A bill to improve microfinance and microenterprise, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Microfinance and Microenterprise 
Enhancement Act of 2011''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) A growing body of research shows that, where markets 
        are inclusive and income gaps are relatively small, growth 
        translates into poverty reduction much more quickly, 
        efficiently, and sustainably.
            (2) Microenterprises, including smallholder and pastoral 
        farms, are important actors in most developing economies and 
        contribute significantly to employment generation, food 
        security, and family financial stability.
            (3) Microfinance institutions and providers have played an 
        increasingly important role in enabling micro-entrepreneurs to 
        graduate from extreme poverty to sustainable living patterns 
        through financial services such as micro-credit, savings, and 
        micro-insurance, as well as skills development, business 
        mentoring, value-chain linkages, and facilitation of producer 
        groups.
            (4) Congress has demonstrated its support for 
        microenterprise development assistance programs through the 
        enactment of three comprehensive microenterprise laws. Support 
        for microenterprise and microfinance remains a key tenet of 
        foreign assistance programs under the Foreign Assistance Act of 
        1961 (22 U.S.C. 2151 et seq.), including pursuant to the 
        following Acts:
                    (A) The Microenterprise for Self-Reliance Act of 
                2000 (title I of Public Law 106-309; 114 Stat. 1079).
                    (B) Public Law 108-31 (117 Stat. 775).
                    (C) The Microenterprise Results and Accountability 
                Act of 2004 (Public Law 108-484; 118 Stat. 3922).
            (5) Microcredit alone is insufficient to sustainably reduce 
        poverty and facilitate inclusive economic growth. In addition 
        to access to credit, poor households need savings tools to 
        build assets, mitigate risks, increase social capital, enhance 
        skills, and integrate into competitive, growing value-chains, 
        as well as to access good-quality health and education 
        services.
            (6) Over the last three decades, the United States Agency 
        for International Development has made microenterprise 
        development an important feature of its programming and has 
        continually sought to enhance the positive impact of 
        investments on poor households. In fiscal year 2010, the United 
        States Agency for International Development provided not less 
        than $262,000,000 in funding for microenterprise development in 
        at least 64 countries through at least 145 diverse implementing 
        partners, including private voluntary organizations, 
        nongovernmental organizations, banks and enterprise development 
        service providers, benefitting over 1,600,000 
        microentrepreneurs and 1,900,000 savers.
            (7) New approaches are essential to keep pace with global 
        technology, not only to alleviate poverty, but also to 
        sustainably reduce poverty by linking poor households to 
        economic opportunities so that they can contribute to and 
        benefit from economic growth in their countries.
            (8) Public funding for microfinance and microenterprise 
        should be available to benefit the poor in all countries, and, 
        in particular, among countries with a high concentration of the 
        very poor.

SEC. 3. SENSE OF CONGRESS ON TARGETED AND EFFECTIVE PROGRAMMING.

