[House Report 115-718]
[From the U.S. Government Publishing Office]


115th Congress   }                                    {         Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                    {        115-718

======================================================================



 
     WOMEN'S ENTREPRENEURSHIP AND ECONOMIC EMPOWERMENT ACT OF 2018

                                _______
                                

  June 8, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Royce of California, from the Committee on Foreign Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 5480]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Foreign Affairs, to whom was referred the 
bill (H.R. 5480) to improve programs and activities relating to 
women's entrepreneurship and economic empowerment that are 
carried out by the United States Agency for International 
Development, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
The Amendment....................................................     2
Summary and Purpose..............................................     7
Background and Need for the Legislation..........................     8
Hearings.........................................................    12
Committee Consideration..........................................    12
Committee Oversight Findings.....................................    13
New Budget Authority, Tax Expenditures, and Federal Mandates.....    13
Congressional Budget Office Cost Estimate........................    13
Directed Rule Making.............................................    14
Non-Duplication of Federal Programs..............................    14
Performance Goals and Objectives.................................    14
Congressional Accountability Act.................................    15
New Advisory Committees..........................................    15
Earmark Identification...........................................    15
Section-by-Section Analysis......................................    15
Changes in Existing Law Made by the Bill, as Reported............    16

                             The Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Women's Entrepreneurship and Economic 
Empowerment Act of 2018''.

SEC. 2. FINDINGS.

  Congress finds the following:
          (1) Because women make up the majority of the world's poor 
        and gender inequalities prevail in incomes, wages, access to 
        finance, ownership of assets, and control over the allocation 
        of resources, women's entrepreneurship and economic empowerment 
        is important to achieve inclusive economic growth at all levels 
        of society. Research shows that when women exert greater 
        influence over household finances, economic outcomes for 
        families improve, and childhood survival rates, food security, 
        and educational attainment increase. Women also tend to place a 
        greater emphasis on household savings which improves families' 
        financial resiliency.
          (2) A 2016 report by the McKinsey Global Institute estimated 
        that achieving global gender parity in economic activity could 
        add as much as $28 trillion to annual global gross domestic 
        product (GDP) by 2025.
          (3) Lack of access to financial services that address gender-
        specific constraints impedes women's economic inclusion. More 
        than one billion women around the world are currently left out 
        of the formal financial system, which in turn causes many women 
        to rely on informal means of saving and borrowing that are 
        riskier and less reliable. Among other consequences, this 
        hampers the success of women entrepreneurs, including those 
        seeking to run or grow small and medium-sized enterprises 
        (SMEs). The International Finance Corporation has estimated 
        that 70 percent of women-owned SMEs in the formal sector are 
        unserved or underserved in terms of access to credit, amounting 
        to a $285 billion credit gap.
          (4) Women's economic empowerment is inextricably linked to a 
        myriad of other women's human rights that are essential to 
        their ability to thrive as economic actors across the 
        lifecycle. This includes, but is not limited to, living lives 
        free of violence and exploitation, achieving the highest 
        possible standard of health and well-being, enjoying full legal 
        and human rights such as access to registration, 
        identification, and citizenship documents, benefitting from 
        formal and informal education, and equal protection of and 
        access to land and property rights, access to fundamental labor 
        rights, policies to address disproportionate care burdens, and 
        business and management skills and leadership opportunities.
          (5) Discriminatory legal and regulatory systems and banking 
        practices are hurdles to women's access to capital and assets, 
        including land, machinery, production facilities, technology, 
        and human resources. Often, these barriers are connected to a 
        woman's marital status, which can determine whether she is able 
        to inherit land or own property in her name. These constraints 
        contribute to women frequently running smaller businesses, with 
        fewer employees and lower asset values.
          (6) Savings groups primarily comprised of women are 
        recognized as a vital entry point, especially for poor and very 
        poor women, to formal financial services and there is a high 
        demand for such groups to protect and grow their savings with 
        formal financial institutions. Evidence shows that, once linked 
        to a bank, the average savings per member increases between 40 
        to 100 percent and the average profit per member doubles. Key 
        to these outcomes is investing in financial literacy, business 
        leadership training, and mentorship.
          (7) United States support for microenterprise and 
        microfinance development programs, which seek to reduce poverty 
        in low-income countries by giving small loans to small-scale 
        entrepreneurs without collateral, have been a useful mechanism 
        to help families weather economic shocks, but many microcredit 
        borrowers largely remain in poverty. The vast majority of 
        microcredit borrowers are women who would like to move up the 
        economic ladder but are held back by binding constraints that 
        create a ``missing middle''-large numbers of microenterprises, 
        a handful of large firms or conglomerates, and very few SMEs in 
        between, which are critical to driving economic growth in 
        developing countries.
          (8) According to the World Bank, SMEs create 4 out of 5 new 
        positions in emerging markets but about half of formal SMEs 
        don't have access to formal credit. The financing gap is even 
        larger when micro and informal enterprises are taken into 
        account. Overall, approximately 70 percent of all micro, small 
        and medium-sized enterprises (MSMEs) in emerging markets lack 
        access to credit.

SEC. 3. ACTIONS TO IMPROVE GENDER POLICIES OF THE UNITED STATES AGENCY 
                    FOR INTERNATIONAL DEVELOPMENT.

  (a) Development Cooperation Policy.--It shall be the development 
cooperation policy of the United States--
          (1) to reduce gender disparities in access to, control over, 
        and benefit from economic, social, political, and cultural 
        resources, wealth, opportunities, and services;
          (2) to strive to eliminate gender-based violence and mitigate 
        its harmful effects on individuals and communities through 
        efforts to develop standards and capacity to reduce gender-
        based violence in the workplace and other places where women 
        conduct work;
          (3) to support activities that secure private property rights 
        and land tenure for women in developing countries, including 
        legal frameworks to give women equal rights to own, register, 
        use, profit from, and inherit land and property, legal literacy 
        to exercise these rights, and capacity of law enforcement and 
        community leaders to enforce such rights; and
          (4) to increase the capability of women and girls to realize 
        their rights, determine their life outcomes, assume leadership 
        roles, and influence decision-making in households, 
        communities, and societies.
  (b) Actions.--In order to advance the policy described in subsection 
(a), the Administrator of the United States Agency for International 
Development shall ensure that--
          (1) strategies, projects, and activities of the Agency are 
        shaped by a gender analysis and, when applicable, use standard 
        indicators to provide one measure of success of such 
        strategies, projects, and activities; and
          (2) gender equality and female empowerment is integrated 
        throughout the Agency's Program Cycle and related processes for 
        purposes of strategic planning, project design and 
        implementation, and monitoring and evaluation.
  (c) Gender Analysis Defined.--In this section, the term ``gender 
analysis''--
          (1) means a socio-economic analysis of available or gathered 
        quantitative and qualitative information to identify, 
        understand, and explain gaps between men and women which 
        typically involves examining--
                  (A) differences in the status of women and men and 
                their differential access to and control over assets, 
                resources, opportunities, and services;
                  (B) the influence of gender roles, structural 
                barriers, and norms on the division of time between 
                paid employment, unpaid work (including subsistence 
                production and care for family members), and volunteer 
                activities;
                  (C) the influence of gender roles, structural 
                barriers, and norms on leadership roles and decision 
                making; constraints, opportunities, and entry points 
                for narrowing gender gaps and empowering women; and
                  (D) potential differential impacts of development 
                policies and programs on men and women, including 
                unintended or negative consequences; and
          (2) includes conclusions and recommendations to enable 
        development policies and programs to narrow gender gaps and 
        improve the lives of women and girls.

