financial services and products including education, housing,
consumption, and emergency loans; microinsurance; remittances;
and, most significantly, savings. In fact, the poor have long
valued and made excellent use of savings products, and recent
advances in the microfinance field have made safe, accessible
savings services more widely available, thus enabling the poor
to manage crises and save for important events.
For all of these reasons, the Committee enthusiastically
supports microenterprise and microfinance development programs.
The Committee is concerned, however, with the manner in which
these programs are currently implemented and managed by USAID.
Despite the program's successes, a recent report by the
Comptroller General highlighted problems with the
implementation of existing programs. Having reviewed the report
and discussed it at great length with GAO officials who
conducted the study, the Committee believes that USAID is not
presently organized to adequately coordinate, implement, and
monitor such programs.
The Committee believes that improvements in the management
of microenterprise programs are essential to help fight poverty
and secure economic opportunity, self-sufficiency, and growth
in the developing world.
H.R. 3818 is intended to address Committee concerns about
the current management and implementation of such programs.
Currently, there is no official account for microenterprise
within USAID, no centralized accountability for microenterprise
funds, and the Agency has contracted out an inappropriately
large portion of the program to consulting firms and other for-
profit contractors. USAID's own recent assessment showed that
during fiscal year 2002, out of $165 million provided directly
to microenterprise organizations, nearly $30 million went to
consultants. [No consolidated data for fiscal year 2003 was
available from USAID at the time this report was filed.]
Numerous worthwhile established organizations that have the
capacity and expertise to deliver services directly to poor
clients are locked out of the process when the Agency uses
``task orders'' against ``indefinite quantity contracts'' with
for-profit enterprises.
The Committee believes that there is a role for for-profit
contractors and consultants, but that the Agency should
demonstrate the cost-effectiveness and sustainability of such
approaches, and that the Agency should maintain prime and
direct responsibility for distributing grants. Awarding
contracts for the distribution of grants results in an
unnecessarily high level of overhead expenses and a partial
disengagement by the Agency from the operation of such
programs.
The Comptroller General, in a report dated November 2003,
found that USAID has met some, but not all, of the key
objectives of such microenterprise development assistance
programs. The report found that microenterprise programs are
indeed helping poor people expand their businesses, but found
that a lack of coordination and reporting in the USAID is
hampering results.
The Comptroller General's report found, among other things,
the following:
LMicroenterprise development assistance
generally can help alleviate some impacts of poverty,
improve income levels and quality of life for borrowers
and provide poor individuals, workers, and their
families with an important coping mechanism.
LAlthough studies and academic analyses funded
by the United States Agency for International
Development have found that microenterprise activities
generally serve the poor clustered around the poverty
line, few loans appear to be reaching the very poor.
LMicroenterprise development assistance
programs of the United States Agency for International
Development have encouraged women's participation in
microfinance projects and, according to data of the
Agency, women have comprised two-thirds or more of the
micro-loan clients in Agency-funded microenterprise
projects since 1997.
The Comptroller General's report recommends that the
Administrator of USAID review the Agency's 'microenterprise
results reporting' system with the goal of ensuring that its
annual reporting is complete and accurate.
Specifically, the report recommends that the Administrator
should review and reconsider the methodologies used for the
collection, analysis, and reporting of data on annual spending
targets, outreach to the very poor, sustainability of
microfinance institutions, and the contribution of Agency's
funding to the institutions it supports.
Given the relatively high percentage of populations living
in rural areas of developing countries, and the combined high
incidence of poverty in rural areas and growing income
inequality between rural and urban markets, the Committee
believes microenterprise programs should target both rural and
urban poor.
The Committee also believes that microenterprise programs
have been successful and should continue to empower vulnerable
women in the developing world. The Committee encourages USAID
to report on the specific ways that women's needs have been
considered in the design and implementation of programs. In
order to get a complete understanding of the impact of
microenterprise programs on women, reports on client outreach,
client impact, and program performance should be disaggregated
by gender.
Microenterprise programs should take into account the risks
faced by women who are potential victims of severe forms of
trafficking and the need for assistance for women who become
victims of severe forms of trafficking, as provided for in
section 106(a)(1) of the Trafficking Victims Protection Act of
2000 (22 U.S.C. 7104(a)(1); Public Law 106-386).
When people first learn of microenterprise, it is the
sustainable approach to self-help at the grassroots that they
often first note. Yet, not only do microenterprise institutions
help to transform the economic viability of families, they can
also deliver these social benefits on an ongoing, permanent
basis and on a large scale.
Since standard repayment rates are over 93%, many
microenterprise institutions leverage start-up capital from
donors with other capital borrowed from commercial sources.
Microenterprise thus offers the potential for a self-propelling
cycle of sustainability and growth.
In a handful of developing countries around the world, the
microfinance sector has grown to become the dominant part of
the financial sector in terms of market penetration, while the
commercial banking sector serves a niche market for the upper
tier of the economy.
In Uganda, Kyrgyzstan and Bolivia, microfinance
institutions are reaching two to five times as many clients as
the commercial banking sector. The demand among the poor for
microfinance services in these countries is vast, and the
governments of such countries have restructured national
banking laws to accommodate the growth of microfinance
institutions.
Such countries have realized that microfinance institutions
are a key building block in fostering a broad-based
architecture in the financial sector so that large numbers of
the working poor and middle class have access to financial
services.
It is extremely important to note the large-scale impact
that microfinance is having on certain national financial
sectors. Economic pluralism sews the seeds for greater
democracy in a society. Broad access to financial services must
be better understood as an essential precursor to broad-based
economic development and for greater democracy.
The Committee notes that the field of microenterprise and
microfinance, in addition to successfully providing assistance
to those poor clients who seek to build a microenterprise, has
also expanded to provide assistance to poor people in need of
financial services such as credit, savings, and insurance.
The Committee recognizes the importance of providing
microfinance assistance to these additional clients in need of
financial and other services but who are currently underserved
by the commercial banking systems in their country.
Access to financial services and the development of
microenterprises can also be supported by programs providing
training, the development of social capital, technical
assistance, and business development services. H.R. 3818
stresses the importance of all of these approaches.
The World Bank estimates that less than 1 percent of the 4
billion people living on less than $3 a day have access to
financial services. The Committee recognizes that USAID has
been at the forefront of international donors in this area
through its microfinance program, and has championed a best-
practices agenda that focuses on building strong retail
financial service providers that can reach tens of thousands of
poor clients in a sustainable way.
Historically, USAID's strategic partners for building best-
practice microfinance institutions have been the global non-
profit microfinance networks such as Accion, FINCA, Freedom
from Hunger, Grameen Foundation, Opportunity International, and
the World Council of Credit Unions, as well as cooperative and
private voluntary organizations such as ACDI, Catholic Relief
Services, Save the Children and World Vision.
Global microfinance networks and other non-profit private
voluntary organizations have the operational experience and
track record in microenterprise and microfinance service
delivery to poor people. The Committee recognizes that for-
profit entities such as consulting firms have supplemented the
work of the networks and the non-profits by making excellent
contributions in the areas of technical assistance, research
and policy reform. However, the Committee believes that for-
profit consulting firms do not have a comparative advantage in
delivering microfinance services directly to poor people.
