To amend the Microenterprise for Self-Reliance Act of 2000 and the Foreign Assistance Act of 1961 to increase assistance for the poorest people in developing countries under microenterprise assistance programs under those Acts, and for other purposes.

SECTION 1. AMENDMENTS TO THE MICROENTERPRISE FOR SELF-RELIANCE ACT OF 
              2000.

    (a) Purposes.--Section 103 of the Microenterprise for Self-Reliance 
Act of 2000 (Public Law 106-309) is amended--
        (1) in paragraph (3), by striking ``microentrepreneurs'' and 
    inserting ``microenterprise households'';
        (2) in paragraph (4), by striking ``and'' at the end;
        (3) in paragraph (5)--
            (A) by striking ``microfinance policy'' and inserting 
        ``microenterprise policy'';
            (B) by striking ``the poorest of the poor'' and inserting 
        ``the very poor''; and
            (C) by striking the period at the end and inserting ``; 
        and''; and
        (4) by adding at the end the following:
        ``(6) to ensure that in the implementation of this title at 
    least 50 percent of all microenterprise assistance under this 
    title, and the amendments made under this title, shall be targeted 
    to the very poor.''.
    (b) Definitions.--Section 104 of such Act is amended--
        (1) in paragraph (2), by striking ``for microentrepreneurs'' 
    and inserting ``to microentrepreneurs and their households''; and
        (2) by adding at the end the following:
        ``(5) Very poor.--The term `very poor' means 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 the equivalent of less than $1 per day.''.

SEC. 2. AMENDMENTS TO THE MICRO- AND SMALL ENTERPRISE DEVELOPMENT 
              CREDITS PROGRAM UNDER THE FOREIGN ASSISTANCE ACT OF 1961.

    (a) Findings and Policy.--Section 108(a)(2) of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2151f(a)(2)) is amended by striking 
``the development of the enterprises of the poor'' and inserting ``the 
access to financial services and the development of microenterprises''.
    (b) Program.--Section 108(b) of such Act (22 U.S.C. 2151f(b)) is 
amended to read as follows:
    ``(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 
lacking full access to credit, including through--
        ``(1) loans and guarantees to microfinance institutions for the 
    purpose of expanding the availability of savings and credit to poor 
    and low-income households;
        ``(2) training programs for microfinance institutions 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.--Section 108(c) of such Act (22 U.S.C. 
2151f(c)) is amended--
        (1) in the first sentence of the matter preceding paragraph 
    (1)--
            (A) by striking ``credit institutions'' and inserting 
        ``microfinance institutions''; and
            (B) by striking ``micro- and small enterprises'' and 
        inserting ``microenterprise households''; and
        (2) in paragraphs (1) and (2), by striking ``credit'' each 
    place it appears and inserting ``financial services''.
    (d) Additional Requirement.--Section 108(d) of such Act (22 U.S.C. 
2151f(d)) is amended by striking ``micro- and small enterprise 
programs'' and inserting ``programs for microenterprise households''.
    (e) Availability of Funds.--Section 108(f)(1) of such Act (22 
U.S.C. 2151f(f)(1)) is amended by striking ``for each of fiscal years 
2001 and 2002'' and inserting ``for each of fiscal years 2001 through 
2004''.
    (f) Conforming Amendment.--Section 108 of such Act (22 U.S.C. 
2151f) is amended in the heading to read as follows:

``SEC. 108. MICROENTERPRISE DEVELOPMENT CREDITS.''.

SEC. 3. AMENDMENTS TO THE MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE 
              PROGRAM UNDER THE FOREIGN ASSISTANCE ACT OF 1961.

    (a) Findings and Policy.--Section 131(a) of the Foreign Assistance 
Act of 1961 (22 U.S.C. 2152a(a)) is amended to read as follows:
    ``(a) Findings and Policy.--Congress finds and declares that--
        ``(1) access to financial services and the development of 
    microenterprise are vital factors in the stable growth of 
    developing countries and in the development of free, open, and 
    equitable international economic systems;
        ``(2) it is therefore in the best interest of the United States 
    to facilitate access to financial services and assist the 
    development of microenterprise in developing countries;
        ``(3) access to financial services and the development of 
    microenterprises can be supported by programs providing credit, 
    savings, training, technical assistance, business development 
    services, and other financial and non-financial services; and
        ``(4) given the relatively high percentage of populations 
    living in rural areas of developing countries, and the combined 
    high incidence of poverty in rural areas and growing income 
    inequality between rural and urban markets, microenterprise 
    programs should target both rural and urban poor.''.
    (b) Authorization.--Section 131(b) of such Act (22 U.S.C. 2152a(b)) 
is amended--
        (1) in paragraph (3)(A)(i), by striking ``entrepreneurs'' and 
    inserting ``clients''; and
        (2) in paragraph (4)(D)--
            (A) in clause (i), by striking ``very small loans'' and 
        inserting ``financial services to poor entrepreneurs''; and
            (B) in clause (ii), by striking ``microfinance'' and 
        inserting ``microenterprise''.
    (c) Monitoring System.--Section 131(c) of such Act (22 U.S.C. 
2152a(c)) is amended by striking paragraph (4) and inserting the 
following:
        ``(4) adopts the widespread use of proven and effective poverty 
    assessment tools to successfully identify the very poor and ensure 
    that they receive needed microenterprise loans, savings, and 
    assistance.''.
    (d) Development and Application of Poverty Measurement Methods.--
Section 131 of such Act (22 U.S.C. 2152a) is amended--
        (1) by redesignating subsections (d) and (e) as subsections (e) 
    and (f), respectively; and
        (2) by inserting after subsection (c) the following:
    ``(d) Development and Certification of Poverty Measurement Methods; 
Application of Methods.--
        ``(1) Development and certification.--(A) The Administrator of 
    the United States Agency for International Development, in 
    consultation with microenterprise institutions and other 
    appropriate organizations, shall develop no fewer than two low-cost 
    methods for partner institutions to use to assess the poverty 
    levels of their current or prospective clients. The United States 
    Agency for International Development shall develop poverty 
    indicators that correlate with the circumstances of the very poor.
        ``(B) The Administrator shall field-test the methods developed 
    under subparagraph (A). 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.
        ``(C) Not later than October 1, 2004, the Administrator shall, 
    from among the low-cost poverty measurement methods developed under 
    subparagraph (A), certify no fewer than two such methods as 
    approved methods for measuring the poverty levels of current or 
    prospective clients of microenterprise institutions for purposes of 
    assistance under this section.
        ``(2) Application.--The Administrator shall require that, with 
    reasonable exceptions, all organizations applying for 
    microenterprise assistance under this Act use one of the certified 
    methods, beginning no later than October 1, 2005, to determine and 
    report the poverty levels of current or prospective clients.''.
    (e) Level of Assistance.--Section 131(e) of such Act, as 
redesignated by subsection (d), is amended by inserting ``and 
$175,000,000 for fiscal year 2003 and $200,000,000 for fiscal year 
2004'' after ``fiscal years 2001 and 2002''.
    (f) Definitions.--Section 131(f) of such Act, as redesignated by 
subsection (d), is amended by adding at the end the following:
        ``(5) 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.''.