SEC. 4. DEVELOPMENT ASSISTANCE FOR MICRO, SMALL AND MEDIUM-SIZED 
                    ENTERPRISES.

  (a) Findings and Policy.--Section 251 of the Foreign Assistance Act 
of 1961 (22 U.S.C. 2211) is amended--
          (1) in paragraph (1)--
                  (A) by striking ``microenterprise'' and inserting 
                ``micro, small and medium-sized enterprise'';
                  (B) by striking ``and in the development'' and 
                inserting ``, in the development''; and
                  (C) by adding at the end before the period the 
                following: ``, and in the economic empowerment of the 
                poor, especially women'';
          (2) in paragraph (2)--
                  (A) by striking ``microenterprise'' and inserting 
                ``micro, small and medium-sized enterprise''; and
                  (B) by adding at the end before the period the 
                following: ``, particularly those enterprises owned, 
                managed, and controlled by women'';
          (3) in paragraph (3), by striking ``microenterprises'' and 
        inserting ``micro, small and medium-sized enterprises'';
          (4) in paragraph (4), by striking ``microenterprise'' and 
        inserting ``micro, small and medium-sized enterprise'';
          (5) in paragraph (5)--
                  (A) by striking ``should continue'' and inserting 
                ``should continue and be expanded''; and
                  (B) by striking ``microenterprise and microfinance 
                development assistance'' and inserting ``development 
                assistance for micro, small and medium-sized 
                enterprises''; and
          (6) in paragraph (6)--
                  (A) by striking ``have been successful'' and 
                inserting ``have had some success'';
                  (B) by striking ``microenterprise programs'' and 
                inserting ``development assistance for micro, small and 
                medium-sized enterprises''; and
                  (C) by striking ``, such as countries in Latin 
                America''.
  (b) Authorization; Implementation; Targeted Assistance.--Section 252 
of the Foreign Assistance Act of 1961 (22 U.S.C. 2211a) is amended as 
follows:
          (1) In subsection (a)--
                  (A) in the matter preceding paragraph (1)--
                          (i) by striking ``credit, savings, and other 
                        services'' and inserting ``credit, including 
                        the use of innovative credit scoring models, 
                        savings, financial technology, financial 
                        literacy, insurance, property rights, and other 
                        services''; and
                          (ii) by striking ``microfinance and 
                        microenterprise clients'' and inserting 
                        ``micro, small and medium-sized enterprise 
                        clients'';
                  (B) in paragraph (1), by striking ``microfinance and 
                microenterprise clients'' and inserting ``micro, small 
                and medium-sized enterprise clients, particularly those 
                clients owned, managed, and controlled by women'';
                  (C) in paragraph (2)--
                          (i) by striking ``microenterprises'' and 
                        inserting ``micro, small and medium-sized 
                        enterprises''; and
                          (ii) by inserting ``acquire United States 
                        goods and services,'' after ``United States 
                        markets,'';
                  (D) in paragraph (3)--
                          (i) by striking ``microfinance and 
                        microenterprise institutions'' and inserting 
                        ``financial intermediaries'';
                          (ii) by striking ``microfinance and 
                        microenterprise clients'' and inserting 
                        ``micro, small and medium-sized enterprises''; 
                        and
                          (iii) by striking ``and'' at the end;
                  (E) in paragraph (4)--
                          (i) by striking ``microfinance and 
                        microenterprise clients and institutions'' and 
                        inserting ``micro, small and medium-sized 
                        enterprises, financial intermediaries, and 
                        capital markets''; and
                          (ii) by striking ``the poor and very poor.'' 
                        and inserting ``the poor and very poor, 
                        especially women;''; and
                  (F) by adding at the end the following:
          ``(5) assistance for the purpose of promoting the economic 
        empowerment of women, including through increased access to 
        financial resources and improving property rights, inheritance 
        rights, and other legal protections; and
          ``(6) assistance for the purpose of scaling up evidence-based 
        graduation approaches, which include targeting the very poor 
        and households in ultra-poverty, consumption support, promotion 
        of savings, skills training, and asset transfers.''.
          (2) In subsection (b)--
                  (A) in paragraph (1) to read as follows:
          ``(1) In general.--There is authorized to be established 
        within the Agency an office to support the Agency's efforts to 
        broaden and deepen local financial markets, expand access to 
        appropriate financial products and services, and support the 
        development of micro, small and medium-sized enterprises. The 
        Office shall be headed by a Director who shall possess 
        technical expertise and ability to offer leadership in the 
        field of financial sector development.'';
                  (B) in paragraph (2)--
                          (i) in subparagraph (B)--
                                  (I) by striking ``Use of central 
                                funding mechanisms.--'' and all that 
                                follows through ``In order to ensure'' 
                                and inserting ``Use of central funding 
                                mechanisms.--In order to ensure'';
                                  (II) by striking ``the office shall'' 
                                and all that follows through ``and 
                                other practitioners'' and inserting 
                                ``the office shall provide coordination 
                                and support for field-implemented 
                                programs, including through targeted 
                                core support for micro, small and 
                                medium-sized enterprises and local 
                                financial markets''; and
                                  (III) by striking clause (ii);
                          (ii) in subparagraph (C)--
                                  (I) by inserting ``, particularly by 
                                protecting the use and funding of local 
                                organizations in countries in which the 
                                Agency invests,'' after ``and 
                                sustainability''; and
                                  (II) by inserting ``, especially 
                                women'' after ``the poor and very 
                                poor''; and
                  (C) by striking paragraph (3).
          (3) In subsection (c)--
                  (A) by striking ``all microenterprise resources'' and 
                inserting ``all micro, small and medium-sized 
                enterprise resources''; and
                  (B) by striking ``clients who are very poor.'' and 
                all that follows and inserting ``activities that reach 
                the very poor, and 50 percent of all small and medium-
                sized enterprise resources shall be targeted to 
                activities that reach enterprises owned, managed, and 
                controlled by women.''.
  (c) Monitoring System.--Section 253(b) of the Foreign Assistance Act 
of 1961 (22 U.S.C. 2211b(b)) is amended--
          (1) in paragraph (1), by inserting ``, including goals on a 
        gender disaggregated basis, such as improvements in employment, 
        access to financial services, enterprise development, earnings 
        and control over income, and property and land rights,'' after 
        ``performance goals'';
          (2) in paragraph (2), by striking ``include performance 
        indicators'' and all that follows through ``the achievement'' 
        and inserting ``incorporate Agency planning and reporting 
        processes and indicators to measure or assess the 
        achievement''; and
          (3) by striking paragraph (4).
  (d) Poverty Measurement Methods.--Section 254 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2211c) is amended to read as follows:

``SEC. 254. POVERTY MEASUREMENT METHODS.

