[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1129 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1129

To establish a program to provide assistance for programs of credit and 
other assistance for microenterprises in developing countries, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 19, 1997

   Mr. Houghton (for himself, Mr. Hall of Ohio, Mr. Dan Schaefer of 
    Colorado, Mr. Torres, Mr. Greenwood, Mr. Filner, Mr. Walsh, Mr. 
 Abercrombie, Mr. Hulshof, Mr. Andrews, Mr. Boehlert, Mr. Meehan, Mrs. 
Morella, Mr. Moran of Virginia, Mr. Payne, Mr. Blumenauer, Mr. Dellums, 
Ms. Rivers, Mr. Brown of Ohio, Mrs. Clayton, Mr. Barrett of Wisconsin, 
 Mr. Vento, Mr. LaFalce, Mrs. Tauscher, Mr. Levin, and Mr. McDermott) 
 introduced the following bill; which was referred to the Committee on 
                        International Relations

_______________________________________________________________________

                                 A BILL


 
To establish a program to provide assistance for programs of credit and 
other assistance for microenterprises in developing countries, 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 ``Microcredit for Self-Reliance Act of 
1997''.

SEC. 2. FINDINGS AND DECLARATIONS OF POLICY.

    The Congress makes the following findings and declarations:
            (1) More than 1,000,000,000 people in the developing world 
        are living in severe poverty.
            (2) According to the United Nations Children's Fund 
        (UNICEF), mortality for children under the age of 5 averages 
        100 child deaths per thousand for all developing countries, 
        with nearly double that rate in the poorest countries.
            (3) Nearly 35,000 children die each day from largely 
        preventable malnutrition and disease.
            (4)(A) Women in poverty generally have larger work loads, 
        and less access to educational and economic opportunities than 
        their male counterparts.
            (B) Directly aiding the poorest of the poor, especially 
        women, in the developing world has a positive effect not only 
        on family incomes, but also on child nutrition, health and 
        education, as women in particular reinvest income in their 
        families.
            (5)(A) The poor in the developing world, particularly 
        women, generally lack stable employment and social safety nets.
            (B) Many turn to self-employment to generate a substantial 
        portion of their livelihood.
            (C) These poor entrepreneurs are often trapped in poverty 
        because they cannot obtain credit at reasonable rates to build 
        their asset base or expand their otherwise viable self-
        employment activities.
            (D) Many of the poor are forced to pay interest rates as 
        high as 10 percent per day to money lenders.
            (6)(A) On February 2-4, 1997, a global microcredit summit 
        was held in Washington, District of Columbia, to launch a plan 
        to expand access to credit for self-employment and other 
        financial and business services to 100,000,000 of the world's 
        poorest families, especially the women of those families, by 
        2005.
            (B) With five to a family, achieving this goal will mean 
        that the benefits of microcredit will thereby reach nearly half 
        of the world's more than 1,000,000,000 absolute poor.
            (7)(A) The poor are able to expand their incomes and their 
        businesses dramatically when they can access loans at 
        reasonable interest rates.
            (B) Through the development of self-sustaining microcredit 
        programs, poor people themselves can lead the fight against 
        hunger and poverty.
            (8)(A) Nongovernmental organizations such as the Grameen 
        Bank, Accion International, and the Foundation for 
        International Community Assistance (FINCA) have been successful 
        in lending directly to the very poor.
            (B) These institutions generate repayment rates averaging 
        95 percent or higher, demonstrating the bankability of the 
        poorest.
            (C) International organizations such as the International 
        Foundation for Agricultural Development (IFAD) and the United 
        Nations Development Program (UNDP) have demonstrated success in 
        supporting microcredit programs.
            (9)(A) Microcredit institutions not only reduce poverty, 
        but also reduce the dependency on foreign assistance.
            (B) Interest income on a credit portfolio can be used to 
        pay recurring institutional costs, assuring the long-term 
        sustainability of development assistance.
            (10) Microcredit institutions leverage foreign assistance 
        resources because loans are recycled, generating new benefits 
        to program participants.
            (11) The development of sustainable microcredit 
        institutions which provide credit and training, and mobilize 
        domestic savings, are critical components to a global strategy 
        of poverty reduction and broad based economic development.
            (12)(A) In 1994, the United States Agency for International 
        Development launched a microenterprise initiative in 
        partnership with the Congress.
            (B) The initiative committed to expanding funding for the 
        microenterprise programs of the Agency, and set a goal that, by 
        the end of fiscal year 1996, half of all microenterprise 
        resources would support programs and institutions providing 
        credit to the poorest, with loans under $300.
            (C) In order to achieve the goal of the microcredit summit, 
        increased investment in microcredit institutions serving the 
        poorest will be critical.
            (13) Providing the United States share of the global 
        investment needed to achieve the goal of the microcredit summit 
        will require only a small increase in United States funding for 
        international microcredit programs, with an increased focus on 
        institutions serving the poorest.
            (14)(A) In order to reach tens of millions of the poorest 
        with microcredit, it is crucial to expand and replicate 
        successful microcredit institutions.
            (B) These institutions need assistance in developing their 
        institutional capacity to expand their services and tap 
        commercial sources of capital.
            (15) Nongovernmental organizations have demonstrated 
        competence in developing networks of local microcredit 
        institutions so that they reach large numbers of the very poor, 
        and achieve financial sustainability.
            (16) Recognizing that the United States Agency for 
        International Development has developed very effective 
        partnerships with nongovernmental organizations, and that the 
        Agency will have fewer missions to carry out its work, the 
        Agency should place priority on investing in these 
        nongovernmental network institutions through the central 
        funding mechanisms of the Agency.
            (17) By expanding and replicating successful microcredit 
        institutions, it should be possible to create a global 
        infrastructure to provide financial services to the world's 
        poorest families.
            (18)(A) The United States Agency for International 
        Development can provide leadership to other bilateral and 
        multilateral development agencies as such agencies expand their 
        support to the microenterprise sector.
            (B) The United States Agency for International Development 
        should seek to improve coordination of donor efforts at the 
        operational level to promote the use of best practices in the 
        provision of financial services to the poor and to ensure that 
        adequate institutional capacity is developed.
            (19) Through expanded support for microcredit, especially 
        credit for the poorest, the United States Agency for 
        International Development can continue to play a leadership 
        role in the global effort to expand financial services and 
        opportunity to 100,000,000 of the poorest families on the 
        planet.

