II 

112TH CONGRESS 

1ST SESSION S. 2027 

To improve microfinance and microenterprise, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 17, 2011 

Mr. BENNET (for himself and Mr. BOOZMAN) introduced the following bill; 

which was read twice and referred to the Committee on Foreign Relations 

A BILL 

To improve microfinance and microenterprise, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Microfinance and Mi5 croenterprise Enhancement Act of 2011’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 

8 (1) A growing body of research shows that, 

9 where markets are inclusive and income gaps are 

10 relatively small, growth translates into poverty reVerDate Mar 15 2010 23:35 Dec 22, 2011 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2027.IS S2027

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1 duction much more quickly, efficiently, and 

2 sustainably. 

3 (2) Microenterprises, including smallholder and 

4 pastoral farms, are important actors in most devel5 oping economies and contribute significantly to em6 ployment generation, food security, and family finan7 cial stability. 

8 (3) Microfinance institutions and providers have 

9 played an increasingly important role in enabling 

10 micro-entrepreneurs to graduate from extreme pov11 erty to sustainable living patterns through financial 

12 services such as micro-credit, savings, and micro-in13 surance, as well as skills development, business men14 toring, value-chain linkages, and facilitation of pro15 ducer groups. 

16 (4) Congress has demonstrated its support for 

17 microenterprise development assistance programs 

18 through the enactment of three comprehensive mi19 croenterprise laws. Support for microenterprise and 

20 microfinance remains a key tenet of foreign assist21 ance programs under the Foreign Assistance Act of 

22 1961 (22 U.S.C. 2151 et seq.), including pursuant 

23 to the following Acts: 


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1 (A) The Microenterprise for Self-Reliance 

2 Act of 2000 (title I of Public Law 106–309; 

3 114 Stat. 1079). 

4 (B) Public Law 108–31 (117 Stat. 775). 

5 (C) The Microenterprise Results and Ac6 countability Act of 2004 (Public Law 108–484; 

7 118 Stat. 3922). 

8 (5) Microcredit alone is insufficient to 

9 sustainably reduce poverty and facilitate inclusive 

10 economic growth. In addition to access to credit, 

11 poor households need savings tools to build assets, 

12 mitigate risks, increase social capital, enhance skills, 

13 and integrate into competitive, growing value-chains, 

14 as well as to access good-quality health and edu15 cation services. 

16 (6) Over the last three decades, the United 

17 States Agency for International Development has 

18 made microenterprise development an important fea19 ture of its programming and has continually sought 

20 to enhance the positive impact of investments on 

21 poor households. In fiscal year 2010, the United 

22 States Agency for International Development pro23 vided not less than $262,000,000 in funding for mi24 croenterprise development in at least 64 countries 

25 through at least 145 diverse implementing partners, 


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1 including private voluntary organizations, non2 governmental organizations, banks and enterprise 

3 development service providers, benefitting over 

4 1,600,000 microentrepreneurs and 1,900,000 savers. 

5 (7) New approaches are essential to keep pace 

6 with global technology, not only to alleviate poverty, 

7 but also to sustainably reduce poverty by linking 

8 poor households to economic opportunities so that 

9 they can contribute to and benefit from economic 

10 growth in their countries. 

11 (8) Public funding for microfinance and micro12 enterprise should be available to benefit the poor in 

13 all countries, and, in particular, among countries 

14 with a high concentration of the very poor. 

15 SEC. 3. SENSE OF CONGRESS ON TARGETED AND EFFEC16 TIVE PROGRAMMING. 

17 It is the sense of Congress that the United States 

18 Agency for International Development should continue 

19 and expand programming in microfinance that adheres to 

20 the following principles and basic considerations: 

21 (1) The United States Agency for International 

22 Development should advance access to economic op23 portunities for very poor and vulnerable populations, 

24 including orphans and vulnerable children, single 

25 mothers, those affected by HIV/AIDS, those affected 


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1 by regional conflict, and the food insecure to ensure 

2 that the poorest are included and benefit from 

3 broad-based economic growth. 

4 (2) To the greatest extent possible, the United 

5 States Agency for International Development should 

6 set clear country or regional funding targets based 

7 on greatest need, as evidenced by poverty indicators 

8 and should strive to fill a gap in unmet demand by 

9 the very poor for financial services. 

10 (3) The United States Agency for International 

11 Development should place special emphasis on aiding 

12 poor women, who constitute a substantial portion of 

13 microentrepreneurs and who face a wide range of 

14 disadvantages, as a means of promoting financial 

15 self-reliance, empowering gender equality, including 

16 land rights and access, and bringing a host of devel17 opment benefits to families through improved nutri18 tion, health, and education. 

