79–010

Calendar No. 670

106TH CONGRESS REPORT

2d Session " ! SENATE 106–335

THE MICROENTERPRISE FOR SELF-RELIANCE

ACT OF 2000

JULY 11, 2000.—Ordered to be printed

Mr. HELMS, from the Committee on Foreign Relations,

submitted the following

REPORT

[To accompany S. 2844]

The Committee on Foreign Relations, having had under consideration a bill to amend the Foreign Assistance Act of 1961 to authorize the provision of assistance to increase the availability of credit

to microenterprises lacking full access to credit, to establish a

Microfinance Loan Facility, and for other purposes, reports favorably thereon and recommends that the bill do pass.

CONTENTS

Page

I. Committee Action .......................................................................................... 1

II. Section-by-Section Analysis .......................................................................... 2

III. Cost Estimate ................................................................................................. 4

IV. Evaluation of Regulatory Impact .................................................................. 6

V. Changes in Existing Law .............................................................................. 6

I. COMMITTEE ACTION

On March 23, 2000 the Committee unanimously ordered reported

S. 2382, the Technical Assistance, Trade Promotion and Anti-Corruption Act of 2000. S. 2382 was reported and placed on the Senate

Legislative Calendar on April 7, 2000, and subsequently referred to

the Committee on Banking, Housing, and Urban Affairs pursuant

to paragraph 1(j)(10) of rule XXV of the Standing Rules of the Senate on April 11, 2000. Paragraph 1(j)(10) of rule XXV of the Standing Rules of the Senate provides that, ‘‘at the request of the Committee on Banking, Housing, and Urban Affairs, any proposed legislation relating to [the International Monetary Fund] reported by

the Committee on Foreign Relations shall be referred to the Committee on Banking, Housing, and Urban Affairs.’’ The Banking
2

Committee has taken no action on S. 2382 as of the writing of this

report.

On Wednesday, June 28, 2000, the Committee on Foreign Relations considered and unanimously approved by voice vote the

Microenterprise for Self-Reliance Act of 2000, which is identical to

Title VI of S. 2382, the Technical Assistance, Trade Promotion, and

Anti-Corruption Act of 2000.

II. SECTION-BY-SECTION ANALYSIS

This act is based largely on S. 1463, the Microenterprise for SelfReliance Act of 1999, introduced on July 29, 1999. Despite the

enormous growth of the world’s economy, over a billion people in

dozens of countries subsist on less than one dollar per day. The

benefits of economic growth have eluded approximately one-fifth of

the world’s population, leaving tremendous poverty in developing

countries around the world. Accordingly, one of the greatest challenges facing the international development community has been

finding ways to extend economic opportunities to these individuals.

Since the 1970s, microenterprise development programs have

been one of the most successful ways to support the end of poverty

in the developing world. Unlike other assistance programs, microenterprise lending programs reach the poorest of the poor with

credit that is repaid by individual borrowers with interest. Microlending programs have demonstrated that if structured correctly,

poverty lending programs can help lift the poorest members of society out of poverty, while repaying loans. In fact, the client repayment rate of these programs has been between 95–98%.

The objective of this act is to ensure the future success of international microenterprise grant and loan programs administered

worldwide by the U.S. Agency for International Development

(USAID). These programs foster self-sufficiency rather than financial dependence.

Sec. 1. Short Title

This section provides the short title for the act will be ‘‘Microenterprise for Self-Reliance Act of 2000’’.

Sec. 2. Findings and Declarations of Policy

This section contains 18 findings on the demand for microenterprise credits, the success with past programs and the need for their

expansion in the developing world.

Sec. 3. Purposes

This section sets forth five main purposes of the Act, each aimed

at bringing microenterprise development to the forefront of the

U.S. assistance effort. The continuation and expansion of commitments made by USAID in its 1994 and 1997 Microenterprise Initiatives are provided for, as are increases in the amount of assistance

devoted to financial services and complimentary business development services reaching the poorest sector in developing countries,

particularly women.
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Sec. 4. Microenterprise Development Grant Assistance

This section adds a new section 132 to the Foreign Assistance

Act of 1961 to authorize appropriations for grants and govern the

use of all microenterprise resources.

Subsection (b)(1) of section 132 authorizes the President to provide grant assistance for programs to increase the availability of

credit and other business development services to microenterprises.

