Reaching Down and Scaling Up:

Focus on

USAID’s Development Partners

U.S. Agency for International Development

Microenterprise Results Reporting for 1999

September 2000
USAID Microserve Indefinite Quantity Contract Nos. PCE-0406-I-00-6012-00, 

PCE-I-00-96-90012-00, Delivery Order #5, Microenterprise Results Reporting

Submitted by Weidemann Associates, Inc. 

To USAID/Global Bureau/Economic Growth/Office of Microenterprise Development

(USAID/G/EGAD/MD)

By Catherine Neill, Weidemann Associates, Inc. under the direction of Elizabeth Hunt, USAID

Supervisor for MRR, and Katharine McKee, Director, USAID/G/EGAD/MD 
Contents

Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

WHAT ARE MICROENTERPRISES? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FOCUS ON USAID’S DEVELOPMENT PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

TRENDS IN THE FIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Blending Methodologies: The Whole is Greater than the Sum . . . . . . . . . . . . . . . . 8

Leveraging Resources: Stretching USAID Funds . . . . . . . . . . . . . . . . . . . . . . . . . 10

Building Networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Disaster Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

THE MICROENTERPRISE FOR SELF-RELIANCE AND 

INTERNATIONAL ANTI- CORRUPTION ACT OF 2000 . . . . . . . . . . . . . . . . . . . . . . . . 13

SEEDS OF HOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

MICROENTERPRISE FUNDING IN 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

MICROENTERPRISE INSTITUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Microfinance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Business Development Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Policy Advocacy and Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

FUTURE DIRECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Annex A: Microenterprise Results Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Annex B: Summary of USAID Microenterprise Funding 

by Country, 1991-1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Table 1. Types of USAID-Supported Institutions in 1999 . . . . . . . . . . . . . . . . . . . 5

Table 2. Sources of USAID Funds for Microenterprise 

by Appropriation Account, 1990-1999. . . . . . . . . . . . . . . . . . . . . . . . . . 17

Table 3. FY 1999 Funding by Region of Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Table 4. FY 1999 Funding by USAID Bureau . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Table 5. Percentage of USAID Funds Committed to 

Poverty Lending in 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Table 6. Clients of Lending Institutions in 1999 . . . . . . . . . . . . . . . . . . . . . . . . . 21

Table 7. Average Loan Balance and Percentage of Women Clients, 1999 . . . . . 22

Table 8. Number of Savers and Savings Amounts in 1999 . . . . . . . . . . . . . . . . 23

Table 9. Average Repayment and Loan Loss Rates, 1999 . . . . . . . . . . . . . . . . . 24

Table 10. Largest Institutional Reporters in USAID’s Active Portfolio, 1999 . . . . . 25

Table 11. Clients of USAID-Supported Business Development Programs . . . . . . 27

Table 12. USAID’s Active Microenterprise Institutions with 

Survey Respondents in 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Table 13. Microenterprise Institutions Funded in 1999. . . . . . . . . . . . . . . . . . . . . 32

Figure 1. Amount of Portfolio for Lending Institutions in 1999 . . . . . . . . . . . . . . . 21

Figure 2. Clients with Poverty Loans in 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Figure 3. Percentage of Clients in Rural Settings, 1999. . . . . . . . . . . . . . . . . . . . 23

Figure 4. Sustainability of USAID-Supported Institutions, 1999 . . . . . . . . . . . . . . 24

iii

Cover Photo: Courtesy of USAID/Bolivia and the ACCION International Network

Acronyms

ANE Asia and the Near East Region (USAID)

BDS Business Development Services

BRAC Bangladesh Rural Advancement Committee

BRI Bank Rakyat Indonesia

CACEDRF Central America and Caribbean Emergency Disaster Recovery Fund

CIS Credit and Investment Staff

CUES Credit Union Empowerment and Strengthening

CWE Credit with Education

DCS Development Credit Staff (formerly CIS)

EE Europe and Eurasia Region (USAID)

ESF Economic Support Funds

FFH Freedom From Hunger

FSA Freedom Support Act

FY Fiscal Year

ICEG International Center for Economic Growth

K-REP Kenya Rural Enterprise Programme

LAC Latin America and Caribbean Region (USAID)

MBP Microenterprise Best Practices

MEDA Mennonite Economic Development Associates

MFI Microfinance Institution

MRR Microenterprise Results Reporting

NGO Nongovernmental Organization

PVO Private Voluntary Organization

SEED Support for Eastern European Democracy

SEEP Small Enterprise Education and Promotion Network

SEF Small Enterprise Foundation

SEPA Support Program for Artisanal Product Exports

TBDC Thekwani Business Development Center

TCP Tshomisano Credit Program

TIME Transition Institutions Microfinance and Enterprise

USAID United States Agency for International Development

VITA Volunteers in Technical Assistance

WOCCU World Council of Credit Unions

v

Executive Summary

Microenterprises provide stability for millions of poor households around

the world. The United States Agency for International Development (USAID)

has invested nearly $1.3 billion in the last decade in microenterprise development. USAID has long supported microenterprise programs as a part of its

strategy for achieving broad-based economic growth. More recently, microenterprise assistance has proven valuable in reaching those most affected by

economic hardship brought on by natural disaster, conflict, health crisis, or

financial system turbulence. USAID recognizes the need to work simultaneously to achieve sustained economic growth and respond to critical short-term

events. This report presents a summary of USAID’s fiscal year 1999 activities

in support of microenterprises worldwide. In addition, it highlights the ways in

which microenterprise institutions are advancing the field through their efforts

to innovate and adapt to changing market conditions.

Recently the U.S. Congress passed and President Clinton signed the

Microenterprise for Self-Reliance and International Anti-Corruption Act of

2000. This legislation makes microenterprise development a more integral part

of the U.S foreign assistance strategy and ensures that the U.S. will maintain

its position as a global leader in promoting the microenterprise sector.

This year’s microenterprise report focuses on the microenterprise institutions that have made great strides toward providing higher-quality services,

including credit, savings, and business development services, to record numbers of microentrepreneurs around the world. Highlights of this year’s report

include:

 Two million loan clients received services through 277 USAID-assisted

institutions. These institutions had a total portfolio value of $667 million; their

average loan size was $329,1 a sign that USAID-supported institutions are

working with poor and very poor clients.

 An additional 2.5 million clients received loans through one USAIDsupported institution, the Micro Division of Bank Rakyat Indonesia (BRI). Its

loan portfolio was $795 million; the average loan size was $322.2

 Of the 2 million loans (excluding BRI), 69 percent, or more than twothirds, were poverty loans with initial loan sizes of $300 or less in Africa, Asia

and the Near East, $400 or less in Latin America and the Caribbean, and

$1000 or less in Europe and Eurasia.3

vii

1 Institutions provide data on the number of loans with loan value outstanding at the end of their fiscal year. Average loan size represents the average outstanding loan size or balance at the time of reporting.

2 BRI was analyzed separately due to its scale, which exceeds all other USAID-supported institutions in 1999 combined.

3 BRI reported that loans with initial value of $300 or less comprised 44 percent of its total loans to clients.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

 BRI alone provided savings services to 24 million savers. The other

USAID-supported institutions provided savings services to an additional 3 million clients.

 Excluding BRI, 70 percent of the clients of USAID-supported microfinance institutions were women.4

 Loan repayment at these institutions is exceptional, reaching more than

95 percent.5

With $153.5 million in USAID funding channeled to microenterprise in

1999, the agency exceeded its $135 million target. More than two-thirds of

total funding ($107 million) went to support financial services programs or

promote a better policy and regulatory environment for microfinance institutions. Of these funds, 58 percent went to support poverty lending.

An additional $47 million (30 percent of total funding) supported business

development services, including training, marketing, technology transfer, and

counseling to microenterprises. The 1999 survey of USAID-supported organizations that provide business development services found that the clients of

business development service programs are predominantly women and tend to

be located in rural areas. The majority of assisted businesses are ongoing businesses. USAID-supported institutions reported assisting nearly half a million

microenterprise clients in 1999.

Many more institutions are seeing the value of providing quality, demanddriven business services as a means of achieving greater impact. The results can

be seen in improved productivity and income gains to microentrepreneurs and

their households. The agency continues to support innovative business development services providers that have a strong commercial orientation and serve

poor and very poor clients.

While it is relatively inexpensive, policy advocacy on behalf of microenterprises can have a powerful and widespread nationwide effect. Policies and regulations controlling the types of financial services that nongovernmental organizations can provide, for example, will determine the extent to which these

services can be extended to thousands of poor women and men. USAID supports a range of policy efforts to improve the environment for both microenterprise institutions and their clients.

viii

4 Women clients constituted 23 percent of BRI’s clients.

5 Loan repayment at BRI was 97 percent.
Introduction

In a post-Cold War world where political upheavals, natural disasters, and

HIV/AIDS have destabilized economies and societies, the United States

Agency for International Development (USAID) has been a leader in supporting programs that assist those who are most at risk. People whose meager

incomes put them under their country’s poverty line are clearly in this category,

because they have little to fall back on during times of crisis.

Development experience has demonstrated that broad-based economic

growth is essential to poverty reduction. Such growth does not occur overnight;

it is a gradual process occurring over many years and requiring the development

of institutional capacity within communities and the accumulation of assets by

individuals and households. This report presents fiscal year 1999 data summarizing USAID-supported programs that work on two fronts simultaneously:

responding to short-term crises and building toward long-term economic

growth.

Over the past 25 years, USAID’s support to microenterprise development

has helped to create new opportunities for poor entrepreneurs around the

world. This report includes stories that demonstrate how men and women who

face dire conditions in the most distressed areas of the world are able to gradually build a ladder out of poverty for themselves and their families through

hard work and determination. As in past years, we have featured individuals

whose stories remind us that support to microenterprise development can

make a difference.

This report especially highlights the efforts of USAID’s development partners, microenterprise institutions. Local institutions providing services to microenterprises are at the vanguard of support to poor

entrepreneurs. Through their efforts, each year more and more

microentrepreneurs are provided access to safe savings and credit services. Through their innovation and experimentation, services useful to

microenterprises at different stages of development and for different

types of businesses are being identified and refined. Through their

problem-solving initiatives, many challenges facing the most vulnerable populations can be addressed. Standing at the vanguard of change,

these organizations adapt to meet new market demands and often join

forces to advocate for improvements to policies and regulations affecting their clients.

What Are Microenterprises?

Microenterprises are small, often informally organized businesses

that poor people operate. These businesses provide essential income

that is used to feed and clothe families, send children to school, buy

1

Ramula Nakasalire, a member of World Vision’s

Microenterprise Development Network (MED-Net) in

Uganda, sells eggs to hospitals and hotels.

Courtesy of World Vision
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

medicine, and build and repair homes. While many microentrepreneurs focus

their efforts on a single business activity, it is not unusual in the developing

world for men and women to supplement their income and diffuse their risk

by operating multiple business activities concurrently.6

Focus on USAID’S Development Partners

USAID’s contribution to microenterprise development is only as effective as

the work of its implementing partners. No U.S. legislative mandate alone will

ensure that the poor in Bangladesh or Zambia will have ongoing access to

essential financial services. Rather, it is the commitment of thousands of local

and international organizations that brings services to those who need them.

