H. Rept. 107-453 - MICROENTERPRISE ASSISTANCE REAUTHORIZATION AMENDMENTS OF 2002107th Congress (2001-2002)
Committee Report
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| Accompanies: | H.R.4073 |
| Committees: | House International Relations Committee |
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107th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 107-453
======================================================================
MICROENTERPRISE ASSISTANCE REAUTHORIZATION AMENDMENTS OF 2002
_______
May 10, 2002.--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
[To accompany H.R. 4073]
[Including cost estimate of the Congressional Budget Office]
The Committee on International Relations, to whom was
referred the bill (H.R. 4073) 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, 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.............................................. 4
Background and Need for the Legislation.......................... 5
Committee Consideration.......................................... 7
Votes of the Committee........................................... 7
Committee Oversight Findings..................................... 8
New Budget Authority and Tax Expenditures........................ 8
Congressional Budget Office Cost Estimate........................ 8
Performance Goals and Objectives................................. 10
Constitutional Authority Statement............................... 10
Section-by-Section Analysis...................................... 10
New Advisory Committees.......................................... 12
Congressional Accountability Act................................. 12
Federal Mandates................................................. 12
Changes in Existing Law Made by the Bill, as Reported............ 12
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. AMENDMENTS TO THE MICROENTERPRISE FOR SELF-RELIANCE ACT OF
2000.
(a) Purposes.--Section 103 of the Microenterprise for Self-Reliance
Act of 2000 (Public Law 106-309) is amended--
(1) in paragraph (3), by striking ``microentrepreneurs''
and inserting ``microenterprise households'';
(2) in paragraph (4), by striking ``and'' at the end;
(3) in paragraph (5)--
(A) by striking ``microfinance policy'' and
inserting ``microenterprise policy'';
(B) by striking ``the poorest of the poor'' and
inserting ``the very poor''; and
(C) by striking the period at the end and inserting
``; and''; and
(4) by adding at the end the following:
``(6) to encourage the United States Agency for
International Development to develop, assess, and implement
effective outreach methods and tools to ensure that all
microenterprise assistance authorized under this title, and the
amendments made by this title, is used to assist the greatest
absolute number of economically viable clients among the very
poor, and that at least 50 percent of all microenterprise
assistance authorized under this title, and the amendments made
under this title, is used in support of programs or lines of
service that target the very poor.''.
(b) Definitions.--Section 104 of such Act is amended--
(1) in paragraph (2), by striking ``for
microentrepreneurs'' and inserting ``to microentrepreneurs and
their households''; and
(2) by adding at the end the following:
``(5) Very poor; poorest people in developing countries.--
The terms `very poor' and `poorest people in developing
countries' mean those persons living either in the bottom 50
percent below the poverty line as established by the national
government of the country or on less than the equivalent of $1
per day.''.
SEC. 2. AMENDMENTS TO THE MICRO- AND SMALL ENTERPRISE DEVELOPMENT
CREDITS PROGRAM UNDER THE FOREIGN ASSISTANCE ACT OF
1961.
(a) Findings and Policy.--Section 108(a)(2) of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151f(a)(2)) is amended by striking
``the development of the enterprises of the poor'' and inserting ``the
access to financial services and the development of microenterprises''.
(b) Program.--Section 108(b) of such Act (22 U.S.C. 2151f(b)) is
amended to read as follows:
``(b) Program.--To carry out the policy set forth in subsection
(a), the President is authorized to provide assistance to increase the
availability of financial services to microenterprise households
lacking full access to credit, including through--
``(1) loans and guarantees to microfinance institutions for
the purpose of expanding the availability of savings and credit
to poor and low-income households;
``(2) training programs for microfinance institutions in
order to enable them to better meet the financial services
needs of their clients; and
``(3) training programs for clients in order to enable them
to make better use of credit, increase their financial
literacy, and to better manage their enterprises.''.
(c) Eligibility Criteria.--Section 108(c) of such Act (22 U.S.C.
2151f(c)) is amended--
(1) in the first sentence of the matter preceding paragraph
(1)--
(A) by striking ``credit institutions'' and
inserting ``microfinance institutions''; and
(B) by striking ``micro- and small enterprises''
and inserting ``microenterprise households''; and
(2) in paragraphs (1) and (2), by striking ``credit'' each
place it appears and inserting ``financial services''.