Subsection (b)(2) stipulates that this assistance be provided

through organizations that have a capacity to develop and implement microenterprise development programs.

This section also targets half of all microenterprise resources to

support programs that directly serve the poorest of the poor. These

programs are identified as those that provide credit and other financial services to entrepreneurs who are very poor, with loans defined by the following loan proxies: $1,000 or less in the Europe

and Eurasia region, $400 or less in the Latin America region, and

$300 or less in the rest of the world (in 1995 U.S. dollars).

Subsection (d) of the new section 131 authorizes $150,000,000 for

fiscal year 2001 to carry out these initiatives. Such funds are to include local currencies, are to be drawn from Part I (including chapter 4 of Part II) of the Foreign Assistance Act of 1961 and from the

SEED Act of 1989, relating to aid to East European nations.

Sec. 5. Micro- and Small Enterprise Development Credits

This section amends section 108 of the Foreign Assistance Act of

1961 to authorize the President to provide assistance to increase

the availability of credit to micro- and small enterprises to ensure

the stable growth of developing countries. This assistance includes

loans and guarantees to credit institutions, as well as training programs for both lenders and microentrepreneurs.

Sec. 6. Microfinance Loan Facility

This section adds a new section 133 to the Foreign Assistance

Act of 1961 authorizing the establishment within USAID of a

United States Microfinance Loan 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 longterm development of U.S.-supported microfinance institutions. The

USAID Administrator is authorized to make loans or loan guarantees, drawing from resources of the Facility, to such institutions in

order to prevent bankruptcy caused by the risks noted above. During fiscal year 2001, Congress must be advised 15 days in advance

of making available funds from the Facility.

Subsection (c)(3) gives the USAID Administrator the authority to

issue credit assistance on such terms and conditions, including

fees, as the Administrator may determine. The principal amount of

loans or loan guarantees in any fiscal year with respect to a single

event is limited to $30,000,000.

Subsection (d) authorizes $5,000,000 for fiscal year 2001 for the

subsidy cost of the loans and for administrative expenses. These

funds are to be drawn from those available under Part I of the Foreign Assistance Act of 1961.
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Sec. 7. Report Relating to Future Development of Microenterprise

Institutions

This section is intended to lay a foundation for the future development of the microfinance sector. Subsection (a) requires the

President to prepare and transmit to Congress a report on the most

cost-effective methods and measurements for increasing the access

of poor people to credit, other financial services, and related training. In particular, the Administration should develop a comprehensive strategy to advance the global microenterprise strategy in a

way that maintains market principles while assuring the very poor,

particularly women, obtain access to financial services.

Sec. 8. United States Agency for International Development as Global Leader and Coordinator of Bilateral and Multilateral Microenterprise Assistance Activities

This section contains findings and a sense of the Congress that

the development of the microfinance sector should be included in

multilateral discussions and institutions such as the International

Fund for Agricultural Development (IFAD) and the United Nations

Development Program (UNDP). In addition, the Secretary of the

Treasury should instruct each U.S. Executive Director of the Multilateral Banks (MDBs) to advocate the development of a coherent

and coordinated strategy to support the microenterprise sector.

Sec. 9. Definitions

Section 9 contains definitions of terms used in this act.

III. COST ESTIMATE

In accordance with rule XXVI, paragraph 11(a) of the Standing

Rules of the Senate, the Committee provides the following estimate

of the cost of this legislation prepared by the Congressional Budget

Office:

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, June 29, 2000.

Hon. JESSE HELMS, Chairman,

U.S. Senate,

Committee on Foreign Relations,

Washington, DC.

DEAR MR. CHAIRMAN:

The Congressional Budget Office has prepared the enclosed cost

estimate for the Microenterprise for Self-Reliance Act of 2000.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Joseph C. Whitehill.

Sincerely,

DAN L. CRIPPEN, Director.

Enclosure.
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CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

Summary

The Microenterprise for Self-Reliance Act of 2000 would authorize grants and loans to capitalize institutions that would make very

small loans in developing countries. It also would authorize training and technical assistance to customers and managers of such institutions. In addition, the bill would create a loan facility that

would offer subsidized loans to such institutions should they face

bankruptcy due to natural disasters, wars, or severe financial crisis. CBO estimates that appropriation of the authorized amounts

would result in additional outlays of $145 million over the next five

years. Because the bill would not affect direct spending or receipts,

pay-as-you-go procedures would not apply.