With the support of USAID, eight of the leading
microfinance networks report having developed over 250
microfinance institutions reaching over 2.5 million clients. In
Uganda and Bolivia for example, the best-practice institutions
were all developed through networks: Centenary Rural
Development Bank, FINCA Uganda, PRIDE Uganda, Uganda
Microfinance Union, Uganda Women Finance Trust, FOCCAS, Faulu
Bancosol, FIE, Prodem, Promujer, Caja los Andes, and Crecer. On
the other hand, consulting firms have been responsible for a
much smaller number of microfinance institutions. Moreover,
they do not report their data systematically in the
MicroBanking Bulletin, a publication designed to promote public
disclosure in the results of microfinance institutions.
The Committee is concerned that programs administered
directly by contractors or consulting firms fail to get
sufficient resources to clients. For example, in a program in
El Salvador in which there were two USAID field staff members
fully trained and experienced in microenterprise, USAID awarded
a contract to a large for-profit enterprise to implement the
entire microenterprise program, which included distributing
grants to nongovernmental organizations and cooperatives. This
approach of contracting out the countrywide management of a
microenterprise program is increasingly being used by USAID in
lieu of direct program management. Such approaches seem neither
cost-effective nor efficient.
Microfinance networks and other non-profit implementing
partners leverage resources from international donors such as
the United States with other donations, debt financing and
equity investments. Moreover, microfinance networks and non-
profit implement programs at cost. For-profit entities such as
consulting firms add a profit to the execution of the project
and do not typically bring additional funding to the table.
While for-profit entities have historically played a
constructive role in the provision of specialized technical
assistance in support of microenterprise development, such
entities often do not alone have the core competency,
organizational track record, or structure to mobilize all the
inputs to build sustainable microenterprise institutions that
can provide services to large numbers of poor people.
The Committee recognizes that USAID's microenterprise
program has flourished in the past by playing to the
comparative strengths of both non-profit and for-profit
entities. Accion, FINCA, Opportunity International, Freedom
from Hunger, World Vision, World Relief, Catholic Relief
Services and CARE have built and now support more than 250
microfinance institutions in 75 countries, including some of
the poorest and most unstable countries in the world. In 2002,
such networks loaned approximately $1.1 billion to
approximately 2.5 million clients. Such networks estimate that
they loaned more than $3 billion over the last 5 years.
Networks are well positioned to reach the very poorest
economically active entrepreneurs in the countries where they
work. Further, such networks have built self-sustaining
microfinance institutions that now cover, on average, almost
all of their operating costs. More than $150 million in earned
revenue was captured by these institutions in 2002 to cover
their operating costs, in addition to private donations that
have added significant leverage to USAID's investments. These
networks have excelled in rapidly developing microfinance
institutions in volatile and risky situations, including during
the early stages of a country's transition from war to peace.
Networks and other non-profit partners are committed for
the long haul to making local financial institutions self-
sustaining, even after USAID assistance ceases. Contractors and
consulting firms, on the other hand, stop their program once
the contract ends. Networks and nonprofits accumulate the
internal knowledge and operational experience that allows them
to improve their performance over time. Contractors generally
rely on procuring consultants to perform the work for them.
In the last 2 years, the Committee notes that USAID has
begun shifting its focus away from non-profit organizations and
networks to contractors in the implementation of the Agency's
microenterprise program. This is happening both at the mission
level and the global level, through the increasing use of
centrally-awarded indefinite quantity contracts.
The Committee notes that in lieu of supporting the networks
on a global level, USAID has issued a large Indefinite Quantity
Contract (IQC) with a ceiling of over $100 million known as the
Accelerated Microenterprise Advancement Project (AMAP). This
mechanism is a 4-year contracting facility that USAID/
Washington and USAID field missions use to acquire technical
services to design, implement or evaluate microenterprise
development activities. This mechanism is largely made up of
contractors who subcontract out the responsibility of providing
direct services to clients to the nonprofits and cooperatives.
The responsibility of the contractors under this mechanism, for
the most part, is to provide technical assistance,
administration support functions and research.
At the country level, USAID has issued similar large
contracts in countries such as El Salvador, Ecuador, Haiti,
Zimbabwe, Uganda and Georgia, often averaging in the tens of
millions of dollars. Some of the funds from these large
contracts often result in financing expensive ``project
management units'' and other intermediary costs, leaving much
less for microenterprise and microfinance service providers
operating on the ground.
The Committee believes that an additional concern with
relying mainly on contractors and consulting firms to implement
microenterprise and microfinance assistance is the
sustainability of programs after U.S. assistance ceases. A
contractor's interest and involvement in a project ends when
the contract ends. A program implemented by a non-profit entity
may continue through funding from other donors or through their
own resources. Contracts for the delivery of microenterprise
assistance may also cost the U.S. taxpayer more in a variety of
ways. For example, the prenegotiated salary scales for
contractors through the Agency's IQCs may be much higher than
their actual rates, and may also be inappropriately and
dramatically higher than non-profit salary scales.
The Committee believes that the use of grants and
cooperative agreements may be more appropriate for the
development of microfinance institutions. The vast majority of
best-practice institutions supported by USAID have been
developed through cooperative agreements, not contracts.
Cooperative agreements also require a 25% matching contribution
from non-USG sources which has led many non-profit entities as
cited above to match many times that amount. Finally, non-
profits by definition do not take a profit on grants or
cooperative agreement, but implement the program at cost.
In sum, the Committee believes that contracts may not be
the most appropriate mechanism for the delivery of
microenterprise and microfinance assistance. The Committee
suggests that the Agency consider the increased use of grants
and cooperative agreements for the bulk of microenterprise and
microfinance programming, which has proven to be a successful
vehicle in the past.
The Committee believes that USAID and the General
Accounting Office should study and evaluate existing delivery
mechanisms, and, after appropriate analysis, recommend the most
appropriate mechanisms for the most cost-effective, efficient
and accountable delivery of such services in support of
microentrepreneurs and other poor clients. The Committee
intends to request that USAID and the General Accounting Office
initiate a study on these issues.
More generally, the Committee is concerned by recent
decisions taken at USAID suggesting a weakening of commitment
to microenterprise development. USAID recently lessened the
status of the work unit responsible for microenterprise
development within the Agency, and USAID has either eliminated
or cut back centralized assistance to support networks, credit
unions, cooperatives and private voluntary organizations. Such
partners have served as the primary vehicles for the direct
provision of financial services to the poor in accordance with
the provisions of the Microenterprise for Self-Reliance Act.
Such partners are poised to reach hundreds of thousands of
additional clients.
The Committee supports the allocation of a portion of
program funds through central mechanisms that finance the
technical assistance and loan capital requirements of global
networks so that they may rapidly scale-up their programs and
meet industry performance standards. These networks shall be
subject to external evaluations and should disclose performance
results to the public in a transparent manner.
The Committee supports the development of regional bureau
strategies with practitioners for expanding the microfinance
sector in each respective region and implement training so that
USAID field staff responsible for microfinance programs are
well-trained in microfinance best practices.
The Legislation
The ``Microenterprise Results and Accountability Act of
2004 contains key provisions that will improve existing
microenterprise programs by increasing the Administration's
oversight of and responsibility for dispersing microenterprise
funds and by creating better accountability through the
establishment of an office and a separate microenterprise
account.
H.R. 3818 answers the recommendations of the General
Accounting Office and of the microenterprise practitioner
community by establishing responsibility for administration of
microenterprise development assistance within a new Office of
Microenterprise Development, within the U.S. Agency for
International Development.