The combination of dedicated practitioners and donors committed to promoting best practice in microenterprise development has been a recipe for success. To achieve its development objective to reach more of the world’s poor,

USAID continues to promote institutional soundness, growth, and innovations that address the economically disadvantaged. USAID also supports creative new models that are able to reach more people, address the needs of poorer clients, and are potentially self-sustaining.

2

Courtesy of Project HOPE

6 The ease of entry into trade and service activities contributes to the size of the microenterprise sector during times of economic crisis.

Project HOPE, Malawi

Where Project HOPE once brought medical help

and relief to crisis areas, it now combines a village

banking methodology with its traditional approach

to promoting health.

Rose Mukhwapa is a fish seller. She is also the

President of the Tiyese (“Let Us Try”) Village Health

Bank, organized by Project HOPE in Malawi. Before

she joined this program six months ago, she was

selling doughnuts. Now she employs two people to

assist her in marketing fish. Since she started her

new business, Rose has adopted her late sister’s

three children and is better able to care for her own

asthma. Her loans also provided her with enough

money to buy fertilizer for her garden.

A meeting of the Tiyese Village Health Bank
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

USAID’s relationship with some of its development partners goes back more

than two decades. Those partners achieving outstanding success have been

encouraged to expand their services and to undertake special projects to

advance the field. USAID’s support to these partners has not always been continuous, rather it has served strategic purposes.

In fiscal year 1999, USAID/Indonesia once again supported one of its oldest development partners, Bank Rakyat Indonesia (BRI). In the early years of

this relationship, USAID supported the growth of BRI’s Unit Desa System,

which consists of small banking centers located throughout the Indonesian

countryside. Each of these offices was empowered to approve loans and collect

savings and time deposits for microentrepreneurs. The system has flourished

and, at the end of 1999, served 2.5 million clients with an average loan size of

$322 and almost 25 million savers. When USAID assistance to the Unit Desa

System was no longer necessary, USAID’s relationship with its long-time partner ended briefly. Today, through a $500,000 USAID grant, the BRI Unit

program is improving its automated information management system, updating and enhancing its BRI Unit training programs, and conducting special

studies to improve effectiveness and outreach.

There is more diversity in the microenterprise field today than ever before.

This variety can be seen in USAID’s portfolio of assisted institutions, although

certain types of institutions are more prevalent in particular parts of the world.

For example, many Asian banks have become fully engaged in working with

the microfinance sector as a result of favorable government policies.

3

Small Enterprise Foundation, South Africa

For the women of Lemondokop Centre, the Tshomisano

Credit Program (TCP) has provided them with the opportunity to significantly improve their lives. Most of the women

did not have a reliable source of income prior to joining

TCP, and most faced the devastating effects of extreme

poverty: food insecurity, poor quality housing, poor clothing, poor sanitation, and the inability to educate their children. Through access to formal financial resources that

were completely unattainable before, these women have

begun to build sustainable businesses that offer reliable

income sources to meet basic household needs.

SEF, a partner of Calmeadow, was founded in 1991 and

today reaches more than 10,000 active clients, 97 percent

of whom are women, with its two programs: TCP and the

Micro-Credit Program. With an outstanding portfolio of approximately US $1.2 million, SEF’s delinquency remains close

to zero. The program operates in the Northern Province of South Africa through a network of nine branch offices.

TCP women at a repayment meeting

Photo by Salene Austin of Calmeadow
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

USAID has seen benefits to the

microenterprise field from supporting different types of organizations. Local nongovernmental

organizations (NGOs), for example, may have small potential outreach but are frequently wellpositioned to provide services to

hard-to-reach clients. Business

associations often have strong

member networks through which

information and technical assistance can be channeled.

USAID funds institutions for

different reasons. In some cases,

support is provided to established

institutions that work with poor

clients to help the organizations

reach full profitability and sustainability so that their operations

can continue beyond the duration

of donor funding. Some organizations funded for this purpose are

World Relief in Cambodia,

MEDA in Nicaragua, and

Opportunity International in

Ghana.7 Since 1995, World Relief

Cambodia has grown from 2,000 clients, to more than 13,500 clients, all

women.

Another reason that USAID supports established organizations is to give

them the resources to work with poorer clients. USAID has funded special programs within commercial banks, such as the Cooperative Bank of Kenya, for

this purpose. While this program is still small, greater access to capital for lending potentially enables banks to provide financial services to larger numbers of

clients. In FY 2000 USAID will provide support to ACCION’s affiliate,

ADMIC, in Mexico, which will be directing its services to microenterprises for

the first time. For the last 20 years this institution has worked with small and

medium-sized businesses.

As some nonprofit institutions have transformed into banks or other regulated institutions, USAID has supported the transformation process. This

enables the institution to mobilize savings and the means to access more loan

4

7 While these organizations were centrally funded, USAID missions frequently support a similar goal.

Compartamos, Mexico

Compartamos is a Mexico City-based

organization dedicated to providing financial services to the country’s selfemployed poor. Until recently, Compartamos operated as a non-profit

organization implementing programs in

microfinance, food and health. With

USAID assistance, Compartamos has

transformed to a private, commercial

institution and significantly expanded its

operations. In 1999, Compartamos

served more than 48,000 women entrepreneurs in rural areas in nine Mexican

states.

With additional USAID funding, Compartamos has launched an exciting new

program that uses handheld computer

technology to substantially cut the time

and cost it takes to make a microloan.

Working with ACCION International, Compartamos created microloan-processing software for the Palm Pilot®, a handheld computer. With this new tool, loan

officers at Compartamos take applications and make loan calculations on the

spot. At the office, data is quickly uploaded to a centralized database.

Alejandra Hernandez Cruz selling

tortillas.

Courtesy of ACCION International
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

capital for microenterprises through interbank lending. USAID has funded this

process in Kenya (K-REP), Mexico (Compartamos), and elsewhere.

In other cases, USAID support goes to promote best practices. This is

accomplished through a variety of means.

 U.S.-based private voluntary organizations (PVOs) with extensive experience in implementation have been funded specifically for the purpose of implementing methodologies that they have helped to refine and for which, in some

cases, they define best practice. FINCA, for example, received funding to

implement its village banking system in Tanzania, while Freedom from Hunger

(FFH) received funding for its Credit with Education (CWE) program in Mali

with credit unions.

 USAID funds international organizations, such as the Grameen Trust, to

support replication and adaptation of the Grameen Bank model that relies on

solidarity groups.

 With USAID funding, centers of excellence have been established that

serve large numbers of organizations across the globe. The Centers for

Microfinance in Nepal, Peru, Poland, and Uganda, for example, are helping to

channel information on current design and practice to many local organizations in those regions.

 USAID also funds organizations, such as PLAN International, with huge

community outreach worldwide to develop expertise in microenterprise development. With a grant from the Office of Private and Voluntary Cooperation

5

Asia & Europe & Latin America

Africa Near East Eurasia1 & Caribbean Worldwide Total

Banks 3 23 6 32

Business Associations 5 8 3 5 21

Consulting 3 5 2 4 3 17

Credit Unions/Cooperatives 7 25 10 37 3 82

For Profits 3 1 1 5

Government Agencies 1 1 1 3

NGOs 45 68 24 82 1 220

Non Bank Financial Institutions 8 4 7 10 29

PVOs 43 26 30 38 32 169

Research/Education 3 6 1 10

Other 4 7 1 12

Total 122 164 89 186 39 600

Table 1. Types of USAID-Supported Institutions in 1999

1 Eurasia includes Kazakstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. The Europe and Eurasia Bureau was formerly

known as the Europe and New Independent States Bureau.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

(PVC), PLAN has developed partnerships with experienced local organizations

to establish sustainable programs that offer financial services to PLAN-assisted

communities.8

Table 1 highlights the active institutions that USAID supported either

directly or indirectly (through an umbrella agreement) in 1999.9 While NGOs

and PVOs constitute 65 percent of USAID-supported institutions worldwide,

in Africa they represent 72 percent. In Asia and the Near East, 57 percent of all

institutions are NGOs or PVOs. Throughout the world, the majority of programs that work directly with clients are implemented by local NGOs or international PVOs. NGOs have indeed risen to the challenge presented by the

huge demand for microenterprise services worldwide. They continue to seek

ways to adapt to meet the changing needs of their clients.

Credit unions are a model that has had tremendous potential and adaptability in reaching the microenterprise sector. As member-based organizations

6

Association Al Amana, Morocco

Volunteers in Technical Assistance (VITA) created the Association

Al Amana in 1997 with USAID funding and relatively modest goals.

Specifically, it aimed at extending a total of 16,750 loans over a 7-year

period through a 14-branch operational structure. Based on the organization's early success, however, VITA modified these goals significantly. With more than 30,000 loans currently outstanding and 47

branch offices, Al Amana is now on a steady path to full selfsufficiency, which it expects to achieve by 2001.

The organization’s clients are poor people working primarily in

Morocco’s cities. Approximately 53 percent of the organization’s

clients are female.

Al Amana uses a model developed locally to provide loans to

microenterprises for working capital and fixed assets. Loan sizes

range from about $50 to about $500, with an average loan size of around $250. Al Amana is now experimenting with

the provision of cost-effective, tailored business development services to its clients through innovative video technology.

One Al Amana client added a $200 loan to her

savings to buy a hair dryer for her salon.

Courtesy of VITA

8 PLAN estimates that over 7 million people benefit from its programs in 43 countries around the world. With assistance from PVC, PLAN acts as

both a donor and a partner, supporting institutional sustainability by assisting with feasibility analysis, planning, management, and monitoring.

9 Umbrella agreements provide funding to an institution that serves as a conduit for funds or technical assistance to other institutions.

10 Jonathan Morduch, “The Microfinance Promise,” Journal of Economic Literature, (December 1999): 1569-1614.

“The microfinance movement has lifted the profile of NGOs. While government failures become

increasingly evident, NGOs have had the energy, dedication, and financial resources to pursue

required legislative changes and institutional experimentation.” 10
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

found throughout much of the world, USAID has supported credit unions in

their efforts to provide more services to self-employed entrepreneurs in addition to formal sector workers and their families. This work has been funded in

all regions, but especially in Latin and Central America, Asia, and Eastern

Europe. The credit union movement has shown its adaptability to a variety of

legal and regulatory environments.

There were 23 banks in the Asia/Near East region supported by USAID in

FY 1999. The greater involvement of banks in the microenterprise sector is

being felt worldwide. With USAID’s backing, NGOs have been able to seek

bank financing directly to dramatically expand their loan portfolios (see

PRIDE/Finance box, page 10).

For-profit institutions comprise nearly 14 percent of all USAID-assisted

institutions if banks, non-bank financial institutions, international consulting

firms, and other for-profits are included. The number of for-profit organizations in USAID’s portfolio should not be surprising since USAID promotes

profitability as a means of building greater institutional self-reliance and scale.

Many of the non-bank financial institutions were, in fact, formerly NGOs that

reached a level of scale and profitability at which formal regulation made sense.

Non-bank financial institutions have been on the rise because many more

countries have been working toward specialized licensing of microfinance institutions. USAID has supported efforts to accomplish this in several countries

because licensing and effective regulation can protect clients and enable institutions to serve more clients through savings mobilization.