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA)

and would not affect the budgets of state, local, or tribal governments.

Estimated Cost to the Federal Government

The estimated budgetary impact of the bill is shown in the following table. The costs of this legislation fall within budget function 150 (international affairs).

Spending Subject to Appropriation

[By fiscal year, in millions of dollars]

2000 2001 2002 2003 2004 2005

Spending Under Current Law for Microenterprise Grants and Loans:

Budget Authority 1 ............................................................................................ 140 0 0 0 0 0

Estimated Outlays ............................................................................................ 130 126 50 28 18 12

Proposed Changes:

Estimated Authorization Level ......................................................................... 0 157 0 0 0 0

Estimated Outlays ............................................................................................ 0 12 87 28 11 7

Spending Under the Bill for Microenterprise Grants and Loans:

Estimated Authorization Level 1 ....................................................................... 140 157 0 0 0 0

Estimated Outlays ............................................................................................ 130 138 137 55 29 18

1 The 2000 level is the amount appropriated for that year.

Basis of Estimate

Under current law, the Administration provides grants and loans

to small-scale financial institutions through several different programs. The bill would authorize appropriations of $150 million in

2001 for grant assistance. The bill would authorize a program of

micro- and small-enterprise credits, though it does not specify a

funding level. CBO assumes that the credit program would continue at the current funding level of $2 million for administrative

costs and credit subsidies in 2001.

The bill would also create a new loan facility to assist U.S.-sponsored, microfinance institutions that face bankruptcy due to natural disaster, war, or severe national financial crisis. It would authorize up to $5 million for the cost of subsidized loans in 2001.

CBO estimates that outlays from the bill’s authorizations would

total $145 million over the 2001–2005 period, assuming appropriation of the necessary amounts and historical spending patterns.
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Pay-As-You-Go Considerations

None.

Previous CBO Estimate

On April 6, 2000, CBO transmitted a cost estimate for S. 2382,

the Technical Assistance, Trade Promotion, and Anti-Corruption

Act of 2000. This bill contains a subset of the provisions in the earlier bill, and the cost estimates for those provisions are the same.

Intergovernmental and Private-Sector Impact

The Microenterprise for Self-Reliance Act of 2000 contains no

intergovernmental or private-sector mandates as defined in UMRA

and would not affect the budgets of state, local, or tribal governments.

Estimate Prepared By

Federal costs: Joseph C. Whitehill. Impact on state, local, and

tribal governments: Leo Lex. Impact on the private sector: Lauren

Marks.

Estimate Approved By

Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.

IV. EVALUATION OF REGULATORY IMPACT

In accordance with rule XXVI, paragraph 11(b) of the Standing

Rules of the Senate, the Committee has concluded that there is no

regulatory impact from this legislation.

V. CHANGES IN EXISTING LAW

In compliance with paragraph 12 rule XXVI of the Standing

Rules of the Senate, 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, existing law in which no change is proposed is shown in roman):

Foreign Assistance Act of 1961

* * * * * * *

øSEC. 108. PRIVATE SECTOR REVOLVING FUND.—(a) The Congress

finds that the development of private enterprise, including cooperatives, 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. It is therefore in the best interests

of the United States to assist the development of the private sector

in developing countries and to engage the United States private

sector in that process. In order to promote such private sector development, the President is authorized to establish a revolving

fund account in the United States Treasury. All funds deposited in

such account shall, notwithstanding any provision in an appropriation Act to the contrary, be free from fiscal year limitations.

ø(b) Of the funds made available under this chapter in each of

the fiscal years 1986 and 1987, up to $18,000,000 may be deposited

in this account. Such funds used in accordance with the policies
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and authorities of this section shall be in addition to other funds

available for private sector activities under other authorities in this

Act. Any reflows and income arising from activities carried out pursuant to this section, including loan repayments and fee income (as

provided in subsection (e) of this section), shall be deposited into

the revolving fund and remain available to carry out the purposes

of this section. All funds in such account may be invested in obligations of the United States.