SEC. 4. REPORT TO CONGRESS.

    (a) In General.--Not later than September 30, 2005, the 
Administrator of the United States Agency for International Development 
shall submit to Congress a report that documents the process of 
developing and applying poverty assessment procedures with its 
partners.
    (b) Reports for Fiscal Year 2006 and Beyond.--Beginning with fiscal 
year 2006, the Administrator of the United States Agency for 
International Development shall annually submit to Congress on a timely 
basis a report that addresses the United States Agency for 
International Development's compliance with the Microenterprise for 
Self-Reliance Act of 2000 by documenting--
        (1) the percentage of its resources that were allocated to the 
    very poor (as defined in paragraph (5) of section 131(f) of the 
    Foreign Assistance Act of 1961 (22 U.S.C. 2152a(f)(5))) based on 
    the data collected from its partners using the certified methods; 
    and
        (2) the absolute number of the very poor reached.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.

Summary: Amends the Microenterprise for Self-Reliance Act of 2000 to make as one of its purposes that in implementation of this Act at least 50 percent of all microenterprise assistance be targeted to the very poor, that is, those persons living either in the bottom 50 percent below the poverty line or on less than the equivalent of one dollar per day. Amends the Foreign Assistance Act of 1961 to revise congressional findings and policy with respect to the micro- and small enterprise development credits program to declare that it is in the best interests of the United States to assist the access to financial services and the development of microenterprises in developing countries, and to engage the US private sector in such process. Authorizes the President to provide assistance to increase the availability of financial services to microenterprise households lacking full access to credit, including through: (1) loans and guarantees to microfinance institutions for the purpose of expanding the availability of savings and credit to poor and low-income households. (2) training programs to enable microfinance institutions to better meet the financial services needs of their clients. And (3) training programs to enable clients to make better use of credit, increase their financial literacy, and to better manage their enterprises. Revises program eligibility criteria to require the Administrator of the agency primarily responsible for administering such program to establish criteria for determining which microfinance institutions are eligible to carry out program activities with respect to microenterprise households assisted under this Act. Limits the use of such assistance to support programs for microenterprise households. Authorizes appropriations through FY 2004. Revises congressional findings and policy with respect to the microenterprise development grant assistance program to declare that: (1) access to financial services and the development of microenterprise are vital factors in the stable growth of developing countries, and therefore it is in the best interest of the United States to facilitate access to financial services and assist the development of microenterprise in developing countries. (2) access to such services and the development of microenterprises can be supported by programs providing credit, savings, training, technical assistance, business development services, and other financial and non-financial services. And (3) microenterprise programs should target both rural and urban poor given the high percentage of population living, and incidence of poverty, in such areas. Urges the President to continue support for central mechanisms and missions that, among other things, support the development of nonprofit global microfinance networks, including credit union systems, that are able to deliver financial services to poor entrepreneurs through a significant grassroots infrastructure based on market principles, and act as wholesale intermediaries providing a range of services to microenterprise retail institutions. Declares that, in order to maximize the sustainable development impact of microenterprise development grant assistance, the Administrator of the agency primarily responsible for administering such assistance shall establish a monitoring system that, among other things, adopts the widespread use of proven and effective poverty assessment tools to successfully identify the very poor and ensure that they receive needed microenterprise loans, savings, and assistance. Requires the Administrator of the US Agency for International Development (AID) to develop and certify no fewer than two low-cost methods for partner institutions to use to assess the poverty levels of their current or prospective clients for purposes of the provision of microenterprise development grant assistance. Directs the Administrator to require all organizations applying for microenterprise assistance under this Act to use one of the certified methods to determine and report the poverty levels of such clients and to demonstrate their ability to reach the very poor. Authorizes appropriations through FY 2004. Directs the Administrator to submit to Congress a report that documents the process of developing and applying poverty assessment procedures with its partners. Directs the Administrator to submit annually to Congress a report that addresses AID's compliance with the Microenterprise for Self-Reliance Act of 2000 by documenting: (1) the percentage of its resources that were allocated to the very poor based on data collected from its partners using the certified methods, and (2) the absolute number of the very poor reached.