PUBLIC LAW 108–484—DEC. 23, 2004

MICROENTERPRISE RESULTS AND

ACCOUNTABILITY ACT OF 2004

118 STAT. 3922 PUBLIC LAW 108–484—DEC. 23, 2004

Public Law 108–484

108th Congress

An Act

To amend the Foreign Assistance Act of 1961 to improve the results and accountability of microenterprise development assistance programs, and for other purposes.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Microenterprise Results and

Accountability Act of 2004’’.

SEC. 2. FINDINGS AND POLICY.

Congress finds and declares the following:

(1) Congress has demonstrated its support for microenterprise development assistance programs through the enactment

of two comprehensive microenterprise laws:

(A) The Microenterprise for Self-Reliance Act of 2000

(title I of Public Law 106–309; 114 Stat. 1082).

(B) Public Law 108–31 (an Act entitled ‘‘An Act 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 program under those Acts, and

for other purposes’’, approved June 17, 2003).

(2) The report on the effectiveness of the United States

Agency for International Development’s microfinance program,

prepared by the Consultative Group to Assist the Poor, rated

the Agency in the top tier of the 17 donors in this field.

(3) The Comptroller General, in a report dated November

2003, found that the United States Agency for International

Development has met some, but not all, of the key objectives

of such microenterprise development assistance programs.

(4) The Comptroller General’s report found, among other

things, the following:

(A) Microenterprise development assistance generally

can help alleviate some impacts of poverty, improve income

levels and quality of life for borrowers and provide poor

individuals, workers, and their families with an important

coping mechanism.

(B) Microenterprise development assistance programs

of the United States Agency for International Development

have encouraged women’s participation in microfinance

projects and, according to data of the Agency, women have

comprised two-thirds or more of the micro-loan clients in

Agency-funded microenterprise projects since 1997.

22 USC 2211

note.

22 USC 2151

note.

Microenterprise

Results and

Accountability

Act of 2004.

Dec. 23, 2004

[H.R. 3818]

PUBLIC LAW 108–484—DEC. 23, 2004 118 STAT. 3923

(5)(A) The Comptroller General’s report recommends that

the Administrator of the United States Agency for International

Development review the Agency’s ‘‘microenterprise results

reporting’’ system with the goal of ensuring that its annual

reporting is complete and accurate.

(B) Specifically, the Administrator should review and

reconsider the methodologies used for the collection, analysis,

and reporting of data on annual spending targets, outreach

to the very poor, sustainability of microfinance institutions,

and the contribution of Agency’s funding to the institutions

it supports.

SEC. 3. MICROENTERPRISE DEVELOPMENT ASSISTANCE.

Chapter 2 of part I of the Foreign Assistance Act of 1961

(22 U.S.C. 2166 et seq.) is amended by inserting after title V

the following new title:

‘‘TITLE VI—MICROENTERPRISE DEVELOPMENT

ASSISTANCE

‘‘SEC. 251. FINDINGS AND POLICY.

‘‘Congress finds and declares the following:

‘‘(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 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

programs should target both rural and urban poor.

‘‘(5) Microenterprise programs have been successful and

should continue to empower vulnerable women in the developing world. The Agency should work to ensure that recipients

of microenterprise and microfinance development assistance

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 have been

successful 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.

22 USC 2211.

118 STAT. 3924 PUBLIC LAW 108–484—DEC. 23, 2004

‘‘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 to microfinance and microenterprise 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;

‘‘(2) assistance 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, to conduct market analysis and product

development for expanding domestic and international sales,

particularly to United States markets, and to increase their

income and build their assets;

‘‘(3) capacity-building for microfinance and microenterprise

institutions in order to enable them to better meet the credit,

savings, and training needs of microfinance and microenterprise

clients; and

‘‘(4) policy, regulatory programs, and research at the

country level that improve the environment for microfinance

and microenterprise clients and institutions that serve the poor

and very poor.

‘‘(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.

‘‘(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 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.