19 (4) The United States Agency for International 

20 Development should ensure that providers of finan21 cial services benefitting from United States Agency 

22 for International Development assistance adhere to 

23 client protection principles, such as the Client Pro24 tection Principles of the ‘‘Smart Campaign’’, and 

25 take concrete steps to protect clients from potenVerDate Mar 15 2010 23:35 Dec 22, 2011 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2027.IS S2027

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1 tially harmful financial products and to support eq2 uitable and fair treatment, including— 

3 (A) avoidance of over-indebtedness; 

4 (B) transparent and responsible pricing; 

5 (C) appropriate collection practices; 

6 (D) mechanisms for redress of grievances; 

7 and 

8 (E) privacy of client data. 

9 (5) The United States Agency for International 

10 Development should encourage providers of financial 

11 services benefitting from assistance programs to pro12 vide cost-effective services and make steady progress 

13 toward full financial sustainability as a means to 

14 achieve large-scale impact and institutional viability, 

15 while also maintaining focus on their target popu16 lation of poor micro-entrepreneurs and smallholder 

17 farmers. 

18 (6) The United States Agency for International 

19 Development should strive to increase access to fi20 nancial services to poor and very poor, rural, and 

21 other underserved populations by supporting a di22 verse range of financial intermediaries, including 

23 nongovernmental organizations and private and 

24 state-owned banks; postal and savings banks and 

25 savings and credit cooperatives; voluntary savings 


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1 associations; member-owned community organiza2 tions; and other non-bank intermediaries, such as 

3 mobile network operators, finance, and insurance 

4 companies. 

5 (7) The United States Agency for International 

6 Development should promote and make use of exist7 ing technologies that show promise for lowering 

8 costs, managing risks, and rapidly scaling up access 

9 to financial products and services, including mobile 

10 phones, smart phones, tablets, point-of-sale devices 

11 linked to smart cards, automatic teller machines 

12 (ATMs), geographic information system (GIS) map13 ping, and cloud computing, among other information 

14 and communication technologies (ICT). 

15 (8) The United States Agency for International 

16 Development should make efforts to identify and 

17 support smaller, community-led partner organiza18 tions, including local collectives and consortia. 

19 SEC. 4. SENSE OF CONGRESS ON EXPANDED INTEGRATED 

20 APPROACHES. 

21 It is the sense of Congress that the next generation 

22 of programming in microfinance and microenterprise de23 velopment should advance holistic, integrated strategies 

24 that focus on the myriad financial and non-financial 

25 needs, including nutrition, health, and education, of houseVerDate Mar 15 2010 23:35 Dec 22, 2011 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2027.IS S2027

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1 holds, as well as the functioning of enterprises, markets, 

2 and their inter-relationships in the economy. 

3 SEC. 5. HOUSEHOLD-BASED APPROACHES. 

4 (a) RESPONSIVE FINANCIAL SERVICES.—The Ad5 ministrator of the United States Agency for International 

6 Development shall promote responsive financial services to 

7 meet the diverse needs of poor households for cash flow 

8 management and asset accumulation by supporting the de9 velopment of savings, remittances, and money transfer 

10 services. 

11 (b) CONSUMPTION SMOOTHING, RISK AGGREGATION, 

12 AND MITIGATION.—The Administrator of the United 

13 States Agency for International Development shall pro14 mote tools that aggregate risks, mitigate shocks, and 

15 smooth consumption, such as insurance and savings de16 posit services, so that the poor can better manage, cope 

17 with, and recover from expected and unexpected income 

18 fluctuations and crises like family emergencies and crop 

19 failures. 

20 (c) PARTNERS.—The Administrator of the United 

21 States Agency for International Development shall iden22 tify and support partners that support informal savings23 led and asset building approaches to microfinance, includ24 ing organizations that work to provide linkages between 


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1 savings-led groups to institutions in the formal financial 

2 sector. 

3 (d) SOCIAL PROTECTION PROGRAMS.—Because some 

4 people are too poor or otherwise unable to make use of 

5 microfinance or microenterprise development services 

6 without special assistance to prepare them for participa7 tion, the Administrator of the United States Agency for 

8 International Development should identify and support or9 ganizations that link social protection programs, including 

10 food assistance, cash or asset transfers, life and livelihood 

11 skills development, and health and nutrition education, 

12 with microfinance services, savings services, and business 

13 development services. Such linkages should attempt to en14 able poor people to stabilize food consumption, survive ex15 treme poverty, develop sustainable livelihoods, and take 

16 advantage of economic opportunities. 

