[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1143 Engrossed in House (EH)]
1st Session
H. R. 1143
_______________________________________________________________________
AN ACT
To establish a program to provide assistance for programs of credit and
other financial services for microenterprises in developing countries,
and for other purposes.
106th CONGRESS
1st Session
H. R. 1143
_______________________________________________________________________
AN ACT
To establish a program to provide assistance for programs of credit and
other financial services 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 ``Microenterprise for Self-Reliance
Act of 1999''.
SEC. 2. FINDINGS AND DECLARATIONS OF POLICY.
The Congress makes the following findings and declarations:
(1) According to the World Bank, more than 1,200,000,000
people in the developing world, or one-fifth of the world's
population, subsist on less than $1 a day.
(2) Over 32,000 of their children die each day from largely
preventable malnutrition and disease.
(3)(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.
(4)(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. In Africa, over 80 percent of
employment is generated in the informal sector of the self-
employed poor.
(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.
(5)(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 microfinance
programs, poor people themselves can lead the fight against
hunger and poverty.
(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 an average family size of five, achieving this
goal will mean that the benefits of microfinance will thereby
reach nearly half of the world's more than 1,000,000,000
absolute poor people.
(7)(A) Nongovernmental organizations, such as those that
comprise the Microenterprise Coalition (such as the Grameen
Bank (Bangladesh,) K-REP (Kenya), and networks such as Accion
International, the Foundation for International Community
Assistance (FINCA), and the credit union movement) are
successful in lending directly to the very poor.
(B) Microfinance institutions such as BRAC (Bangladesh),
BancoSol (Bolivia), SEWA Bank (India), and ACEP (Senegal) are
regulated financial institutions that can raise funds directly
from the local and international capital markets.
(8)(A) Microenterprise institutions not only reduce
poverty, but also reduce the dependency on foreign assistance.
(B) Interest income on the credit portfolio is used to pay
recurring institutional costs, assuring the long-term
sustainability of development assistance.
(9) Microfinance institutions leverage foreign assistance
resources because loans are recycled, generating new benefits
to program participants.
(10)(A) The development of sustainable microfinance
institutions that provide credit and training, and mobilize
domestic savings, are critical components to a global strategy
of poverty reduction and broad-based economic development.
(B) In the efforts of the United States to lead the
development of a new global financial architecture,
microenterprise should play a vital role. The recent shocks to
international financial markets demonstrate how the financial
sector can shape the destiny of nations. Microfinance can serve
as a powerful tool for building a more inclusive financial
sector which serves the broad majority of the world's
population including the very poor and women and thus generate
more social stability and prosperity.
(C) Over the last two decades, the United States has been a
global leader in promoting the global microenterprise sector,
primarily through its development assistance programs at the
United States Agency for International Development.
Additionally, the United States Department of the Treasury and
the Department of State have used their authority to promote
microenterprise in the development programs of international
financial institutions and the United Nations.
(11)(A) In 1994, the United States Agency for International
Development launched the ``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 that provide
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.
(12) 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.
(13)(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.
(14) Nongovernmental organizations have demonstrated
competence in developing networks of local microfinance
institutions and other assistance delivery mechanisms so that
they reach large numbers of the very poor, and achieve
financial sustainability.
(15) 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 those
nongovernmental network institutions that meet performance
criteria through the central funding mechanisms of the Agency.
(16) 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.
(17)(A) The United States can provide leadership to other
bilateral and multilateral development agencies as such
agencies expand their support to the microenterprise sector.
(B) The United States should seek to improve coordination
among G-7 countries in the support of the microenterprise
sector in order to leverage the investment of the United States
with that of other donor nations.
(18) Through increased support for microenterprise,
especially credit for the poorest, the United States 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. PURPOSES.
The purposes of this Act are--
(1) to make microenterprise development an important
element of United States foreign economic policy and
assistance;
(2) to provide for the continuation and expansion of the
commitment of the United States Agency for International
Development to the development of microenterprise institutions
as outlined in its 1994 Microenterprise Initiative;
(3) to support and develop the capacity of United States
and indigenous nongovernmental organization intermediaries to
provide credit, savings, training and technical 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 coordinate microfinance policy, in consultation
with the Department of the Treasury and the Department of
State, and to provide global leadership in promoting
microenterprise for the poorest among bilateral and
multilateral donors.
SEC. 4. MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE.
