[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3818 Introduced in House (IH)]






108th CONGRESS
  2d Session
                                H. R. 3818

To amend the Foreign Assistance Act of 1961 to improve the results and 
accountability of microenterprise development assistance programs, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 24, 2004

    Mr. Smith of New Jersey (for himself, Mr. Hyde, Mr. Lantos, Mr. 
Rohrabacher, Mr. Bell, Mr. Green of Texas, Ms. Ros-Lehtinen, Mr. Payne, 
Mr. Pitts, Ms. Harris, Mr. Dicks, Mr. Sanders, Mr. Smith of Washington, 
  Mr. Baird, Mr. Faleomavaega, and Mr. Brown of Ohio) introduced the 
 following bill; which was referred to the Committee on International 
                               Relations

_______________________________________________________________________

                                 A BILL


 
To amend the Foreign Assistance Act of 1961 to improve the results and 
accountability of microenterprise development assistance programs, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

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

SEC. 2. FINDINGS AND POLICY.

    Congress finds and declares the following:
            (1) Congress has demonstrated its support for 
        microenterprise development assistance programs through the 
        enactment of two comprehensive microenterprise laws:
                    (A) The Microenterprise for Self-Reliance Act of 
                2000 (title I of Public Law 106-309; 114 Stat. 1082).
                    (B) Public Law 108-31 (an Act entitled ``An Act to 
                amend the Microenterprise for Self-Reliance Act of 2000 
                and the Foreign Assistance Act of 1961 to increase 
                assistance for the poorest people in developing 
                countries under microenterprise assistance program 
                under those Acts, and for other purposes'', approved 
                June 17, 2003).
            (2) The United States Agency for International Development, 
        the agency responsible for implementing microenterprise 
        development assistance programs authorized under sections 108 
        and 131 of the Foreign Assistance Act of 1961 (22 U.S.C. 2151f 
        and 2152a), is not presently organized to adequately 
        coordinate, implement, and monitor such programs, as evidenced 
        by the late submission by the Agency of the report required by 
        section 108 of the Microenterprise for Self-Reliance Act of 
        2000.
            (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) Although studies and academic analyses funded 
                by the United States Agency for International 
                Development have found that microenterprise activities 
                generally serve the poor clustered around the poverty 
                line, few loans appear to be reaching the very poor.
                    (C) Microenterprise development assistance programs 
                of the United States Agency for International 
                Development have encouraged women's participation in 
                microfinance projects and, according to data of the 
                Agency, women have comprised two-thirds or more of the 
                micro-loan clients in Agency-funded microenterprise 
                projects since 1997.
            (5)(A) The Comptroller General's report recommends that the 
        Administrator of the United States Agency for International 
        Development review the Agency's ``microenterprise results 
        reporting'' system with the goal of ensuring that its annual 
        reporting is complete and accurate.
            (B) Specifically, the Administrator should review and 
        reconsider the methodologies used for the collection, analysis, 
        and reporting of data on annual spending targets, outreach to 
        the very poor, sustainability of microfinance institutions, and 
        the contribution of Agency's funding to the institutions it 
        supports.

SEC. 3. MICROENTERPRISE DEVELOPMENT ASSISTANCE.

     Chapter 2 of part I of the Foreign Assistance Act of 1961 (22 
U.S.C. 2166 et seq.) is amended by inserting after title V the 
following new title:

           ``TITLE VI--MICROENTERPRISE DEVELOPMENT ASSISTANCE

``SEC. 251. FINDINGS AND POLICY.

    ``Congress finds and declares the following:
            ``(1) Access to financial services and the development of 
        microenterprise are vital factors in the stable growth of 
        developing countries and in the development of free, open, and 
        equitable international economic systems.
            ``(2) It is therefore in the best interest of the United 
        States to facilitate access to financial services and assist 
        the development of microenterprise in developing countries.
            ``(3) Access to financial services and the development of 
        microenterprises can be supported by programs providing credit, 
        savings, training, technical assistance, business development 
        services, and other financial services.
            ``(4) Given the relatively high percentage of populations 
        living in rural areas of developing countries, and the combined 
        high incidence of poverty in rural areas and growing income 
        inequality between rural and urban markets, microenterprise 
        programs should target both rural and urban poor.
            ``(5) Microenteprise programs have been successful and 
        should continue to empower vulnerable women in the developing 
        world. Such programs should take into account the risks faced 
        by women who are potential victims of severe forms of 
        trafficking and the need for assistance for women who become 
        victims of severe forms 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).

``SEC. 252. AUTHORIZATION; IMPLEMENTATION; TARGETED ASSISTANCE.