(d) Additional Requirement.--Section 108(d) of such Act (22 U.S.C.
2151f(d)) is amended by striking ``micro- and small enterprise
programs'' and inserting ``programs for microenterprise households''.
(e) Availability of Funds.--Section 108(f)(1) of such Act (22
U.S.C. 2151f(f)(1)) is amended by striking ``for each of fiscal years
2001 and 2002'' and inserting ``for each of fiscal years 2001 through
2004''.
(f) Conforming Amendment.--Section 108 of such Act (22 U.S.C.
2151f) is amended in the heading to read as follows:
``SEC. 108. MICROENTERPRISE DEVELOPMENT CREDITS.''.
SEC. 3. AMENDMENTS TO THE MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE
PROGRAM UNDER THE FOREIGN ASSISTANCE ACT OF 1961.
(a) Findings and Policy.--Section 131(a) of the Foreign Assistance
Act of 1961 (22 U.S.C. 2152a(a)) is amended to read as follows:
``(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.--Section 131(b) of such Act (22 U.S.C. 2152a(b))
is amended--
(1) in paragraph (3)--
(A) in the first sentence of the matter preceding
subparagraph (A), by striking ``targeted to very poor
entrepreneurs'' and all that follows and inserting
``used in support of programs or lines of service under
which 50 percent or more of the incoming or prospective
clients are initially very poor.''; and
(B) in subparagraph (A)(i) , by striking
``entrepreneurs'' and inserting ``clients''; and
(2) in paragraph (4)(D)--
(A) in clause (i), by striking ``very small loans''
and inserting ``financial services to poor
entrepreneurs''; and
(B) in clause (ii), by striking ``microfinance''
and inserting ``microenterprise''.
(c) Monitoring System.--Section 131(c) of such Act (22 U.S.C.
2152a(c)) is amended by striking paragraph (4) and inserting the
following:
``(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 credits,
loans, and assistance.''
(d) Development and Application of Poverty Measurement Methods.--
Section 131 of such Act (22 U.S.C. 2152a) is amended--
(1) by redesignating subsections (d) and (e) as subsections
(e) and (f), respectively; and
(2) by inserting after subsection (c) the following:
``(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 appropriate microfinance institutions,
microenterprise institutions, and other appropriate entities
shall develop no fewer than two low-cost methods for measuring
the poverty levels of the current or prospective clients of
microenterprise organizations for purposes of assistance under
this section. In developing such methods, the Administrator
shall give consideration to methods already in use by
practitioner institutions.
``(B) The Administrator shall field-test the methods
developed under this paragraph, and as part of the testing,
institutions and programs may use these 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 this paragraph, certify no fewer than two of
such methods as approved methods for measuring the poverty
levels of the current or prospective clients of microenterprise
organizations for purposes of assistance under this section.
``(2) Application.--Beginning on and after October 1, 2004,
assistance furnished under this section to a program or to a
line of service within an institution shall qualify, in whole
or in part, as targeted assistance to the very poor if one or
more of the measurement methods approved under paragraph (1),
or one or more of the measurement methods approved in
accordance with paragraph (1) after October 1, 2004, verifies
that at least 50 percent of the incoming or prospective clients
of the program or line of service are initially among the very
poor.''.
(e) Level of Assistance.--Section 131(e) of such Act, as
redesignated by subsection (d), is amended by inserting ``and
$175,000,000 for fiscal year 2003 and $200,000,000 for fiscal year
2004'' after ``fiscal years 2001 and 2002''.
(f) Definitions.--Section 131(f) of such Act, as redesignated by
subsection (d), is amended by adding at the end the following:
``(5) Very poor; poorest people in developing countries.--
The terms `very poor' and `poorest people in developing
countries' mean those persons living either in the bottom 50
percent below the poverty line as established by the national
government of the country or on less than the equivalent of $1
per day.''.
SEC. 4. REPORT TO CONGRESS.