Business and trade associations offer expertise in business development and

strong networks through which services can be provided to

microentrepreneurs. In Egypt, USAID works through a number

of business associations to provide financial services to their members. In Peru, USAID has an umbrella agreement with ADEX, an

export association, to provide assistance to several NGOs that are

helping poor microentrepreneurs successfully develop high-end

exports in handicrafts, shoes, and apparel.11 The NGOs provide a

range of business development services directly to microentrepreneurs, such as market research, business consulting, and new

product development and testing.

USAID’s partners also include research institutions and government agencies. In Europe and Eurasia, in particular, the use of

research or educational institutions to promote microenterprise is

more common than in other regions, as they have proved to be

effective in undertaking much-needed policy research and advocacy on behalf of microenterprises. On occasion, government

agencies may also receive USAID funding. In Bolivia, for

7

11 ADEX is also the umbrella through which COPEME, the national consortium of Peruvian NGOs working with microenterprises, receives funding.

With a loan from Opportunity International’s Albanian

partner, PSHM, Ismete Demo opened a shop in Tirana.

Courtesy of Opportunity International
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

example, USAID supports efforts on behalf of the government’s banking

agency to adapt the regulatory framework for NGOs operating as microfinance

institutions.

TRENDS IN THE FIELD

Because it is impossible to report on all the ways in which USAID works

with its partners to advance microenterprise worldwide, several interesting

developments will be highlighted. These include:

 Efforts to blend methodologies to achieve a broader impact.

 Different means of leveraging donor resources.

 The promotion of national and international networks.

 Ways of helping microenterprise institutions and their clients

survive crises.

BLENDING METHODOLOGIES: 

THE WHOLE IS GREATER

THAN THE SUM

USAID supports a variety of savings and credit methodologies, such

as solidarity groups, credit unions,

village banks, and individual loan

programs. While each approach has

its merits, a recent USAID study also

noted that there has been diffusion

or blending of methodologies as

microenterprise practitioners seek to

expand client services and pursue

market share.12 After FINCA established its village banks to fill a need

that credit unions were not meeting,

other large multisectoral PVOs, such

as CARE and Catholic Relief

Services, followed by setting up village banks. Freedom from Hunger

(FFH) then elaborated on FINCA’s

model by adding a component,

8

12. Larry Frankel, Jeff Ashe and Gloria Almeyda, “Synergy in Microfinance Programs: Lessons from the Field,” U.S. Agency for International

Development, Washington, D.C., September 1999.

ApproTEC, Kenya

ApproTEC is a facilitator NGO supported by USAID/Kenya that works through

partner private sector suppliers to market

technology-based services to microentrepreneurs in Africa. Because ApproTEC has

focused on developing technologies that

enhance productivity for agribusinesses, it

has catalysed substantial investments by

local private sector companies to build a

significant new industry. Each year

ApproTEC relies less and less on donor

support for its promotion program.

With USAID assistance, ApproTEC is

commercializing a new, very low-cost irrigation pump that is appropriate for poor

entrepreneurs. ApproTEC’s role has been

to ensure high-quality production and develop the market for this pump

through a marketing and promotion campaign. ApproTEC’s SuperMoneyMaker pumps are now being profitably manufactured by five engineering firms in Kenya and sold by more than 75 retail outlets. The pump

owners’ high profit margins have created a huge demand for more pumps.

The average annual profit earned from land irrigated using this pump is

$1,250, which is above Kenya’s poverty line ($810) and more than twice the

average profit earned without pumps ($530).

The Super MoneyMaker pump is

used for crops grown for local

consumption, rather than for

export.

Courtesy of ApproTEC
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

Credit with Education, to educate women on health and

business issues. Other PVOs, such as Helen Keller

International and Project HOPE have now adapted CWE

to their child survival programs. Later FFH looked to

existing credit unions as another vehicle for expanding its

CWE program in Mali, Burkina Faso, and the

Philippines.

The growing convergence or blending of microfinance

products, services, and clientele among credit unions and

other microfinance institutions is a positive trend for

microenterprise development. Where credit unions have,

for the most part, developed as more sustainable institutions, they traditionally have been less accessible to the

poor and to microenterprises. Microfinance institutions,

on the other hand, have always focused on products and

services for microentrepreneurs and have had much more

to learn about institutional viability. Seeking to extend their services to the

same clientele has led to a collaborative effort between credit unions and PVOs,

resulting in stronger institutions, more microenterprise products, and greater

outreach to the poor.

As an example of this development, in the Philippines, the World Council

of Credit Unions (WOCCU) and FFH have collaborated with USAID assistance to manage the Credit Union Empowerment and Strengthening Project

(CUES). CUES has been highly praised for revitalizing failing credit institutions and giving them new relevance for their members. The model credit

union program has increased savings mobilization and recycled the savings into

microenterprise loans. Because of the previous high delinquency rate in

Filipino credit cooperatives, the program has focused on educating members

about the importance of loan repayment and teaching cooperatives how to

monitor and collect delinquent loans.

Where WOCCU brought knowledge of credit union principles and management, FFH had experience in reaching a poorer clientele in the Philippines.

Together these organizations have teamed up to produce a financially sound

program with extensive outreach to the poor of Mindanao. Twelve local cooperatives representing more than 50,000 members are involved in CUES.

9

Crispina Canales and her husband in their newly expanded restaurant

Courtesy of WOCCU

“I was very impressed by the strengthening activities being undertaken by CUES partner

cooperatives in order to achieve Model Credit Union status and the implementation of international

standards in their operations.”

The Honorable Pantaleon D. Alvarez, House of Representatives, Republic of the Philippines
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

Another example of how microenterprise practitioners are integrating different approaches to meet their current clients’ needs and

attract new clients can be observed in the field operations of

ACCION International, Opportunity International, and VITA.

These PVOs are now providing specialized business support services on a wider scale within the context of their microfinance programs rather than requiring credit clients to undergo training.

Business development services are provided to an overlapping but

distinct client base with a demand for technical or managerial business assistance. Combining business development services and

financial services in this way reflects current thinking in the field

that many microentrepreneurs need more than credit to increase

returns on their businesses and are willing to pay if they perceive

the services as valuable.

LEVERAGING RESOURCES: STRETCHING USAID FUNDS

A daunting challenge to microenterprise practitioners has been the escalating demand for financial services without a proportional increase in donor

funding. Once again, microenterprise institutions have been on the vanguard

of change as they have found ways to leverage donor funding in limited

amounts to achieve greater access to capital and expand client services. One

example is the recycling of loan

repayments into new loans, which

generates new benefits to program

participants. USAID funds provided

to an organization for loan capital in

1997, for example, are likely to have

been recycled as many as 12 times by

the year 2000.13

Donor funding can also be leveraged through the provision of guarantees to back loans made to microentrepreneurs. USAID is providing

loan guarantees to banks in Bolivia,

Ecuador, Haiti, and Honduras to

promote microfinance. USAID/

Haiti has offered risk-sharing loan

portfolio guarantees to two banks,

Sociétè Génerale de Banque S.A.

(SOGEBANK) and Sociétè Financière Haitienne de Développement

10

Two clients of MEDA/Bolivia’s San Luis Savings and Credit

Cooperative

Courtesy of MEDA

13 This would be the case for village banks that generally have client loan terms of three months or less.

PRIDE/Finance, Guinea

In 1998, an estimated two-thirds of Guinea’s economically active population was employed in the informal sector, and 62 percent of Guinea’s gross

domestic product came from the informal economy. Still recovering from the

rule of Sékou Touré, which had devastated the once-prosperous agricultural sector, Guinea was also trying to cope with a swelling refugee population

from troubled Guinea Bissau, Liberia, and Sierra Leone.

USAID has supported PRIDE/Finance in Guinea since the organization

was established in 1991. VITA, a U.S. PVO, has provided technical assistance to PRIDE/Finance since 1993. In 1998, PRIDE/Finance expanded

throughout Guinea and was operating 16 branches, with a loan portfolio of

9,000 loans valued at $1,255,763 and an average loan size of $140. After

months of negotiations with the government of Guinea, USAID agreed to

fund VITA’s continued technical support and provide additional loan capital

to PRIDE/Finance. The arrangement includes forging a unique relationship

with Riggs Bank in Washington, D.C. that established a $2.6 million “U.S.

Guinea Trust” to leverage additional capital. The timeline calls for PRIDE/

Finance to be self-sustaining by December 2002.
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

S.A. (SOFIHDES) for medium to

long-term microenterprise loans.

Loan sizes to microentrepreneurs

through the commercial banks range

from $230 to $3,500. USAID/

Haiti’s program is designed to

encourage the Haitian commercial

banking sector to engage in making

such loans to microenterprises.14

There is a growing trend by

microfinance institutions to use

commercial financing as a means of

leveraging scarce donor funds. With

USAID’s backing, NGOs have been

able to seek bank financing directly

to dramatically expand their loan

portfolios.

BUILDING NETWORKS

Another important area that USAID supports and where microenterprise

development organizations are taking the lead is in the promotion of networks.

The creation of national and international networks for the dissemination of

best practices and technical assistance has greatly enriched the microenterprise

community. Practitioner associations, such as the SEEP Network,15 have been

instrumental in advancing and disseminating research on developments in both

microfinance and business development services.

USAID supports national associations, such as COPEME in Peru, that provide important services to its members, including a credit bureau, performance

indicator reports, training and technical assistance. USAID also recently funded a network training that the Ghana Microfinance Institutions Network

(GHAMFIN) and SEEP organized to strengthen services and promote best

practices for networks in Benin, Burkina Faso, Cameroon, Ghana, Malawi,

Mauritania, Namibia, Nigeria, Peru, the Philippines, Uganda, and Zimbabwe.

The PVO community, in conjunction with USAID, is also strengthening its

networks of local affiliates. USAID’s Office of Private and Voluntary Cooperation and PVOs are jointly exploring innovative forms for working with overseas partners to build institutional capacity. Two elements being addressed are

11

FINCA, Kosovo

Isuf Morina, 36, was with his four children in the first floor of his house in

Ostrozub, a small village in southern Kosovo, when a grenade exploded on

the third floor. His family survived but the house was completely destroyed.

For three months, Isuf, his children, and other villagers hid in the mountains,

where they had buried food in anticipation of war.

Isuf and his children now live in one room of a neighboring house. Isuf’s

business, a small grocery store, was destroyed by fire. He has managed to

restore part of the shop and is slowly rebuilding his business with the help of

a FINCA loan.

Now the chairman of the Shpresa (“Hope”) village banking group in

Malishevo, Isuf plans to invest his FINCA loan in new inventory, including

cosmetics and perfumes. Isuf’s long-term plan is to purchase a large freezer

to store chickens and other meat to sell wholesale to shops and restaurants

in Malishevo. As his business grows, he will hire workers and purchase a

sausage-making machine. With his profits, he will rebuild his house and send

his four children to university. It will take time, Isuf says, but he will rebuild.

14 The program is structured similarly to the portable guarantee loan program that USAID’S Global Bureau, Office of Development Credit Staff, formerly Credit and Investment Staff (CIS), operates.

15 The SEEP (Small Enterprise Education and Promotion) Network is an association of international NGOs that support micro and small business

programs in the developing world. With more than 50 members based in North America, the Network aims to promote learning by its member

organizations and their southern affiliates and partners. SEEP also works to develop comparable networks and consortia throughout the world.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

the need for mentoring relationships with smaller organizations and innovation

in design and program implementation to achieve broader impact and scale.

World Relief International, for example, has a mentoring relationship with

Shelter Now International to promote best practices in the provision of microenterprise and microfinance services.

