[Congressional Record Volume 145, Number 109 (Thursday, July 29, 1999)]
[Senate]
[Pages S9756-S9758]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DeWine (for himself, Ms. Snowe, Mr. Torricelli, Ms. 
        Collins, Mr. Durbin, Mrs. Feinstein, Ms. Mikulski, Mr. Schumer, 
        Mr. Bingaman, Mr. Chafee, and Mr. Kennedy):
  S. 1463. A bill to establish a program to provide assistance for 
programs of credit and other financial services for microenterprises in 
developing countries, and for other purposes; to the Committee on 
Foreign Relations.


             Micro-Enterprise for Self Reliance Act of 1999

  Mr. DeWINE. Mr. President, I rise today to introduce legislation that 
would ensure the future success of international micro-enterprise grant 
and loan programs. Many members of Congress have seen the success of 
micro-enterprise programs around the world. These programs reach the 
poorest of the poor with small loans to help them work their way out of 
poverty. These have proven to be very worthwhile and successful 
programs administered worldwide by the U.S. Agency for International 
Development (USAID).
  Unlike other assistance programs, we do not give funds away. Instead, 
we lend these funds to people once considered credit risks. The record 
of these programs boasts a client repayment rate of between 95% to 98%. 
Micro-enterprise programs are proof that with access to credit, the 
poor can and do better their lives while repaying their loans.
  To ensure the future of these programs and provide continued hope to 
others seeking to build out of poverty, I introduce today the Micro-
Enterprise for Self Reliance Act of 1999. I am pleased to be 
introducing the legislation along with Senators Snowe, Torricelli, 
Collins, Durbin, Feinstein, Mikulski, Schumer, Bingaman, Chafee and 
Kennedy. This bill would strengthen the foundations of these programs 
to ensure their survival and provide the mechanisms necessary for their 
continued success as financial institutions. First, it would provide 
grant assistance to micro-enterprise programs to increase availability 
of credit and other services. We also target half of all micro-
enterprise resources to support programs that serve the poorest of the 
poor with loans of $300 or less. This is a key provision of the bill 
and would give strong direction to USAID to work with sections of 
society that respond best to micro-lending programs.
  Second, this bill would authorize credits to micro-lending programs. 
These credits generally are used to expand already successful programs. 
Further, we seek to guarantee these programs' survival by establishing 
a facility to help rescue micro-lending institutions that are imperiled 
by war, currency movements or natural disasters. The facility would 
provide for loans to successful institutions to help them get back on 
their feet.
  Finally, we are interested in encouraging the future development and 
stability of these programs. Our bill calls for a report by USAID that 
would recommend other steps that could be taken to further the 
development of micro-lending institutions such as networks, 
regulations, a federal charter, financial instruments and coordination 
with multilateral institutions.
  We believe that this investment in micro-enterprise programs now will 
reduce the need for foreign assistance in the future. Congress now has 
the chance to ensure the future of these very successful programs, and 
help provide a sense of hope and a future of possibilities for the poor 
in developing countries. I thank my fellow cosponsors for their support 
for this legislation and look forward to working with them to gain 
congressional approval.
  Mr. President, I ask unanimous consent that the text of the Micro-
Enterprise for Self-Reliance Act be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1463

       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

[[Page S9757]]

     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. While this scale of outreach may not be achievable in 
     this short-time frame, the realization of this goal could 
     dramatically alter the face of global poverty.
       (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

[[Page S9758]]

     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 developing 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) 1 representative from the Department of the Treasury.
       ``(B) 1 representative from the Department of State.
       ``(C) 1 representative from the United States Agency for 
     International Development.
       ``(D)(i) 2 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) 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.
       ``(e) Funding.--
       ``(1) Availability of funds to cover subsidy costs.--Of the 
     funds made available to carry out this part for fiscal years 
     2000 and 2001, up to $5,000,000 may be made available to 
     cover the subsidy cost (as defined in section 502(5) of the 
     Federal Credit Reform Act of 1990) to carry out this section 
     for each such fiscal year. In addition, of such amount for 
     each fiscal year, up to $______________