    ``(a) Authorization.--The President is authorized to provide 
assistance on a grant basis for programs in developing countries to 
increase the availability of credit, savings, and other services to 
microenterprises lacking full access to capital, training, technical 
assistance, and business development services, through--
            ``(1) grants to microfinance institutions for the purpose 
        of expanding the availability of credit, savings, and other 
        financial services to microentreprise clients;
            ``(2) grants to microenterprise institutions 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, 
        and to increase their income and build their assets;
            ``(3) capacity-building for microenterprise institutions in 
        order to enable them to better meet the credit, savings, and 
        training needs of microentreprise clients; and
            ``(4) policy and regulatory programs at the country level 
        that improve the environment for microentreprise clients and 
        microenterprise institutions that serve the poor and very poor.
    ``(b) Implementation.--
            ``(1) Office of microenterprise development.--
                    ``(A) Establishment.--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.
                    ``(B) Duties.--The Office shall coordinate and be 
                responsible for the provision of assistance under this 
                title.
            ``(2) Assistance through grants to eligible 
        organizations.--Assistance under subsection (a) shall be 
        provided through grants executed, approved, or reviewed by the 
        Office to eligible implementing partner organizations that have 
        a capacity to develop and implement microenterprise programs.
            ``(3) Review and approval.--With respect to assistance 
        under subsection (a) that is furnished through field missions 
        of the Agency, the Office shall be responsible for--
                    ``(A) reviewing or approving each grant agreement 
                prior to obligation of funds under the agreement in 
                order to ensure that activities to be carried out using 
                such funds are efficacious, technically sound, and 
                suitable for the economic and security climate of the 
                country or region where the activities will be 
                conducted; and
                    ``(B) approving microenterprise development 
                components of strategic plans of missions, bureaus, and 
                offices of the Agency.
    ``(c) Targeted Assistance.--In carrying out sustainable poverty-
focused programs under subsection (a), 50 percent of all 
microenterprise resources shall be targeted to very poor clients, 
defined as those individuals living in the bottom 50 percent below the 
poverty line as established by the national government of the country. 
Specifically, 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.
    ``(d) Support for Central Mechanisms.--The Administrator should 
increase the use of central mechanisms through microenterprise, 
microfinance, and practitioner institutions in the implementation of 
this title.

``SEC. 253. MONITORING SYSTEM.

    ``(a) Establishment.--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 establish a monitoring system that meets the requirements of 
subsection (b).
    ``(b) Requirements.--The requirements referred to in subsection (a) 
are the following:
            ``(1) The monitoring system establishes performance goals 
        for the assistance and expresses such goals in an objective and 
        quantifiable form, to the extent feasible.
            ``(2) The monitoring system establishes 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 eligible implementing partner organizations to 
        use to assess the poverty levels of their current 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 October 1, 2004, 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 or prospective clients of 
        microenterprise institutions for purposes of assistance under 
        section 252.
    ``(b) Application.--The Administrator shall require that, with 
reasonable exceptions, all eligible implementing partner organizations 
applying for microenterprise assistance under this title use one of the 
certified methods, beginning not later than October 1, 2005, to 
determine and report the poverty levels of current or prospective 
clients.

``SEC. 255. AUTHORIZATION OF APPROPRIATIONS; ADDITIONAL AUTHORITIES.

    ``(a) Authorization of Appropriations.--There are authorized to be 
appropriated to the President to carry out this subtitle $200,000,000 
for fiscal year 2005 and such sums as may be necessary for fiscal year 
2006.
    ``(b) Additional Authorities.--(1) Amounts appropriated pursuant to 
the authorization of appropriations under subsection (a)--
            ``(A) may be referred to as the `Microenterprise 
        Development Assistance Account';
            ``(B) shall be allocated to the Office, and upon approval 
        by the Director of the Office, may be reallocated to field 
        missions of the Agency in furtherance of the purposes of this 
        title;
            ``(C) are authorized to remain available until expended; 
        and
            ``(D) are in addition to amounts otherwise available for 
        such purposes.
    ``(2) 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 (9) of subsection (b) of such section with respect to such 
assistance.''.

SEC. 4. MICROENTERPRISE DEVELOPMENT CREDITS.