DISASTER RECOVERY

Countless communities throughout the world are afflicted by political or

ethnic strife and even more are recovering from a period of instability brought

on by conflict, natural disaster or financial system turbulence.When conflict

subsides, microenterprise institutions frequently arise in response to the

demand for resources to rebuild.

Microenterprise assistance institutions can be found working with

struggling entrepreneurs in many of

the world’s communities where

recovery has begun.

Microenterprise development

institutions are actively engaged in

working with people whose income

and social status place them at very

high risk in the event of economic or

social disaster. These institutions

have many different approaches for

working with vulnerable populations. Some are engaged in specialized business support activities or in

the provision of credit and savings,

while others offer a range of community development programs,

beyond microenterprise services,

that include group formation, health

education, and literacy training.

In the Dominican Republic,

USAID has funded the Center for

the Support of Micro and Small

Enterprises-Instituto Tecnológico de

Santo Domingo (CAMPE-INTEC)

in its efforts to assist microentrepreneurs following natural disaster.

After Hurricane Georges, CAMPEINTEC used a diagnostic tool to

determine the extent to which

12

ProMujer, Nicaragua

Following Hurricane

Mitch in 1998, ProMujer staff

took quick action to support

clients. After short-term

relief efforts, the institution

quickly assessed what it

could do to meet clients’

urgent needs without compromising its viability.

Several stopgap measures were critical in helping

ProMujer stay solvent.

Initially, loan disbursements

were halted for one week to

avoid use of loans for non-business investments. During that time, women

came to repay their loans or provide partial payments, while in other cases

they used savings to make loan repayments. Strong client commitment to

meeting loan obligations provided a foundation for rebuilding.

While program operations were briefly suspended, it was not long before

the program continued its loan operations, recognizing that the women

needed more capital to rebuild their businesses. ProMujer had aimed to be

self-sufficient within the year, so program goals had to be revised. Despite

this major setback, ProMujer expects to achieve full financial sustainability

only a year later than initially planned. While the demand for financial services

in Nicaragua has played a big role in keeping ProMujer alive during these

difficult times, good management and client relations have also contributed

to ensuring the program’s ongoing success. As for ProMujer’s clients, they

are glad to see the return to normal operations, including training in basic

health and prevention techniques that served a good purpose following the

hurricane.

Juniette Pichardo produces ceramic figures in her

home workshop.

Courtesy of ProMujer
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

microbusinesses needed technical assistance to restart.

CAMPE-INTEC provides a package of services to

microenterprises that aims to increase productivity

while alleviating damage to the business. Using radio

spots broadcast nationwide, CAMPE-INTEC offers

advice on how to prepare for, what to do during, and

steps to take following disaster.

Working with vulnerable populations, microenterprise assistance institutions also become vulnerable

to the same disasters. Recognizing the need to assist its

development partners with disaster planning and management, USAID commissioned research to look into

the ways that microfinance institutions can respond to

crises that effect their communities. Through its Microenterprise Best Practices (MBP) activity, USAID has

provided technical guidance on managing risks and

emergencies in microfinance.

USAID recognizes the need for flexibility and having grant funds and credit

available so that resources can be quickly directed to institutions coping with

crisis. As reported last year, USAID created a special fund for microenterprise

institutions that had been hard hit by Hurricane Mitch. The agency will continue to respond proactively to help established microfinance institutions get

through difficult times arising from crises beyond their control.

The Microenterprise for Self-Reliance and

International Anti-Corruption Act of 2000

The Microenterprise Initiative, launched in 1994, articulated USAID’s basic

commitment and strategy for support to microenterprise development.

Renewed in 1997, members of the U.S. Congress and practitioners once again

examined USAID’s role in supporting microenterprise development worldwide. Ongoing dialogue among these constituents yielded important consensus and led to a number of refinements in USAID’s development targets based

on important lessons derived from the field, such as the need to account for

regional variations affecting microenterprises and their service needs.

Building on this consensus, recently the U.S. Congress passed and President

Clinton signed the Microenterprise for Self-Reliance and International AntiCorruption Act of 2000. This legislation makes microenterprise development

a more integral part of the U.S foreign assistance strategy and ensures that the

U.S. remains a global leader in promoting the microenterprise sector.

13

After Hurricane Mitch destroyed their shrimp business, Rosalina Ramirez

and her husband set up a sidewalk shop selling clothing with a loan

from World Relief in Honduras.

Photo by Jon Warren of World Relief
There are signs of hope in Africa. There has been improvement in per capita

GDP growth for USAID-assisted countries throughout sub-Saharan Africa. In 55

percent of the countries in sub-Saharan Africa where USAID operates, average

annual growth rates exceed 1 percent.1 Yet the number of refugees within Africa

grew from 1 million in 1970 to nearly 16 million in 1994, mostly as a result of

internal political or ethnic conflict. Today, two key concerns for Africa are how it

will manage the deadly effects of HIV/AIDS and how those countries that are transitioning into democracy will fare in their efforts to bring economically marginalized groups, such as refugees and the rural poor, into the mainstream.

In 1998, the U.S. Congress enacted the Seeds of Hope Act “to support sustainable and broad-based agricultural and rural development in sub-Saharan Africa.”

Under this Act, USAID was directed to “use credit and microenterprise assistance

to improve the capacity and efficiency of agricultural production in sub-Saharan

Africa of small-scale farmers and small rural entrepreneurs.”

Because crop production is excluded from the agency’s definition of microenterprise, assistance to small-scale farmers for crop farming is not included in these findings. Through MRR, however, USAID reports on efforts made to assist rural farm

households with their non-crop production enterprises, such as micro-scale agroprocessing activities. USAID field missions in Ethiopia, Kenya, Mali, Nigeria,

Senegal, South Africa, Uganda, and Zambia, included microenterprise development

in their strategies for assisting rural households, the vast majority of which are

engaged in both farm and nonfarm activities.

USAID funding to African-based microenterprise activities has continued to

grow since 1994, the first year of the agency’s Microenterprise Initiative.2

Of USAID Africa funds in 1999, 46 percent ($19 million) went to support

financial programs or to improve the legal and regulatory environment for microfinance institutions.3 USAID provided another $22.3 million (54 percent) to institutions engaged in providing business services to microentrepreneurs, many of

whom are severely constrained by a lack of access to basic facilities and services, such

as roads, telephones, and computers in rural areas. Funds for nonfinancial services

Table A1. USAID’S Funding to Microenterprise Activities in Africa (US$ Millions)

FY 1996 FY 1997 FY 1998 FY 1999

Amount Percent Amount Percent Amount Percent Amount Percent

Africa Region $27.1 24% $38.0 23% $37.4 27% $41.3 27%

Total USAID Funding $111.4 100% $165.0 100% $138.4 100% $153.2 100%

1 “1999 Agency Performance Report,” U.S. Agency for International Development, (Washington, D.C.: Center for Development Information and

Evaluation, February 28, 2000), p.15.

2 Microenterprise funding data prior to FY 1996 do not completely capture agency support to microenterprise in Africa because they do not

include funding from central bureaus that went to Africa-based programs.

3 USAID/Senegal has obligated funds for addressing financial policy constraints affecting microenterprise.

Seeds of Hop
are also used to address improvements in the wider policy environment affecting microenterprises. This represents less than 2 percent of

total Africa funding.4

HIV/AIDS and Microenterprise

Seventy percent of people in the world infected with HIV live in

Africa. The prospect for many of the worst-hit communities is especially bleak. USAID has worked to mitigate the effects of the crisis

across many of its program areas, including microenterprise. In FY

2000, USAID/Zimbabwe will be using funds appropriated specifically for combating HIV for some microenterprise support activities.

Many USAID-assisted microfinance institutions are already building

partnerships with local health organizations to integrate health education into ongoing programs.

A recent study commissioned by the Office of Microenterprise Development explored the effects of HIV/AIDS on institutions and communities that have already seen numerous changes related to the crisis.5 These include reductions in client savings as health costs rise,

changes in portfolio quality as delinquency increases, and rising staff

costs due to absenteeism and death. Alternative methods to manage

these challenges are being compiled and shared within the microfinance community to help mitigate the crisis in Africa and elsewhere.

Democracy

USAID’s investments in democratic reform and economic growth work hand-inhand throughout Africa. Recent political changes in a number of African countries

have opened the door to the possibility of even greater reform. USAID supports

microenterprise programs in Benin, Ghana, Malawi, Mali, South Africa and

Tanzania as a means of reinforcing democratic gains and building civil society institutions. In particular, by working through rural groups and local associations,

microfinance institutions and BDS providers offer key leadership and participation

opportunities to citizens who have long been disenfranchised.

USAID’s Growing Microenterprise Support in Africa

USAID plans to continue playing a strong role in Africa in the coming years.

Already new USAID-supported microenterprise programs are being developed in

the Congo, Ethiopia, Nigeria, Rwanda, and Senegal. These will serve to provide

access to many thousands of rural entrepreneurs in areas where USAID has not

actively worked in the past. In countries such as South Africa, where USAID has

provided ongoing support to microenterprise, new strategies are being developed to

enhance outreach to disadvantaged groups.

4 USAID missions in Kenya and Senegal supported research on nonfinancial policy in FY 1999.

5 See Joan Parker, “Discussion Paper: Microfinance and HIV/AIDS,” Microenterprise Best Practices Project, Washington, D.C., May 2000. This

paper is available online at www.mip.org.

Photo by Betty LaDuke of Freedom from Hunger

pe Revisited
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

Under the act, the agency is

authorized to implement more grant

assistance to microfinance institutions to expand the availability of

financial and business support services, encourage capacity building

within the institutions providing

these services, and promote policy

and regulatory reforms that work in

favor of microenterprises worldwide.

The agency has also been called on

to provide a comprehensive strategy

to include the ways in which it will

seek to improve access to financial

and related business services to the

world’s poor.

Key elements of this bill state

that, first, 50 percent of all microenterprise resources shall be targeted to

very poor entrepreneurs, defined as

those with no more than half the

income established as the poverty

line by the government of each

country.

Second, loans to the very poor will be defined in 1995 dollars in the

amounts of $300 or less to clients in Africa, Asia and the Near East, $400 or

less to clients in Latin America and the Caribbean, and $1,000 or less to clients

in Europe and Eurasia. (These new limits address the regional variations noted

above.)16

Third, demand-driven business development programs that achieve reasonable cost recovery and are provided to clients holding poverty loans in the

amounts named above are also appropriate for the very poor and count towards

the 50 percent funding target.

Subsequent annual reports on the agency’s microenterprise activities will

address the specific ways in which USAID has implemented these objectives.

16

16 In anticipation of the passage of legislation early in 2000, Microenterprise Results Reporting (MRR) collected data for poverty loans using the

new limits.

EnterpriseWorks Worldwide, Uganda

Through its local affiliate, Appropriate Technology (Uganda), EnterpriseWorks Worldwide seeks to develop, expand and improve agricultural processing and marketing services in Uganda. Under the USAID-funded

Sustainable Agriculture Food-Based Enterprises project, a three-year

$650,000 effort, activities have a secondary focus on internally displaced persons residing in refugee camps due to civil disturbance.