Not later than July 1, 2004, the Administrator of the United States
Agency for International Development shall submit to Congress a report
that contains--
(1) a description of the interim poverty measurement
methods developed and implemented pursuant to section 131(d)(1)
of the Foreign Assistance Act of 1961, as added by section
3(d);
(2) an analysis of the results of the application of such
interim poverty measurement methods to sustainable poverty-
focused programs under such section; and
(3) a description of the proposed final poverty measurement
methods to be implemented beginning on October 1, 2004, in
accordance with section 131(d)(2) of such Act, as added by
section 3(d).
Purpose and Summary
H.R. 4073, a bill making amendments to the Microenterprise
and Self-Reliance Act of 2000 and the Foreign Assistance Act of
1961, as amended, (FAA), as reported out of the Committee on
International Relations, reauthorizes and increases authorized
funding levels for microenterprise programs under the authority
of the Administrator of the U.S. Agency for International
Development. The bill amends the Purposes and Definitions
sections of the Microenterprise and Self-Reliance Act of 2000,
and also amends the Findings and Policy, Eligibility Criteria,
Additional Requirement, and Availability of Funds subsections
of Section 108 of the FAA (concerning the Microenterprise
Development Credits program). The bill also makes amendments to
the Findings and Policy, Authorization, Monitoring System and
Definition subsections of Section 131 of the FAA (concerning
the Microenterprise Development Grant Assistance program), adds
an additional subsection on Poverty Measurement (Section
131(d)), and also requires a report to Congress concerning the
implementation of this subsection. Specifically, H.R. 4073
reauthorizes microenterprise grant assistance for an additional
2 years, through FY2004, providing authorization for $175
million in 2003 and $200 million in 2004
The goals and objectives of this legislation are to amend
the Microenterprise and Self-Reliance Act of 2000 and the
Foreign Assistance Act of 1961 to reauthorize microenterprise
assistance, to better focus assistance on the very poor, and to
make definitional and other amendments to update language of
both acts concerning rural lending, the provision of financial
services, and the development and application of poverty
measurement tools for the purpose of ensuring U.S.
microenterprise assistance reaches the very poor.
Background and Need for the Legislation
The Microenterprise for Self-Reliance Act of 2000 (PL 106-
309) authorized U.S. microenterprise programs under the
authority of the Administrator of the U.S. Agency for
International Development (USAID). PL 106-309 authorized these
programs for an initial 2-year period, which expires on
September 30, 2002. Mr. Smith of New Jersey and Mr. Roemer each
introduced bills to reauthorize microenterprise programs, and
H.R. 4073 as reported represents a compromise draft that
incorporates significant aspects of each bill. H.R. 4073 would
increase U.S. funding to $175 million in FY2003 and $200
million in FY2004, and makes a number of important definitional
changes.
In reauthorizing the Microenterprise for Self-Reliance Act,
the Committee has provided significant increases in authorized
funding levels for microenterprise development grant programs
in recognition of the effectiveness of these programs, the
unmet need for credit, savings and other business and financial
services among millions of poor people, and the capacity of
microenterprise development programs globally to put additional
resources to good use.
The Committee recognizes the valuable contributions that
USAID has made to the development and expansion of financially-
sustainable microenterprise institutions during the initial
authorization period. The amendments in H.R. 4073 are intended
to encourage USAID to apply an equal level of creativity and
innovation to promote outreach to the very poor. By designating
at least 50 percent of all assistance to programs or lines of
service that target the very poor, the Committee seeks to
encourage microenterprise institutions to develop and expand
programs that specifically target the very poor. While
recognizing that poor people at all levels of poverty require
greater access to financial and non-financial microenterprise
development services, the Committee emphasizes that all
microenterprise assistance authorized by H.R. 4073 should be
used to assist the greatest possible number of the very poor.
In support of this goal, the 50 percent of funds designated for
programs or lines of services targeting the very poor shall be
considered as a minimum, and not a maximum.