  ``The Administrator of the Agency, in consultation with financial 
intermediaries and other appropriate organizations, should have in 
place at least one method for implementing partners to use to assess 
poverty levels of their current incoming or prospective clients.''.
  (e) Additional Authorities.--Section 255 of the Foreign Assistance 
Act of 1961 (22 U.S.C. 2211d) is amended--
          (1) by striking ``assistance for microenterprise development 
        assistance'' and inserting ``development assistance for micro, 
        small and medium-sized enterprises''; and
          (2) by striking ``and, to the extent applicable'' and all 
        that follows and inserting a period.
  (f) Microenterprise Development Credits.--Section 256 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2212) is amended--
          (1) in the section heading, by striking ``microenterprise 
        development credits'' and inserting ``development credits for 
        micro, small and medium-sized enterprises'';
          (2) in subsection (a)--
                  (A) in paragraph (1), by striking ``micro- and small 
                enterprises'' and inserting ``micro, small and medium-
                sized enterprises''; and
                  (B) in paragraph (2), by striking 
                ``microenterprises'' and inserting ``micro, small and 
                medium-sized enterprises'';
          (3) in subsection (b), in the matter preceding paragraph (1), 
        by inserting ``and other financial services'' after ``credit'';
          (4) by striking ``microenterprise households'' each place it 
        appears and inserting ``micro, small and medium-sized 
        enterprises and households''; and
          (5) by striking ``microfinance institutions'' each place it 
        appears and inserting ``financial intermediaries''.
  (g) United States Microfinance Loan Facility.--Section 257 of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2213) is amended--
          (1) in the section heading, by striking ``united states 
        microfinance loan facility'' and inserting ``united states 
        micro, small and medium-sized enterprise loan facility'';
          (2) in subsection (a)--
                  (A) by striking ``United States Microfinance Loan 
                Facility'' and inserting ``United States Micro, Small 
                and Medium-Sized Enterprise Loan Facility''; and
                  (B) by striking ``United States-supported 
                microfinance institutions'' and inserting ``United 
                States-supported financial intermediaries'';
          (3) in subsection (b)--
                  (A) by striking ``United States-supported 
                microfinance institutions'' each place it appears and 
                inserting ``United States-supported financial 
                intermediaries''; and
                  (B) in paragraph (2), by striking ``microfinance 
                institutions'' and inserting ``financial 
                intermediaries''.
  (h) Contents of Report.--Subsection (b) of section 258 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2214) is amended to read as follows:
  ``(b) Contents.--To the extent practicable, the report should contain 
the following:
          ``(1) Information about assistance provided under section 
        252, including--
                  ``(A) the amount of each grant or other form of 
                assistance;
                  ``(B) the name and type of each intermediary and 
                implementing partner organization receiving assistance;
                  ``(C) the name of each country receiving assistance; 
                and
                  ``(D) the methodology used to ensure compliance with 
                the targeted assistance requirements in subsection (c) 
                of such section.
          ``(2) The percentage of assistance provided under section 252 
        disaggregated by income level, including for the very poor, and 
        gender.
          ``(3) The estimated number of individuals that received 
        assistance provided under section 252 disaggregated by income 
        level, including for the very poor, and gender, and by type of 
        assistance, including loans, training, and business development 
        services.
          ``(4) The results of the monitoring system required under 
        section 253.
          ``(5) Information about any method in place to assess poverty 
        levels under section 254.''.
  (i) Definitions.--Section 259 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2214a) is amended--
          (1) in paragraph (3), by striking ``Committee on 
        International Relations'' and inserting ``Committee on Foreign 
        Affairs'';
          (2) in paragraph (4), by striking ``microenterprises'' and 
        inserting ``micro, small and medium-sized enterprises'';
          (3) in paragraph (6)--
                  (A) in subparagraph (E), by striking 
                ``microenterprise institution'' and inserting ``micro, 
                small and medium-sized enterprise institution''; and
                  (B) in subparagraph (F), by striking ``microfinance 
                institution'' and inserting ``financial intermediary'';
          (4) in paragraph (7) to read as follows:
          ``(7) Micro, small and medium-sized enterprise institution.--
        The term `micro, small and medium-sized enterprise institution' 
        means an entity that provides services, including finance, 
        training, or business development services, for micro, small 
        and medium-sized enterprises in foreign countries.'';
          (5) in paragraph (8) to read as follows:
          ``(8) Financial intermediary.--The term `financial 
        intermediary' means the entity that acts as the intermediary 
        between parties in a financial transaction, such as a bank, 
        credit union, investment fund, a village savings and loan 
        group, or an institution that provides financial services to a 
        micro, small or medium-sized enterprise.'';
          (6) by striking paragraph (9);
          (7) by redesignating paragraphs (10) through (14) as 
        paragraphs (9) through (13), respectively;
          (8) in paragraph (9) (as redesignated), by striking ``of 
        microenterprise development'';
          (9) in paragraph (10) to read as follows:
          ``(10) Practitioner institution.--The term `practitioner 
        institution' means a not-for-profit entity, financial 
        intermediary, information and communications technology firm 
        with a mobile money platform, a village and savings loan group, 
        or any other entity that provides financial or business 
        development services authorized under section 252 that benefits 
        micro, small and medium-sized enterprise clients.'';
          (10) in paragraph (12) (as redesignated)--
                  (A) in the heading, by striking ``united states-
                supported microfinance institution'' and inserting 
                ``united states-supported financial intermediary''; and
                  (B) by striking ``United States-supported 
                microfinance institution'' and inserting ``United 
                States-supported financial intermediary'';
          (11) in subparagraph (B) of paragraph (13) (as redesignated) 
        to read as follows:
                  ``(B) living below the International Poverty Line, as 
                defined by the International Bank for Reconstruction 
                and Development and the International Development 
                Association (collectively referred to as the `World 
                Bank').''.
  (j) Technical and Conforming Amendments.--Title VI of chapter 2 of 
part I of the Foreign Assistance Act of 1961 is amended as follows:
          (1) In the title heading, by striking ``MICROENTERPRISE 
        DEVELOPMENT ASSISTANCE'' and inserting ``DEVELOPMENT ASSISTANCE 
        FOR MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES''.
          (2) In the heading for subtitle C, by striking ``United 
        States Microfinance Loan Facility'' and inserting ``United 
        States Micro, Small and Medium-Sized Microfinance Loan 
        Facility''.

SEC. 5. REPORT AND BRIEFING BY UNITED STATES AGENCY FOR INTERNATIONAL 
                    DEVELOPMENT.