The headquarters staff of USAID within the Bureau for
Economic Growth, Agriculture and Trade are currently
responsible for the development of best practices and for
contracting a number of core programs, but are not currently
accountable for the overall provision of microenterprise
development assistance. Instead, USAID has implemented a system
of decentralization, whereby microenterprise programs
administered by the Agency are accountable only at the field
mission level.
Decentralization of USAID functions may have had benefits,
among them that strategies are developed by field missions of
the Agency who are able to coordinate with the U.S. Embassy and
host nation officials.
However, the Committee believes that the management of
microenterprise programs in the field is only as good as the
experience and training of mission field staff. Unfortunately,
in many cases the Agency has elected to ``subcontract'' the
management of microenterprise programs, even in cases where it
has trained mission personnel.
H.R. 3818 will address this fundamental concern by
requiring the Office established by this act be responsible for
reviewing or approving all microenterprise activities. Under
H.R. 3818, programs would continue to be implemented and
monitored by the field missions of the agency, but overall
accountability for such programs would be with the central
Office of Microenterprise Development.
H.R. 3818 will also ensure that more money goes directly to
impoverished clients instead of expensive consultants.
The legislation emphasizes the importance of
microenterprise and microfinance by establishing a separate
title called ``Microenterprise Development Assistance'' in the
Foreign Assistance Act of 1961, and will emphasize the
importance of using microenterprise programs to help improve
the lives of the actual victims and potential victims of severe
forms of trafficking.
The Committee intends that the term ``microenterprise
clients'' means individuals, including, but not restricted to,
microentrepreneurs, who receive any of a broad range of
financial services, business development services and
complementary non-financial services delivered by microfinance
and microenterprise institutions which are designed to increase
clients' income, build their assets, and improve their quality
of life.
The Committee intends that the legislation promote and
support the delivery of both microfinance and microenterprise
programs in order to facilitate poverty alleviation, improved
socioeconomic impact, and increases in social capital.
Microfinance refers to a range of financial and non-financial
services such as credit, savings, insurance, remittances, and
complementary training for individuals, including, but not
restricted to, microentrepreneurs. Microenterprise development
refers to a range of services including finance, business
development services, and non-financial services such as
training, explicitly for microentrepreneurs.
The purpose of providing for technical reviews and a
central funding mechanism is to ensure that established best
practices are followed and efficiently disseminated, thereby
ensuring improved performance and the broadest and deepest
possible outreach. At the same time, it is the intent of this
legislation that USAID provide incentives for continued
innovation, within the context of best practices, particularly
in outreach to the very poor, increasing overall household
assets, including social as well as financial capital, and
providing broadened financial and non-financial services that
facilitate poverty alleviation and improved impact of poverty
alleviation efforts.
In requiring that eligible implementing partner
organizations use certified poverty measurement methods to
assess the poverty level of their current or prospective
clients by October 2005, the intent of the Committee is for
implementing partners to use these methods to assess the
poverty level of incoming clients, or, in the case of new
programs, the poverty level of prospective clients and would
not require programs to certify the poverty level of existing
clients. It is the Committee's hope, however, that over time
these or related poverty assessment methods will be useful in
determining the impact of programs on client movement out of
poverty.
The November 2003 report of the Comptroller General stated
that ``. . . many practitioners, including USAID, now generally
consider loan size an inadequate indicator of clients level of
poverty.''
This finding was a major impetus for passage in 2003 of
H.R. 192 that provided a framework for USAID to certify and put
into use at least two new and more effective poverty
measurement methods to better measure and ensure that 50
percent of USAID microenterprise development resources are
benefiting very poor clients.
The Committee intended in H.R. 192, and in this
legislation, that the definition of ``very poor'' be ``those
individuals living on less than the equivalent of one dollar
per day'' where ``one dollar per day'' is adjusted for local
purchasing power parity.
The Committee retained language on loan size as a way to
define the ``very poor'' for USAID to use until the new
measurements of assessing the poverty levels of the clients
(linked more directly to one of the two conceptual definitions
in H.R. 192--either the bottom fifty percent below the national
poverty line, or those living on less than the equivalent of
one dollar per day) have been certified and adopted by USAID,
effective October 1, 2005.
Since women comprise approximately 70 percent of the
world's poor, it is expected that women's needs shall be
explicitly considered through these innovations, as well as
expansions of existing services, in both the design and
implementation of financial products and other non-financial
services. The Committee therefore encourages USAID to report on
the specific ways women's needs and assets have been considered
in the design and implementation of programs.
The Committee believes that economic empowerment,
especially for women, is a vital aspect of any strategy to
combat the spread of HIV/AIDS, and particularly empowers women
to protect themselves from transmission of HIV. Microfinance
institutions can play a critical role in providing not only
financial products and services to respond to the grave
financial impact of the pandemic at the client household level,
but also disseminating prevention and awareness information to
clients in HIV/AIDS affected communities.
Accountability and effectiveness of U.S. foreign aid
programs should be paramount considerations by Congress and the
Executive Branch. The structure for reform envisioned by H.R.
3818 is accountable and responsible, and is based on that of
other successful programs, including the Food for Peace program
and the Development Credit program.
Ensuring better results--not authorizing additional money--
is the focus of this legislation. H.R. 3818 reauthorizes
funding for microenterprise programs for FY 2005 at a level
consistent with the FY2004 authorization of $200 million. The
legislation authorizes such sums as necessary for FY2006.
Hearings
The Committee did not hold any hearings on microenterprise
assistance during the second session of the 108th Congress
prior to the consideration of H.R. 3818
Committee Consideration
H.R. 3818 was introduced by Vice Chairman Smith on February
24, 2004, and was referred to the Committee on International
Relations. The Committee considered H.R. 3818 at a meeting on
February 25, 2004.
Summary of Amendments
The Committee adopted three amendments en bloc, offered by
Rep. Meeks. The first amendment, inserted in section 251 of the
new Microenterprise Development Assistance title established by
the bill, a new finding which cites the success of
microenterprise programs in empowering disenfranchised groups
such as women, and suggests that such programs should also
target populations disenfranchised due to race or ethnicity in
countries where a strong relationship between poverty and race
or ethnicity has been demonstrated, such as countries in Latin
America.
The second amendment amended section 252(a)(2) of the new
title to authorize provision of assistance to conduct market
analysis and product development for the expansion of domestic
and international sales, particularly to United States markets.
The third amendment inserted an additional reporting
element in section 258(b) of the new title that requires an
estimate of the percentage of beneficiaries of assistance under
the new title in countries where a strong relationship between
poverty and race or ethnicity has been demonstrated.
The amendments en bloc were agreed to by voice vote.
The Committee ordered H.R. 3818 reported favorably to the
House, as amended, by a voice vote.
Vote of the Committee
The measure passed by voice vote. There were no recorded
votes.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 4, 2004.
Hon. Henry J. Hyde, Chairman,
Committee on International Relations,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3818, the
Microenterprise Results and Accountability Act of 2004.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Joseph C.
Whitehill, who can be reached at 226-2840.
Sincerely,
Douglas Holtz-Eakin.
Enclosure
cc:
Honorable Tom Lantos,
Ranking Member.
H.R. 3818--Microenterprise Results and Accountability Act of 2004.