The Committee intends that the term ``program and lines of
service'' should include not only the provision of direct
financial services but also other programs that serve the very
poor by building capacity and reducing poverty. The Committee
further intends that the term ``program and lines of service''
shall include those poverty-focused services within larger
institutions. This provision ensures that poverty-focused
services within larger institutions can be eligible to receive
resources targeted to the very poor, even if the institution as
a whole does not serve a majority of very poor clients. Such
institutions are eligible to receive those resources targeted
to the very poor if those institutions develop particular lines
of service under which 50 percent or more of the incoming or
prospective clients are initially very poor.
H.R. 4073 requires USAID, in consultation with the
microenterprise community, to develop ``poverty measurement
methods'' in order to enable microenterprise organizations to
identify which of their prospective clients meet the definition
of ``very poor.'' Section 131(b)(3) of the Foreign Assistance
Act currently requires that 50 percent of all microenterprise
assistance be targeted to very poor entrepreneurs (defined as
those living in the bottom 50 percent below the poverty line).
Because it is expensive and technically difficult to
``measure'' poverty of potential clients, USAID has used loan
size when measuring implementation agency compliance with the
50 percent requirement. Many academics and practitioners do not
agree that loan size is a valid proxy, nor are they in
agreement on how best to measure poverty (income alone is not
considered a valid indicator). H.R. 4073 will require that by
October 1, 2004, the Administrator certify no fewer than two
low-cost methods for measuring the poverty levels of the
current or prospective clients of microenterprise
organizations. The bill also requires that after October 1,
2004, the Administrator use these new methods to determine
which programs meet the criteria of targeting the ``very
poor.''
The Committee has expanded the definition of the very poor
to include those severely poor people living on less than $1
per day and has provided clear guidance to USAID for the
development and use of cost-efficient practical poverty
measurement tools that can be applied by practitioner
organizations. The Committee has included language that directs
that beginning on October 1, 2004, at least half of all
microenterprise development grant resources shall go to
programs that can demonstrate by use of a USAID-certified
poverty measurement method that 50 percent or more of their
incoming or prospective clients are initially very poor. This
change creates substantially greater incentive for USAID to
find and support financially-sustainable lines of
microenterprise development service that favor the very poor,
while allowing up to half of the funding to support other lines
of service that serve poor people who are somewhat better-off.
The Committee expects that this provision will provide a
clearer, more meaningful guideline that will create
substantially stronger incentive for USAID and its grantees to
push the frontiers of microenterprise development to include
more of the very poor than are currently being reached by USAID
supported microenterprise development programs and services.
The Committee has also broadened the definition of
microenterprise development services in recognition of the
importance of delivering both financial and non-financial
services to the poor, and has emphasized the importance of
providing these services to rural as well as urban areas, given
the concentrations of poverty often found in rural areas.
The Committee recognizes that USAID has included some
incentives for poverty outreach in its procurement process.
However, after a review of the current procurement guidelines,
the Committee finds that the current incentives and guidelines
are inadequate to encourage innovation and support the rapid
expansion of financial services to the very poor and others
currently underserved or excluded from microenterprise
programs. H.R. 4073 addresses these inadequacies by requiring
the development of poverty-measurement methods. The Committee
hopes that these methods will enable microenterprise
institutions to demonstrably reach the greatest number of the
very poor with sustainable and cost-efficient programs.
The Committee recognizes that microfinance networks are
efficient vehicles for rapidly expanding access to financial
services by the poor. These networks build new microfinance
institutions in underserved areas and provide technical
assistance, systems support, quality control, and research.
Microfinance networks also raise substantial private-sector
funding assistance for their partner microfinance institutions
around the world. Investing in microfinance networks is an
efficient and appropriate use of U.S. government foreign
assistance. The Committee strongly encourages analysis from
USAID on how the establishment of an ``Accelerated Growth
Fund'' would assist in the promotion of microenterprise
networks. In the Microenterprise for Self-Reliance Act of 2000,
Congress requested the Administration to prepare a report
assessing the need and structure for an Accelerated Growth Fund
within 180 days of the enactment of the Act. USAID is currently
delinquent in submitting the report, which has prevented the
Committee from properly evaluating proposals to capitalize such
a fund in the reauthorization process. The Committee expects
that the report will be forthcoming in the near future, and
seeks to work with the Administration and the microenterprise
development community to develop and establish an Accelerated
Growth Fund in the future, if appropriate.