The EnterpriseWorks approach emphasizes development of private sector

mechanisms and sustainability of enterprises created and assisted through

its projects. The organization’s activities in Uganda build on past successes

from other EnterpriseWorks projects in Africa using agricultural processing

technologies. Local staff has trained two local manufacturers and 104 retailers to produce and market technologies such as a manual oilseed press,

treadle pump, cassava slicer, and peanut grinder. In 1998, 534 agribusinesses were using these technologies.

An example of the technology’s economic impact can be seen in the business of an EnterpriseWorks client in northern Uganda. In 1999, he expanded

his production of sunflower seeds and harvested more than 7,000 kilograms.

He processed these seeds into 1,400 liters of oil, which he sold for more than

US $2,000. Had he sold the same amount unprocessed, he would have

made half the amount of money. Furthermore, he started buying seed from

neighboring farmers and processing their oil for a small fee. His business

now employs four people for a third of the year, at the height of production.
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

Microenterprise Funding in 1999

Overall USAID funding to microenterprise development in 1999 was

$153.5 million, up from $138.4 million in 1998. Table 2 contains USAID

funding data over the past decade. Despite some fluctuations resulting from

project funding cycles and some large individual obligations, the trend has been

a gradual increase in microenterprise funding.

At the same time that total funds to microenterprises appear to be rising, a

shift in the source of these funds from within the agency is occurring. Funds

from the Development Assistance Fund for microenterprise development were

down slightly (6 percent) in 1999 from the previous year, but were down 19

percent from 1995. Since 1995, lower levels of development assistance funding

and increased competition among priority programs have resulted in less DA

funding available for microenterprise programs. Long-running development

programs in USAID missions throughout Africa, the LAC region, and Asia and

the majority of centrally funded microenterprise programs are funded through

this account.

Economic Support Funds (ESF) were increasingly directed at microenterprise development and up by 20 percent in 1999 over 1998. Concurrently,

increased spending for microenterprises occurred through other specialized

accounts. A 39 percent increase in local currency in 1999 over the prior year

reflects the use of more Title II food aid funds for microenterprise programs.17

17

Fund 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

DA1 44.6 40.2 61.3 51.6 89.2 93.3 72.9 83.3 79.9 75.3

ESF 9.6 43.2 34.4 20.8 31.6 22.9 16.1 24.5 27.2 32.9

FSA2 5.4 20.6 14.3 12.8

SEED 4.7 24.8 4.6 12.0

CACEDRF 3.2

Local Currency 21.0 30.2 30.6 23.6 16.6 17.3 12.2 11.8 12.4 17.3

Total 75.43 113.6 126.3 96.0 137.4 133.5 111.3 165.0 138.4 153.5

Table 2. Sources of USAID Funds for Microenterprise by Appropriation Account, 1990-1999

(Millions of US Dollars, actuals)

1 Development Assistance Funds include Development Fund for Africa.

2 FSA refers to the Freedom Support Act.

3 Total does not add because data on fund accounts are not available for Colombia and Oman.

17 Local currency obtained through monetization of Title II funds under PL 480 is specifically designated for uses related to food security in the

poorest countries of the world.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

In addition, microenterprise funding grew in 1999 through the use of funds

appropriated for assistance for Eastern Europe under the SEED (Support for

Eastern European Democracy) Act. Funds appropriated for the Central America

and Caribbean Emergency Disaster Recovery Fund (CACEDRF) following

Hurricane Mitch were also used for microenterprise development activities.

Table 3 shows the breakdown of USAID funding by region of use in the past

year. Funds provided by central bureaus are shown in the region where the

funded activity or institution is located. In 1999, more than two-thirds (70

percent) of total USAID funding went into financial services programs for loan

capital, operational expenses, technical assistance, or microfinance policy advocacy. The remaining 30 percent was applied to business development programs

that included training, marketing, counseling, technology transfer, or policy

advocacy on behalf of microentrepreneurs.

Total amount of financial policy funding in 1999 was $4.6 million or 4 percent of total financial funding. Funding for microenterprise policy advocacy of

a general nature, (i.e., not related to financial services programs), amounted to

$3.8 million in 1999 or 8 percent of total nonfinancial funding.

In 1999, funding to Africa, Europe and Eurasia, and Latin America all

increased over 1998 funding. In both the Europe and Eurasia region and the

Latin America and the Caribbean region, funding increased by over 30 percent

from 1998 funding levels.

The percentage of total funding going to Africa was exactly the same in both

years, although the amount rose by 10 percent. The greater proportion of 1999

funding to nonfinancial programs in Africa does not reflect a significant drop

in actual funding to microfinance, which went from $20.8 million in FY 1998

to $19.0 million in FY 1999, a decrease of 8 percent. Rather, funding to business support programs increased by 34 percent (up $5.7 million from 1998

funding) in 1999.18

18

Table 3. FY 1999 Funding by Region of Use (Millions of US Dollars)

Financial Programs Nonfinancial Programs Total

Amount Percent Amount Percent Amount Percent

Africa $19.0 46 $22.3 54 $41.3 27

Asia/Near East $31.7 87 $3.5 13 $35.2 23

Europe/Eurasia $19.1 74 $6.6 26 $25.7 17

Latin America/Caribbean $34.1 78 $9.7 22 $43.8 28

Worldwide $3.0 41 $4.5 59 $7.5 5

Total $106.9 70 $46.6 30 $153.5 100

18 This includes more than $7 million in an unusual one-time grant to a single organization, EnterpriseWorks Worldwide, for its Africa programs.

Excluding this amount from total funding for Africa, 57 percent of funding to Africa went to financial programs and 43 percent went to nonfinancial

programs.
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

Table 4 shows the 1999 contributions to microenterprise support by the

USAID bureau that provided the funds. Central bureau funding, which

includes the Global Bureau and the Bureau for Humanitarian Response, was

down $6.1 million (16 percent) from 1998. In prior years the central bureaus

played a larger role in microenterprise funding (27 percent of overall funding

in 1998) than most of the regional bureaus.19 Programs managed by the central bureaus have been used to provide technical leadership while supplementing mission funding; this approach is designed to build institutional capacity

and encourage best practices among practitioners. Recently more USAID field

missions, which receive their funding through the regional bureaus, have

included microenterprise as a component of their country development strategies for the first time. (See the Africa section for examples.) As these programs

are implemented, it may result in larger amounts of regional bureau funding

for microenterprise.

Funds committed to microenterprise by the Africa Bureau, Europe and

Eurasia Bureau, and LAC Bureau increased in 1999 from 1998 levels. LAC

Bureau funding grew by 76 percent as a result of large microfinance investments in two countries, Guatemala and Haiti. Africa Bureau funding increased

by 12 percent, and Europe and Eurasia Bureau funding increased by 35 percent. In the Asia/Near East (ANE) region, funding in 1999 was down 13 percent from 1998, from a high of $37 million in 1998.

Of 1999 funding for financial institutions, 58 percent went to support poor

clients who received poverty loans.20 This calculation is made based on the

institutions receiving financial funding in 1999 that provided data to MRR.

The poverty lending proportions for Africa, ANE and LAC21 Bureaus grew in

1999. In 1998, these proportions were 56, 59, and 63 percent, for Africa,

19

Table 4. FY 1999 Funding by USAID Bureau (Millions of US Dollars)

Financial Programs Nonfinancial Programs Total

Amount Percent Amount Percent Amount Percent

Africa Bureau $13.6 50 $13.7 50 $27.3 18

Asia/Near East Bureau $30.9 95 $1.7 5 $32.6 21

Europe/Eurasia Bureau $19.0 74 $6.6 26 $25.6 17

Latin America/Caribbean Bureau $29.4 79 $7.6 21 $37.0 24

Central Bureaus $14.0 45 $17.0 55 $31.0 20

Total $106.9 70 $46.6 30 $153.5 100

19 If one excludes the one-time grant to Enterprise Works Worldwide of $10.8 million for business development services worldwide, funding by

central bureaus dropped by 45 percent or nearly $17 million from 1998 funding levels. Over $6 million of central bureau 1999 appropriated funds

carried forward to FY 2000.

20 MRR uses the following calculation for the proportion of funds going to poverty lending: The amount of funds provided to the institution by

USAID is prorated based on the percentage of the total outstanding portfolio value held in poverty loans.

21 A revised poverty loan amount of $400 in LAC region was used in the FY 1999 data collection based on the new Microenterprise for Self

Reliance Act of 2000. However, at least one mission, El Salvador, had its implementing partners report on loans of $300 or less.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

ANE, and LAC Bureaus, respectively. Overall, the proportion of funding for

poverty lending was down 5 percent, from 63 percent in 1998.

In Europe and Eurasia, however, the percent of financial funds to poverty

lending dropped from 72 percent in 1998 to 42 percent in 1999. While programs receiving 1999 funding had a smaller proportion of their portfolios in

poverty loans, the average outstanding loan size for all USAID partner microfinance institutions in the Europe/Eurasia (EE) Region was still only $259.

This discrepancy relates to the fact that large obligations were made to relatively small institutions in anticipation of an increase in microenterprise support activities. In other words, the current poverty lending ratio of the institution does not reflect the intended effect of USAID funding on changes in the

institution’s clientele. In fact, as noted above, USAID often supports institutions in their efforts to design programs to be more responsive to the poor. The

low average loan size in the EE region is based on USAID’s active portfolio in

that region. Many of these institutions have large numbers of poor clients.

The following sections discuss how USAID funding for FY 1999 was

applied in support of microenterprise institutions that provide financial services, business development services, or policy advocacy and research for the

microenterprise sector.

Microenterprise Institutions

MICROFINANCE

USAID’s support to microfinance institutions occurs on many levels.

Through policy initiatives, improved regulatory environments are being promoted to strengthen financial institutions and protect clients. USAID also

directly provides loan capital for microloans and support for operational

expenses, staff training, new product development, and to initiate new programs in microfinance institutions.

20

Table 5. Percentage of USAID Funds Committed to Poverty Lending in 1999

Africa $27.3 $13.6 50 63

Asia/Near East $32.6 $30.9 95 73

Europe/Eurasia $25.6 $19.0 74 42

Latin America/Caribbean $37.0 $29.4 79 70

Central Bureaus $31.0 $14.0 45 54

Total all Bureaus $153.5 $106.9 70 58

Percent of Financial

Funding for Poverty

Lending

Total Microenterprise

Funding

(US$ millions)

Financial Programs

Amount

(US$ millions)

Percent of US$

for region
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

Of the microfinance institutions with active

USAID agreements, 277 reported data for their 1999

fiscal year. (See Annex A.) Of this number, 148

organizations or 53 percent of those reporting also

reported data in 1998. The remainder includes

organizations with new USAID agreements. Because

USAID’s roster of microenterprise institutions

changes on an annual basis, it is not possible to track

a specific set of institutions in the MRR database

over an extended period of time. MRR tracks institutions only for the extent of time for which they

have an active USAID agreement.22 In some cases, an

institution appears in the data over many years, in others, only briefly.

Every year, MRR grapples with how to show very large microfinance institutions that have a dramatic effect on the data. In 1998, the Bangladesh Rural

Action Committee (BRAC) was such an institution. With 2 million rural

clients, most of whom are women, it played a large part in determining the

summary data for the Asia region and the agency as a whole.

In FY 99, USAID/Indonesia renewed its support of BRI after several years'

absence from its portfolio. BRI’s Micro Division alone had nearly 2.5 million

loan clients at year-end in 1999, with an outstanding portfolio of $795 million.