ø(c) (1) The agency primarily responsible for administering this

part is authorized to use the funds maintained in this revolving

fund account to furnish assistance in furtherance of the policy of

subsection (a) on such terms and conditions as it may determine.

Amounts in the revolving fund account shall be available for obligation for assistance under this section only to such extent as may

be provided in advance in appropriation Acts. Assistance may be

provided under this section without regard to sections 604(a) and

620(r) of this Act.

ø(2) Assistance under this section may be provided only to support private sector activities which—

ø(A) are consistent with the United States development assistance policies set forth in section 102 of this Act and with

the development priorities of the host country;

ø(B) are the types of activities for which assistance may be

provided under sections 103 through 106 of this Act;

ø(C) will have a demonstration effect;

ø(D) will be innovative;

ø(E) are financially viable;

ø(F) will maximize the development impact appropriate to

the host country, particularly in employment and the use of

appropriate technology; and

ø(G) are primarily directed to making available to small

business enterprises and cooperatives necessary support and

services which are not otherwise generally available.

øIn determining whether an enterprise is a small business enterprise, the agency primarily responsible for administering this part

shall take into consideration the enterprise’s total net fixed assets

and number of employees, together with the relevant definition utilized by the host country government and the International Bank

for Reconstruction and Development and other international organizations.

ø(3)(A) Not more than $3,000,000 may be made available under

this section to support any one project.

ø(B) Not more than 50 per centum of the financial support for

any project may be provided under this section, and a substantial

portion of the financial support for a project assisted under this

section must be provided by sources within the host country.

ø(C) Not more than 20 per centum of the assets of the revolving

fund account under this section may be used to support projects in

any one country.

ø(D) In order to maximize the impact on institution building,

loans under this section shall be made primarily to intermediary

entities which provide necessary support and services for private

sector activities.

ø(E) Loans under this section shall be at or near the interest rate

otherwise available to the recipient.
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ø(d) (1) If at any time the assets of the revolving fund account exceeds $100,000,000, the President shall remit the amount in excess of $100,000,000 to the United States Treasury.

ø(2) As used in this section, ‘‘assets’’ includes amounts in the revolving fund account plus the value of investments made with

amounts from the fund plus the current value of outstanding obligations under loans under this section.

ø(3) In addition to the requirement of paragraph (1), at the end

of any fiscal year, the agency primarily responsible for administering this part may determine that amounts in the revolving

fund are sufficient to permit the remittance to the United States

Treasury of an amount equal to a portion or the total amount of

appropriated funds deposited in the revolving fund. Any such remittance shall be deemed to be a decrease in the appropriated

funds in the revolving fund. After remittance has been made of an

amount equal to the total amount of appropriated funds, the revolving fund shall consist and be deemed to consist entirely of nonappropriated funds.

ø(e) A fee may be charged, where appropriate, in carrying out activities with funds from the revolving fund authorized in this section. The amount of any such fee shall be determined by the agency

primarily responsible for administering this part.

ø(f) In the event the revolving fund is terminated, all unobligated

money in the fund at the time of such termination shall be transferred to and become part of the miscellaneous receipts account of

the Treasury.

ø(g) As part of its annual congressional presentation documents

submitted to the Congress, the agency primarily responsible for administering this part shall include a description of projects proposed to be funded from the revolving fund account for that fiscal

year. To the extent that projects are proposed for funding which

are not contained in the annual congressional presentation documents, at least fifteen days’ advance notification shall be provided

to the Congress in accordance with section 634A of this Act.

ø(h) Not later than December 31 of each year, the President shall

submit a comprehensive report which details all projects funded

under this section during the previous fiscal year, all reflows to the

revolving fund account, a status report on all projects currently

contained in the fund’s portfolio. Such reports shall include, but not

be limited to, information regarding numbers and kinds of beneficiaries reached, amounts and kinds of benefits provided by the

funded projects to targeted populations, and a justification for

projects within the context of the goals and objectives of the United

States development assistance program.

ø(i) (1) To carry out the purposes of subsection (a), in addition

to the other authorities set forth in this section, the agency primarily responsible for administering this part is authorized to issue

guarantees on such terms and conditions as it shall determine assuring against losses incurred in connection with loans made to

projects that meet the criteria set forth in subsection (c). The full

faith and credit of the United States is hereby pledged for the full

payment and performance of such guarantees.