  (a) In General.--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 provide a briefing and submit to 
the Committee on Foreign Affairs of the House of Representatives and 
the Committee on Foreign Relations of the Senate a report on the 
implementation of this Act and the amendments made by this Act, 
including actions to improve the gender policies of the United States 
Agency for International Development pursuant to section 3.
  (b) Public Availability.--The report required under paragraph (1) 
shall be posted and made available on a text-based, searchable, and 
publicly-available internet website.

SEC. 6. REPORT BY COMPTROLLER GENERAL OF THE UNITED STATES.

  (a) In General.--Not later than two years after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit to the Committee on Foreign Affairs of the House of 
Representatives and the Committee on Foreign Relations of the Senate a 
report on development assistance for micro, small and medium-sized 
enterprises administered by the United States Agency for International 
Development.
  (b) Matters to Be Included.--The report required under subsection (a) 
shall include an assessment of the following:
          (1) What is known about the impact of such development 
        assistance on the economies of developing countries.
          (2) The extent to which such development assistance is 
        targeting women and the very poor, including what is known 
        about how such development assistance benefits women.
          (3) The extent to which the United States Agency for 
        International Development has developed a methodology used to 
        ensure compliance with the targeted assistance requirement in 
        section 252(c) of the Foreign Assistance Act of 1961, as 
        amended by section 4 of this Act, and the quality of such 
        methodology.
          (4) The monitoring system required in section 253(b) of the 
        Foreign Assistance Act of 1961, as amended by section 4 of this 
        Act, including the quality of such monitoring system.

                          Summary and Purpose

    H.R. 5480, the Women's Entrepreneurship and Economic 
Empowerment Act, seeks to address impediments to women's 
economic inclusion in developing countries, including gender 
inequalities in access to finance, ownership of assets, and 
control over the allocation of resources. The legislation does 
this primarily by requiring all strategies, projects, and 
activities of the United States Agency for International 
Development (USAID) to be shaped by a gender analysis, and by 
expanding the Agency's microenterprise assistance authorities 
to include programs in developing countries to increase the 
availability of credit, including the use of innovative credit 
scoring models, savings, financial technology, financial 
literacy, insurance, property rights, and other services for 
small and medium-sized enterprises (SMEs), particularly those 
enterprises owned, managed, and controlled by women.