The Committee recognizes that credit unions in developing
countries are vital delivery channels for financial services to
the very poor. USAID should continue supporting the approach
used by the World Council of Credit Unions (WOCCU) for the
delivery of microenterprise services. WOCCU's approach builds
safe and sound financial institutions and provides additional
capacity in credit unions to meet members' savings and loans,
microenterprise loans, and education needs. The Committee
intends that the term ``program and lines of service'' shall
include the types of cost-efficient, sustainable programs that
build capacity and reduce poverty, such as those implemented by
the World Council of Credit Unions.
The Committee supports the use of debt financing
instruments for use as loan capital, as microfinance
organizations mature and move away from donor dependence. To
stimulate collaboration with the commercial banking sector and
encourage their participation, government assistance is
necessary. Instruments such as the Development Credit Authority
(DCA) and the Overseas Private Investment Corporation (OPIC)
will stimulate the participation of the private and government
financial sectors in providing resources for economic
development.
Committee Consideration
On April 25, 2002, the Committee on International Relations
marked up the bill, H.R. 4073, pursuant to notice, in open
session. The Committee adopted an amendment in the nature of a
substitute offered by Mr. Smith of New Jersey. The Committee, a
quorum being present, agreed by voice vote to a motion made by
Chairman Hyde to favorably report the bill, as amended, to the
House of Representatives.
Votes of the Committee
There were no recorded votes during the consideration of
the bill.
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
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R.4073, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 1, 2002.
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. 4073, a bill 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.
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,
Dan L. Crippen, Director.
Enclosure
cc:
Honorable Tom Lantos
Ranking Democratic Member
H.R. 4073--A bill 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
SUMMARY
H.R. 4073 would authorize the appropriation of $175 million
in 2003 and $200 million in 2004 for grants and credits to
microenterprise development programs, or programs that would
provide access to financial services to poor persons in
developing countries. The bill would place emphasis on
assistance to persons living within the bottom 50 percent below
a country's poverty line or living on less than the equivalent
of $1 per day. CBO estimates that implementing H.R. 4073 would
cost $328 million over the 2003-2007 period, assuming the
appropriation of the authorized amounts. Because the bill would
not affect direct spending or receipts, pay-as-you-go
procedures would not apply.
H.R. 4073 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. 4073 is shown in the
following table. The estimate assumes this legislation will be
enacted by the beginning of 2003, that the specified amounts
will be appropriated before the start of each fiscal year, and
that outlays will follow historical spending patterns. The
costs of this legislation fall within budget function 150
(international affairs).
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for
Microenterprise Assistance Programs:
Budget Authority \1\.................................. 155 0 0 0 0 0
Estimated Outlays..................................... 131 118 66 34 18 10
Proposed Changes:
Authorization Level................................... 0 175 200 0 0 0
Estimated Outlays..................................... 0 23 91 113 67 34
Spending Under H.R. 4073 for
Microenterprise Assistance Programs:
Authorization Level \1\............................... 155 175 200 0 0 0
Estimated Outlays..................................... 131 141 157 147 85 44
----------------------------------------------------------------------------------------------------------------
\1\ The 2002 level is the amount appropriated for that year.
PAY-AS-YOU-GO CONSIDERATIONS:
None.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 4073 contains no intergovernmental or private-sector
mandates as defined in UMRA and would not affect the budgets of
state, local, or tribal governments.
ESTIMATE PREPARED BY:
Federal Costs: Joseph C. Whitehill (226-2840)
Impact on State, Local, and Tribal Governments: Elyse Goldman
(225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-2940)
ESTIMATE APPROVED BY:
Peter H. Fontaine
Deputy Assistant Director for Budget Analysis
Performance Goals and Objectives
The goals and objectives of this legislation are to amend
the Microenterprise and Self-Reliance Act of 2000 and the
Foreign Assistance Act of 1961 to reauthorize microenterprise
assistance and to make amendments to update language of both
acts concerning rural lending, the provision of financial
services, and the devleopment and application of poverty
measurement tools for the purpose of ensuring U.S.
microenterprise assistance reaches the very poor.
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. Amendments to the Microenterprise for Self-Reliance Act of
2000.