ø(2) Loans guaranteed under this subsection shall be on such

terms and conditions as the agency may prescribe, except for the

following:
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ø(A) The agency shall issue guarantees only when it is necessary to alleviate a credit market imperfection.

ø(B) Loans guaranteed shall provide for complete amortization within a period not to exceed ten years or, if the principal

purpose of the guaranteed loan is to finance the construction

or purchase of a physical asset with a useful life of less than

ten years, within a period not to exceed such useful life.

ø(C) No loan guaranteed to any one borrower may exceed 50 percent of the cost of the activity to be financed, or $3,000,000,

whichever is less, as determined by the agency.

ø(D) No loan may be guaranteed unless the agency determines that the lender is responsible and that adequate provision is made for servicing the loan on reasonable terms and

protecting the financial interest of the United States.

ø(E) The fees earned from the loan guarantees issued under

this subsection shall be deposited in the revolving fund account

as part of the guarantee reserve established under paragraph

(5) of this subsection. Fees shall be assessed at a level such

that the fees received, plus the funds from the revolving fund

account placed in the guarantee reserve satisfy the requirements of paragraph (5). Fees shall be reviewed every twelve

months to ensure that the fees assessed on new loan guarantees are at the required level.

ø(F) Any guarantee shall be conclusive evidence that such

guarantee has been properly obtained, and that the underlying

loan as contracted qualifies for such guarantee. Except for

fraud or material misrepresentation for which the parties seeking payment under such guarantee are responsible, such guarantee shall be presumed to be valid, legal, and enforceable.

ø(G) The agency shall determine that the standards used by

the lender for assessing the credit risk of new and existing

guaranteed loans are reasonable. The agency shall require that

there be a reasonable assurance of repayment before credit assistance is extended.

ø(H) Commitments to guarantee loans may be made by the

agency only to the extent that the total loan principal, any part

of which is guaranteed, will not exceed the amount specified in

annual appropriations Acts.

ø(3) To the extent that fees are not sufficient as specified under

paragraph (2)(E) to cover expected future liabilities, appropriations

are authorized to maintain an appropriate reserve.

ø(4) The losses guaranteed under this subsection may be in dollars or in other currencies. In the case of loans in currencies other

than dollars, the guarantees issued shall be subject to an overall

payment limitation expressed in dollars.

ø(5) The agency shall segregate in the revolving fund account

and hold as a reserve an amount estimated to be sufficient to cover

the agency’s expected net liabilities on the loan guarantees outstanding under this subsection; except that the amount held in reserve shall not be less than 25 percent of the principal amount of

the agency’s outstanding contingent liabilities on such guarantees.

Any payments made to discharge liabilities arising from the loan

guarantees shall be paid first out of the assets in the revolving

fund account and next out of other funds made available for this

purpose.¿
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SEC. 108. MICRO- AND SMALL ENTERPRISE DEVELOPMENT CREDITS.

(a) FINDINGS AND POLICY.—Congress finds and declares that—

(1) the development of micro- and small enterprises are a

vital factor in the stable growth of developing countries and in

the development and stability of a free, open, and equitable

international economic system; and

(2) it is, therefore, in the best interests of the United States

to assist the development of the enterprises of the poor in developing countries and to engage the United States private sector

in that process.

(b) PROGRAM.—To carry out the policy set forth in subsection (a),

the President is authorized to provide assistance to increase the

availability of credit to micro- and small enterprises lacking full access to credit, including through—

(1) loans and guarantees to credit institutions for the purpose

of expanding the availability of credit to micro- and small enterprises;

(2) training programs for lenders in order to enable them to

better meet the credit needs of microentrepreneurs; and

(3) training programs for microentrepreneurs in order to enable them to make better use of credit and to better manage

their enterprises.

(c) ELIGIBILITY CRITERIA.—The Administrator of the United

States Agency for International Development shall establish criteria

for determining which entities described in subsection (b) are eligible to carry out activities, with respect to micro- and small enterprises, assisted under this section. Such criteria may include the following:

(1) The extent to which the recipients of credit from the entity

do not have access to the local formal financial sector.

(2) The extent to which the recipients of credit from the entity

are among the poorest people in the country.