                Background and Need for the Legislation

    Across the globe, women make up the majority of the world's 
poor due in part to gender-specific constraints to economic 
empowerment, including lack of access to financial services and 
discriminatory legal and regulatory systems that inhibit 
ownership and inheritance of assets such as real property. In 
2015, the World Bank Group's Women Business and the Law found 
that 155 of 173 economies still have at least one law 
restricting women's economic opportunities. Yet research shows 
that when women exert greater influence over household 
finances, they reinvest up to 90 percent of their wages on 
household expenses, which improves childhood survival rates, 
food security, educational attainment for their children, and 
economic outcomes for families.
    More than 1 billion women are left out of the formal 
financial system and women-owned SMEs face a nearly $300 
billion credit gap. Significant research underscores the 
potential gains to global growth through women's increased 
economic participation. A 2014 analysis by Goldman Sachs Global 
Market Institute found that closing the gender gap in access to 
credit for women-owned SMEs could increase per-capita gross 
domestic product (GDP) in developing countries by 12 percent. A 
2015 study by the International Labor Organization found that 
countries with high female labor force participation rates are 
more resilient to economic shocks and suffer fewer slowdowns in 
economic growth. And a 2016 report by the McKinsey Global 
Institute estimated that achieving global gender parity in 
economic activity by 2025 could add as much as $28 trillion to 
annual global GDP--an amount roughly equal to the combined 
economies of the United States and China.
    Key to driving this growth is looking beyond microfinance 
to support for SMEs, which create four out of five new jobs in 
developing economies, as well as confronting other barriers 
women face. This bill brings attention to the need to protect 
the legal and human rights of women, which is integral to their 
economic participation and ability to live free of violence and 
exploitation.
Lack of Secure Property Rights.
    Women in more than half of the world's countries face 
limits on their ability to own, inherit, or manage land by law 
or custom. For example, laws governing inheritance (a primary 
means of land transfer) often favor male relatives, or 
administrative practices and officials may not recognize a 
wife's joint ownership of land with her husband. While many 
countries have worked to make their existing laws more 
equitable, at the local level custom tends to uphold persistent 
disparities in recognized ownership and control. For example, 
despite a formal ownership of property, women may come under 
pressure to give their land to male relatives upon demand.
    This lack of secure property rights prevents women from 
turning their land (and other movable assets) into economic 
opportunity. Without confidence in their ability to ensure 
long-term ownership of property, women are discouraged from 
investing to improve its productivity and increase its value, 
and cannot use the property as collateral for a loan. The 
effect on female farmers is particularly acute as women operate 
a significant number of smallholder farms throughout much of 
Africa and Asia.
    To help address these challenges, Section 3 of H.R. 5480 
declares that it is the development cooperation policy of the 
United States to support activities that secure private 
property rights and land tenure for women in developing 
countries, including legal frameworks to give women equal 
rights to own, register, use, profit from, and inherit land and 
property, legal literacy to exercise these rights, and capacity 
of law enforcement and community leaders to enforce such 
rights. Furthermore, Section 4 amends Section 252 of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2211a) to explicitly 
authorize the President to provide assistance on a non-
reimbursable basis for programs in developing countries to 
support women's property rights.
Lack of Access to the Financial System.
    A lack of access to financial institutions and products 
also impedes women's economic inclusion, which in turn causes 
many women to rely on informal means of saving and borrowing 
that are riskier and less reliable, or to not seek out 
alternative financing at all. According to a 2017 Global Index 
report, women in developing economies remain 9 percentage 
points less likely than men to have a bank account. Even as 
millions of individuals enter the formal financial system, this 
gender gap in account ownership has not narrowed. Moreover, 
many women with a formal bank account only have access to it 
through a joint account with family members, which in practice 
may limit their control over account assets.
    Women face barriers to accessing financial products beyond 
just savings accounts, such as credit, loans and insurance. 
This hampers the success of women entrepreneurs, particularly 
those seeking to run or grow SMEs. The International Finance 
Corporation has estimated that 70 percent of women-owned SMEs 
in the formal sector are unserved or underserved in terms of 
access to credit.
    Reasons for the gender gap in access to the formal 
financial system include the fact that women generally control 
fewer assets than men, may be misunderstood by financial 
institutions, or harder to reach, and women themselves may be 
less familiar with the benefits of formal financial services. 
For example, in addition to being restricted or banned from 
ownership or inheritance of certain assets, women may also face 
legal or cultural limitations on their financial independence 
from family members--all of which means fewer controlled assets 
to facilitate their borrowing and banking. Restrictions on 
travel and access to technology make women harder to reach 
through both traditional and digital channels. Also, many 
financial institutions are unfamiliar with the barriers women 
face to using their services, with loan officers failing to 
consider how their processes for opening bank accounts or 
credit approval may disadvantage women who are less likely to 
have formal identification or evidence of income. Likewise, 
higher rates of illiteracy among women combined with a greater 
tendency towards risk aversion mean women often report feeling 
less comfortable or aware of the benefits of formal banking.
    To address this barrier, Section 3 of H.R. 5480 declares 
that it is the development cooperation policy of the United 
States to reduce gender disparities in access to, control over, 
and benefit from economic, social, political, and cultural 
resources, wealth, opportunities, and services. Furthermore, 
Section 4 expands USAID's microenterprise assistance 
authorities to include support for SMEs, particularly those 
owned, controlled, and managed by women, and also by 
modernizing the Agency's financial assistance toolkit to 
increase women's access to credit, including through the use of 
innovative credit scoring models, savings, financial 
technology, financial literacy, insurance, and other services.
Lack of Access to Technology.
    Women in the developing world are significantly less likely 
than men to use or have access to the internet--the so-called 
``digital gender divide.'' A 2012 study by Intel Corporation 
found that, in low- and middle-income countries, women are 
about 25 percent less likely than men to be online, with this 
discrepancy increasing to as much as 30 to 40 percent in parts 
of Asia, Africa, and the Middle East. The report estimated 
that, in total, there are about 200 million fewer women and 
girls online than men and boys in developing countries, largely 
due to cultural norms around the appropriateness of women's 
access to technology, cost concerns, and higher illiteracy 
rates among women. Similar discrepancies can be seen in mobile 
phone usage. USAID estimates that 1.7 billion women in low- and 
middle-income countries still do not own mobile phones, and the 
gap between the number of men and women using the internet has 
grown steadily over the past 3 years. This lack of access to 
technology limits opportunities for female business owners and 
entrepreneurs, particularly as new financial technologies 
become available.
    The Digital Global Access Policy Act (or the ``Digital GAP 
Act''), which commits the United States to increase efforts and 
coordination to promote affordable and gender-equitable 
internet access, among other things, has been the primary 
legislative vehicle through which the committee has sought to 
address this disparity. However, Section 4 of H.R. 5480 also 
modernizes USAID's microenterprise assistance authorities to 
include support for women's access to financial technology as a 
means of economically empowering women.
Gender-based Violence.
    Women's economic empowerment also requires freedom from 
violence. According to some estimates, as many as one in three 
women worldwide experience physical or sexual violence in their 
lifetime. Section 3 of H.R. 5480 states that it shall be the 
development cooperation policy of the United States to strive 
to eliminate gender-based violence and mitigate its harmful 
effects on individuals and communities through efforts to 
develop standards and capacity to reduce gender-based violence 
in the workplace and other places where women conduct work.
Microenterprise and the ``Missing Middle.''
    Beginning with his work in the slums of Bangladesh in the 
mid-1970s, Nobel laureate Muhammad Yunus touched off a global 
movement in support of ``microcredit'' investing, which seeks 
to reduce poverty in low-income countries by giving small loans 
to microentrepreneurs without collateral. But decades later, 
microcredit's record remains mixed. It is now generally viewed 
as a useful mechanism to help families weather economic shocks, 
but microcredit borrowers have largely remained in poverty.
    Microenterprise development assistance, administered by 
USAID, has enjoyed strong support in Congress as demonstrated 
through annual appropriations and the enactment of numerous 
authorizing statutes. The Microenterprise for Self-Reliance and 
International Anti-Corruption Act of 2000 (Public Law 106-82) 
specifically required that 50 percent of all microenterprise 
resources be targeted to the very poor. However, a report by 
the Comptroller General in 2003 found, among other things, that 
despite studies and academic analyses that microenterprise 
activities generally serve the poor, few loans appeared to be 
reaching the very poor. This in turn prompted additional 
legislation in the 108th Congress--H.R. 192, which amends 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 
programs under those Acts (Public Law 108-31) and H.R. 3818, 
the Microenterprise Results and Accountability Act of 2004 
(Public Law 108-484)--both of which established important 
reforms to promote accountability and effectiveness of 
microenterprise programs. Specifically, H.R. 192 provided a 
framework for USAID to certify and put into use at least two 
poverty measurement methods to ensure that 50 percent of USAID 
microenterprise development resources are benefiting very poor 
clients. H.R. 3818 went further, establishing a monitoring 
system to ensure that the 50 percent standard would be met.
    H.R. 5840 improves this 50 percent requirement and 
monitoring system under current law by mandating that 50 
percent of all SME resources authorized in the bill benefit 
enterprises owned, managed, and controlled by women and by 
requiring the monitoring system to include performance goals on 
a gender disaggregated basis. The committee notes that the 
bill's amendments to Section 252(c) of the Foreign Assistance 
Act of 1961 should not be misconstrued as requiring 50 percent 
of all dollars to be directly appropriated to the populations 
described in that section; rather 50 percent of all 
appropriated dollars should target activities that benefit 
those populations described in such section. Likewise, the 
bill's amendments to the monitoring system--specifically 
language in Section 4(b) regarding improvements in employment, 
access to financial services, enterprise development, earnings 
and control over income, and property and land rights--are 
examples of the types of performance goals USAID should use as 
part of its monitoring system, to the extent they are 
practicable.
    The Women's Entrepreneurship and Economic Empowerment Act 
further improves current law by expanding microenterprise 
assistance authorities to include support for SMEs, 
particularly those enterprises owned, managed, and controlled 
by women. Better awareness of the factors impeding women's 
economic participation has converged with increased attention 
to the importance of SMEs in driving the kind of broad-based 
economic growth in emerging markets that microenterprises alone 
have not been able to achieve.
    According to the World Bank, formal SMEs contribute up to 
60 percent of total employment and up to 40 percent of GDP in 
emerging economies. While some emerging markets have thriving 
SME sectors, particularly in East Asia, most developing 
countries suffer from what has been called the ``missing 
middle''--large numbers of informal microenterprises, a handful 
of large firms or conglomerates, and very few SMEs in between. 
Overall, approximately 70 percent of all micro, small and 
medium-sized enterprises (MSMEs) in emerging markets lack 
access to credit. The current credit gap for formal SMEs is 
estimated to be $1.2 trillion; the total credit gap for both 
formal and informal SMEs is as high as $2.6 trillion.
    Women-owned SMEs represent slightly more than one-third of 
formal SMEs in emerging markets, or about 8-10 million firms 
(representing 31 to 38 percent of all SMEs in emerging 
markets); women also own another 40 percent of the 340 million 
SMEs operating in the informal economy. However, the average 
growth rate of women-owned SMEs is significantly lower than 
those run by men. A number of factors have been cited as 
contributing to the slow growth of these women-owned 
businesses, including lack of access to finance, lower levels 
of business education or management training, risk aversion, 
and disparate household responsibilities. Women's 
entrepreneurship is also skewed towards smaller firms and less 
profitable sectors, and women are more likely to operate home-
based businesses than men. This performance gap among women-
owned SMEs is now being viewed as a possible area for increased 
return on investment and broader economic growth.
    To help ensure sustainable and inclusive economic 
development at scale, the committee encourages USAID to use its 
expanded authorities to focus its support for SMEs with the 
greatest potential for growth and impact on their communities.
    Given the limited resources available, it is important to 
prioritize those SMEs that demonstrate an ability to leverage 
additional investment to grow their company by revenue and by 
jobs created. Investing in growth-oriented enterprises will 
help ensure a strong return on investment in both traditional 
and growing sectors of local economies, as well as the 
sustainability of these investments over time.

