[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 2027 Introduced in Senate (IS)]
112th CONGRESS
1st Session
S. 2027
To improve microfinance and microenterprise, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 17, 2011
Mr. Bennet (for himself and Mr. Boozman) introduced the following bill;
which was read twice and referred to the Committee on Foreign Relations
_______________________________________________________________________
A BILL
To improve microfinance and microenterprise, 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 ``Microfinance and Microenterprise
Enhancement Act of 2011''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) A growing body of research shows that, where markets
are inclusive and income gaps are relatively small, growth
translates into poverty reduction much more quickly,
efficiently, and sustainably.
(2) Microenterprises, including smallholder and pastoral
farms, are important actors in most developing economies and
contribute significantly to employment generation, food
security, and family financial stability.
(3) Microfinance institutions and providers have played an
increasingly important role in enabling micro-entrepreneurs to
graduate from extreme poverty to sustainable living patterns
through financial services such as micro-credit, savings, and
micro-insurance, as well as skills development, business
mentoring, value-chain linkages, and facilitation of producer
groups.
(4) Congress has demonstrated its support for
microenterprise development assistance programs through the
enactment of three comprehensive microenterprise laws. Support
for microenterprise and microfinance remains a key tenet of
foreign assistance programs under the Foreign Assistance Act of
1961 (22 U.S.C. 2151 et seq.), including pursuant to the
following Acts:
(A) The Microenterprise for Self-Reliance Act of
2000 (title I of Public Law 106-309; 114 Stat. 1079).
(B) Public Law 108-31 (117 Stat. 775).
(C) The Microenterprise Results and Accountability
Act of 2004 (Public Law 108-484; 118 Stat. 3922).
(5) Microcredit alone is insufficient to sustainably reduce
poverty and facilitate inclusive economic growth. In addition
to access to credit, poor households need savings tools to
build assets, mitigate risks, increase social capital, enhance
skills, and integrate into competitive, growing value-chains,
as well as to access good-quality health and education
services.
(6) Over the last three decades, the United States Agency
for International Development has made microenterprise
development an important feature of its programming and has
continually sought to enhance the positive impact of
investments on poor households. In fiscal year 2010, the United
States Agency for International Development provided not less
than $262,000,000 in funding for microenterprise development in
at least 64 countries through at least 145 diverse implementing
partners, including private voluntary organizations,
nongovernmental organizations, banks and enterprise development
service providers, benefitting over 1,600,000
microentrepreneurs and 1,900,000 savers.
(7) New approaches are essential to keep pace with global
technology, not only to alleviate poverty, but also to
sustainably reduce poverty by linking poor households to
economic opportunities so that they can contribute to and
benefit from economic growth in their countries.
(8) Public funding for microfinance and microenterprise
should be available to benefit the poor in all countries, and,
in particular, among countries with a high concentration of the
very poor.
SEC. 3. SENSE OF CONGRESS ON TARGETED AND EFFECTIVE PROGRAMMING.
It is the sense of Congress that the United States Agency for
International Development should continue and expand programming in
microfinance that adheres to the following principles and basic
considerations:
(1) The United States Agency for International Development
should advance access to economic opportunities for very poor
and vulnerable populations, including orphans and vulnerable
children, single mothers, those affected by HIV/AIDS, those
affected by regional conflict, and the food insecure to ensure
that the poorest are included and benefit from broad-based
economic growth.
(2) To the greatest extent possible, the United States
Agency for International Development should set clear country
or regional funding targets based on greatest need, as
evidenced by poverty indicators and should strive to fill a gap
in unmet demand by the very poor for financial services.
(3) The United States Agency for International Development
should place special emphasis on aiding poor women, who
constitute a substantial portion of microentrepreneurs and who
face a wide range of disadvantages, as a means of promoting
financial self-reliance, empowering gender equality, including
land rights and access, and bringing a host of development
benefits to families through improved nutrition, health, and
education.
(4) The United States Agency for International Development
should ensure that providers of financial services benefitting
from United States Agency for International Development
assistance adhere to client protection principles, such as the
Client Protection Principles of the ``Smart Campaign'', and
take concrete steps to protect clients from potentially harmful
financial products and to support equitable and fair treatment,
including--
(A) avoidance of over-indebtedness;
(B) transparent and responsible pricing;
(C) appropriate collection practices;
(D) mechanisms for redress of grievances; and
(E) privacy of client data.
(5) The United States Agency for International Development
should encourage providers of financial services benefitting
from assistance programs to provide cost-effective services and
make steady progress toward full financial sustainability as a
means to achieve large-scale impact and institutional
viability, while also maintaining focus on their target
population of poor micro-entrepreneurs and smallholder farmers.
(6) The United States Agency for International Development
should strive to increase access to financial services to poor
and very poor, rural, and other underserved populations by
supporting a diverse range of financial intermediaries,
including nongovernmental organizations and private and state-
owned banks; postal and savings banks and savings and credit
cooperatives; voluntary savings associations; member-owned
community organizations; and other non-bank intermediaries,
such as mobile network operators, finance, and insurance
companies.
(7) The United States Agency for International Development
should promote and make use of existing technologies that show
promise for lowering costs, managing risks, and rapidly scaling
up access to financial products and services, including mobile
phones, smart phones, tablets, point-of-sale devices linked to
smart cards, automatic teller machines (ATMs), geographic
information system (GIS) mapping, and cloud computing, among
other information and communication technologies (ICT).