(3) The extent to which the entity is oriented toward working

directly with poor women.

(4) The extent to which the entity recovers its cost of lending.

(5) The extent to which the entity implements a plan to become financially sustainable.

(d) ADDITIONAL REQUIREMENT.—Assistance provided under this

section may only be used to support micro- and small enterprise

programs and may not be used to support programs not directly related to the purposes described in subsection (b).

(e) AUTHORIZED USES OF FUNDS.—

(1) IN GENERAL.—Amounts made available to carry out this

section may be used for, among other things—

(A) the subsidy cost, as defined in section 502(5) of the

Federal Credit Reform Act of 1990, for activities under this

section; and

(B) the cost of administration expenses in carrying out

credit activities under this section.

(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
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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) RULE OF CONSTRUCTION.—Amounts authorized to be appropriated under this subsection are in addition to amounts

otherwise available to carry out this section.

* * * * * * *

SEC. 131. COORDINATED DONOR STRATEGY FOR SUPPORT AND EDUCATION OF ORPHANS IN SUB-SAHARAN AFRICA.

(a) STATEMENT OF POLICY.—It is in the national interest of the

United States to assist in mitigating the burden that will be placed

on sub-Saharan African social, economic, and political institutions

as these institutions struggle with the consequences of a dramatically increasing AIDS orphan population, many of whom are themselves infected by HIV/AIDS. Effectively addressing that burden

and its consequences in sub-Saharan Africa will require a coordinated multidonor strategy.

(b) DEVELOPMENT OF STRATEGY.—The President shall coordinate

the development of a multidonor strategy to provide for the support

and education of AIDS orphans and the families, communities, and

institutions most affected by the HIV/AIDS epidemic in sub-Saharan Africa.

(c) AUTHORITY.—Assistance made available under this section

may be made available notwithstanding any other provision of law.

(d) DEFINITION.—In this section, the term ‘‘HIV/AIDS’’ means,

with respect to an individual, an individual who is infected with—

(1) the human immunodeficiency virus (HIV); or

(2) HIV and the acquired immune deficiency virus (AIDS).

SEC. 132. MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE.

(a) FINDINGS AND POLICY.—Congress finds and declares that—

(1) the development of microenterprise is a vital factor in the

stable growth of developing countries and in the development of

free, open, and equitable international economic systems;

(2) it is therefore in the best interest of the United States to

assist the development of microenterprises in developing countries; and

(3) the support of microenterprise can be served by programs

providing credit, savings, training, technical assistance, and

business development services.

(b) AUTHORIZATION.—

(1) IN GENERAL.—In carrying out this part, the President is

authorized to provide grant assistance for programs to increase

the availability of credit and other services to microenterprises

lacking full access to capital training, technical assistance, and

business development services through—

(A) grants to microfinance institutions for the purpose of

expanding the availability of credit, savings, and other financial services to microentrepreneurs;

(B) grants to microenterprise development institutions for

the purpose of training, technical assistance, and business

development services for microenterprises to enable them to

make better use of credit, to better manage their enterprises,

and to increase their income and build their assets;
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(C) capacity building for microenterprise development institutions in order to enable them to better meet the credit

and training needs of microentrepreneurs; and

(D) policy and regulatory programs at the country level

that improve the environment for microentrepreneurs and

microenterprise development institutions that serve the poor

and very poor.

(2) IMPLEMENTATION.—Assistance authorized under paragraph (1) shall be provided through organizations that have a

capacity to develop and implement microenterprise programs,

including particularly—

(A) United States and indigenous private and voluntary

organizations;

(B) United States and indigenous credit unions and cooperative organizations; or

(C) other indigenous governmental and nongovernmental

organizations.

(3) TARGETED ASSISTANCE.—In carrying out sustainable poverty-focused programs under paragraph (1), 50 percent of all

microenterprise resources shall be targeted to very poor

enterpreneurs, defined as those living in the bottom 50 percent

below the poverty line as established by the national government of the country. Specifically, such resources shall be used

for—

(A) direct support of programs under this subsection

through practitioner institutions that—

(i) provide credit and other financial services to entrepreneurs 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

(ii) can cover their costs in a reasonable time period;

or

(B) 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 subparagraph (A)(i)) whether they are

provided by microfinance institutions or by specialized

business development services providers.