SEC. 3. MICROENTERPRISE DEVELOPMENT ASSISTANCE.

    (a) Purposes.--The purposes of this section are--
            (1) to provide for the continuation and expansion of the 
        commitment of the United States Agency for International 
        Development to the development of microenterprise institutions;
            (2) to make microenterprise development the centerpiece of 
        the overall economic growth strategy of the United States 
        Agency for International Development;
            (3) to support and develop the capacity of United States 
        and indigenous nongovernmental organization intermediaries to 
        provide credit, savings, and training services to 
        microentrepreneurs;
            (4) to increase the amount of assistance devoted to credit 
        activities designed to reach the poorest sector in developing 
        countries, and to improve the access of the poorest, 
        particularly women, to microenterprise credit in developing 
        countries; and
            (5) to encourage the United States Agency for International 
        Development to provide global leadership in promoting 
        microenterprise for the poorest among bilateral and 
        multilateral donors.
    (b) Authorization.--(1) The President, acting through the 
Administrator of the United States Agency for International 
Development, is authorized to provide assistance for programs of credit 
and other assistance for microenterprises in developing countries.
    (2) Microenterprise credit and related activities assisted under 
this section shall be carried out primarily through United States and 
indigenous nongovernmental organizations and United States and 
indigenous credit unions, cooperative organizations, and other private 
financial intermediaries, that have the capacity to develop and to 
implement microenterprise programs, and that are oriented toward 
working directly with the poor, especially women.
    (c) Eligibility Criteria.--The Administrator of the United States 
Agency for International Development shall establish criteria for 
determining which entities described in subsection (b)(2) are eligible 
to carry out activities assisted under this section. Such criteria 
shall include the following:
            (1) The extent to which the recipients of credit from the 
        entity do not have access to the local formal financial sector.
            (2) The extent to which the recipients of credit from the 
        entity are among the poorest people in the country.
            (3) The extent to which the entity is oriented toward 
        working directly with poor women.
            (4) The extent to which the entity recovers its cost of 
        lending to the poor.
            (5) The extent to which the entity implements a plan to 
        become financially sustainable.
    (d) Funding Levels for Fiscal Years 1998 and 1999.--
            (1) In general.--Of the amounts made available to carry out 
        chapter 1 of part I of the Foreign Assistance Act of 1961 (22 
        U.S.C. 2151 et seq.)--
                    (A) not less than $170,000,000 for fiscal year 1998 
                shall be made available for assistance under this 
                section; and
                    (B) not less than $180,000,000 for fiscal year 1999 
                shall be made available for assistance under this 
                section.
            (2) Additional requirements.--(A) Of the amounts made 
        available under each of subparagraphs (A) and (B) of paragraph 
        (1) for fiscal years 1998 and 1999, not less than $85,000,000 
        for fiscal year 1998 and not less than $90,000,000 for fiscal 
        year 1999 shall be used to support poverty lending as defined 
        in paragraph (3).
            (B) Of the amounts made available under each of 
        subparagraphs (A) and (B) of paragraph (1) for fiscal years 
        1998 and 1999, not less than $50,000,000 of such amounts for 
        each such fiscal year shall be provided through the central 
        mechanisms of the United States Agency for International 
        Development for support of United States and indigenous 
        nongovernmental organizations.
            (3) Definitions.--(A) For purposes of this subsection, the 
        term ``to support poverty lending'' means--
                    (i) funds lent to members of the poverty target 
                population (as defined in subparagraph (B)) within low-
                income countries in amounts equivalent to $300 or less 
                in 1997 United States dollars; and
                    (ii) funds used for institutional development of an 
                entity described in subsection (b)(2), which is engaged 
                in making loans of $300 or less in 1997 United States 
                dollars to members of the poverty target population (as 
                defined in subparagraph (B)) or the portion of a mixed 
                program which makes such loans.
            (B) The term ``poverty target population'' means the 
        poorest 50 percent of those individuals living below the 
        poverty line, defined by the national government of the foreign 
        country.