This section amends the Purposes and Definitions
subsections of the act. Specifically, it amends some of the
terminology used in these sections, reflecting developments in
the microenterprise industry. The word ``microentrepreneur'' is
changed to ``microenterprise household,'' a modification
requested by the Microenterprise Coalition and endorsed by
USAID. This section also strikes the term ``microfinance
policy'' and replaces it with ``microenterprise policy.'' This
section strikes the phrase ``poorest of the poor,'' and
replaces it with the phrase ``the very poor,'' which is defined
later in this section. This section adds an additional
subparagraph to the Purposes subsection, one that encourages
USAID ``to develop, assess and implement effective outreach
tools and methods'' to ensure that microenterprise assistance
is used ``to assist the greatest absolute number of
economically viable clients among the very poor, and that at
least 50 percent of all microenterprise assistance'' is used
``in support of programs or lines of service that target the
very poor.'' In the Definitions subsection, ``very poor'' is
defined as ``those persons living either in the bottom 50
percent below the poverty line as established by the national
government of the country, or on less than the equivalent of $1
per day.''
Section 2. Amendments to the Micro- and Small Enterprise Development
Credits Program under the Foreign Assistance Act of 1961.
This section amends Section 108(a) of the FAA to update
terminology by adding the concept of ``financial services.''
Section 108(b) amended to authorize the President ``to provide
assistance to increase the availability of financial services
to microenterprise households lacking full access to credit.''
This section also authorizes the appropriation of $1,500,000
for each of fiscal years 2003 and 2004, the current level for
the program. This section also amends the name of subject
program to the ``Microenterprise Development Credits'' program.
Section 3. Amendments to the Microenterprise Development Grant
Assistance Program under the Foreign Assistance Act of 1961.
This section amends Section 131(a) of the FAA by stressing
the importance of rural development and the access to financial
services. This section also amends Section 131(b) of the FAA by
requiring that ``50 percent of all microenterprise resources
shall be used in support of programs or lines of service under
which 50 percent or more of the incoming or prospective clients
are initially very poor.'' This represents a change from
current law which requires that 50 percent of microenterprise
resources be targeted to ``very poor entrepreneurs.'' This
change is based on the proposition that recipient
microenterprise institutions (as grantees) should demonstrate
ex ante their commitment to reaching out to the ``very poor,''
and that the Administrator should establish special criteria in
accordance with this amendment to ensure that microenterprise
institutions target the ``very poor.''
By establishing this new target that 50 percent of total
funding to go to programs or services that can verify that at
least 50 percent of their incoming clients are very poor, this
section addresses a major shortcoming of existing U.S.
microenterprise programs. The current target that ``50 percent
of Microenterprise Development resources go to the poor''
cannot be measured cost-effectively, and USAID has never made
an attempt to prospectively link this target to grant-making
decisions. The current target is unenforceable and provides
little incentive for USAID or its grantees to find and support
financially-sustainable lines of service that favor the very
poor. In contrast, the target in this section of H.R. 4073 is
both measurable with low-cost methods and enforceable through
linkage to grant-making decisions, and will provide substantial
new incentive for outreach to the very poor.
This section also amends Section 131(c) of the FAA by
requiring the Administrator to ``adopt the widespread use of
proven and effective poverty assessment tools to successfully
identify the very poor and ensure that they receive needed
microenterprise credits, loans and assistance.'' This section
adds a new subsection (d), entitled ``Development and
Certification of Poverty Measurement Methods; Application of
Methods'' which addresses Congressional concerns that USAID and
microenterprise institutions need to find more accurate and
representative methods for measuring the poverty of current and
prospective clients. This new subsection requires the
Administrator of USAID , in consultation with appropriate
microfinance institutions, to ``develop no fewer than two low-
cost methods for measuring the poverty levels of the current or
prospective clients of microenterprise organizations'' and that
the Administrator ``give consideration to methods already in
use by practitioner institutions.'' This subsection requires
the Administrator to field-test the methods developed, and
provides that microenterprise institutions and programs may use
these methods on a voluntary basis to determine their ability
to reach the very poor. This subsection further requires the
Administrator to certify ``no fewer than two of such methods as
approved methods for measuring the poverty levels of the
current or prospective clients of microenterprise
organizations'' no later than October 1, 2004. This section
further requires that beginning on an after October 1, 2004,
assistance furnished to a program or to a line of service
within an institution shall qualify, in whole or in part, as
targeted assistance to the very poor if one or more of the
approved poverty measurement methods ``verifies that at least
50 percent of the incoming or prospective clients of the
program or line of service are initially among the very poor.''