Chapter 1 of part I of the Foreign Assistance Act of 1961 (22
U.S.C. 2151 et seq.) is amended--
(1) by redesignating the second section 129 (as added by
section 4 of the Torture Victims Relief Act of 1998 (Public Law
105-320)) as section 130; and
(2) by adding at the end the following new section:
``SEC. 131. MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE.
``(a) Findings and Policy.--The 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, and technical
assistance.
``(b) Authorization.--(1) In carrying out this part, the President
is authorized to provide grant assistance for programs to increase the
availability of credit and other services to microenterprises lacking
full access to capital and training through--
``(A) grants to microfinance institutions for the purpose
of expanding the availability of credit, savings, and other
financial services to microentrepreneurs;
``(B) training, technical assistance, and other support for
microenterprises to enable them to make better use of credit,
to better manage their enterprises, and to increase their
income and build their assets;
``(C) capacity building for microfinance institutions in
order to enable them to better meet the credit and training
needs of microentrepreneurs; and
``(D) policy and regulatory programs at the country level
that improve the environment for microfinance institutions that
serve the poor and very poor.
``(2) Assistance authorized under paragraph (1) shall be provided
through organizations that have a capacity to develop and implement
microenterprise programs, including particularly--
``(A) United States and indigenous private and voluntary
organizations;
``(B) United States and indigenous credit unions and
cooperative organizations;
``(C) other indigenous governmental and nongovernmental
organizations; or
``(D) business development services, including indigenous
craft programs.
``(3) In carrying out sustainable poverty-focused programs under
paragraph (1), 50 percent of all microenterprise resources shall be
used for direct support of programs under this subsection through
practitioner institutions that provide credit and other financial
services to the poorest with loans of $300 or less in 1995 United
States dollars and can cover their costs of credit programs with
revenue from lending activities or that demonstrate the capacity to do
so in a reasonable time period.
``(4) The President should continue support for central mechanisms
and missions that--
``(A) provide technical support for field missions;
``(B) strengthen the institutional development of the
intermediary organizations described in paragraph (2);
``(C) share information relating to the provision of
assistance authorized under paragraph (1) between such field
missions and intermediary organizations; and
``(D) support the development of nonprofit global
microfinance networks, including credit union systems, that--
``(i) are able to deliver very small loans through
a vast grassroots infrastructure based on market
principles; and
``(ii) act as wholesale intermediaries providing a
range of services to microfinance retail institutions,
including financing, technical assistance, capacity
building and safety and soundness accreditation.
``(5) Assistance provided under this subsection may only be used to
support microenterprise programs and may not be used to support
programs not directly related to the purposes described in paragraph
(1).
``(c) Monitoring System.--In order to maximize the sustainable
development impact of the assistance authorized under subsection
(a)(1), 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, to
the extent feasible;
``(2) establishes performance indicators to be used in
measuring or assessing the achievement of the goals and
objectives of such assistance;
``(3) provides a basis for recommendations for adjustments
to such assistance to enhance the sustainable development
impact of such assistance, particularly the impact of such
assistance on the very poor, particularly poor women; and
``(4) provides a basis for recommendations for adjustments
to measures for reaching the poorest of the poor, including
proposed legislation containing amendments to improve paragraph (3).
``(d) Authorization of Appropriations.--
``(1) In general.--(A) There are authorized to be
appropriated $152,000,000 for fiscal year 2000 and $167,000,000
for fiscal year 2001 to carry out this section.
``(B) Amounts appropriated pursuant to the authorization of
appropriations under subparagraph (A) are authorized to remain
available until expended.
``(2) Rule of construction.--Amounts authorized to be
appropriated under paragraph (1) are in addition to amounts
otherwise available to carry out this section.''.
SEC. 5. MICRO- AND SMALL ENTERPRISE DEVELOPMENT CREDITS.
Section 108 of the Foreign Assistance Act of 1961 (22 U.S.C. 2151f)
is amended to read as follows:
``SEC. 108. MICRO- AND SMALL ENTERPRISE DEVELOPMENT CREDITS.
``(a) Findings and Policy.--The Congress finds and declares that--
``(1) the development of micro- and small enterprises are a
vital factor in the stable growth of de- veloping countries and
in the development and stability of a free, open, and equitable
international economic system; and
``(2) it is, therefore, in the best interests of the United
States to assist the development of the enterprises of the poor
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.