    It is the sense of Congress that the United States Agency for 
International Development should continue and expand programming in 
microfinance that adheres to the following principles and basic 
considerations:
            (1) The United States Agency for International Development 
        should advance access to economic opportunities for very poor 
        and vulnerable populations, including orphans and vulnerable 
        children, single mothers, those affected by HIV/AIDS, those 
        affected by regional conflict, and the food insecure to ensure 
        that the poorest are included and benefit from broad-based 
        economic growth.
            (2) To the greatest extent possible, the United States 
        Agency for International Development should set clear country 
        or regional funding targets based on greatest need, as 
        evidenced by poverty indicators and should strive to fill a gap 
        in unmet demand by the very poor for financial services.
            (3) The United States Agency for International Development 
        should place special emphasis on aiding poor women, who 
        constitute a substantial portion of microentrepreneurs and who 
        face a wide range of disadvantages, as a means of promoting 
        financial self-reliance, empowering gender equality, including 
        land rights and access, and bringing a host of development 
        benefits to families through improved nutrition, health, and 
        education.
            (4) The United States Agency for International Development 
        should ensure that providers of financial services benefitting 
        from United States Agency for International Development 
        assistance adhere to client protection principles, such as the 
        Client Protection Principles of the ``Smart Campaign'', and 
        take concrete steps to protect clients from potentially harmful 
        financial products and to support equitable and fair treatment, 
        including--
                    (A) avoidance of over-indebtedness;
                    (B) transparent and responsible pricing;
                    (C) appropriate collection practices;
                    (D) mechanisms for redress of grievances; and
                    (E) privacy of client data.
            (5) The United States Agency for International Development 
        should encourage providers of financial services benefitting 
        from assistance programs to provide cost-effective services and 
        make steady progress toward full financial sustainability as a 
        means to achieve large-scale impact and institutional 
        viability, while also maintaining focus on their target 
        population of poor micro-entrepreneurs and smallholder farmers.
            (6) The United States Agency for International Development 
        should strive to increase access to financial services to poor 
        and very poor, rural, and other underserved populations by 
        supporting a diverse range of financial intermediaries, 
        including nongovernmental organizations and private and state-
        owned banks; postal and savings banks and savings and credit 
        cooperatives; voluntary savings associations; member-owned 
        community organizations; and other non-bank intermediaries, 
        such as mobile network operators, finance, and insurance 
        companies.
            (7) The United States Agency for International Development 
        should promote and make use of existing technologies that show 
        promise for lowering costs, managing risks, and rapidly scaling 
        up access to financial products and services, including mobile 
        phones, smart phones, tablets, point-of-sale devices linked to 
        smart cards, automatic teller machines (ATMs), geographic 
        information system (GIS) mapping, and cloud computing, among 
        other information and communication technologies (ICT).
            (8) The United States Agency for International Development 
        should make efforts to identify and support smaller, community-
        led partner organizations, including local collectives and 
        consortia.

SEC. 4. SENSE OF CONGRESS ON EXPANDED INTEGRATED APPROACHES.

    It is the sense of Congress that the next generation of programming 
in microfinance and microenterprise development should advance 
holistic, integrated strategies that focus on the myriad financial and 
non-financial needs, including nutrition, health, and education, of 
households, as well as the functioning of enterprises, markets, and 
their inter-relationships in the economy.

SEC. 5. HOUSEHOLD-BASED APPROACHES.

    (a) Responsive Financial Services.--The Administrator of the United 
States Agency for International Development shall promote responsive 
financial services to meet the diverse needs of poor households for 
cash flow management and asset accumulation by supporting the 
development of savings, remittances, and money transfer services.
    (b) Consumption Smoothing, Risk Aggregation, and Mitigation.--The 
Administrator of the United States Agency for International Development 
shall promote tools that aggregate risks, mitigate shocks, and smooth 
consumption, such as insurance and savings deposit services, so that 
the poor can better manage, cope with, and recover from expected and 
unexpected income fluctuations and crises like family emergencies and 
crop failures.
    (c) Partners.--The Administrator of the United States Agency for 
International Development shall identify and support partners that 
support informal savings-led and asset building approaches to 
microfinance, including organizations that work to provide linkages 
between savings-led groups to institutions in the formal financial 
sector.
    (d) Social Protection Programs.--Because some people are too poor 
or otherwise unable to make use of microfinance or microenterprise 
development services without special assistance to prepare them for 
participation, the Administrator of the United States Agency for 
International Development should identify and support organizations 
that link social protection programs, including food assistance, cash 
or asset transfers, life and livelihood skills development, and health 
and nutrition education, with microfinance services, savings services, 
and business development services. Such linkages should attempt to 
enable poor people to stabilize food consumption, survive extreme 
poverty, develop sustainable livelihoods, and take advantage of 
economic opportunities.

SEC. 6. ENTERPRISE AND MARKET-BASED APPROACHES.