                                Hearings

    Most recently, the Foreign Affairs Committee held a hearing 
on July 12, 2017, entitled ``Beyond Microfinance: Empowering 
Women in the Developing World'' related to the contents of H.R. 
5480. The bill is an additional result of the committee's 
extended focus on empowering women and girls through U.S. 
foreign policy, which has been the subject of five full 
committee hearings since 2014, other subcommittee hearings in 
recent Congresses, and the consideration of significant 
legislation related to women's empowerment, including the Girls 
Count Act of 2015, the Protecting Girls' Access to Education in 
Vulnerable Settings Act, and the Women, Peace, and Security Act 
of 2017, among others.

                        Committee Consideration

    On April 17, 2018, the Committee on Foreign Affairs marked 
up H.R. 5480 in open session, pursuant to notice. An amendment 
(offered by Chairman Royce) was considered en bloc with the 
underlying bill, and both were agreed to by voice vote.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of Rules of 
the House of Representatives, the committee reports that 
findings and recommendations of the committee, based on 
oversight activities under clause 2(b)(1) of House Rule X, are 
incorporated in the descriptive portions of this report, 
particularly in the ``Background and Need for the Legislation'' 
and ``Section-by-Section Analysis'' sections.

      New Budget Authority, Tax Expenditures, and Federal Mandates

    In compliance with clause 3(c)(2) of House Rule XIII and 
the Unfunded Mandates Reform Act (Public Law 104-4), the 
committee adopts as its own the estimate of new budget 
authority, entitlement authority, tax expenditure or revenues, 
and Federal mandates contained in the cost estimate prepared by 
the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 23, 2018.

Hon. Edward R. Royce, Chairman,
 Committee on Foreign Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5480, the Women's 
Entrepreneurship and Economic Empowerment Act of 2018.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte, who can be reached at 226-2840.
            Sincerely,
                                                Keith Hall.
Enclosure

cc:  Honorable Eliot L. Engel
    Ranking Member

H.R. 5480--Women's Entrepreneurship and Economic Empowerment Act of 
        2018.
    As ordered reported by the House Committee on Foreign 
Affairs on April 17, 2018.

    H.R. 5480 would authorize the assistance provided to 
microenterprises by the U.S. Agency for International 
Development (USAID) to be expanded to include small and medium-
sized enterprises (SME), particularly those owned or managed by 
women. It also would require the agency to update its 
monitoring and reporting on that assistance. Finally, it would 
require the Government Accountability Office (GAO) to report on 
the agency's programs for microenterprises and SMEs and require 
USAID to brief the Congress and report on the implementation of 
the bill.
    The Consolidated Appropriations Act of 2018 directed USAID 
to make available not less than $265 million for 
microenterprise programs. According to USAID, many of its 
ongoing assistance programs in sectors such as agricultural 
development and health care support both microenterprises and 
SMEs, including those owned or managed by women. On the basis 
of that information, CBO expects that USAID would not increase 
assistance to SMEs under the bill. USAID indicated that it 
would need one additional employee and a contractor for up to 
two years to update its monitoring and reporting under the 
bill; on that basis, CBO estimates those efforts would cost 
about $500,000 each year. In total, CBO estimates that 
implementing the updated monitoring and reporting and providing 
the required USAID and GAO reports would cost $1 million over 
the 2018-2023 period, subject to the availability of 
appropriated funds.
    Enacting H.R. 5480 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    CBO estimates that enacting H.R. 5480 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    H.R. 5480 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Sunita D'Monte. 
The estimate was reviewed by Leo Lex, Deputy Assistant Director 
for Budget Analysis.

                          Directed Rule Making

    Pursuant to clause 3(c) of House Rule XIII, as modified by 
section 3(i) of H. Res. 5 during the 115th Congress, the 
committee notes that H.R. 5480 contains no directed rule-making 
provisions.

                  Non-Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of House Rule XIII, the 
committee states that no provision of this bill establishes or 
reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                    Performance Goals and Objectives

    The objective of this legislation is to improve the 
policies of USAID related to gender considerations and women's 
economic empowerment. Section 3 establishes a development 
cooperation policy of the United States to support women's 
economic empowerment which will be advanced by requiring USAID 
to ensure that all of its strategies, projects and activities 
are shaped by a gender analysis using standard indicators. 
Section 4 of the bill expands USAID's microenterprise 
assistance authorities to include support for small and medium 
enterprises, particularly those enterprises owned, managed, and 
controlled by women. The bill stipulates that at least 50 
percent of all micro, small and medium-sized enterprise 
resources shall be targeted to activities that reach the very 
poor, and 50 percent of small and medium-sized enterprise 
resources shall be targeted to activities that reach 
enterprises owned, managed, and controlled by women. These 
requirements are reinforced by an annual USAID report to 
Congress and a monitoring system which shall include enhanced 
performance goals beyond what is required under current law, 
including on a gender disaggregated basis. Finally, the bill 
requires the Comptroller General to report to Congress on 
development assistance for micro, small and medium-sized 
enterprises, including the impact of such assistance on the 
economies of developing countries, the extent to which such 
assistance is targeting women and the very poor, the extent to 
which USAID has developed a methodology to ensure compliance 
with the targeted assistance requirement, and the quality of 
USAID's monitoring system. This will enable Congress to conduct 
effective oversight of performance and results.

                    Congressional Accountability Act

    H.R. 5480 does not apply to terms and conditions of 
employment or to access to public services or accommodations 
within the legislative branch.

                        New Advisory Committees

    H.R. 5480 does not establish or authorize any new advisory 
committees.

                         Earmark Identification

    H.R. 5480 contains no congressional earmarks, limited tax 
benefits, or limited tariff benefits as described in clauses 
9(e), 9(f), and 9(g) of House Rule XXI.