``(c) Eligibility Criteria.--The Administrator of the United States
Agency for International Development shall establish criteria for
determining which entities described in subsection (b) are eligible to
carry out activities, with respect to micro- and small enterprises,
assisted under this section. Such criteria may 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) Additional Requirement.--Assistance provided under this
section may only be used to support micro- and small enterprise
programs and may not be used to support programs not directly related
to the purposes described in subsection (b).
``(e) Authorization of Appropriations.--
``(1) In general.--(A) There are authorized to be
appropriated $1,500,000 for each of the fiscal years 2000 and
2001 to carry out this section.
``(B) Amounts authorized to be appropriated under
subparagraph (A) shall be made available for the subsidy cost,
as defined in section 502(5) of the Federal Credit Reform Act
of 1990, for activities under this section.
``(2) Administrative expenses.--There are authorized to be
appropriated $500,000 for each of the fiscal years 2000 and
2001 for the cost of administrative expenses in carrying out
this section.
``(3) Rule of construction.--Amounts authorized to be
appropriated under this subsection are in addition to amounts
otherwise available to carry out this section.''.
SEC. 6. MICROFINANCE LOAN FACILITY.
Chapter 1 of part I of the Foreign Assistance Act of 1961 (22
U.S.C. 2151 et seq.), as amended by this Act, is further amended by
adding the following new section:
``SEC. 132. UNITED STATES MICROFINANCE LOAN FACILITY.
``(a) Establishment.--The Administrator of the United States Agency
for International Development is authorized to establish a United
States Microfinance Loan Facility (hereinafter in this section referred
to as the `Facility') to pool and manage the risk from natural
disasters, war or civil conflict, national financial crisis, or short-
term financial movements that threaten the long-term development of
United States-supported microfinance institutions.
``(b) Supervisory Board of the Facility.--(1) The Facility shall be
supervised by a board composed of the following representatives
appointed by the President not later than 180 days after the date of
the enactment of Microenterprise for Self-Reliance Act of 1999:
``(A) one representative from the Department of the
Treasury.
``(B) one representative from the Department of State.
``(C) one representative from the United States Agency for
International Development.
``(D)(i) two United States citizens from United States
nongovernmental organizations that operate United States-
sponsored microfinance activities.
``(ii) Individuals described in clause (i) shall be
appointed for a term of 2 years.
``(2) The Administrator of the United States Agency for
International Development or his designee shall serve as Chairman and
an additional voting member of the board.
``(c) Disbursements.--(1) The board shall make disbursements from
the Facility to United States-sponsored microfinance institutions to
prevent the bankruptcy of such institutions caused by: (A) natural
disasters, (B) national wars or civil conflict, or (C) national
financial crisis or other short term financial movements that threaten
the long-term development of United States-supported microfinance
institutions. Such disbursements shall be made as concessional loans
that are repaid maintaining the real value of the loan to microfinance
institutions that demonstrate the capacity to resume self-sustained
operations within a reasonable time period. The Facility shall provide
for loan losses with each loan disbursed.
``(2) During each of the fiscal years 2001 and 2002, funds may not
be made available from the Facility until 15 days after notification of
the availability has been provided to the congressional committees
specified in section 634A of this Act in accordance with the procedures
applicable to reprogramming notifications under that section.
``(d) General Provisions.--
``(1) Policy provisions.--In providing the credit
assistance authorized by this section, the board should apply,
as appropriate, the policy provisions in this part applicable
to development assistance activities.
``(2) Default and procurement provisions.--
``(A) Default provision.--The provisions of section
620(q) of this Act, or any comparable provisions of
law, shall not be construed to prohibit assistance to a
country in the event that a private sector recipient of
assistance furnished under this section is in default
in its payment to the United States for the period
specified in such section.
``(B) Procurement provision.--Assistance may be
provided under this section without regard to section
604(a) of this Act.
``(3) Terms and conditions of credit assistance.--(A)
Credit assistance provided under this section shall be offered
on such terms and conditions, including fees charged, as the
board may determine.
``(B) The principal amount of loans made or guaranteed
under this section in any fiscal year, with respect to any
single borrower, may not exceed $30,000,000.
``(C) No payment may be made under any guarantee issued
under this section for any loss arising out of fraud or
misrepresentation for which the party seeking payment is
responsible.
``(4) Full faith and credit.--All guarantees issued under
this section shall constitute obligations, in accordance with
the terms of such guarantees, of the United States of America
and the full faith and credit of the United States of America
is hereby pledged for the full payment and performance of such
obligations to the extent of the guarantee.
