110 HR 6957 IH: Microfinance Capacity-Building Act of U.S. House of Representatives 2008-09-18 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 110th CONGRESS 2d Session H. R. 6957 IN THE HOUSE OF REPRESENTATIVES September 18, 2008 Mr. Boozman (for himself and Mr. Meeks of New York) introduced the following bill; which was referred to the Committee on Foreign Affairs A BILL To amend the Foreign Assistance Act of 1961 to provide funding for capacity-building to microfinance service providers.

1.

Short title

This Act may be cited as the Microfinance Capacity-Building Act of 2008.

2.

Findings and declaration of policy

Congress finds and declares the following: (1)Microfinance is considered one of the great success stories of United States foreign aid because of its ability to reach the poor, especially women, with programs that have a high impact and are highly sustainable. (2)Studies conducted in India, Kenya, and the Philippines found average annual returns on microbusiness investments ranging from 177 to 847 percent, demonstrating the enormous capacity the poor have to work and save their way out of poverty. (3)An estimated 113 million clients are currently being served with microcredit, and the Microcredit Summit Campaign has set a goal of reaching 175 million of the world’s poorest families by 2015. (4)The lack of human capital is widely recognized as the single greatest constraint to the growth of leading microfinance networks and other practitioners providing direct financial services to the poor. (5)According to some industry estimates, in order to meet the anticipated demand for microfinance, the industry will have to hire 1.6 million new loan officers in Africa, Asia, Latin America, and the Near East, assuming a loan officer to client ratio of 1 to 300. (6)Conservative estimates state that $2 billion in private investment capital is currently being leveraged for microfinance. Substantially more could be mobilized and invested in some of the world’s poorest countries but remains untapped due to the lack of institutional capacity and qualified leaders. (7)The lack of human capacity is particularly severe in sub-Saharan Africa due to the relative immaturity of the microfinance industry, a small pool of trained and certified bankers and finance experts, and the prevalence of HIV/AIDS.

3.

Sense of Congress

It is the sense of Congress that the microfinance capacity-building activities supported by subsection (d) of section 252 of the Foreign Assistance Act of 1961 (22 U.S.C. 2211a), as added by section 4 of this Act, is intended to drive innovation and provide comprehensive solutions that address the lack of human capital in developing countries, particularly in sub-Saharan Africa. Such activities should provide a regional and sub-regional approach to maximizing economies of scale and should focus predominately on educating and training African nationals in order to build capacity in the microfinance industry in developing countries, particularly in sub-Saharan African countries.

4.

Capacity-building for microfinance service providers

(a)

In general

Section 252 of the Foreign Assistance Act of 1961 (22 U.S.C. 2211a) is amended by adding at the end the following: (d)

Capacity building for microfinance service providers

(1)

Authorization

In carrying out the programs authorized under subsection (a), the Administrator shall establish a grant program to provide assistance on a non-reimbursable basis to private, non-profit networks of microfinance institutions that provide direct financial services, which may include credit of all types, savings, insurance, remittances and cash transfers, to the poor and very poor in developing countries. (2)

Activities supported

Assistance provided under paragraph (1) shall, to the maximum extent practicable, be used to carry out traditional and nontraditional education and training for individuals working in the microfinance industry in developing countries, particularly in sub-Saharan African countries. Such education and training may include curriculum development, distance learning, job shadowing, mentoring, training of trainers, scholarships for undergraduate and graduate courses, and purchasing and leasing equipment, including software and other technology, to support activities— (A)to improve the effectiveness of institutional governance structures and quality of senior management, including directors, chief executive officers, chief operating officers, chief financial officers, and other senior staff; (B)to strengthen the knowledge and ability of senior and middle managers to establish and implement effective financial and nonfinancial services, including the development and implementation of products and services, risk management, human resources, accounting, process analysis and auditing systems; (C)to improve the technical knowledge and ability of microfinance employees, which may include branch managers, loan officer supervisors, loan officers, tellers, insurance agents, and other field staff, regarding delivery of financial services to clients; (D)to improve the collection and transmission of training, procedures, and best practices among financial institutions and employees; and (E)to identify new staff and ensure the recruitment and retention of trained staff members through the development of incentive programs and educational components. (3)

Eligibility

To be eligible for assistance under paragraph (1), a network of microfinance institutions described in paragraph (1) shall— (A)deliver direct financial services to the poor and very poor in at least five developing countries through a network of local microfinance institutions that are owned or formally affiliated and accredited by the network in accordance with its financial and social performance standards; (B)operate as a private nonprofit organization; and (C)agree to match, in cash contributions from non-federal sources and on a 2 dollar-to-1 dollar basis, the amount of the grant provided to the network under paragraph (1). (4)

Considerations

In making a determination to provide assistance under paragraph (1), the Administrator shall ensure that participating networks of microfinance institutions include— (A)not less than 50 percent women in the activities supported under this subsection; and (B)100 percent individuals from developing countries in the activities supported under this subsection. (5)

Preference

In making a determination to provide assistance under paragraph (1), the Administrator shall give preference to networks of microfinance institutions that promote the inclusion of women in senior management positions. (6)

Reporting and evaluation

(A)The Administrator, acting through the Director, shall establish a reporting and evaluation system to assess the effectiveness of recipient microfinance institutions in carrying out activities under paragraph (2). (B)A recipient microfinance institution shall report on the number of (i) individuals educated and trained, (ii) certificates awarded, (iii) university credit units awarded, (iv) degrees awarded, and (v) education and training curriculum units created. (C)Data reported by recipient microfinance institutions under clauses (i) through (iv) of subparagraph (B) shall be disaggregated by sex, country of origin, country of employment, and job title or position held. (7)

Authorization of appropriations

(A)

In general

To carry out this subsection, there are authorized to be appropriated— (i)$6,000,000 for fiscal year 2009; (ii)$12,000,000 for fiscal year 2010; (iii)$15,000,000 for fiscal year 2011; (iv)$12,000,000 for fiscal year 2012; and (v)$5,000,000 for fiscal year 2013. (B)

Minimum allocation

Not less than 60 percent of the funds appropriated pursuant to the authorization of appropriations under subparagraph (A) for a fiscal year shall be used to support capacity-building activities in sub-Saharan Africa. . (b)

Conforming amendment

Such section is further amended in the heading by adding at the end before the period the following: ; capacity building for microfinance service providers in sub-Saharan Africa.