‘‘(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 and shall especially

provide the greatest possible resources to the poor and

very poor. When administering assistance under this section, the Administrator shall—

Establishment.

President.

22 USC 2211a.

PUBLIC LAW 108–484—DEC. 23, 2004 118 STAT. 3925

‘‘(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 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.

‘‘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

for the assistance and expresses such goals in an objective

and quantifiable form, to the extent feasible.

22 USC 2211b.

Termination

date.

118 STAT. 3926 PUBLIC LAW 108–484—DEC. 23, 2004

‘‘(2) The monitoring system shall include performance

indicators to be used in measuring or assessing 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. 255. ADDITIONAL AUTHORITIES.

‘‘Notwithstanding any other provision of law, amounts made

available for assistance for microenterprise development assistance

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.’’.

SEC. 4. MICROENTERPRISE DEVELOPMENT CREDITS.

(a) TRANSFER.—Section 108 of the Foreign Assistance Act of

1961 (22 U.S.C. 2151f) is hereby—

22 USC 2212.

22 USC 2211d.

Effective date.

Deadline.

22 USC 2211c.

PUBLIC LAW 108–484—DEC. 23, 2004 118 STAT. 3927

(1) transferred from chapter 1 of part I of the Foreign

Assistance Act of 1961 to title VI of chapter 2 of part I of

such Act (as added by section 3 of this Act); and

(2) inserted after section 255 of the Foreign Assistance

Act of 1961.

(b) REDESIGNATION.—Title VI of chapter 2 of part I of the

Foreign Assistance Act of 1961 is amended by redesignating section

108 (as added by subsection (a)) as section 256.

(c) CONFORMING AMENDMENTS.—Title VI of chapter 2 of part

I of the Foreign Assistance Act of 1961 is amended—

(1) by inserting after the title heading the following:

‘‘Subtitle A—Grant Assistance’’;

(2) by inserting after section 255 the following:

‘‘Subtitle B—Credit Assistance’’; and

(3) in section 256 (as redesignated by subsection (b))—

(A) in the matter preceding paragraph (1) of subsection

(c), by striking ‘‘Administrator of the agency primarily

responsible for administering this part’’ and inserting

‘‘Administrator of the Agency’’; and

(B) in subsection (f)(1)—

(i) by striking ‘‘section 131’’ and inserting ‘‘this

part’’; and (ii) by striking ‘‘$1,500,000 for each of fiscal years

2001 through 2004’’ and inserting ‘‘such sums as may

be necessary for each of the fiscal years 2005 through

2009’’.

SEC. 5. UNITED STATES MICROFINANCE LOAN FACILITY.

(a) TRANSFER.—Section 132 of the Foreign Assistance Act of

1961 (22 U.S.C. 2152b) is hereby—

(1) transferred from chapter 1 of part I of the Foreign

Assistance Act of 1961 to title VI of chapter 2 of part I of

such Act (as added by section 3 of this Act); and

(2) inserted after section 256 of the Foreign Assistance

Act of 1961 (as added by section 4 of this Act).

(b) REDESIGNATION.—Title VI of chapter 2 of part I of the

Foreign Assistance Act of 1961 is amended by redesignating section

132 (as added by subsection (a)) as section 257.

(c) CONFORMING AMENDMENTS.—Title VI of chapter 2 of part

I of the Foreign Assistance Act of 1961 is amended—

(1) by inserting after section 256 the following:

‘‘Subtitle C—United States Microfinance Loan Facility’’; and

(2) in section 257 (as redesignated by subsection (b))—

(A) in subsection (b)(3), by striking ‘‘2001 and 2002’’

and inserting ‘‘2005 through 2009’’;

(B) in the matter preceding subparagraph (A) of subsection (d)(1), by striking ‘‘this part for the fiscal year

2001, up to $5,000,000’’ and inserting ‘‘this part for each

of the fiscal years 2005 through 2009, such sums as may

be necessary’’; and

(C) by striking subsection (e).

22 USC 2213.

22 USC 2152b,

2213.