This subsection authorizes assistance in the amount of $175
million for 2003 and $200 million for 2004.
Section 4. Report.
This section requires that the Administrator submit a
report to Congress no later than July 1, 2004, concerning the
development, application, and analysis of interim poverty
measurement methods required under Section 3 above.
New Advisory Committees
H.R. 4073 does not establish or authorize any new advisory
committees.
Congressional Accountability Act
H.R. 4073 does not apply to the legislative branch.
Federal Mandates
H.R. 4073 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):
MICROENTERPRISE FOR SELF-RELIANCE ACT OF 2000
(Public Law 106-309)
* * * * * * *
TITLE I--MICROENTERPRISE FOR SELF-RELIANCE ACT OF 2000
* * * * * * *
SEC. 103. PURPOSES.
The purposes of this title are--
(1) * * *
* * * * * * *
(3) to support and develop the capacity of United
States and indigenous nongovernmental organization
intermediaries to provide credit, savings, training,
technical assistance, and business development services
to [microentrepreneurs] microenterprise households;
(4) to emphasize financial services and
substantially increase the amount of assistance devoted
to both financial services and complementary business
development services designed to reach the poorest
people in developing countries, particularly women;
[and]
(5) to encourage the United States Agency for
International Development to coordinate [microfinance
policy] microenterprise policy, in consultation with
the Department of the Treasury and the Department of
State, and to provide global leadership among bilateral
and multilateral donors in promoting microenterprise
for the [poorest of the poor.] the very poor; and
(6) to encourage the United States Agency for
International Development to develop, assess, and
implement effective outreach methods and tools to
ensure that all microenterprise assistance authorized
under this title, and the amendments made by this
title, is used to assist the greatest absolute number
of economically viable clients among the very poor, and
that at least 50 percent of all microenterprise
assistance authorized under this title, and the
amendments made under this title, is used in support of
programs or lines of service that target the very poor.
SEC. 104. DEFINITIONS.
In this title:
(1) * * *
(2) Microenterprise institution.--The term
``microenterprise institution'' means an institution
that provides services, including microfinance,
training, or business development services, [for
microentrepreneurs] to microentrepreneurs and their
households.
* * * * * * *
(5) Very poor; poorest people in developing
countries.--The terms ``very poor'' and ``poorest
people in developing countries'' mean those persons
living either in the bottom 50 percent below the
poverty line as established by the national government
of the country or on less than the equivalent of $1 per
day.
* * * * * * *
----------
FOREIGN ASSISTANCE ACT OF 1961
* * * * * * *
PART I
Chapter 1--Policy; Development Assistance Authorizations
* * * * * * *
[SEC. 108. MICRO- AND SMALL ENTERPRISE DEVELOPMENT CREDITS.]
SEC. 108. MICROENTERPRISE DEVELOPMENT CREDITS.
(a) Findings and Policy.--Congress finds and declares
that--
(1) * * *
(2) it is, therefore, in the best interests of the
United States to assist [the development of the
enterprises of the poor] the access to financial
services and the development of microenterprises in
developing countries and to engage the United States
private sector in that process.
[(b) Program.--To carry out the policy set forth in
subsection (a), the President is authorized to provide
assistance to increase the availability of credit to micro- and
small enterprises lacking full access to credit, including
through--
[(1) loans and guarantees to credit institutions
for the purpose of expanding the availability of credit
to micro- and small enterprises;
[(2) training programs for lenders in order to
enable them to better meet the credit needs of
microentrepreneurs; and
[(3) training programs for microentrepreneurs in
order to enable them to make better use of credit and
to better manage their enterprises.]