``(e) Report.--Not later than 60 days after the date on which the
last representative to the board is appointed pursuant to subsection
(b), the chairman of the board shall prepare and submit to the
appropriate congressional committees a report on the policies, rules,
and regulations of the Facility.
``(f) Funding.--(1)(A) Of the amounts made available to carry out
this part for each of the fiscal years 2000 and 2001, up to $5,000,000
may be made available for--
``(i) the subsidy cost, as defined in section 502(5) of the
Federal Credit Reform Act of 1990, to carry out this section;
and
``(ii) subject to subparagraph (B), the cost of
administrative expenses to carry out this section.
``(B) Of the amount made available under subparagraph (A) to carry
out this section for a fiscal year, not more than $500,000 may be made
available for administrative expenses under subparagraph (A)(ii).
``(2) Amounts made available under paragraph (1) are in addition to
amounts available under any other provision of law to carry out this
section.
``(g) Definitions.--In this section:
``(1) 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.
``(2) United states-supported microfinance institution.--
The term `United States-supported microfinance institution'
means a financial intermediary that has received funds made
available under this Act for fiscal year 1980 or any subsequent
fiscal year.''.
SEC. 7. REPORT RELATING TO FUTURE DEVELOPMENT OF MICROFINANCE
INSTITUTIONS.
(a) Report.--Not later than 180 days after the date of the
enactment of this Act, the President, in consultation with the
Administrator of the United States Agency for International
Development, the Secretary of State, and the Secretary of the Treasury,
shall prepare and transmit to the appropriate congressional committees
a report on the most cost-effective methods for increasing the access
of poor people to credit, other financial services, and related
training.
(b) Contents.--The report described in subsection (a)--
(1) should include how the President, in consultation with
the Administrator of the United States Agency for International
Development, the Secretary of State, and the Secretary of the
Treasury, will jointly develop a comprehensive strategy for
advancing the global microenterprise sector in a way that
maintains market principles while assuring that the very poor,
particularly women, obtain access to financial services; and
(2) shall provide guidelines and recommendations for--
(A) instruments to assist microenterprise networks
to develop multi-country and regional microlending
programs;
(B) technical assistance to foreign governments,
foreign central banks and regulatory entities to
improve the policy environment for microfinance
institutions, and to strengthen the capacity of
supervisory bodies to supervise microcredit
institutions;
(C) the potential for federal chartering of United
States-based international microfinance network
institutions, including proposed legislation;
(D) instruments to increase investor confidence in
microcredit institutions which would strengthen the
long-term financial position of the microcredit
institutions and attract capital from private sector
entities and individuals, such as a rating system for
microcredit institutions and local credit bureaus;
(E) an agenda for integrating microfinance into
United States foreign policy initiatives seeking to
develop and strengthen the global finance sector; and
(F) innovative instruments to attract funds from
the capital markets, such as instruments for leveraging
funds from the local commercial banking sector, and the
securitization of microloan portfolios.
(c) Appropriate Congressional Committees Defined.--In this section,
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.
SEC. 8. UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT AS GLOBAL
LEADER AND COORDINATOR OF BILATERAL AND MULTILATERAL
MICROENTERPRISE ASSISTANCE ACTIVITIES.
(a) Findings and Policy.--The Congress finds and declares that--
(1) the United States can provide leadership to other
bilateral and multilateral development agencies as such
agencies expand their support to the microenterprise sector;
and
(2) the United States should seek to improve coordination
among G-7 countries in the support of the microenterprise
sector in order to leverage the investment of the United States
with that of other donor nations.
(b) Sense of the Congress.--It is the sense of the Congress that--
(1) the Administrator of the United States Agency for
International Development and the Secretary of State should
seek to support and strengthen the effectiveness of
microfinance activities in United Nations agencies, such as the
International Fund for Agricultural Development (IFAD) and the
United Nations Development Program (UNDP), which have provided
key leadership in developing the microenterprise sector; and
(2) the Secretary of the Treasury should instruct each
United States Executive Director of the Multilateral
Development Banks (MDBs) to advocate the development of a
coherent and coordinated strategy to support the
microenterprise sector and an increase of multilateral resource
flows for the purposes of building microenterprise retail and
wholesale intermediaries.
Passed the House of Representatives April 13, 1999.
Attest:
Clerk.