Savers amounted to 24.2 million clients with combined savings valued at $2.2 billion! While including these numbers

would bring the number of USAID clients to a much higher level, Table 6 and the analysis that follows will exclude

them, because their inclusion would distort underlying

characteristics and trends of the rest of the data.

The total number of clients23 in USAID-supported

microfinance institutions increased from 1.4 million in

1997, to 1.6 million in 1998 (excluding BRAC), and 2.0

million in 1999 (excluding BRI). This is an average annual

increase of 19 percent.

Figure 1 illustrates an important regional difference

based on the distribution of loan portfolio. With only

slightly more than a third of total clients, LAC institutions

hold more than two-thirds of the total portfolio.

21

22 An argument could be made that much of the effect of USAID’s support is not readily visible until several years after the initial funding agreement is made.

23 As in prior years, the number of loans is used as a proxy for the number of clients because many financial institutions track only the number of

loans, not clients. In a very rare case would an individual have more than one loan outstanding with a microfinance institution.

Table 6. Clients of Lending Institutions in 1999

(USAID's Active Portfolio)

Total Clients Percent of

(thousands) Total Clients

Africa 250.5 12.4

Asia/Near East 923.0 45.7

Europe/Eurasia 70.4 3.5

Latin America/Caribbean 775.7 38.4

Total 2,019.6 100.0

Figure 1. Amount of Portfolio for Lending

Institutions in 1999 (USAID’s Active Portfolio)

Africa

$53.8

Asia/Near East

$135.4

Europe/Eurasia

$18.2

Latin America/Caribbean

$459.7

Millions of U.S. Dollars
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

The value of portfolio outstanding of all regions decreased by 21

percent in 1999 from 1998. This decrease is due to a combination of

factors, including a difference in the set of institutions represented in

USAID’s portfolio, international financial crisis causing flat institutional performance, and currency devaluations. A decrease in the

amount of portfolio held by microfinance institutions also implies

that the average loan balance per client was lower, as indeed it was.

Average outstanding balance came down significantly in 1999 in

both EE and LAC regions, from $1,100 and $872 in 1998 to $259

and $593, respectively, in 1999. Overall, the average loan balance

decreased from $389 in 1998 to $330 in 1999. Asia and the Near

East subregions are shown separately to highlight differences in programs and contexts.

The percentage of women clients remains high because many programs are working almost exclusively with women. The challenge in

countries in the Near East, such as Egypt and Morocco, continues to

be how to create more economic opportunities for women in societies

where women have traditionally been less visibly involved in the

financial economy. It is also the case, especially among the more successful and mature businesses, that businesses are family enterprises in

which both spouses and children work together.

Figure 2 shows the proportions of clients from each region who

have poverty loans. Two-thirds of the clients in USAID-supported

institutions had poverty loans, with the majority of these clients in Asia and

Latin America. This proportion changes from year-to-year based on the universe of institutions with USAID agreements that report to MRR.24

Table 8 data show the extent of savings that

USAID-supported institutions are holding on

behalf of their microenterprise clients.25 Where

average savings reported in 1998 amounted to

$240, average savings in 1999 for all regions were

$113. This may again reflect differences in the

reporting universe and the effect of currency

devaluations against the U.S. dollar in 1999.

Figure 3 data demonstrate how USAIDsupported programs are distributed across rural

and urban environments. In all regions, with the

exception of Asia, microfinance programs are represented more in urban areas, where population

22

0

100

200

300

400

500

600

700

800

900

1000

Africa Asia/

Near East

Europe/

Eurasia

Latin

American/

Caribbean

Poverty Loans Other Loans

1 This table does not include data from BRI,

which has more than 2 million loan clients.

Table 7. Average Loan Balance and Percentage of

Women Clients, 1999 (USAID’s Active Portfolio)

Figure 2. Clients with Poverty Loans

in 19991

Hundreds of Thousands

(USAID’s Active Portfolio)

Average Percentage of

Balance Women Clients

(US$) %

Africa $214 77

Asia $114 74

Near East $412 36

Europe/Eurasia $259 48

Latin America/Caribbean $593 68

Worldwide $330 69

24 The overall proportion of poverty loans in 1998 (in numbers) was 83 percent with BRAC included, and 63 percent without BRAC.

25 This data excludes BRI’s 24.2 million savers who have $2.2 billion in savings with an average savings value of $94.
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

density contributes to program

scale and efficiency. As in prior

years, Asia’s independent route to

development, which includes the

use of more banks with extensive

rural outreach, sets it apart from

other regions.

As programs mature, some of

them extend their services to rural

areas, reaching out from the cities.

USAID has been encouraging

these efforts in many places.

The proportion of clients reported to be residing in rural areas has risen since

1998. Excluding BRAC, the proportion of rural clients in 1998 was 46 percent

as compared with 58 percent in 1999. The rural/urban mix was nearly the same

for all regions in the two years. Asia and the Near East are shown separately to

illustrate another difference between programs in these two areas.

USAID has a clear interest in ensuring that the quality of services to clients

is good and improving. Microfinance institutions that are diligent in maintaining high repayment rates in accordance with best practices have proved to

have much better prospects for long-term survival with the potential for

23

Table 8. Number of Savers and Savings Amounts in 1999

Savings Savings Average

Members Amounts Savings

(thousands) (millions of US$) (US$)

Africa 888.0 $49.2 $55

Asia/Near East 1,060.7 $53.9 $51

Europe/Eurasia 60.6 $6.8 $112

Latin America/Caribbean 1,245.8 $259.2 $208

Total 3,255.1 $369.1 $113

0

10

20

30

40

50

60

70

80

90

100

44.0

93.8

6.8

3.2

41.2

Latin

America/

Caribbean

Europe/

Eurasia

Africa Asia Near East

Figure 3. Percentage of Clients in Rural Settings,

1999

Nepalese women in Pact’s Women’s Empowerment Program

Courtesy of Pact, Inc.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

growth. Two indicators that USAID monitors address

the quality of loan services and institutional performance: repayment and loan loss rates.26 High average

repayment rates and low loan losses for all regions suggest that USAID-supported institutions manage their

portfolios well.

Figure 4 shows that the proportion of institutions

that self-reported as financially sustainable27 is much

higher than it has been in prior years. The higher percentage of fully sustainable microfinance institutions in

Asia is related to the large number of banks in this year’s

reporting universe. As regulated for-profit institutions, banks generally have

access to loan capital and the financial discipline necessary to profitably manage their micro portfolios.28

Whereas last year only 11 percent of all institutions reported achieving

financial sustainability, this year 42 percent report they are able to cover their

own operational and financial

expenses with client revenues.29 This

situation is only possible when an

institution reaches a sufficiently

large scale of operations and level of

efficiency to produce adequate

income from interest and client fees.

Table 10 shows the institutions in

USAID’s portfolio, excluding BRI,

that reported the largest client base.

This group accounts for 43 percent

of the total clients in USAID’s active

portfolio and 56 percent of the total

value of outstanding loans to

microenterprise; 74 percent of the

loans made by these institutions

combined are poverty loans.

Most of the largest institutions in

USAID’s portfolio are in Asia and

Latin America; none are in Africa.

24

Table 9. Average Repayment and Loan Loss

Rates, 1999

Repayment Loan Loss 

Region Percent Percent

Africa 98.4 0.6

Asia/Near East 96.5 1.1

Europe/Eurasia 95.6 1.9

Latin America/Caribbean 94.4 1.7

Worldwide 95.2 1.5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Worldwide

(n = 235)

Not Yet Sustainable Operational Sustainability Fully Sustainable

Africa

(n = 44)

Asia/Near East

(n = 80)

Europe/Eurasia

(n = 29)

Latin America/

Caribbean

(n = 82)

1 Fifteen percent (42) of the 277 institutions did not provide sustainability data.

Figure 4. Sustainability of USAID-Supported Institutions,1 1999

26 Loan repayment is calculated based on the amount of portfolio reported to be in arrears for 90 days or more. Loan loss rates show the percent

of portfolio that must be written off because of delinquent loans.

27 Operationally sustainable institutions produce adequate income from interest and fees to cover all operational expenses, including loan losses.

Fully financially sustainable institutions are able to cover all operational expenses, including the cost of funds from market sources and inflation.

28 Banks with new micro programs may cross-subsidize their micro operations with revenues generated by loans to other sectors.

29 Because these data are self-reported and calculated by the institution, the sustainability percentages cannot be fully verified by MRR. USAID

missions and central offices monitor this information for management purposes and as the basis for contract or grant renewal.
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

Eight are in Latin America; six are in Asia. Of those in Latin America, four are

in Bolivia, which boasts the highest concentration of microfinance institutions

in the world.

BUSINESS DEVELOPMENT SERVICES

Business development services (BDS) include a range of services to assist

businesses at all stages of development. In Nepal, for example, Pact, Inc.30 provides basic entrepreneurial training to assist extremely poor rural women who

are undertaking business activities for the first time. A number of other programs are designed for first-time entrepreneurs who desire to generate income

through self-employment. Many other USAID-supported programs assist

existing businesses that are in need of special services such as marketing or

upgraded technology and skills. These services help microenterprises to build

both income and assets. Based on the data reported by USAID-supported

25

30 Pact, Inc. was originally an acronym for Private Agencies Collaborating Together.

Table 10. Large Institutional Reporters in USAID's Active Portfolio, 1999

Number of Number of

Microfinance Institution Type Borrowers Poverty Loans

1. Palli Karma Sahajak Foundation/Bangladesh1 Non Bank/Umbrella 220,000 220,000

2. Women’s Development Federation/Sri Lanka NGO 116,544 116,544

3. BancoSol/Bolivia Bank 73,073 7,015

4. ACLEDA/Cambodia NGO 56,412 46,444

5. WOCCU/Romania2 Credit Union 54,210 37,960

6. WOCCU/Bolivia2 Credit Union 53,962 12,156

7. Compartamos/Mexico3 NGO 48,835 38,700

8. MIBANCO/Peru Bank 41,344 26,875

9. Caja Los Andes/Bolivia Non Bank 39,334 12,305

10. WOCCU/Ecuador4 Credit Union 37,840 37,840

11. Pact/Nepal PVO 35,000 35,000

12. PRODEM/Bolivia Non Bank 35,000 14,493

13. Financiera CALPIA/El Salvador Non Bank 34,390 12,606

14. Catholic Relief Services/Cambodia PVO 29,948 29,948

Total 875,892 647,886

1 The Palli Karma Sahajak Foundation is an apex institution that on-lends to poverty lending institutions. The clients reported are those of

the retail lending institutions.

2 The WOCCU programs represent credit union federations and include the activities of many different credit unions in those countries.

3 Compartamos was still an NGO when it reported 1999 data to MRR.

4 For the purposes of its reporting to MRR, WOCCU/Ecuador reports on only a portion of its portfolio; that is, the USAID-supported portion.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

institutions, almost two-thirds (60

percent) of the assisted businesses are

ongoing businesses.

Most USAID-supported organizations offering business support

services provide either training (84

percent) or business management

counseling (79 percent) to their

clients. More than two-thirds (70

percent) are involved in marketing

products or creating market linkages

for their clients. Over half (54 percent) provide assistance with production technologies.