(4) SUPPORT FOR CENTRAL MECHANISMS.—The President

should continue support for central mechanisms and missions

that—

(A) provide technical support for field missions;

(B) strengthen the institutional development of the intermediary organizations described in paragraph (2);

(C) share information relating to the provision of assistance authorized under paragraph (1) between such field

missions and intermediary organizations; and

(D) support the development of nonprofit global microfinance networks, including credit union systems, that—
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(i) are able to deliver very small loans through a vast

grassroots infrastructure based on market principles;

and

(ii) act as wholesale intermediaries providing a

range of services to microfinance retail institutions, including financing, technical assistance, capacity building and safety and soundness accreditation.

(5) LIMITATION.—Assistance provided under this subsection

may only be used to support microenterprise programs and may

not be used to support programs not directly related to the purposes described in paragraph (1).

(6) DEFINITION.—In this subsection, the term ‘‘business development services’’ means support for the growth of microenterprises through training, technical assistance, marketing assistance, improved production technologies, and other services.

(c) MONITORING SYSTEM.—In order to maximize the sustainable

development impact of the assistance authorized under subsection

(a)(1), the Administrator of the United States Agency for International Development shall establish a monitoring system that—

(1) establishes performance goals for such assistance and expresses such goals in an objective and quantifiable form, to the

extent feasible;

(2) establishes performance indicators to be used in measuring or assessing the achievement of the goals and objectives

of such assistance;

(3) provides a basis for recommendations for adjustments to

such assistance to enhance the sustainable development impact

of such assistance, particularly the impact of such assistance on

the very poor, particularly poor women; and

(4) provides a basis for recommendations for adjustments to

measures for reaching the poorest of the poor, including proposed legislation containing amendments to improve paragraph

(3).

(d) LEVEL OF ASSISTANCE.—Of the funds made available under

this part and the Support for East European Democracy (SEED)

Act of 1989, including local currencies, there are authorized to be

available $135,000,000 during fiscal year 2001, and $150,000,000

during fiscal year 2002, to carry out the provisions of this section.

SEC. 133. UNITED STATES MICROFINANCE LOAN FACILITY.

(a) ESTABLISHMENT.—The Administrator is authorized to establish a United States Microfinance 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 shortterm financial movements that threaten the long-term development

of United States-supported microfinance institutions.

(b) DISBURSEMENTS.—

(1) IN GENERAL.—The Administrator shall make disbursements from the Facility to United States-supported microfinance institutions to prevent the bankruptcy of such institutions caused by—

(A) natural disasters;

(B) national wars or civil conflict; or

(C) national financial crisis or other short-term financial

movements that threaten the long-term development of

United States-supported microfinance institutions.
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(2) FORM OF ASSISTANCE.—Assistance under this section shall

be in the form of loans or loan guarantees for microfinance institutions that demonstrate the capacity to resume self-sustained operations within a reasonable time period.

(3) CONGRESSIONAL NOTIFICATION PROCEDURES.—During

each of the fiscal years 2001 and 2002, funds may not be made

available from the Facility until 15 days after notification of the

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

borrower, 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.—

(A) IN GENERAL.—Of the amounts made available to

carry out this part for each of the fiscal years 2000 and

2001, up to $5,000,000 may be made available for—

(i) the subsidy cost, as defined in section 502(5) of

the Federal Credit Reform Act of 1990, to carry out this

section; and

(ii) subject to subparagraph (B), the cost of administrative expenses to carry out this section.

(B) LIMITATION ON ADMINISTRATIVE EXPENSES.—Of the

amount made available under subparagraph (A) to carry
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out this section for a fiscal year, not more than $500,000

may be made available for administrative expenses under

subparagraph (A)(ii).

(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.

(e) DEFINITIONS.—In this section:

(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the

Administrator of the agency primarily responsible for administering this part.

(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term

‘‘appropriate congressional committees’’ means the Committee

on Foreign Relations of the Senate and the Committee on International Relations of the House of Representatives.

(3) UNITED STATES-SUPPORTED MICROFINANCE INSTITUTION.— The term ‘‘United States-supported microfinance institution’’

means a financial intermediary that has received finds made

available under this Act for fiscal year 1980 or any subsequent

fiscal year.

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