22 USC 2213.

22 USC 2212.

22 USC 2151f,

2212.

118 STAT. 3928 PUBLIC LAW 108–484—DEC. 23, 2004

SEC. 6. MISCELLANEOUS PROVISIONS.

Title VI of chapter 2 of part I of the Foreign Assistance Act

of 1961 (as added by section 3 of this Act and amended by sections

4 and 5 of this Act) is further amended by adding at the end

the following new subtitle:

‘‘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.

22 USC 2214.

PUBLIC LAW 108–484—DEC. 23, 2004 118 STAT. 3929

‘‘(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.

‘‘(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 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 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;

‘‘(F) a microfinance institution; 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.

‘‘(10) OFFICE.—The term ‘office’ means the office of microenterprise development established under section 252(b)(1).

22 USC 2214a.

Internet.

118 STAT. 3930 PUBLIC LAW 108–484—DEC. 23, 2004

‘‘(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.

‘‘(12) 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.—The term ‘United States-supported microfinance institution’ means a financial intermediary that has received funds

made available under this part for fiscal year 1980 or any

subsequent fiscal year.

‘‘(14) 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).’’.

SEC. 7. SENSE OF CONGRESS.

It is the sense of Congress that, in carrying out title VI of

chapter 2 of part I of the Foreign Assistance Act of 1961 (as

added by section 3 of this Act and amended by sections 4 through

6 of this Act), the Administrator of the United States Agency

for International Development—

(1) where applicable, should ensure that microenterprise

development assistance provided under such title is matched

by recipients with an equal amount of assistance from nonUnited States Government sources, including private donations,

multilateral funding, commercial and concessional borrowing,

savings, and program income;

(2) should include in the report required by section 258

of the Foreign Assistance Act of 1961 (as added by section

6 of this Act) a description of all matching assistance (as

described in paragraph (1)) provided for the prior year by

recipients of microenterprise development assistance under

such title;

(3) should ensure that recipients of microenterprise

development assistance under such title do not expend an

unreasonably large percentage of such assistance on administrative costs;

(4) should not use recipients of microenterprise development assistance under such title to carry out critical management functions of the Agency, including functions such as

strategy development or overall management of programs in

a country; and

22 USC 2211

note.

PUBLIC LAW 108–484—DEC. 23, 2004 118 STAT. 3931

LEGISLATIVE HISTORY—H.R. 3818 (S. 3027):

HOUSE REPORTS: No. 108–459 (Comm. on International Relations).

CONGRESSIONAL RECORD, Vol. 150 (2004):

Nov. 20, considered and passed House.

Dec. 8, considered and passed Senate.

Æ

(5) should consult with the appropriate congressional

committees with respect to the implementation of title VI of

chapter 2 of part I of the Foreign Assistance Act of 1961

not later than 90 days after the date of the enactment of

this Act.

SEC. 8. REPEALS.

(a) FOREIGN ASSISTANCE ACT OF 1961.—Section 131 of the

Foreign Assistance Act of 1961 (22 U.S.C. 2152a) is hereby repealed.

(b) PUBLIC LAW 108–31.—

(1) IN GENERAL.—Section 4 of Public Law 108–31 (22 U.S.C.

2151f note) is amended by striking subsection (b).

(2) CONFORMING AMENDMENT.—Section 4 of Public Law

108–31 is amended by striking ‘‘(a)’’ and all that follows through

‘‘Not later’’ and inserting ‘‘Not later’’.

SEC. 9. REFERENCES.

Any reference in a law, regulation, agreement, or other document of the United States to section 108, 131, or 132 of the Foreign

Assistance Act of 1961 shall be deemed to be a reference to subtitle

B of title VI of chapter 2 of part I of the Foreign Assistance

Act of 1961, subtitle A of title VI of chapter 2 of part I of such

Act, or subtitle C of title VI of chapter 2 of part I of such Act,

respectively.

Approved December 23, 2004.

22 USC 2211

note.

22 USC 2151f

note.

Deadline.