(b) Program.--To carry out the policy set forth in
subsection (a), the President is authorized to provide
assistance to increase the availability of financial services
to microenterprise households lacking full access to credit,
including through--
(1) loans and guarantees to microfinance
institutions for the purpose of expanding the
availability of savings and credit to poor and low-
income households;
(2) training programs for microfinance institutions
in order to enable them to better meet the financial
services needs of their clients; and
(3) training programs for clients in order to
enable them to make better use of credit, increase
their financial literacy, and to better manage their
enterprises.
(c) Eligibility Criteria.--The Administrator of the agency
primarily responsible for administering this part shall
establish criteria for determining which [credit institutions]
microfinance institutions described in subsection (b)(1) are
eligible to carry out activities, with respect to [micro- and
small enterprises] microenterprise households, assisted under
this section. Such criteria may include the following:
(1) The extent to which the recipients of [credit]
financial services from the entity do not have access
to the local formal financial sector.
(2) The extent to which the recipients of [credit]
financial services from the entity are among the
poorest people in the country.
* * * * * * *
(d) Additional Requirement.--Assistance provided under this
section may only be used to support [micro- and small
enterprise programs] programs for microenterprise households
and may not be used to support programs not directly related to
the purposes described in subsection (b).
* * * * * * *
(f ) Availability of Funds.--
(1) In general.--Of the amounts authorized to be
available to carry out section 131, there are
authorized to be available $1,500,000 [for each of
fiscal years 2001 and 2002] for each of fiscal years
2001 through 2004 to carry out this section.
* * * * * * *
SEC. 131. MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE.
[(a) Findings and Policy.--Congress finds and declares
that--
[(1) the development of microenterprise is a vital
factor 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 assist the development of
microenterprises in developing countries; and
[(3) the support of microenterprise can be served
by programs providing credit, savings, training,
technical assistance, and business development
services.]
(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) * * *
* * * * * * *
(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.] used in support of programs or lines of
service under which 50 percent or more of the incoming
or prospective clients are initially very poor.
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 [entrepreneurs]
clients who are very poor, with loans
in 1995 United States dollars of--
(I) * * *
* * * * * * *
(4) Support for central mechanisms.--The President
should continue support for central mechanisms and
missions, as appropriate, that--
(A) * * *
* * * * * * *
(D) support the development of nonprofit
global microfinance networks, including credit
union systems, that--
(i) are able to deliver [very small
loans] 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 [microfinance]
microenterprise retail institutions,
including financing, technical
assistance, capacity-building, and
safety and soundness accreditation.
* * * * * * *
(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) * * *
* * * * * * *
[(4) provides a basis for recommendations for
adjustments to measures for reaching the poorest of the
poor, including proposed legislation containing
amendments to enhance the sustainable development
impact of such assistance, as described in paragraph
(3).]
(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 credits, loans, 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
appropriate microfinance institutions, microenterprise
institutions, and other appropriate entities shall
develop no fewer than two low-cost methods for
measuring the poverty levels of the current or
prospective clients of microenterprise organizations
for purposes of assistance under this section. In
developing such methods, the Administrator shall give
consideration to methods already in use by practitioner
institutions.
(B) The Administrator shall field-test the methods
developed under this paragraph, and as part of the
testing, institutions and programs may use these
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 this paragraph,
certify no fewer than two of such methods as approved
methods for measuring the poverty levels of the current
or prospective clients of microenterprise organizations
for purposes of assistance under this section.
(2) Application.--Beginning on and after October 1,
2004, assistance furnished under this section to a
program or to a line of service within an institution
shall qualify, in whole or in part, as targeted
assistance to the very poor if one or more of the
measurement methods approved under paragraph (1), or
one or more of the measurement methods approved in
accordance with paragraph (1) after October 1, 2004,
verifies that at least 50 percent of the incoming or
prospective clients of the program or line of service
are initially among the very poor.
[(d)] (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.
[(e)] (f) Definitions.--In this section:
(1) * * *
* * * * * * *
(5) Very poor; poorest people in developing
countries.--The terms ``very poor'' and ``poorest
people in developing countries'' mean those persons
living either in the bottom 50 percent below the
poverty line as established by the national government
of the country or on less than the equivalent of $1 per
day.
* * * * * * *