Of the institutions with active

USAID funding agreements in FY

1999, 80 provided data on their

BDS operations. These institutions

have been providing services for an

average of seven years. The majority

(84 percent) works directly with

clients. More than two-thirds also

offer BDS to other microenterprise

assistance organizations. Providing

support to partner institutions that

in turn build the capacity of other

microenterprise organizations is yet

another way in which USAID leverages its support to microenterprises.

World Education’s activities in

South Africa are an example of how

strengthening organizational clients

can affect many more microentrepreneurs reached through those organizations.

One of USAID’s primary objectives for the institutions it funds and monitors is to promote a commercial orientation. Improved cost recovery, through

a variety of means, is a primary objective to ensure that business services offered

are in demand and are market-driven. Of institutions reporting 1999 data, 62

percent of those providing business services charge for their services through

fees, margins on goods sold, or by other means. Of these, 30 percent reported

covering more than 25 percent of their costs. USAID’s BDS partners are

increasingly appreciating the value of a client-centered, commercial

orientation.

26

World Education, South Africa

The Ntinga1 Microenterprise Support

Project was developed by World Education

and launched in 1996 with USAID funding.

Since then, Ntinga has forged successful

working partnerships with local microfinance institutions and microenterprise support providers.

One of its most successful partnerships

has been with the Thekweni Business

Development Center (TBDC), in Durban,

the busiest shipping hub in sub-Saharan

Africa. What has ensured TBDC’s success

was the incorporation of a strong publicprivate partnership element with the local

Durban Metropolitan Council.

With technical assistance from Ntinga, TBDC conducted an institutional

analysis, streamlined its operations, and established satellite service centers

in Durban’s underserved townships. Among the services TBDC provides to

microentrepreneurs are project management, export training, business linkages, and manufacturing opportunities. Today, TBDC serves more than

2,000 clients monthly and has facilitated business linkages in excess of

$4 million.

World Education is currently in the process of securing funding for the

next phase of Ntinga, which will work more intensively with leading partner

institutions to establish Centers of Excellence and Outreach in four target

provinces. In addition to a wide range of microenterprise-specific activities,

World Education will use the next phase of Ntinga to implement costeffective methods for addressing issues posed by the HIV/AIDS epidemic.

A TBDC advisor provides technical

support to a client.

Courtesy of World Education

1 A Zulu word that means to soar or fly
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

In addition to the more than 400,000 clients noted in Table 11, business

services were provided to many more microentrepreneurs through another

1,687 organizations that received training and other business support services

from USAID-supported institutions.

Of the entrepreneurs assisted through USAID-supported programs, 39 percent work in the commerce or trade sector, 37 percent in businesses related to

agriculture or agribusiness, 12 percent in the service industry, 9 percent in

manufacturing, and another 4 percent in other sectors. The clients of BDS programs are predominantly women. They tend to be located in rural areas. The

majority (70 percent) of BDS clients have incomes below the poverty line in

their country. Almost one-third of the total number of clients are very poor or

have incomes less than half of what is defined as the poverty line for that

country.31

POLICY ADVOCACY AND REFORM

While policy advocacy on behalf of microenterprises is relatively inexpensive, it can have a powerful and widespread nationwide effect. Policies and regulations controlling the types of financial services that NGOs can offer, for

example, will determine the extent to which these services can be provided to

thousands of poor women and men. USAID supports a range of policy efforts

to improve the environment for both microenterprise development institutions

and their clients.

27

Table 11. Clients of USAID-Supported Business Development Programs

Number of Percent Percent Percent Percent Below Percent

Micro Clients Women Rural Urban Poverty Line1 Very Poor2

Africa 192,7613 47 80 20 79 25

Asia 82,929 74 88 11 61 38

Near East 9,901 12 100 20

Europe/Eurasia 15,552 57 29 71 10 3

Latin America/Caribbean 100,3874 81 44 56 76 37

Total 401,530 61 69 31 70 29

1 Organizations were asked to report how many of their clients were below their country’s poverty line.

2 Organizations were asked to report how many of their clients were very poor, defined as having less than half the income designated as

the poverty line for that country.

3 World Education/Ntinga is included because it trained organizations, which, in turn, provided business services to 156,368 microenterprise

clients.

4 One organization, Fundacion Jose Maria Covelo in Honduras, reported that it had trained 8,095 clients directly. Another 66,418 microenterprise clients, not included in the total clients for LAC region, received BDS services through assisted organizations.

31 Half of USAID-supported BDS institutions in the survey track their clients’ income levels through records of business income, business assets,

or household income. The remaining 50 percent provided estimates of their BDS clients’ income levels.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

There were 27 different institutions that reported on policy

research and advocacy activities.

Each institution advocates or works

on a variety of issues in support of

microenterprise development.

In Africa, for example, USAID/

Kenya supports institutions that

advocate in different policy areas.

The International Center for

Economic Growth (ICEG) advocates on behalf of microenterprises

to help gain access to basic market

facilities and services, such as running water, that are readily available

to larger businesses. In addition,

ICEG has analyzed gender biases in

current policy and sought to

improve technology policy as it

relates to microenterprise. Another

institution, the Kenya Institute for

Public Policy Research and Analysis,

analyzed trade policies and licensing

as they affect microenterprises.

Funded by USAID/Indonesia,

the Partnership for Economic

Growth is helping Indonesia’s economic and financial systems recover from the effects of the Asian financial crisis by providing technical assistance and grants to various Indonesian government and private institutions. One of its key concerns is to see that Indonesia’s

microfinance system, which manages nearly 4 percent of the country’s total

outstanding credit, continues to develop.

As a part of this program, USAID provides two policy advisors, one located

in the Central Bank, which is responsible for regulating the banking system,

and one in the Ministry of Small Enterprise. These advisors work closely both

with their host institutions and a government-wide working group that has

been developing microenterprise-friendly policies. Among their achievements

has been a new regulatory regime for commercial banks and small-scale village

financial institutions that follow market principles, have a deposit and savings

orientation, and are geared toward sustainability.

28

Action for Enterprise, Mali

Action for Enterprise, a U.S.-

based PVO, has a microenterprise

export promotion program in Mali,

Support Program for Artisanal

Product Exports (SEPA). SEPA is

helping to forge sustainable business ties between international

importers, Malian export agents,

and crafts producers. SEPA’s role

is to facilitate communication and

relationships between these economic actors to increase sales and income by producers, generate interest

among new buyers, and improve production capacity.

SEPA has already hosted a number of American importers in Mali, including the owner of Bamboula Ltd. After spending four days with the SEPA

team, the owner of Bamboula purchased 20 percent more product than she

had in all previous trips to Mali that year. Bamboula’s agent in Mali noted

that, through SEPA’s involvement, they have been introduced to many new

producers and high quality products. SEPA has helped with banking and

shipping issues and contributed to increased sales by sourcing and designing new products for its North American clients. Once the project is complete, ongoing commercial relations will be in place between micro-scale

producers, export agents, and buyers that will ensure benefits to all partners,

including a higher sales volume and more income for producers.

Courtesy of Action for Enterprise
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

Future Directions

“... by forging ahead in the face of skepticism, microfinance programs now provide promise for millions of households. Even critics

have been inspired by this success. The time is right for assessing

next steps with candor... and better evidence.” (Morduch, 1999)

This report has highlighted recent developments in microenterprise development, many of which have resulted from innovations that microenterprise

institutions have made in response to market conditions. USAID credits the

microenterprise organizations for the tremendous amount of work they have

done to pioneer new programs and adapt to adverse circumstances.

Many institutions that had just begun at the start of the decade are now seasoned practitioners and are learning how to better manage their programs

through volatile times. Many microenterprise institutions are experimenting

with a variety of new services for their clients, such as home improvement loans

and other special purpose loans. At the same time, much more needs to be

done to strengthen and expand existing services.

To address changes in market demand, institutions are developing new

products for their microfinance clients. For example, BancoSol, in Bolivia, with

more than 70,000 clients, recently introduced a new line of housing credit and

has issued credit cards that carry discounts at pharmacies, hospitals and other

29

Constanta, Georgia

In 1997, Save the Children set up operations in Georgia as the

NGO, Constanta, to deliver financial services to poor women

microentrepreneurs. With a GDP per capita of only $960, Georgia

was ranked 105 in the United Nations Human Development Index in

1997.

With assistance from the United Nations High Commissioner for

Refugees (UNHCR), Constanta focused on assisting Tbilisi’s internally displaced persons, the poorest residents, who fled civil war

and political unrest between 1991 and 1993. Operations based in

Tbilisi were expanded to Isani and Batumi districts with a USAID

grant.

With loans from Constanta, Marva Shamwgia has been able to

expand the inventory of her grocery business and increase her family’s income. By investing in her business, she earns roughly $130 a

month, which supports her five children and husband, who lost his job. Almost 80 percent of her income goes to

providing food and other household necessities. Marva stressed the importance of access to credit; “It ensures the survival of the family in a very difficult situation.” She hopes her children can borrow from Constanta to start their own

businesses.

Courtesy of Save the Children

A Constanta meeting of new microentrepreneurs in Tbilisi
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

locations. The Center for Agricultural and Rural Development in the

Philippines has added several loan

products, including productive/asset

loans, housing loans, multipurpose

loans for health and education, and a

loan acceleration program targeting

entrepreneurs with excellent loan

repayment performance and larger

capital needs.

Business development practitioners are also making strides toward

better understanding their poorer

clients’ needs and responding with

market-oriented services that

increase their clients’ revenues, profits, and productivity. Networks in

the practitioner community are

working to ensure that lessons are

shared and more is done to build the

capacity and long-term viability of

organizations that are providing

essential business services such as

marketing, production technology,

and export assistance.

USAID is proud of its development partners’ accomplishments. It is especially proud of the way in which this partnership has led to more widespread

access to financial services and business support services for the poor around

the world. These microenterprise institutions are building their own capacity

to provide sustainable services to more people every year. As a leading microenterprise donor, USAID seeks to support strategic efforts that carry the field forward and provide a strong foundation for the next century of microenterprise

programs.

30

Microenterprise in Nigeria

More than a year after inaugurating a democratically elected president

and national, state and local representatives, Nigeria is slowly emerging

from 15 years of corrupt military dictatorship. Nigeria’s leaders have had to

face its legacy of widespread economic devastation. Per capita income in

Nigeria today is only $280.

USAID’s recently reestablished mission in Nigeria has launched a new

project for microenterprise development, the Transition Institutions

Microfinance and Enterprise (TIME) project.

TIME is an innovative project that is testing new alliances and fresh ideas

to increase both savings mobilization and the availability of credit services to

local enterprises. Two of the largest microfinance institutions in Africa, the

Country Women’s Association of Nigeria and the Farmers Agriculture Development Union, which together represent more than 900,000 members, are

employing new off-line “smart card” technology in a test program for 4,000

rural women that was piloted by Weidemann Associates, Inc. under a

USAID-funded contract. A consortium of 31 of the largest banks in Nigeria

owns this newly introduced technology, which will reside in many bank

branches and merchant locations by the end of the year. The lead partner

bank, Guaranty Bank, has contributed over $1 million in hardware, software,

and loan matching funds to the pilot. Another partner, AIICO, a leading insurance company, is providing credit life and disability insurance to borrowers.
Annex A: Microenterprise Results Reporting

METHODOLOGY

This is the fourth annual report of Microenterprise Results Reporting

(MRR), USAID's activity to collect and report on microenterprise funding

data and institutional results.32 Weidemann Associates, Inc. implements MRR

under the MicroServe Indefinite Quantity Contract. This and all prior year

reports are available online at www.mrreporting.org.