SEC. 4. PROGRAM PERFORMANCE CRITERIA.

    (a) Strengthening of Appropriate Mechanisms.--The Administrator of 
the United States Agency for International Development shall strengthen 
appropriate mechanisms, including mechanisms for central 
microenterprise programs, for the purpose of strengthening the 
institutional development of the entities described in section 3(b)(2).
    (b) Monitoring System.--In order to maximize the sustainable 
development impact of the assistance authorized under section 3, the 
Administrator of the United States Agency for International Development 
shall establish a monitoring system that--
            (1) establishes performance goals for such assistance and 
        expresses such goals in an objective and quantifiable form;
            (2) establishes performance systems or indicators to 
        measure the extent to which projects are achieving such goals; 
        and
            (3) provides a basis for recommendations for adjustments to 
        such assistance to enhance the sustainable development impact 
        of such assistance on the very poor, particularly women.
    (c) Additional Monitoring Requirements.--As a part of the 
monitoring system established under subsection (b), the Administrator 
of the United States Agency for International Development--
            (1) using data provided by lending institutions, shall 
        monitor the actual amount of microenterprise credit and number 
        of loans made available to the poverty target population as a 
        result of each project or program carried out pursuant to this 
        Act;
            (2) using data provided by lending institutions, shall 
        monitor the amount of funding provided pursuant to this Act 
        which is allocated to organizations engaged in making loans of 
        under $300 to the poverty target population, or to the poverty 
        lending portion of mixed programs;
            (3) shall report annually on the compliance of United 
        States Agency for International Development missions with the 
        microenterprise initiative described in section 2(12); and
            (4) shall include a summary of the information collected 
        under paragraphs (1) and (2) in the annual congressional 
        presentation document of the United States Agency for 
        International Development to the Congress.

SEC. 5. CONTRIBUTIONS TO THE INTERNATIONAL FUND FOR AGRICULTURAL 
              DEVELOPMENT.

    (a) Findings.--The Congress finds the following:
            (1)(A) The International Fund for Agricultural Development 
        (``IFAD'') has as its mission serving the poorest of the poor 
        in rural areas.
            (B) IFAD has had two decades of experience in assisting the 
        economic development of the rural poor.
            (2) IFAD has been a significant supporter of 
        microenterprise and other microfinance activities for the rural 
        poor almost since its inception and it was the first 
        international institution to assist the Grameen Bank.
            (3) IFAD can make a significant contribution to developing 
        a global network of sustainable microenterprise and other 
        microfinance institutions which serve the very poor through 
        support for nongovernmental organizations and other community 
        based microcredit institutions.
    (b) United States Contributions to IFAD.--
            (1) In general.--(A) There are authorized to be 
        appropriated $20,000,000 for each of the fiscal years 1998 and 
        1999 for United States contributions to the International Fund 
        for Agricultural Development for the purpose of establishing 
        and carrying out a special initiative to provide grants to 
        nongovernmental organizations and other private community-based 
        microenterprise institutions serving the very poor, especially 
        women.
            (B) Funds authorized to be appropriated under subparagraph 
        (A) are in addition to amounts otherwise available for such 
        purposes.
            (2) Additional requirements.--(A) Amounts contributed to 
        IFAD under paragraph (1) shall be available only for the 
        following:
                    (i) Loans to members of the poverty target 
                population (as defined in section 3(d)(3)(B)) within 
                low-income countries in amounts equivalent to $300 of 
                less in 1997 United States Dollars.
                    (ii) The institutional development of financial 
                intermediaries that primarily or exclusively make loans 
                to members of the poverty target population (as defined 
                in section 3(d)(3)(B)) in amounts equivalent to $300 or 
                less in 1997 United States Dollars, or for training of 
                such borrowers.
            (B) Microenterprise credit and related activities assisted 
        under this section shall be carried out primarily through 
        nongovernmental organizations, credit unions, cooperative 
        organizations, and other private financial intermediaries, that 
        have the capacity to develop and to implement microenterprise 
        programs, and that are oriented toward working directly with 
        the poor and women.
    (c) Other Contributions to IFAD.--The President shall urge other 
donor nations to the International Fund for Agricultural Development to 
support and contribute to the microenterprise and microfinance 
activities of the Fund (as described in subsection (b)).

SEC. 6. UNITED NATIONS DEVELOPMENT PROGRAM'S MICROSTART PROGRAM.

    It is the sense of the Congress that--
            (1) the Microstart Program established by the United 
        Nations Development Program (UNDP) represents an important new 
        initiative; and
            (2) the President should instruct the United States 
        representative to the United Nations to use the voice and vote 
        of the United States to support the Microstart Program of the 
        United Nations Development Program.
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