                      Section-by-Section Analysis

    Section 1. Short Title. This Act may be cited as the 
``Women's Entrepreneurship and Economic Empowerment Act of 
2018.''
    Section. 2. Findings. Includes eight congressional findings 
related to barriers facing women's economic empowerment, 
financial inclusion, and United States support for 
microenterprise and microfinance development programs.
    Section. 3. Actions to Improve Gender Policies of the 
United States Agency for International Development. Establishes 
a development cooperation policy of the United States to reduce 
gender disparities related to economic participation and 
opportunity, strive to eliminate gender-based violence, support 
women's property rights, and improve the ability of women and 
girls to actively shape their futures.
    To advance the development cooperation policy, this section 
requires USAID to ensure that all strategies and projects of 
the Agency are shaped by a gender analysis that considers 
differences in the status of women and men and their access to 
resources, and integrates efforts to empower women throughout 
USAID's programs.
    Section. 4. Development Assistance for Micro, Small and 
Medium-Sized Enterprises. Expands USAID's microenterprise 
development assistance authority to include small and medium-
sized enterprises, with an emphasis on supporting enterprises 
owned, managed, and controlled by women. The purpose of this 
section is to prioritize women's economic advancement and 
address the ``missing middle'' of small and medium-sized 
enterprises in developing countries, which are critical to 
driving economic growth.
    Though exact definitions vary, the committee understands 
that USAID's definition of SMEs means enterprises employing 
between 10 and 250 employees.
    This section also modernizes USAID's development assistance 
toolkit to include innovative credit scoring models, financial 
technology, financial literacy, insurance, and actions to 
improve property and inheritance rights.
    Section. 5. Briefing and Report. Requires USAID to produce 
a publicly available report and brief Congress on the 
implementation of this Act.
    Section. 6. Report by the Comptroller. Requires the 
Government Accountability Office to report to Congress on 
development assistance for micro, small and medium-sized 
enterprises administered by USAID, including how such 
assistance benefits women.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                     FOREIGN ASSISTANCE ACT OF 1961



           *       *       *       *       *       *       *
    TITLE VI--[MICROENTERPRISE DEVELOPMENT ASSISTANCE] DEVELOPMENT 
        ASSISTANCE FOR MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES

                      Subtitle A--Grant Assistance

SEC. 251. FINDINGS AND POLICY.

     Congress finds and declares the following:
            (1) Access to financial services and the 
        development of [microenterprise] micro, small and 
        medium-sized enterprise are vital factors in the stable 
        growth of developing countries [and in the 
        development], in the development of free, open, and 
        equitable international economic systems, and in the 
        economic empowerment of the poor, especially women.
            (2) It is therefore in the best interest of the 
        United States to facilitate access to financial 
        services and assist the development of 
        [microenterprise] micro, small and medium-sized 
        enterprise in developing countries, particularly those 
        enterprises owned, managed, and controlled by women.
            (3) Access to financial services and the 
        development of [microenterprises] micro, small and 
        medium-sized enterprises 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] micro, small 
        and medium-sized enterprise programs should target both 
        rural and urban poor.
            (5) Microenterprise programs have been successful 
        and [should continue] should continue and be expanded 
        to empower vulnerable women in the developing world. 
        The Agency should work to ensure that recipients of 
        [microenterprise and microfinance development 
        assistance] development assistance for micro, small and 
        medium-sized enterprises 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] 
        development assistance for micro, small and medium-
        sized enterprises [have been successful] have had some 
        success 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] credit, including the use of 
innovative credit scoring models, savings, financial 
technology, financial literacy, insurance, property rights, and 
other services to [microfinance and microenterprise clients] 
micro, small and medium-sized enterprise 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] micro, small and medium-sized 
        enterprise clients, particularly those clients owned, 
        managed, and controlled by women;
            (2) assistance for the purpose of training, 
        technical assistance, and business development services 
        for [microenterprises] micro, small and medium-sized 
        enterprises 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, acquire United States goods and 
        services, and to increase their income and build their 
        assets;
            (3) capacity-building for [microfinance and 
        microenterprise institutions] financial intermediaries 
        in order to enable them to better meet the credit, 
        savings, and training needs of [microfinance and 
        microenterprise clients] micro, small and medium-sized 
        enterprises; [and]
            (4) policy, regulatory programs, and research at 
        the country level that improve the environment for 
        [microfinance and microenterprise clients and 
        institutions] micro, small and medium-sized 
        enterprises, financial intermediaries, and capital 
        markets that serve [the poor and very poor.] the poor 
        and very poor, especially women;
            (5) assistance for the purpose of promoting the 
        economic empowerment of women, including through 
        increased access to financial resources and improving 
        property rights, inheritance rights, and other legal 
        protections; and
            (6) assistance for the purpose of scaling up 
        evidence-based graduation approaches, which include 
        targeting the very poor and households in ultra-
        poverty, consumption support, promotion of savings, 
        skills training, and asset transfers.
    (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.]
            (1) In general.--There is authorized to be 
        established within the Agency an office to support the 
        Agency's efforts to broaden and deepen local financial 
        markets, expand access to appropriate financial 
        products and services, and support the development of 
        micro, small and medium-sized enterprises. The Office 
        shall be headed by a Director who shall possess 
        technical expertise and ability to offer leadership in 
        the field of financial sector 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] 
                        Use of central funding mechanisms._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] the 
                        office shall provide coordination and 
                        support for field-implemented programs, 
                        including through targeted core support 
                        for micro, small and medium-sized 
                        enterprises and local financial 
                        markets.
                            [(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, particularly by protecting 
                the use and funding of local organizations in 
                countries in which the Agency invests, and 
                shall especially provide the greatest possible 
                resources to the poor and very poor, especially 
                women. 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] all micro, small and medium-
sized enterprise 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.] activities that reach the very poor, and 50 
        percent of all small and medium-sized enterprise 
        resources shall be targeted to activities that reach 
        enterprises owned, managed, and controlled by women.

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, including goals on a gender disaggregated basis, 
        such as improvements in employment, access to financial 
        services, enterprise development, earnings and control 
        over income, and property and land rights, 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] incorporate Agency planning 
        and reporting processes and indicators to measure or 
        assess 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. 254. POVERTY MEASUREMENT METHODS.

    The Administrator of the Agency, in consultation with 
financial intermediaries and other appropriate organizations, 
should have in place at least one method for implementing 
partners to use to assess poverty levels of their current 
incoming or prospective clients.

SEC. 255. ADDITIONAL AUTHORITIES.

    Notwithstanding any other provision of law, amounts made 
available for [assistance for microenterprise development 
assistance] development assistance for micro, small and medium-
sized enterprises 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.].

                     Subtitle B--Credit Assistance

SEC. 256. [MICROENTERPRISE DEVELOPMENT CREDITS]  DEVELOPMENT CREDITS 
                    FOR MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES.

    (a) Findings and Policy.--Congress finds and declares 
that--
            (1) the development of [micro- and small 
        enterprises] micro, small and medium-sized enterprises 
        is 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 access to financial 
        services and the development of [microenterprises] 
        micro, small and medium-sized enterprises 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 financial services 
to [microenterprise households] micro, small and medium-sized 
enterprises and households lacking full access to credit and 
other financial services, including through--
            (1) loans and guarantees to [microfinance 
        institutions] financial intermediaries for the purpose 
        of expanding the availability of savings and credit to 
        poor and low-income households;
            (2) training programs for [microfinance 
        institutions] financial intermediaries in order to 
        enable them to better meet the financial services needs 
        of their clients; and
            (3) training programs for clients in order to 
        enable them to make better use of credit, increase 
        their financial literacy, and to better manage their 
        enterprises to improve their quality of life.
    (c) Eligibility Criteria.--The Administrator of the Agency 
shall establish criteria for determining which [microfinance 
institutions] financial intermediaries described in subsection 
(b)(1) are eligible to carry out activities, with respect to 
[microenterprise households] micro, small and medium-sized 
enterprises and households, assisted under this section. Such 
criteria may include the following:
            (1) The extent to which the recipients of financial 
        services from the entity do not have access to the 
        local formal financial sector.
            (2) The extent to which the recipients of financial 
        services 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.
            (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 programs for 
[microenterprise households] micro, small and medium-sized 
enterprises and households and may not be used to support 
programs not directly related to the purposes described in 
subsection (b).
    (e) Procurement Provision.--Assistance may be provided 
under this section without regard to section 604(a).
    (f) Availability of Funds.--
            (1) In general.--Of the amounts authorized to be 
        available to carry out this part, there are authorized 
        to be available such sums as may be necessary for each 
        of the fiscal years 2005 through 2009 to carry out this 
        section.
            (2) Coverage of subsidy costs.--Amounts authorized 
        to be available under paragraph (1) shall be made 
        available to cover the subsidy cost, as defined in 
        section 502(5) of the Federal Credit Reform Act of 
        1990, for activities under this section.