SUMMARY
H.R. 3818 would create within the U.S. Agency for
International Development (USAID) a new Office of
Microenterprise Development. The bill would authorize the
appropriation of $200 million for fiscal year 2005 and such
sums as may be necessary for 2006 for grants and credits to
microenterprise development programs, or programs that would
provide access to financial services to poor persons in
developing countries. A new Office of Microenterprise
Development would be responsible for coordinating all
microenterprise activities funded by USAID. CBO estimates that
implementing H.R. 3818 would cost $354 million over the 2005-
2009 period, assuming the appropriation of the authorized
amounts. H.R. 3818 would not affect direct spending or
receipts.
H.R. 3818 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 3818 is shown in the
following table. The costs of this legislation fall within
budget function 150 (international affairs).
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2004 2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for Microenterprise Grants 200 0 0 0 0 0
and Loans
Estimated Budget Authority \1\
Estimated Outlays 160 152 79 40 19 11
Proposed Changes 0 200 203 0 0 0
Estimated Authorization Level
Estimated Outlays 0 26 103 122 69 34
Spending Under H.R. 3818 for Microenterprise Grants 200 200 203 0 0 0
and Loans
Estimated Authorization Level \1\
Estimated Outlays 160 178 182 162 88 45
----------------------------------------------------------------------------------------------------------------
\1\ The 2004 level is the amount authorized for that year. Because USAID has not published its operating budget
for 2004, CBO has used the amount authorized for 2004 for the purpose of this estimate.
BASIS OF ESTIMATE
H.R. 3818 would authorize the appropriation of $200 million
in 2005 and such sums as may be necessary in 2006 for
activities designed to promote microenterprises. The estimate
assumes that the bill will be enacted late in 2004, that the
authorized amounts will be provided in annual appropriation
acts, and that outlays will follow historical spending
patterns. It also assumes funding in 2006 at the level
authorized for 2005 adjusted for inflation. (If appropriations
in 2006 were not adjusted for inflation, CBO estimates that
spending over the 2006-2009 period would be $3 million lower
than the amounts shown above.)
The bill would encourage the use of centralized
decisionmaking within USAID for microenterprise programs. It
would establish a new office within USAID that would be
required to review or approve each grant agreement before funds
are obligated by field missions or implementing partner
organizations. Based on information from USAID, CBO expects
that the new office would require a director and up to an
additional six full-time positions. CBO estimates the new
requirements would increase administrative expenses by about $1
million a year. The estimate assumes the necessary funds are
included in the authorized amounts.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 3818 contains no intergovernmental or private-sector
mandates as defined in UMRA and would not affect the budgets of
state, local, or tribal governments.
Performance Goals and Objectives
The goals and objectives of this legislation are to improve
the results and accountability of the microenterprise
development programs administered under the authority of the
Foreign Assistance Act of 1961.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8, clause 18 of the
Constitution (relating to making all laws necessary and proper
for carrying into execution powers vested by the Constitution
in the Government of the United States).
Section-by-Section Analysis and Discussion
Section 1. Short Title. Section 1 contains a short title,
the ``Microenterprise Results and Accountability Act of 2004.''
Section 2. Findings and Policy. Section 2 contains five
findings or statements of policy, including findings on past
Congressional support for microenterprise development
assistance programs through the enactment of Public Laws 106-
309 and 108-31; a finding that states the U.S. Agency for
International Development is not presently organized to
adequately coordinate, implement and monitor microenterprise
development assistance programs; and statements summarizing
salient points from the Comptroller General's report on
microenterprise development assistance, dated November 2003.
Section 3. Microenterprise Development Assistance. Section
3 amends chapter 2 of part I of the Foreign Assistance Act of
1961 by inserting a new title, designated as title VI, entitled
``Microenterprise Development Assistance.''
Subtitle A of the new title includes five sections:
Section 251 includes five findings or declarations of
policy concerning the importance of microenterprise development
assistance in promoting stable economic growth in developing
countries and in promoting the developing of free, open, and
equitable international economic systems.
Section 252(a) authorizes microenterprise development
assistance on a grant basis for programs in developing
countries to increase the availability of credit, savings and
other services to microenterprises lacking full access to
capital, training, technical assistance, and business
development services, through (1) grants to microfinance
institutions for the purpose of expanding the availability of
credit, savings, and other financial services to
microenterprise clients; (2) grants to microenterprise
institutions for the purpose of training, technical assistance,
and business development services for microenterprises to
enable them to make better use of credit, to better manage
their enterprises, and to increase their income and build their
assets; (3) capacity-building for microenterprise institutions
in order to enable them to better meet the credit, savings, and
training needs of microenterprise clients; and (4) policy and
regulatory programs at the country level that improve the
environment for microenterprise clients and microenterprise
institutions that serve the poor and very poor.
Section 252(b)(1)(A) establishes within the Agency an
Office of Microenterprise Development, which shall be headed by
a Director who shall be appointed by the Administrator and who
should possess technical expertise and ability to offer
leadership in the field of microenterprise development.
Section 252(b)(1)(B) requires the Office to coordinate and
be responsible for the provision of assistance under title VI.
Section 252(b)(2) requires that assistance under section
252(a) be provided through grants executed, approved, or
reviewed by the Office to eligible implementing partner
organizations that have a capacity to develop and implement
microenterprise programs. ``Eligible implementing partner
organizations'' is a defined term in section 259, which is
included in the new title VI.
Section 252(b)(3) establishes that the Office, with respect
to assistance under section 252(a) that is furnished through
field missions of the Agency, shall be responsible for
reviewing or approving each grant agreement prior to obligation
of funds under the agreement in order to ensure that activities
to be carried out using such funds are efficacious, technically
sound, and suitable for the economic and security climate of
the country or region where the activities will be conducted;
and approving microenterprise development components of
strategic plans of missions, bureaus, and offices of the
Agency. In this context, reviewing grant agreements could refer
to review of requests for proposals or other forms of the grant
prior to negotiation or finalization of the grant agreement.
Section 252(c) concerns ``targeted assistance,'' and
includes language that already appears in existing law (section
131 of the FAA).
Section 252(d) includes language similar to existing law
which states that the Administrator should increase the use of
central mechanisms through microenterprise, microfinance, and
practitioner institutions in the implementation of title VI.
Section 253 requires that the Administrator, acting through
the Director of the Office, establish a monitoring system that
(1) establishes performance goals for the assistance and
expresses such goals in an objective and quantifiable form, to
the extent feasible; (2) establishes performance indicators to
be used in measuring or assessing the achievement of the
performance goals described above and the objectives of the
assistance authorized under section 252; (3) provides a basis
for recommendations for adjustments to the assistance to
enhance the sustainability and the impact of the assistance,
particularly the impact of such assistance on the very poor,
particularly poor women; and adopts the widespread use of
proven and effective poverty assessment tools to successfully
identify the very poor and ensure that they receive adequate
access to microenterprise loans, savings, and assistance.
Section 254(a) repeats language from existing law (section
131) and requires the Administrator, in consultation with
microenterprise institutions and other appropriate
organizations, to develop no fewer than two low-cost methods
for eligible implementing partner organizations to use to
assess the poverty levels of their current or prospective
clients. This section requires the Administrator to develop
poverty indicators that correlate with the circumstances of the
very poor. This section requires the Administrator to field-
test the required methods; and, not later than October 1, 2004,
the Administrator to, certify from among such the low-cost
poverty measurement methods no fewer than two such methods as
approved methods for measuring the poverty levels of current or
prospective clients of microenterprise institutions for
purposes of assistance under section 252.
Section 254(b) restates existing law by requiring that,
with reasonable exceptions, all eligible implementing partner
organizations applying for microenterprise assistance under
title VI shall use one of the certified methods, beginning not
later than October 1, 2005, to determine and report the poverty
levels of current or prospective clients.
