[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3818 Enrolled Bill (ENR)]
H.R.3818
One Hundred Eighth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twentieth day of January, two thousand and four
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,

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This Act may be cited as the ``Microenterprise Results and
Accountability Act of 2004''.

970383ab987513ba7f6cecfa7a85bcd7e8a0615b2bf10b7e555a26cf3ae0aec6

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.

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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.''.

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(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''.

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(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).

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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).''.

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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.

c32fb9b2b84e50565aeb48e809313914527de34fbc5013949305d440a7e8cf13

(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''.

ea2542fa48d6012d1ad607ed73c96855c5832342348f2ae9be993944449a9ec3

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.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

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Microenterprise Results and Accountability Act of 2004 — HR. 3818

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