    (a) Transfer.--Section 108 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2151f) is hereby--
            (1) transferred from chapter 1 of part I of the Foreign 
        Assistance Act of 1961 to title VI of chapter 2 of part I of 
        such Act (as added by section 3 of this Act); and
            (2) inserted after section 255 of the Foreign Assistance 
        Act of 1961.
    (b) Redesignation.--Title VI of chapter 2 of part I of the Foreign 
Assistance Act of 1961 is amended by redesignating section 108 (as 
added by subsection (a)) as section 256.
    (c) Conforming Amendments.--Title VI of chapter 2 of part I of the 
Foreign Assistance Act of 1961 is amended--
            (1) by inserting after the title heading the following:

                   ``Subtitle A--Grant Assistance'';

            (2) by inserting after section 255 the following:

                   ``Subtitle B--Credit Assistance'';

        and
            (3) in section 256 (as redesignated by subsection (b))--
                    (A) in the matter preceding paragraph (1) of 
                subsection (c), by striking ``Administrator of the 
                agency primarily responsible for administering this 
                part'' and inserting ``Administrator of the Agency''; 
                and
                    (B) in subsection (f)(1)--
                            (i) by striking ``section 131'' and 
                        inserting ``this part''; and
                            (ii) by striking ``2001 through 2004'' and 
                        inserting ``2005 and 2006''.

SEC. 5. UNITED STATES MICROFINANCE LOAN FACILITY.

    (a) Transfer.--Section 132 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2152b) is hereby--
            (1) transferred from chapter 1 of part I of the Foreign 
        Assistance Act of 1961 to title VI of chapter 2 of part I of 
        such Act (as added by section 3 of this Act); and
            (2) inserted after section 256 of the Foreign Assistance 
        Act of 1961 (as added by section 4 of this Act).
    (b) Redesignation.--Title VI of chapter 2 of part I of the Foreign 
Assistance Act of 1961 is amended by redesignating section 132 (as 
added by subsection (a)) as section 257.
    (c) Conforming Amendments.--Title VI of chapter 2 of part I of the 
Foreign Assistance Act of 1961 is amended--
            (1) by inserting after section 256 the following:

       ``Subtitle C--United States Microfinance Loan Facility'';

        and
            (2) in section 257 (as redesignated by subsection (b))--
                    (A) in subsection (b)(3), by striking ``2001 and 
                2002'' and inserting ``2005 and 2006'';
                    (B) in the matter preceding subparagraph (A) of 
                subsection (d)(1), by striking ``the fiscal year 2001'' 
                and inserting ``each of the fiscal years 2005 and 
                2006''; and
                    (C) by striking subsection (e).

SEC. 6. MISCELLANEOUS PROVISIONS.

    Title VI of chapter 2 of part I of the Foreign Assistance Act of 
1961 (as added by section 3 of this Act and amended by sections 4 and 5 
of this Act) is further amended by adding at the end the following new 
subtitle:

                 ``Subtitle D--Miscellaneous Provisions

``SEC. 258. REPORT.

    ``(a) In General.--Not later than December 31, 2005, and each 
December 31 thereafter, the Administrator of the Agency 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 provided under section 252, with 
        a listing of--
                    ``(A) the amount of each grant;
                    ``(B) the name of each implementing partner 
                organization; and
                    ``(C) a listing of the number of countries 
                receiving assistance authorized by sections 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 absolute number of the very poor reached with 
        assistance furnished 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) An estimate of the percentage of beneficiaries of 
        assistance under this title who are women, including, to the 
        extent practicable, the percentage of these women who have been 
        victims of sex trafficking, as well as information on efforts 
        to provide assistance under this title to women who have been 
        victims of severe forms of trafficking or who were previously 
        involved in prostitution.
            ``(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.
    ``(c) Limitation.--The content of the report required by this 
section shall be produced by the Office established under section 
252(b)(1), and shall be made available for free electronic distribution 
through such Office.

``SEC. 259. DEFINITION.

    ``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) Eligible implementing partner organization.--The term 
        `eligible 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 microentreprise 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 microentreprise 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 microentreprise 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.''.

SEC. 7. REPEALS.

    (a) Foreign Assistance Act of 1961.--Section 131 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2152a) is hereby repealed.
    (b) Public Law 108-31.--
            (1) In general.--Section 4 of Public Law 108-31 (22 U.S.C. 
        2151f note) is amended by striking subsection (b).
            (2) Conforming amendment.--Section 4 of Public Law 108-31 
        is amended by striking ``(a)'' and all that follows through 
        ``Not later'' and inserting ``Not later''.

SEC. 8. REFERENCES.

    Any reference in a law, regulation, agreement, or other document of 
the United States to section 108, 131, or 132 of the Foreign Assistance 
Act of 1961 shall be deemed to be a reference to subtitle B of title VI 
of chapter 2 of part I of the Foreign Assistance Act of 1961, subtitle 
A of title VI of chapter 2 of part I of such Act, or subtitle C of 
title VI of chapter 2 of part I of such Act, respectively.
                                 <all>