Section 255(a) authorizes there to be appropriated to the
President to carry out subtitle A $200,000,000 for fiscal year
2005 and such sums as may be necessary for fiscal year 2006.
Section 255(b)(1) provides that amounts appropriated
pursuant to the authorization of appropriations under
subsection 255(a) may be referred to as the `Microenterprise
Development Assistance Account'; shall be allocated to the
Office, and upon approval by the Director of the Office, may be
reallocated to field missions of the Agency in furtherance of
the purposes of this title; are authorized to remain available
until expended; and are in addition to amounts otherwise
available for such purposes.
Section 255(b)(2) provides that, notwithstanding any other
provision of law, amounts made available for assistance for
microenterprise development assistance under any provision of
law other than this title may be provided to further the
purposes of title VI. To the extent assistance described in the
preceding sentence is provided in accordance with such
sentence, the Administrator of the Agency shall include, as
part of the report required under section 258, a detailed
description of such assistance and, to the extent applicable,
the information required by paragraphs (1) through (9) of
subsection (b) of section 258 with respect to such assistance.
Section 4. Microenterprise Development Credits. Section 4
amends the Foreign Assistance Act of 1961 by transferring
section 108 of such act from chapter 1 of part I to subtitle B
of the new title VI (as added by section 3), inserting it after
section 255 (as added by section 3), and redesignating the
transferred section as section 256. Section 108 from existing
law otherwise is unchanged, with the exception of the
authorization of such section for the fiscal years 2005 and
2006.
Section 5. United States Microfinance Loan Facility.
Section 5 amends the Foreign Assistance Act of 1961 by
transferring section 132 of such act from chapter 1 of part I
to subtitle C of the new title VI (as added by section 3),
inserting it after section 256 (as added by section 4), and
redesignating the transferred section as section 257. Section
132 from existing law otherwise is unchanged, with the
exception of the authorization of such section for the fiscal
years 2005 and 2006.
Section 6. Miscellaneous Provisions. Section 6 amends the
newly established title VI by adding at the end a new subtitle
D, entitled ``Miscellaneous Provisions,'' which includes two
sections:
Section 258(a) requires that Not later than December 31,
2005, and each December 31 thereafter, the Administrator shall
submit to the appropriate congressional committees a report
that contains a detailed description of the implementation of
title VI for the previous fiscal year.
Section 258(b) requires the report required of section
258(a) to contain the following information: (1) The number of
grants provided under section 252, with a listing of the amount
of each grant; the name of each implementing partner
organization; and a listing of the number of countries
receiving assistance authorized by sections 252; (2) The
results of the monitoring system required under section 253;
(3) The process of developing and applying poverty assessment
procedures required under section 254; (4) The percentage of
assistance furnished under section 252 that was allocated to
the very poor based on the data collected using the certified
methods required by section 254; (5) The absolute number of the
very poor reached with assistance furnished under section 252;
(6) The amount of assistance provided under section 252 through
central mechanisms; (7) The name of each country that receives
assistance under section 256 and the amount of such assistance;
(8) An estimate of the percentage of beneficiaries of
assistance under this title who are women, including, to the
extent practicable, the percentage of these women who have been
victims of sex trafficking, as well as information on efforts
to provide assistance under this title to women who have been
victims of severe forms of trafficking or who were previously
involved in prostitution; and (9) Any additional information
relating to the provision of assistance authorized by this
title, including the use of the poverty measurement tools
required by section 254, or additional information on
assistance provided by the United States to support
microenterprise development under this title or any other
provision of law.
Section 258(c) requires that the content of the report
required by section 258 shall be produced by the Office
established under section 252(b)(1), and shall be made
available for free electronic distribution through such Office.
Section 259 includes 14 definitions used throughout title
VI.
Section 7. Repeals. Section 7 repeals section 131 of the
Foreign Assistance Act, strikes subsection (b) of section 4 of
P.L. 108-31, and makes a conforming amendment to the same
section.
Section 8. References. Section 8 establishes that any
reference in a law, regulation, agreement, or other document of
the United States to section 108, 131, or 132 of the Foreign
Assistance Act of 1961 shall be deemed to be a reference to
subtitle B of title VI of chapter 2 of part I of the Foreign
Assistance Act of 1961, subtitle A of title VI of chapter 2 of
part I of such act, or subtitle C of title VI of chapter 2 of
part I of such act, respectively.
New Advisory Committees
H.R. 3818 establishes no new advisory committees.
Congressional Accountability Act
H.R. 3818 does not apply to the legislative branch.
Federal Mandates
H.R. 3818 imposes no Federal mandates.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
FOREIGN ASSISTANCE ACT OF 1961
* * * * * * *
PART I
Chapter 1--Policy; Development Assistance Authorizations
* * * * * * *
[SEC. 131. MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE.
[(a) Findings and Policy.--Congress finds and declares
that--
[(1) access to financial services and the
development of microenterprise are vital factors in the
stable growth of developing countries and in the
development of free, open, and equitable international
economic systems;
[(2) it is therefore in the best interest of the
United States to facilitate access to financial
services and assist the development of microenterprise
in developing countries;
[(3) access to financial services and the
development of microenterprises can be supported by
programs providing credit, savings, training, technical
assistance, business development services, and other
financial and non-financial services; and
[(4) given the relatively high percentage of
populations living in rural areas of developing
countries, and the combined high incidence of poverty
in rural areas and growing income inequality between
rural and urban markets, microenterprise programs
should target both rural and urban poor.
[(b) Authorization.--
[(1) In general.--In carrying out this part, the
President is authorized to provide grant assistance for
programs to increase the availability of credit and
other services to microenterprises lacking full access
to capital training, technical assistance, and business
development services, through--
[(A) grants to microfinance institutions
for the purpose of expanding the availability
of credit, savings, and other financial
services to microentrepreneurs;
[(B) grants to microenterprise institutions
for the purpose of training, technical
assistance, and business development services
for microenterprises to enable them to make
better use of credit, to better manage their
enterprises, and to increase their income and
build their assets;
[(C) capacity-building for microenterprise
institutions in order to enable them to better
meet the credit and training needs of
microentrepreneurs; and
[(D) policy and regulatory programs at the
country level that improve the environment for
microentrepreneurs and microenterprise
institutions that serve the poor and very poor.
[(2) Implementation.--Assistance authorized under
paragraph (1)(A) and (B) shall be provided through
organizations that have a capacity to develop and
implement microenterprise programs, including
particularly--
[(A) United States and indigenous private
and voluntary organizations;
[(B) United States and indigenous credit
unions and cooperative organizations; or
[(C) other indigenous governmental and
nongovernmental organizations.
[(3) Targeted assistance.--In carrying out
sustainable poverty-focused programs under paragraph
(1), 50 percent of all microenterprise resources shall
be targeted to very poor entrepreneurs, defined as
those living in the bottom 50 percent below the poverty
line as established by the national government of the
country. Specifically, such resources shall be used
for--
[(A) direct support of programs under this
subsection through practitioner institutions
that--
[(i) provide credit and other
financial services to clients who are
very poor, with loans in 1995 United
States dollars of--
[(I) $1,000 or less in the
Europe and Eurasia region;
[(II) $400 or less in the
Latin America region; and
[(III) $300 or less in the
rest of the world; and
[(ii) can cover their costs in a
reasonable time period; or
[(B) demand-driven business development
programs that achieve reasonable cost recovery
that are provided to clients holding poverty
loans (as defined by the regional poverty loan
limitations in subparagraph (A)(i)), whether
they are provided by microfinance institutions
or by specialized business development services
providers.