(8) The United States Agency for International Development
should make efforts to identify and support smaller, community-
led partner organizations, including local collectives and
consortia.
SEC. 4. SENSE OF CONGRESS ON EXPANDED INTEGRATED APPROACHES.
It is the sense of Congress that the next generation of programming
in microfinance and microenterprise development should advance
holistic, integrated strategies that focus on the myriad financial and
non-financial needs, including nutrition, health, and education, of
households, as well as the functioning of enterprises, markets, and
their inter-relationships in the economy.
SEC. 5. HOUSEHOLD-BASED APPROACHES.
(a) Responsive Financial Services.--The Administrator of the United
States Agency for International Development shall promote responsive
financial services to meet the diverse needs of poor households for
cash flow management and asset accumulation by supporting the
development of savings, remittances, and money transfer services.
(b) Consumption Smoothing, Risk Aggregation, and Mitigation.--The
Administrator of the United States Agency for International Development
shall promote tools that aggregate risks, mitigate shocks, and smooth
consumption, such as insurance and savings deposit services, so that
the poor can better manage, cope with, and recover from expected and
unexpected income fluctuations and crises like family emergencies and
crop failures.
(c) Partners.--The Administrator of the United States Agency for
International Development shall identify and support partners that
support informal savings-led and asset building approaches to
microfinance, including organizations that work to provide linkages
between savings-led groups to institutions in the formal financial
sector.
(d) Social Protection Programs.--Because some people are too poor
or otherwise unable to make use of microfinance or microenterprise
development services without special assistance to prepare them for
participation, the Administrator of the United States Agency for
International Development should identify and support organizations
that link social protection programs, including food assistance, cash
or asset transfers, life and livelihood skills development, and health
and nutrition education, with microfinance services, savings services,
and business development services. Such linkages should attempt to
enable poor people to stabilize food consumption, survive extreme
poverty, develop sustainable livelihoods, and take advantage of
economic opportunities.
SEC. 6. ENTERPRISE AND MARKET-BASED APPROACHES.
(a) Interventions.--The Administrator of the United States Agency
for International Development shall align household-level interventions
for the poor with interventions that catalyze more inclusive markets
and link the poor to expanding economic opportunities.
(b) Development of Financial Products.--The Administrator of the
United States Agency for International Development shall support the
development of a range of financial products adapted to the needs of
enterprises, including working capital for inputs, labor, and
production services; long-term asset finance; and agriculture, animal
husbandry, and rural enterprise loans. Such products should be provided
through a diversity of financing schemes, including financiers along
the value chain such as input suppliers, traders, and processors.
(c) Support for Agriculture Specific Tools.--The Administrator of
the United States Agency for International Development shall support
microfinance institutions and providers that are using agriculture-
specific tools, including--
(1) household profiling, crop analysis, and land mapping;
(2) diversification of loan portfolio to include a variety
of sectors and crops;
(3) linkages to extension and formal financial services;
and
(4) linking farmers to clients and larger supply chains.
(d) Linked Approaches.--To ensure that the poor are not left out of
economic growth strategies, the Administrator of the United States
Agency for International Development shall focus investments on linking
microenterprises into global, regional, and local value chains where
they have a comparative advantage. The Agency should consider issues
such as the business enabling environment, market competitiveness,
inter-firm cooperation, firm-level upgrading, and the relationships
between firms that create incentives or disincentives for investing in
improved performance or upgrading.
(e) Support for Small- and Medium-Sized Enterprises.--The
Administrator of the United States Agency for International Development
should consider support for small- and medium-sized enterprises as a
means to improve productivity and competitiveness in key subsectors in
which large numbers of poor micro-entrepreneurs participate, as well as
to strengthen the channels, such as employment, by which the benefits
of growth are transmitted to the poor.
SEC. 7. MEASURING AND REPORTING RESULTS.
(a) Modification of Poverty Assessment Tools.--The Administrator of
the United States Agency for International Development shall modify the
Poverty Assessment Tools (PATs) of the Agency so that partner
organizations can use them for expanded data management purposes.
(b) Alternatives to Poverty Assessment Tools.--Notwithstanding any
other provision of law, not later than one year after the date of the
enactment of this Act, the Administrator of the United States Agency
for International Development shall identify and approve alternatives
to the Poverty Assessment Tools, such as those commonly used within the
industry and development community.
SEC. 8. FINANCIAL ACCESS AND MICROENTERPRISE INNOVATION FUND.
(a) Establishment.--The Administrator of the United States Agency
for International Development is authorized to utilize one percent of
the Agency's development assistance account budget for fiscal years
2013 through 2017 for the creation of a financial access and
microenterprise innovation challenge fund.
(b) Use of Fund.--The fund established under this section shall be
used to--
(1) identify, test, and support cost-effective and
innovative products and technologies that improve the delivery
of financial services to the poor and very poor, particularly
in rural locations;
(2) identify, test, and support new microfinance and
microenterprise products, services, and delivery systems that
show potential to become cost-effective at large scale; and
(3) help transition such methods and technologies to
widespread adoption.
(c) Grants.--The financial access and microenterprise innovation
challenge fund shall make grants to organizations and companies,
including those interested in eventual commercialization. Where
appropriate, grants should reward or require recipients to
substantially invest their own funds. The mechanisms may include
challenge grants that require recipients to match grant funds with
their own funds in minimum ratios and bounties for achievement of
targets, such as the number of poor customers reached.
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