17 SEC. 6. ENTERPRISE AND MARKET-BASED APPROACHES. 

18 (a) INTERVENTIONS.—The Administrator of the 

19 United States Agency for International Development shall 

20 align household-level interventions for the poor with inter21 ventions that catalyze more inclusive markets and link the 

22 poor to expanding economic opportunities. 

23 (b) DEVELOPMENT OF FINANCIAL PRODUCTS.—The 

24 Administrator of the United States Agency for Inter25 national Development shall support the development of a 


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1 range of financial products adapted to the needs of enter2 prises, including working capital for inputs, labor, and 

3 production services; long-term asset finance; and agri4 culture, animal husbandry, and rural enterprise loans. 

5 Such products should be provided through a diversity of 

6 financing schemes, including financiers along the value 

7 chain such as input suppliers, traders, and processors. 

8 (c) SUPPORT FOR AGRICULTURE SPECIFIC TOOLS.— 

9 The Administrator of the United States Agency for Inter10 national Development shall support microfinance institu11 tions and providers that are using agriculture-specific 

12 tools, including— 

13 (1) household profiling, crop analysis, and land 

14 mapping; 

15 (2) diversification of loan portfolio to include a 

16 variety of sectors and crops; 

17 (3) linkages to extension and formal financial 

18 services; and 

19 (4) linking farmers to clients and larger supply 

20 chains. 

21 (d) LINKED APPROACHES.—To ensure that the poor 

22 are not left out of economic growth strategies, the Admin23 istrator of the United States Agency for International De24 velopment shall focus investments on linking microenter25 prises into global, regional, and local value chains where 


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1 they have a comparative advantage. The Agency should 

2 consider issues such as the business enabling environment, 

3 market competitiveness, inter-firm cooperation, firm-level 

4 upgrading, and the relationships between firms that create 

5 incentives or disincentives for investing in improved per6 formance or upgrading. 

7 (e) SUPPORT FOR SMALL- AND MEDIUM-SIZED EN8 TERPRISES.—The Administrator of the United States 

9 Agency for International Development should consider 

10 support for small- and medium-sized enterprises as a 

11 means to improve productivity and competitiveness in key 

12 subsectors in which large numbers of poor micro-entre13 preneurs participate, as well as to strengthen the channels, 

14 such as employment, by which the benefits of growth are 

15 transmitted to the poor. 

16 SEC. 7. MEASURING AND REPORTING RESULTS. 

17 (a) MODIFICATION OF POVERTY ASSESSMENT

18 TOOLS.—The Administrator of the United States Agency 

19 for International Development shall modify the Poverty 

20 Assessment Tools (PATs) of the Agency so that partner 

21 organizations can use them for expanded data manage22 ment purposes. 

23 (b) ALTERNATIVES TO POVERTY ASSESSMENT

24 TOOLS.—Notwithstanding any other provision of law, not 

25 later than one year after the date of the enactment of this 


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1 Act, the Administrator of the United States Agency for 

2 International Development shall identify and approve al3 ternatives to the Poverty Assessment Tools, such as those 

4 commonly used within the industry and development com5 munity. 

6 SEC. 8. FINANCIAL ACCESS AND MICROENTERPRISE INNO7 VATION FUND. 

8 (a) ESTABLISHMENT.—The Administrator of the 

9 United States Agency for International Development is 

10 authorized to utilize one percent of the Agency’s develop11 ment assistance account budget for fiscal years 2013 

12 through 2017 for the creation of a financial access and 

13 microenterprise innovation challenge fund. 

14 (b) USE OF FUND.—The fund established under this 

15 section shall be used to— 

16 (1) identify, test, and support cost-effective and 

17 innovative products and technologies that improve 

18 the delivery of financial services to the poor and very 

19 poor, particularly in rural locations; 

20 (2) identify, test, and support new microfinance 

21 and microenterprise products, services, and delivery 

22 systems that show potential to become cost-effective 

23 at large scale; and 

24 (3) help transition such methods and tech25 nologies to widespread adoption. 


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1 (c) GRANTS.—The financial access and microenter2 prise innovation challenge fund shall make grants to orga3 nizations and companies, including those interested in 

4 eventual commercialization. Where appropriate, grants 

5 should reward or require recipients to substantially invest 

6 their own funds. The mechanisms may include challenge 

7 grants that require recipients to match grant funds with 

8 their own funds in minimum ratios and bounties for 

9 achievement of targets, such as the number of poor cus10 tomers reached. 

Æ 


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