[(4) Support for central mechanisms.--The President
should continue support for central mechanisms and
missions, as appropriate, that--
[(A) provide technical support for field
missions;
[(B) strengthen the institutional
development of the intermediary organizations
described in paragraph (2);
[(C) share information relating to the
provision of assistance authorized under
paragraph (1) between such field missions and
intermediary organizations; and
[(D) support the development of nonprofit
global microfinance networks, including credit
union systems, that--
[(i) are able to deliver financial
services to poor entrepreneurs through
a significant grassroots infrastructure
based on market principles; and
[(ii) act as wholesale
intermediaries providing a range of
services to microenterprise retail
institutions, including financing,
technical assistance, capacity-
building, and safety and soundness
accreditation.
[(5) Limitation.--Assistance provided under this
subsection may only be used to support microenterprise
programs and may not be used to support programs not
directly related to the purposes described in paragraph
(1).
[(c) Monitoring System.--In order to maximize the
sustainable development impact of the assistance authorized
under subsection (b)(1), the Administrator of the agency
primarily responsible for administering this part shall
establish a monitoring system that--
[(1) establishes performance goals for such
assistance and expresses such goals in an objective and
quantifiable form, to the extent feasible;
[(2) establishes performance indicators to be used
in measuring or assessing the achievement of the goals
and objectives of such assistance;
[(3) provides a basis for recommendations for
adjustments to such assistance to enhance the
sustainable development impact of such assistance,
particularly the impact of such assistance on the very
poor, particularly poor women; and
[(4) adopts the widespread use of proven and
effective poverty assessment tools to successfully
identify the very poor and ensure that they receive
needed microenterprise loans, savings, and assistance.
[(d) Development and Certification of Poverty Measurement
Methods; Application of Methods.--
[(1) Development and certification.--(A) The
Administrator of the United States Agency for
International Development, in consultation with
microenterprise institutions and other appropriate
organizations, shall develop no fewer than two low-cost
methods for partner institutions to use to assess the
poverty levels of their current or prospective clients.
The United States Agency for International Development
shall develop poverty indicators that correlate with
the circumstances of the very poor.
[(B) The Administrator shall field-test the methods
developed under subparagraph (A). As part of the
testing, institutions and programs may use the methods
on a voluntary basis to demonstrate their ability to
reach the very poor.
[(C) Not later than October 1, 2004, the
Administrator shall, from among the low-cost poverty
measurement methods developed under subparagraph (A),
certify no fewer than two such methods as approved
methods for measuring the poverty levels of current or
prospective clients of microenterprise institutions for
purposes of assistance under this section.
[(2) Application.--The Administrator shall require
that, with reasonable exceptions, all organizations
applying for microenterprise assistance under this Act
use one of the certified methods, beginning no later
than October 1, 2005, to determine and report the
poverty levels of current or prospective clients.
[(e) Level of Assistance.--Of the funds made available
under this part, the FREEDOM Support Act, and the Support for
East European Democracy (SEED) Act of 1989, including local
currencies derived from such funds, there are authorized to be
available $155,000,000 for each of the fiscal years 2001 and
2002 and $175,000,000 for fiscal year 2003 and $200,000,000 for
fiscal year 2004, to carry out this section.
[(f) Definitions.--In this section:
[(1) Business development services.--The term
``business development services'' means support for the
growth of microenterprises through training, technical
assistance, marketing assistance, improved production
technologies, and other services.
[(2) Microenterprise institution.--The term
``microenterprise institution'' means an institution
that provides services, including microfinance,
training, or business development services, for
microentrepreneurs.
[(3) Microfinance institution.--The term
``microfinance institution'' means an institution that
directly provides, or works to expand, the availability
of credit, savings, and other financial services to
microentrepreneurs.
[(4) Practitioner institution.--The term
``practitioner institution'' means any institution that
provides services, including microfinance, training, or
business development services, for microentrepreneurs,
or provides assistance to microenterprise institutions.
[(5) Very poor.--The term ``very poor'' means those
individuals--
[(A) living in the bottom 50 percent below
the poverty line established by the national
government of the country in which those
individuals live; or
[(B) living on less than the equivalent of
$1 per day.]
* * * * * * *
Chapter 2--Other Programs
* * * * * * *
TITLE VI--MICROENTERPRISE DEVELOPMENT ASSISTANCE
Subtitle A--Grant Assistance
SEC. 251. FINDINGS AND POLICY.
Congress finds and declares the following:
(1) Access to financial services and the
development of microenterprise are vital factors in the
stable growth of developing countries and in the
development of free, open, and equitable international
economic systems.
(2) It is therefore in the best interest of the
United States to facilitate access to financial
services and assist the development of microenterprise
in developing countries.
(3) Access to financial services and the
development of microenterprises can be supported by
programs providing credit, savings, training, technical
assistance, business development services, and other
financial services.
(4) Given the relatively high percentage of
populations living in rural areas of developing
countries, and the combined high incidence of poverty
in rural areas and growing income inequality between
rural and urban markets, microenterprise programs
should target both rural and urban poor.
(5) Microenteprise programs have been successful
and should continue to empower vulnerable women in the
developing world. Such programs should take into
account the risks faced by women who are potential
victims of severe forms of trafficking and the need for
assistance for women who become victims of severe forms
of trafficking, as provided for in section 106(a)(1) of
the Trafficking Victims Protection Act of 2000 (22
U.S.C. 7104(a)(1); Public Law 106-386).
(6) Given that microenterprise programs have been
successful in empowering disenfranchised groups such as
women, microenterprise programs should also target
populations disenfranchised due to race or ethnicity in
countries where a strong relationship between poverty
and race or ethnicity has been demonstrated, such as
countries in Latin America.
SEC. 252. AUTHORIZATION; IMPLEMENTATION; TARGETED ASSISTANCE.
(a) Authorization.--The President is authorized to provide
assistance on a grant basis for programs in developing
countries to increase the availability of credit, savings, and
other services to microenterprises lacking full access to
capital, training, technical assistance, and business
development services, through--
(1) grants to microfinance institutions for the
purpose of expanding the availability of credit,
savings, and other financial services to
microentreprise clients;
(2) grants to microenterprise institutions for the
purpose of training, technical assistance, and business
development services for microenterprises to enable
them to make better use of credit, to better manage
their enterprises, to conduct market analysis and
product development for expanding domestic and
international sales, particularly to United States
markets, and to increase their income and build their
assets;
(3) capacity-building for microenterprise
institutions in order to enable them to better meet the
credit, savings, and training needs of microentreprise
clients; and
(4) policy and regulatory programs at the country
level that improve the environment for microentreprise
clients and microenterprise institutions that serve the
poor and very poor.
(b) Implementation.--
(1) Office of microenterprise development.--
(A) Establishment.--There is established
within the Agency an Office of Microenterprise
Development, which shall be headed by a
Director who shall be appointed by the
Administrator and who should possess technical
expertise and ability to offer leadership in
the field of microenterprise development.
(B) Duties.--The Office shall coordinate
and be responsible for the provision of
assistance under this title.