 Subtitle C--[United States Microfinance Loan Facility] United States 
       Micro, Small, and Medium-Sized Microfinance Loan Facility

SEC. 257. [UNITED STATES MICROFINANCE LOAN FACILITY]  UNITED STATES 
                    MICRO, SMALL AND MEDIUM-SIZED ENTERPRISE LOAN 
                    FACILITY.

    (a) Establishment.--The Administrator is authorized to 
establish a [United States Microfinance Loan Facility] United 
States Micro, Small and Medium-Sized Enterprise Loan Facility 
(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] United States-supported 
financial intermediaries.
    (b) Disbursements.--
            (1) In general.--The Administrator shall make 
        disbursements from the Facility to [United States-
        supported microfinance institutions] United States-
        supported financial intermediaries 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] United 
                States-supported financial intermediaries.
            (2) Form of assistance.--Assistance under this 
        section shall be in the form of loans or loan 
        guarantees for [microfinance institutions] financial 
        intermediaries that demonstrate the capacity to resume 
        self-sustained operations within a reasonable time 
        period.
            (3) Congressional notification procedures.--During 
        each of the fiscal years 2005 through 2009, funds may 
        not be made available from the Facility until 15 days 
        after notification of the proposed availability of the 
        funds has been provided to the congressional committees 
        specified in section 634A in accordance with the 
        procedures applicable to reprogramming notifications 
        under that section.
    (c) General Provisions.--
            (1) Policy provisions.--In providing the credit 
        assistance authorized by this section, the 
        Administrator should apply, as appropriate, the policy 
        provisions in this part that are applicable to 
        development assistance activities.
            (2) Default and procurement provisions.--
                    (A) Default provision.--The provisions of 
                section 620(q), or any comparable provision of 
                law, shall not be construed to prohibit 
                assistance to a country in the event that a 
                private sector recipient of assistance 
                furnished under this section is in default in 
                its payment to the United States for the period 
                specified in such section.
                    (B) Procurement provision.--Assistance may 
                be provided under this section without regard 
                to section 604(a).
            (3) Terms and conditions of credit assistance.--
                    (A) In general.--Credit assistance provided 
                under this section shall be offered on such 
                terms and conditions, including fees charged, 
                as the Administrator may determine.
                    (B) Limitation on principal amount of 
                financing.--The principal amount of loans made 
                or guaranteed under this section in any fiscal 
                year, with respect to any single event, may not 
                exceed $30,000,000.
                    (C) Exception.--No payment may be made 
                under any guarantee issued under this section 
                for any loss arising out of fraud or 
                misrepresentation for which the party seeking 
                payment is responsible.
            (4) Full faith and credit.--All guarantees issued 
        under this section shall constitute obligations, in 
        accordance with the terms of such guarantees, of the 
        United States of America, and the full faith and credit 
        of the United States of America is hereby pledged for 
        the full payment and performance of such obligations to 
        the extent of the guarantee.
    (d) Funding.--
            (1) Allocation of funds.--Of the amounts made 
        available to carry out this part for each of the fiscal 
        years 2005 through 2009, such sums as may be necessary 
        may be made available for--
                    (A) the subsidy cost, as defined in section 
                502(5) of the Federal Credit Reform Act of 
                1990, to carry out this section; and
                    (B) the administrative costs to carry out 
                this section.
            (2) Relation to other funding.--Amounts made 
        available under paragraph (1) are in addition to 
        amounts available under any other provision of law to 
        carry out this section.

                  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.]
    (b) Contents.--To the extent practicable, the report should 
contain the following:
            (1) Information about assistance provided under 
        section 252, including--
                    (A) the amount of each grant or other form 
                of assistance;
                    (B) the name and type of each intermediary 
                and implementing partner organization receiving 
                assistance;
                    (C) the name of each country receiving 
                assistance; and
                    (D) the methodology used to ensure 
                compliance with the targeted assistance 
                requirements in subsection (c) of such section.
            (2) The percentage of assistance provided under 
        section 252 disaggregated by income level, including 
        for the very poor, and gender.
            (3) The estimated number of individuals that 
        received assistance provided under section 252 
        disaggregated by income level, including for the very 
        poor, and gender, and by type of assistance, including 
        loans, training, and business development services.
            (4) The results of the monitoring system required 
        under section 253.
            (5) Information about any method in place to assess 
        poverty levels under section 254.
    (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] Committee on 
        Foreign Affairs 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] micro, small and medium-
        sized enterprises 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] micro, 
                small and medium-sized enterprise institution;
                    (F) a [microfinance institution] financial 
                intermediary; 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.]
            (7) Micro, small and medium-sized enterprise 
        institution.--The term ``micro, small and medium-sized 
        enterprise institution'' means an entity that provides 
        services, including finance, training, or business 
        development services, for micro, small and medium-sized 
        enterprises in foreign countries.
            (8) Financial intermediary.--The term ``financial 
        intermediary'' means the entity that acts as the 
        intermediary between parties in a financial 
        transaction, such as a bank, credit union, investment 
        fund, a village savings and loan group, or an 
        institution that provides financial services to a 
        micro, small or medium-sized enterprise.
            [(10)] (9) 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.]
            (10) Practitioner institution.--The term 
        ``practitioner institution'' means a not-for-profit 
        entity, financial intermediary, information and 
        communications technology firm with a mobile money 
        platform, a village and savings loan group, or any 
        other entity that provides financial or business 
        development services authorized under section 252 that 
        benefits micro, small and medium-sized enterprise 
        clients.
            [(12)] (11) 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.--] (12) United states-supported financial 
        intermediary._The term ``[United States-supported 
        microfinance institution] United States-supported 
        financial intermediary'' means a financial intermediary 
        that has received funds made available under this part 
        for fiscal year 1980 or any subsequent fiscal year.
            [(14)] (13) 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).]
                    (B) living below the International Poverty 
                Line, as defined by the International Bank for 
                Reconstruction and Development and the 
                International Development Association 
                (collectively referred to as the ``World 
                Bank'').

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