[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3818 Engrossed in House (EH)]
108th CONGRESS
2d Session
H. R. 3818
_______________________________________________________________________
AN ACT
To amend the Foreign Assistance Act of 1961 to improve the results and
accountability of microenterprise development assistance programs, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
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 report on the effectiveness of the United States
Agency for International Development's microfinance program,
prepared by the Consultative Group to Assist the Poor, rated
the Agency in the top tier of the 17 donors in this field.
(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) 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) Microenterprise programs have been successful and
should continue to empower vulnerable women in the developing
world. The Agency should work to ensure that recipients of
microenterprise and microfinance development assistance under
this title communicate and work with nongovernmental
organizations and government organizations to identify and
assist victims 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) and women who are
victims of or susceptible to other forms of exploitation and
violence.
``(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 non-reimbursable basis for programs in developing
countries to increase the availability of credit, savings, and other
services to microfinance and microenterprise clients lacking full
access to capital, training, technical assistance, and business
development services, through--
``(1) assistance for the purpose of expanding the
availability of credit, savings, and other financial and non-
financial services to microfinance and microenterprise clients;
``(2) assistance 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 microfinance and
microenterprise institutions in order to enable them to better
meet the credit, savings, and training needs of microfinance
and microenterprise clients; and
``(4) policy, regulatory programs, and research at the
country level that improve the environment for microfinance and
microenterprise clients and institutions that serve the poor
and very poor.
``(b) Implementation.--
``(1) Office of microenterprise development.--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.
``(2) Additional provisions.--
``(A) Use of implementing partner organizations.--
Assistance under this section shall emphasize the use
of implementing partner organizations that best meet
the requirements of subparagraph (C).
``(B) Use of central funding mechanisms.--
``(i) Program.--In order to ensure that
assistance under this title is distributed
effectively and efficiently, the office shall
also seek to implement a program of central
funding under which assistance is administered
directly by the office, including through
targeted core support for microfinance and
microenterprise networks and other
practitioners.
``(ii) Funding.--Of the amount made
available to carry out this subtitle for a
fiscal year, not less than $25,000,000 should
be made available to carry out clause (i).
``(C) Efficiency and cost-effectiveness.--
Assistance under this section shall meet high standards
of efficiency, cost-effectiveness, and sustainability
and shall especially provide the greatest possible
resources to the poor and very poor. When administering
assistance under this section, the Administrator
shall--
``(i) take into consideration the
percentage of funds a provider of assistance
intends to expend on administrative costs;
``(ii) take all appropriate steps to ensure
that the provider of assistance keeps
administrative costs as low as practicable to
ensure the maximum amount of funds are used for
directly assisting microfinance and
microenterprise clients, for establishing
sustainable microfinance and microenterprise
institutions, or for advancing the
microenterprise development field; and
``(iii) give preference to proposals from
providers of assistance that are the most
technically competitive and have a reasonable
allocation to overhead and administrative
costs.
``(3) Approval of strategic plans.--With respect to
assistance provided under this section, the office shall be
responsible for concurring in the microenterprise development
components of strategic plans of missions, bureaus, and other
offices of the Agency and providing technical support to field
missions to help the missions prepare such components.
``(c) Targeted Assistance.--In carrying out sustainable poverty-
focused programs under subsection (a), 50 percent of all
microenterprise resources shall be targeted to clients who are very
poor. Specifically, until September 30, 2006, 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.
``SEC. 253. MONITORING SYSTEM.
``(a) In General.--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
strengthen its monitoring system to meet the requirements of subsection
(b).
``(b) Requirements.--The requirements referred to in subsection (a)
are the following:
``(1) The monitoring system shall include performance goals
for the assistance and expresses such goals in an objective and
quantifiable form, to the extent feasible.
``(2) The monitoring system shall include 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 implementing partner organizations to use to
assess the poverty levels of their current incoming 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 April 1, 2005, 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, incoming, or prospective clients
of microenterprise institutions for purposes of assistance
under section 252.
``(b) Application.--The Administrator shall require that, with
reasonable exceptions, all implementing partner organizations applying
for microenterprise assistance under this title use one of the
certified methods, beginning not later than October 1, 2006, to
determine and report the poverty levels of current, incoming, or
prospective clients.
``SEC. 255. ADDITIONAL AUTHORITIES.
``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 (11) 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 ``$1,500,000 for each of
fiscal years 2001 through 2004'' and inserting
``such sums as may be necessary for each of the
fiscal years 2005 through 2009''.
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 through 2009'';
(B) in the matter preceding subparagraph (A) of
subsection (d)(1), by striking ``this part for the
fiscal year 2001, up to $5,000,000'' and inserting
``this part for each of the fiscal years 2005 through
2009, such sums as may be necessary''; 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 June 30, 2006, and each June 30
thereafter, the Administrator of the Agency, acting through the
Director of the office, 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, cooperative agreements,
contracts, contributions, or other form of assistance provided
under section 252, with a listing of--
``(A) the amount of each grant, cooperative
agreement, contract, contribution, or other form of
assistance;
``(B) the name of each recipient and each
developing country with respect to which projects or
activities under the grant, cooperative agreement,
contract, contribution, or other form of assistance
were carried out; and
``(C) a listing of the number of countries
receiving assistance authorized by section 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 estimated number of the very poor reached with
assistance provided 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) Information on the efforts of the Agency to ensure
that recipients of United States microenterprise and
microfinance development assistance work closely with
nongovernmental organizations and foreign governments to
identify and assist victims or potential victims of severe
forms of trafficking in persons and women who are victims of or
susceptible to other forms of exploitation and violence.
``(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.
``(11) The level of funding provided through contracts, the
level of funding provided through grants, contracts, and
cooperative agreements that is estimated to be subgranted or
subcontracted, as the case may be, to direct service providers,
and an analysis of the comparative cost-effectiveness and
sustainability of projects carried out under these mechanisms.
``(c) Availability to Public.--The report required by this section
shall be made available to the public on the Internet website of the
Agency.
``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) Implementing partner organization.--The term
`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 microenterprise 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 microfinance and microenterprise 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 microfinance and
microenterprise 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 (as calculated using the purchasing power parity
(PPP) exchange rate method).''.
SEC. 7. SENSE OF CONGRESS.
It is the sense of Congress that, in carrying out 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 through 6 of this Act),
the Administrator of the United States Agency for International
Development--
(1) where applicable, should ensure that microenterprise
development assistance provided under such title is matched by
recipients with an equal amount of assistance from non-United
States Government sources, including private donations,
multilateral funding, commercial and concessional borrowing,
savings, and program income;
(2) should include in the report required by section 258 of
the Foreign Assistance Act of 1961 (as added by section 6 of
this Act) a description of all matching assistance (as
described in paragraph (1)) provided for the prior year by
recipients of microenterprise development assistance under such
title;
(3) should ensure that recipients of microenterprise
development assistance under such title do not expend an
unreasonably large percentage of such assistance on
administrative costs;
(4) should not use recipients of microenterprise
development assistance under such title to carry out critical
management functions of the Agency, including functions such as
strategy development or overall management of programs in a
country; and
(5) should consult with the appropriate congressional
committees with respect to the implementation of title VI of
chapter 2 of part I of the Foreign Assistance Act of 1961 not
later than 90 days after the date of the enactment of this Act.
SEC. 8. 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. 9. 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.
Passed the House of Representatives November 20, 2004.
Attest:
Clerk.
108th CONGRESS
2d Session
H. R. 3818
_______________________________________________________________________
AN ACT
To amend the Foreign Assistance Act of 1961 to improve the results and
accountability of microenterprise development assistance programs, and
for other purposes.