(2) Assistance through grants to eligible
organizations.--Assistance under subsection (a) shall
be provided through grants executed, approved, or
reviewed by the Office to eligible implementing partner
organizations that have a capacity to develop and
implement microenterprise programs.
(3) Review and approval.--With respect to
assistance under subsection (a) that is furnished
through field missions of the Agency, the Office shall
be responsible for--
(A) reviewing or approving each grant
agreement prior to obligation of funds under
the agreement in order to ensure that
activities to be carried out using such funds
are efficacious, technically sound, and
suitable for the economic and security climate
of the country or region where the activities
will be conducted; and
(B) approving microenterprise development
components of strategic plans of missions,
bureaus, and offices of the Agency.
(c) Targeted Assistance.--In carrying out sustainable
poverty-focused programs under subsection (a), 50 percent of
all microenterprise resources shall be targeted to very poor
clients, defined as those individuals living in the bottom 50
percent below the poverty line as established by the national
government of the country. Specifically, such resources shall
be used for--
(1) support of programs under this section through
practitioner institutions that--
(A) provide credit and other financial
services to clients who are very poor, with
loans in 1995 United States dollars of--
(i) $1,000 or less in the Europe
and Eurasia region;
(ii) $400 or less in the Latin
America region; and
(iii) $300 or less in the rest of
the world; and
(B) can cover their costs in a reasonable
time period; or
(2) demand-driven business development programs
that achieve reasonable cost recovery that are provided
to clients holding poverty loans (as defined by the
regional poverty loan limitations in paragraph (1)(A)),
whether they are provided by microfinance institutions
or by specialized business development services
providers.
(d) Support for Central Mechanisms.--The Administrator
should increase the use of central mechanisms through
microenterprise, microfinance, and practitioner institutions in
the implementation of this title.
SEC. 253. MONITORING SYSTEM.
(a) Establishment.--In order to maximize the sustainable
development impact of assistance authorized under section
252(a), the Administrator of the Agency, acting through the
Director of the Office, shall establish a monitoring system
that meets the requirements of subsection (b).
(b) Requirements.--The requirements referred to in
subsection (a) are the following:
(1) The monitoring system establishes performance
goals for the assistance and expresses such goals in an
objective and quantifiable form, to the extent
feasible.
(2) The monitoring system establishes performance
indicators to be used in measuring or assessing the
achievement of the performance goals described in
paragraph (1) and the objectives of the assistance
authorized under section 252.
(3) The monitoring system provides a basis for
recommendations for adjustments to the assistance to
enhance the sustainability and the impact of the
assistance, particularly the impact of such assistance
on the very poor, particularly poor women.
(4) The monitoring system adopts the widespread use
of proven and effective poverty assessment tools to
successfully identify the very poor and ensure that
they receive adequate access to microenterprise loans,
savings, and assistance.
SEC. 254. DEVELOPMENT AND CERTIFICATION OF POVERTY MEASUREMENT METHODS;
APPLICATION OF METHODS.
(a) Development and Certification.--
(1) In general.--The Administrator of the Agency,
in consultation with microenterprise institutions and
other appropriate organizations, shall develop no fewer
than two low-cost methods for eligible implementing
partner organizations to use to assess the poverty
levels of their current or prospective clients. The
Administrator shall develop poverty indicators that
correlate with the circumstances of the very poor.
(2) Field testing.--The Administrator shall field-
test the methods developed under paragraph (1). As part
of the testing, institutions and programs may use the
methods on a voluntary basis to demonstrate their
ability to reach the very poor.
(3) Certification.--Not later than October 1, 2004,
the Administrator shall, from among the low-cost
poverty measurement methods developed under paragraph
(1), certify no fewer than two such methods as approved
methods for measuring the poverty levels of current or
prospective clients of microenterprise institutions for
purposes of assistance under section 252.
(b) Application.--The Administrator shall require that,
with reasonable exceptions, all eligible implementing partner
organizations applying for microenterprise assistance under
this title use one of the certified methods, beginning not
later than October 1, 2005, to determine and report the poverty
levels of current or prospective clients.
SEC. 255. AUTHORIZATION OF APPROPRIATIONS; ADDITIONAL AUTHORITIES.
(a) Authorization of Appropriations.--There are authorized
to be appropriated to the President to carry out this subtitle
$200,000,000 for fiscal year 2005 and such sums as may be
necessary for fiscal year 2006.
(b) Additional Authorities.--(1) Amounts appropriated
pursuant to the authorization of appropriations under
subsection (a)--
(A) may be referred to as the ``Microenterprise
Development Assistance Account'';
(B) shall be allocated to the Office, and upon
approval by the Director of the Office, may be
reallocated to field missions of the Agency in
furtherance of the purposes of this title;
(C) are authorized to remain available until
expended; and
(D) are in addition to amounts otherwise available
for such purposes.
(2) Notwithstanding any other provision of law, amounts
made available for assistance for microenterprise development
assistance under any provision of law other than this title may
be provided to further the purposes of this title. To the
extent assistance described in the preceding sentence is
provided in accordance with such sentence, the Administrator of
the Agency shall include, as part of the report required under
section 258, a detailed description of such assistance and, to
the extent applicable, the information required by paragraphs
(1) through (10) of subsection (b) of such section with respect
to such assistance.
Subtitle B--Credit Assistance
SEC. [108.] 256. MICROENTERPRISE DEVELOPMENT CREDITS.
(a) * * *
* * * * * * *
(c) Eligibility Criteria.--The [Administrator of the agency
primarily responsible for administering this part]
Administrator of the Agency shall establish criteria for
determining which microfinance institutions described in
subsection (b)(1) are eligible to carry out activities, with
respect to microenterprise households, assisted under this
section. Such criteria may include the following:
(1) * * *
* * * * * * *
(f ) Availability of Funds.--
(1) In general.--Of the amounts authorized to be
available to carry out [section 131] this part, there
are authorized to be available $1,500,000 for each of
fiscal years [2001 through 2004] 2005 and 2006 to carry
out this section.
* * * * * * *
Subtitle C--United States Microfinance Loan Facility
SEC. [132.] 257. UNITED STATES MICROFINANCE LOAN FACILITY.
(a) * * *
(b) Disbursements.--
(1) * * *
* * * * * * *
(3) Congressional notification procedures.--During
each of the fiscal years [2001 and 2002] 2005 and 2006,
funds may not be made available from the Facility until
15 days after notification of the proposed availability
of the funds has been provided to the congressional
committees specified in section 634A in accordance with
the procedures applicable to reprogramming
notifications under that section.
* * * * * * *
(d) Funding.--
(1) Allocation of funds.--Of the amounts made
available to carry out this part for [the fiscal year
2001] each of the fiscal years 2005 and 2006, up to
$5,000,000 may be made available for--
(A) * * *
* * * * * * *
[(e) Definitions.--In this section:
[(1) Administrator.--The term ``Administrator''
means the Administrator of the agency primarily
responsible for administering this part.
[(2) Appropriate congressional committees.--The
term ``appropriate congressional committees'' means the
Committee on Foreign Relations of the Senate and the
Committee on International Relations of the House of
Representatives.
[(3) United states-supported microfinance
institution.--The term ``United States-supported
microfinance institution'' means a financial
intermediary that has received funds made available
under part I of this Act for fiscal year 1980 or any
subsequent fiscal year.]
Subtitle D--Miscellaneous Provisions
SEC. 258. REPORT.
(a) In General.--Not later than December 31, 2005, and each
December 31 thereafter, the Administrator of the Agency shall
submit to the appropriate congressional committees a report
that contains a detailed description of the implementation of
this title for the previous fiscal year.