Funding and institutional data presented in this report are from two primary

sources; first, funding data are from USAID field missions and central bureau

offices that provide data used for agency planning and budget purposes. Field

staff enter much of this data directly into MRR’s online database. Second, institutional data are reported by implementing institutions with active USAID

grants or contracts in response to an annual questionnaire.

MRR and USAID staff disseminate questionnaires to practitioners of microfinance and business development services and those engaged in policy advocacy and research. 

31

32 This report was prepared by Catherine Neill, with assistance from Carmen Varley, Weidemann Associates, under the supervision of Elizabeth

Hunt, in the Office of Microenterprise Development, and Katharine McKee, Director of the Office of Microenterprise Development. Dina Towbin,

Weidemann Associates, provided editing assistance.

Table 12. USAID's Active Microenterprise Institutions with Survey Respondents in 1999

Total Active Microfinance Business

Type Institutions Survey Development Survey Policy Survey

Banks 32 29

Business Associations 21 7 5

Consulting Firms 17 3 4

Cooperatives/ Credit Unions 82 38 1 4

For-Profits 5 2 1

Government Agencies 3 2

NGOs 220 132 30 7

Non-Bank Financial Institutions 29 25 3 1

PVOs 169 42 29 7

Research/Educational Institutions 10 5

USAID1 27 1

Other2 12 2 2 2

Total 627 277 80 27

1 Mission projects that have not yet committed funds to particular institutions, mission support activities on behalf of microenterprises, and

technical assistance and support activities of the office of G/EGAD/MD.

2 Includes institutions that do not fit into other categories, such as the International Finance Corporation and the Enterprise Funds of Central

Europe.
REACHING DOWN AND SCALING UP: FOCUS ON USAID’S DEVELOPMENT PARTNERS

Questionnaires used in the data collection process are available for viewing

at the MRR website. Because USAID uses umbrella agreements to channel

funds to a greater number of institutions, there is not always a direct connection between USAID and many of the practitioners providing services to

clients. Where possible, MRR collects data on microenterprise clients, even

where USAID does not have a direct funding agreement with the implementing institution, for example, institutions that have agreements with USAIDsupported umbrella institutions. In this way, MRR is able to report more completely how USAID funding assistance addresses the needs of poor

microentrepreneurs worldwide.

32

Table 13. Microenterprise Institutions Funded in 1999

Banks 1,428 6 564 1 0 0 1,992 7

Business 210 2 0 2,699 8 0 2,909 10

Associations

Consulting 4,758 5 1,442 3 2,863 6 273 2 9,336 14

Firms

Cooperatives & 4,543 19 0 841 2 500 1 5,884 20

Credit Unions

For-Profits 924 2 0 200 1 0 1,124 3

Government 0 400 1 0 15 1 415 2

Agencies

NGOs 31,576 43 0 0 5,095 22 0 36,671 64

Non-Profits 25,080 13 0 0 0 25,080 13

PVOs 25,279 53 528 2 23,329 32 1,786 1 50,922 84

Research & 800 1 0 1,785 5 110 1 2,695 7

Educational 

Institutions

USAID1 6,333 12 1,689 2 5,147 9 692 2 13,861 22

Other2 1,322 5 930 4 380 2 2,632 9

Total3 102,253 161 4,623 9 42,889 89 3,756 10 153,521 255

1 Mission projects that have not yet committed funds to particular institutions, mission support activities on behalf of microenterprises, and

technical assistance and support activities of the office of G/EGAD/MD.

2 Includes institutions that do not fit into other categories, such as the International Finance Corporation and the Enterprise Funds of Central

Europe.

3 Note that the total of all institutions does not equal the sum of the other institution columns, as 14 institutions received funds for more than

one type of activity.

Amount

US$

(000’s) Number

Amount

US$

(000’s) Number

Amount

US$

(000’s) Number

Amount

US$

(000’s) Number

Amount

US$

(000’s) Number

Financial

Institutions

Financial

Policy

Non-Financial

Institutions

Non-Financial

Policy

Total

Obligations
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT MICROENTERPRISE RESULTS REPORTING FOR 1999

In the four years that MRR has been collecting data from USAID-assisted

institutions, the quality of the data has improved markedly. Many more institutions now are able to report on poverty lending than were initially. A challenge for MRR is to verify institutional data on sustainability, which is currently self-reported.

In 1999, 277 microfinance institutions responded to the MRR survey.

Ninety received 1999 funding; the remainder received funding in prior years.

Of the 80 organizations that provided MRR with data on their business development services, 27 received 1999 funding. Of the 27 policy advocacy organizations that provided MRR with data, only 4 received 1999 funding. All the

institutions included in the reporting population are currently being monitored by USAID or through USAID agreements to umbrella institutions.

Because USAID’s funding precedes new program implementation, often by

several months, funding for a particular fiscal year may not capture all the eventual program uses for that year’s funding.

33
34

SUMMARY OF USAID MICROENTERPRISE FUNDING BY COUNTRY, 1991-1999, US$ ’000’s

Annex B

Africa (AFR)

Benin 1,835 1,040 1,397

Botswana 451 627 158

Burkina Faso 110 150

Burundi 1,020 2,171 543

Chad 270 258 1,635 10

Eritrea 200 200

Ethiopia 330 34 1,049 1,683

Gambia 37 100 298 10 276

Ghana 250 1,050 505 2,584 4,515 4,448 6,322

Guinea 4,054 1,409 2,210 2,210 500 401 73 1,300

Guinea-Bissau 40 1,370 1,855 2,575 2,033

Kenya 1,608 1,084 270 1,650 2,000 2,904 1,717 2,629

Madagascar 685 801 550 229 260 225

Malawi 5,482 3,466 1,953 340

Mali 3,346 4,329 175 8,251 1,160 148 417 809 3,131

Mozambique 450 750 180 630 3,373 2,370 2,802 0

Namibia 280 320 410 712 241

Niger 2,795 3 715 0

RCSA 400

REDSO/EA 260

Senegal 932 7,040 7,850 3,520 450 932 364 2,500 2,778

South Africa 3,021 8,016 3,781 3,308 4,005 50

Swaziland 1,879 3,327

Tanzania 1,558 1,478 200 950

Togo 1,292 1,141

Uganda 2,328 2,330 3,358 2,582 2,416 3,044 5,481 5,162 4,752

Zambia 570 153 500 600 1,000 616 1,500

Zimbabwe 720 603 5,500 425 350 35 200

Regional Programs 491 100 800

AFR Subtotal 21,470 35,295 29,747 24,074 17,013 22,853 25,764 24,421 27,257

Asia/Near East (ANE)

Bangladesh 1,500 250 650 1,165 5,670 8,639 7,663 3,388

Cambodia 112 462 2,398 1,281

Egypt 24,892 35,554 11,000 17,376 16,020 10,000 15,000 15,000 15,000

India 428 250

Indonesia 1,867 2,590 679 2,200 747 866 1,000

Jordan 1,031 100 500 2,792 3,539 5,739

Lebanon 2,045 1,000 1,000 2,100

Morocco 210 1,500 3,600 1,450 990 2,000

Nepal 840 1,980 2,260 1,950 1,200 50 1,170 1,855 500

Pakistan 3,417 3,134

Philippines 23,866 4,820 2,666 4,802 8,411 3,000 2,746 900

South Pacific 2,336 564

Sri Lanka 1,353 2,873 1,292 482 549 769 200

Yemen 821 658

West Bank/Gaza 1,888 2,499 3,311 501

ANE Subtotal 59,392 53,673 18,821 21,699 31,879 30,888 36,925 36,970 32,659

Europe and Eurasia (EE)

Albania 2,240 2,200 225 1,000 1,000 1,500

Armenia 553 2,150

Azerbaijan 991 4,200

Bulgaria 1,564 1,400 771 132 524 1,450

Caucasus 6,940 2,000

Central/Eastern Europe 2,614 200

Croatia 500 500

REGION COUNTRY 1991 1992 1993 1994 1995 1996 1997 1998 1999
35

SUMMARY OF USAID MICROENTERPRISE FUNDING BY COUNTRY, 1991-1999, US$ ’000’s

Annex B

Czech Republic 569 500 

Estonia 224 150 

Europe/Eurasia Region 1,000

Georgia 870 923 2,027 500

Hungary 1,197 730 310

Kazakstan 244 1,377 1,975

Kyrgystan 6,200 487 2,878 1,177 1,826

Latvia 224 430 

Lithuania 560 600 

Macedonia 2,500 950 900 500 2,000

Moldova 60 180

Montenegro 1,000

Poland 7,756 4,976 1,693 19,088 

Romania 896 500 1,405 3,200 2,050 4,547

Russia 12,810 5,200 2,475 2,139 7,340 7,357

Slovakia 896 500 

Tajikistan 101

Turkmenistan 356

Ukraine 2,100 450 2,403 1,238

Uzbekistan 40

ENI Subtotal 0 0 2,614 38,106 20,136 10,473 45,398 18,941 25,570

Latin America and the Caribbean (LAC)

Belize 342 266 

Bolivia 1,442 2,136 3,548 5,532 7,652 1,775 1,800 3,230 1,200

Caribbean Regional 1,021 1,005 1,000 4,610 600 

Costa Rica 200 300 110 140 15 

Dominican Republic 4,778 5,684 2,065 1,300 780 500

Ecuador 200 250 945 1,094 796 945 758

El Salvador 11,863 11,882 9,898 19,120 7,788 2,478 3,214 3,800 2,990

Guatemala 795 647 708 1,974 1,403 9,576

Guyana 875 350 700 53 30

Haiti 2,030 1,180 760 3,148 2,868 3,698 7,246

Honduras 9,783 8,307 6,190 1,187 587 914 5,205

Jamaica 356 745 946 743 696 442 389 640

Mexico 65 200 147

Nicaragua 627 101 1,744 448 1,222 1,440 2,817

Peru 387 732 4,592 3,011 7,796 3,220 4,447 6,564 5,863

Regional Programs 1,444 

LAC Subtotal 25,394 25,438 35,589 40,721 32,595 15,200 20,101 21,080 36,972

CENTRAL BUREAUS

Global

Business Development 3,150 10,750

Development Credit 400 500 450 61 573 375

Emerging Markets 4,136 2,800 

Microenterprise 2,595 3,145 3,793 4,909 22,416 20,194 28,534 24,994 12,288

Housing (RHUDO) 300 

Women in Development 216 730 645 

Global Subtotal 3,211 8,511 4,243 4,909 22,416 23,939 28,595 28,717 23,413

Bureau for Humanitarian Response (BHR)

Private & Voluntary Coop. 4,148 3,381 4,989 7,887 9,494 8,005 8,289 8,316 7,650

BHR Subtotal 4,148 3,381 4,989 7,887 9,494 8,005 8,289 8,316 7,650

SUBTOTAL for Central Bureaus 7,359 11,892 9,232 12,796 31,910 31,944 36,884 37,033 31,063

GRAND TOTAL 113,615 126,298 96,003 137,396 133,533 111,358 165,072 138,445 153,521

REGION COUNTRY 1991 1992 1993 1994 1995 1996 1997 1998 1999