    (a) Interventions.--The Administrator of the United States Agency 
for International Development shall align household-level interventions 
for the poor with interventions that catalyze more inclusive markets 
and link the poor to expanding economic opportunities.
    (b) Development of Financial Products.--The Administrator of the 
United States Agency for International Development shall support the 
development of a range of financial products adapted to the needs of 
enterprises, including working capital for inputs, labor, and 
production services; long-term asset finance; and agriculture, animal 
husbandry, and rural enterprise loans. Such products should be provided 
through a diversity of financing schemes, including financiers along 
the value chain such as input suppliers, traders, and processors.
    (c) Support for Agriculture Specific Tools.--The Administrator of 
the United States Agency for International Development shall support 
microfinance institutions and providers that are using agriculture-
specific tools, including--
            (1) household profiling, crop analysis, and land mapping;
            (2) diversification of loan portfolio to include a variety 
        of sectors and crops;
            (3) linkages to extension and formal financial services; 
        and
            (4) linking farmers to clients and larger supply chains.
    (d) Linked Approaches.--To ensure that the poor are not left out of 
economic growth strategies, the Administrator of the United States 
Agency for International Development shall focus investments on linking 
microenterprises into global, regional, and local value chains where 
they have a comparative advantage. The Agency should consider issues 
such as the business enabling environment, market competitiveness, 
inter-firm cooperation, firm-level upgrading, and the relationships 
between firms that create incentives or disincentives for investing in 
improved performance or upgrading.
    (e) Support for Small- and Medium-Sized Enterprises.--The 
Administrator of the United States Agency for International Development 
should consider support for small- and medium-sized enterprises as a 
means to improve productivity and competitiveness in key subsectors in 
which large numbers of poor micro-entrepreneurs participate, as well as 
to strengthen the channels, such as employment, by which the benefits 
of growth are transmitted to the poor.

SEC. 7. MEASURING AND REPORTING RESULTS.

    (a) Modification of Poverty Assessment Tools.--The Administrator of 
the United States Agency for International Development shall modify the 
Poverty Assessment Tools (PATs) of the Agency so that partner 
organizations can use them for expanded data management purposes.
    (b) Alternatives to Poverty Assessment Tools.--Notwithstanding any 
other provision of law, not later than one year after the date of the 
enactment of this Act, the Administrator of the United States Agency 
for International Development shall identify and approve alternatives 
to the Poverty Assessment Tools, such as those commonly used within the 
industry and development community.

SEC. 8. FINANCIAL ACCESS AND MICROENTERPRISE INNOVATION FUND.

    (a) Establishment.--The Administrator of the United States Agency 
for International Development is authorized to utilize one percent of 
the Agency's development assistance account budget for fiscal years 
2013 through 2017 for the creation of a financial access and 
microenterprise innovation challenge fund.
    (b) Use of Fund.--The fund established under this section shall be 
used to--
            (1) identify, test, and support cost-effective and 
        innovative products and technologies that improve the delivery 
        of financial services to the poor and very poor, particularly 
        in rural locations;
            (2) identify, test, and support new microfinance and 
        microenterprise products, services, and delivery systems that 
        show potential to become cost-effective at large scale; and
            (3) help transition such methods and technologies to 
        widespread adoption.
    (c) Grants.--The financial access and microenterprise innovation 
challenge fund shall make grants to organizations and companies, 
including those interested in eventual commercialization. Where 
appropriate, grants should reward or require recipients to 
substantially invest their own funds. The mechanisms may include 
challenge grants that require recipients to match grant funds with 
their own funds in minimum ratios and bounties for achievement of 
targets, such as the number of poor customers reached.

Summary: Microfinance and Microenterprise Enhancement Act of 2011 - Expresses the sense of Congress that the United States Agency for International Development (USAID) should expand specified microfinance programming. Directs USAID to: (1) modify the Poverty Assessment Tools so that partner organizations can use them for expanded data management purposes, (2) align household-level interventions with interventions that link the poor to expanding economic opportunities, (3) support the development of financial products adapted to the needs of enterprises, (4) support microfinance institutions and providers that are using agriculture-specific tools, (5) promote financial services to meet the needs of poor households for cash flow management and asset accumulation, and (6) support partners that provide informal savings-led and asset building approaches to microfinance. Urges USAID to: (1) consider support for small- and medium-sized enterprises as a means to improve productivity and competitiveness in key subsectors in which large numbers of poor micro-entrepreneurs participate. And (2) support organizations that link social protection programs with microfinance services, savings services, and business development services. Authorizes USAID to utilize 1 of its development assistance account budget for FY2013 through FY2017 for the creation of a financial access and microenterprise innovation challenge fund that shall: (1) support cost-effective and innovative products and technologies that improve the delivery of financial services to the poor, particularly in rural locations. (2) support new microfinance and microenterprise products, services, and delivery systems that show potential to become cost-effective at large scale. And (3) help transition such methods and technologies to widespread adoption.