(b) Contents.--The report shall contain the following:
(1) The number of grants provided under section
252, with a listing of--
(A) the amount of each grant;
(B) the name of each implementing partner
organization; and
(C) a listing of the number of countries
receiving assistance authorized by sections
252.
(2) The results of the monitoring system required
under section 253.
(3) The process of developing and applying poverty
assessment procedures required under section 254.
(4) The percentage of assistance furnished under
section 252 that was allocated to the very poor based
on the data collected using the certified methods
required by section 254.
(5) The absolute number of the very poor reached
with assistance furnished under section 252.
(6) The amount of assistance provided under section
252 through central mechanisms.
(7) The name of each country that receives
assistance under section 256 and the amount of such
assistance.
(8) An estimate of the percentage of beneficiaries
of assistance under this title who are women,
including, to the extent practicable, the percentage of
these women who have been victims of sex trafficking,
as well as information on efforts to provide assistance
under this title to women who have been victims of
severe forms of trafficking or who were previously
involved in prostitution.
(9) Any additional information relating to the
provision of assistance authorized by this title,
including the use of the poverty measurement tools
required by section 254, or additional information on
assistance provided by the United States to support
microenterprise development under this title or any
other provision of law.
(10) An estimate of the percentage of beneficiaries
of assistance under this title in countries where a
strong relationship between poverty and race or
ethnicity has been demonstrated.
(c) Limitation.--The content of the report required by this
section shall be produced by the Office established under
section 252(b)(1), and shall be made available for free
electronic distribution through such Office.
SEC. 259. DEFINITIONS.
In this title:
(1) Administrator.--The term ``Administrator''
means the Administrator of the Agency.
(2) Agency.--The term ``Agency'' means the United
States Agency for International Development.
(3) Appropriate congressional committees.--The term
``appropriate congressional committees'' means the
Committee on International Relations of the House of
Representatives and the Committee on Foreign Relations
of the Senate.
(4) Business development services.--The term
``business development services'' means support for the
growth of microenterprises through training, technical
assistance, marketing assistance, improved production
technologies, and other related services.
(5) Director.--The term ``Director'' means the
Director of the Office.
(6) Eligible implementing partner organization.--
The term ``eligible implementing partner organization''
means an entity eligible to receive assistance under
this title which is--
(A) a United States or an indigenous
private voluntary organization;
(B) a United States or an indigenous credit
union;
(C) a United States or an indigenous
cooperative organization;
(D) an indigenous governmental or
nongovernmental organization;
(E) a microenterprise institution;
(F) a microfinance institution; or
(G) a practitioner institution.
(7) Microenterprise institution.--The term
``microenterprise institution'' means a not-for-profit
entity that provides services, including microfinance,
training, or business development services, for
microentreprise clients in foreign countries.
(8) Microfinance institution.--The term
``microfinance institution'' means a not-for-profit
entity or a regulated financial intermediary that
directly provides, or works to expand, the availability
of credit, savings, and other financial services to
microentreprise clients in foreign countries.
(9) Microfinance network.--The term ``microfinance
network'' means an affiliated group of practitioner
institutions that provides services to its members,
including financing, technical assistance, and
accreditation, for the purpose of promoting the
financial sustainability and societal impact of
microenterprise assistance.
(10) Office.--The term ``Office'' means the Office
of Microenterprise Development established under
section 252(b)(1).
(11) Practitioner institution.--The term
``practitioner institution'' means a not-for-profit
entity or a regulated financial intermediary, including
a microfinance network, that provides services,
including microfinance, training, or business
development services, for microentreprise clients, or
provides assistance to microenterprise institutions in
foreign countries.
(12) Private voluntary organization.--The term
``private voluntary organization'' means a not-for-
profit entity that--
(A) engages in and supports activities of
an economic or social development or
humanitarian nature for citizens in foreign
countries; and
(B) is incorporated as such under the laws
of the United States, including any of its
states, territories or the District of
Columbia, or of a foreign country.
(13) United states-supported microfinance
institution.--The term ``United States-supported
microfinance institution'' means a financial
intermediary that has received funds made available
under this part for fiscal year 1980 or any subsequent
fiscal year.
(14) Very poor.--The term ``very poor'' means those
individuals--
(A) living in the bottom 50 percent below
the poverty line established by the national
government of the country in which those
individuals live; or
(B) living on less than the equivalent of
$1 per day.
* * * * * * *
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SECTION 4 OF THE ACT OF JUNE 17, 2003
(Public Law 108-31)
AN ACT To amend the Microenterprise for Self-Reliance Act of 2000 and
the Foreign Assistance Act of 1961 to increase assistance for the
poorest people in developing countries under microenterprise assistance
programs under those Acts, and for other purposes.
SEC. 4. REPORT TO CONGRESS.
[(a) In General.--] Not later than September 30, 2005, the
Administrator of the United States Agency for International
Development shall submit to Congress a report that documents
the process of developing and applying poverty assessment
procedures with its partners.
[(b) Reports for Fiscal Year 2006 and Beyond.--Beginning
with fiscal year 2006, the Administrator of the United States
Agency for International Development shall annually submit to
Congress on a timely basis a report that addresses the United
States Agency for International Development's compliance with
the Microenterprise for Self-Reliance Act of 2000 by
documenting--
[(1) the percentage of its resources that were
allocated to the very poor (as defined in paragraph (5)
of section 131(f) of the Foreign Assistance Act of 1961
(22 U.S.C. 2152a(f)(5))) based on the data collected
from its partners using the certified methods; and
[(2) the absolute number of the very poor
reached.]2/26/2004 4:25:28 PM -
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Dissenting Views
Mr. Chairman, I wish to express my dissenting views on this
legislation, but first I want to emphasize my support for
accountability at all levels and branches of government. I am
outspoken about my concerns over wasteful use of taxpayer
money, and these concerns factor into my opposition to the bill
as considered by the committee.
In particular, I am concerned about provisions in this law
that exclude for-profit, private sector consulting firms from
participating in the U.S. Agency for International
Development's microenterprise development program. Many of
these firms currently provide valuable services and expertise
to the Agency and to beneficiaries around the world and do
about 20 percent of USAID's work in microenterprise
development. For-profit firms add significant value to USAID's
program implementation in areas such as loan delivery, legal
and regulatory reform, and the creation of industry
infrastructure that serves a broad group of international
microenterprise development organizations.
Excluding for-profit firms eliminates an important
participant in the bidding process for contracts. If we
eliminate this sector of this industry from bidding, we also
eliminate potential cost savings and efficiencies that result
from competition. When competition is reduced, costs rise and
quality declines. Beneficiaries of the microenterprise program,
USAID's performance, and U.S. taxpayers would bear the brunt of
such decline.
Competition for contracts is not only beneficial on the
front end of the contracting process, but the potential for
future contracts gives incentives for all industry players to
demonstrate their value in the execution and completion of
contracts. By not including these tax-paying U.S. entities from
participation, we eliminate contributors that are accountable
to the congressional program goals by virtue of the contractual
nature of their business with USAID.
It is ironic that in a program intended to foster
entrepreneurship and for-profit enterprises in developing and
free markets around the world, we propose to limit the
participation of such enterprises in the very execution of the
program.
I urge you to ensure that private sector development firms
are allowed to continue to participate in the USAID
microenterprise program.
Jeff Flake.