[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 3027 Considered and Passed Senate (CPS)]







108th CONGRESS
  2d Session
                                S. 3027

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 SENATE OF THE UNITED STATES

                           November 20, 2004

 Mr. DeWine (for himself, Mr. Sarbanes, Ms. Mikulski, Mr. Smith, Mrs. 
Clinton, Mr. Allen, Mr. Corzine, Mr. Hagel, and Mr. Durbin) introduced 
                the following bill; which was read twice

            November 21 (legislative day, November 20), 2004

              Considered, read the third time, and passed

_______________________________________________________________________

                                 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 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.

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) 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. AVAILABILITY OF FUNDS; ADDITIONAL AUTHORITIES.

    ``(1) 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.''.

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 ``for each of fiscal years 
                        2001 through 2004'' and inserting ``for fiscal 
                        year 2005 and such sums as may be necessary for 
                        each of the fiscal years 2006 through 2009''.

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 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, up to $5,000,000 for fiscal year 2005 and 
                such sums as may be necessary for each of the fiscal 
                years 2006 through 2009,''; 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 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).''.

SEC. 7. SENSE OF CONGRESS.

    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.

SEC. 8. 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. 9. 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.
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