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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3818 Enrolled Bill (ENR)]

        H.R.3818

                       One Hundred Eighth Congress

                                 of the

                        United States of America

                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
           the twentieth day of January, two thousand and four

                                 An Act

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

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Microenterprise Results and 
Accountability Act of 2004''.

SEC. 2. FINDINGS AND POLICY.

    Congress finds and declares the following:
        (1) Congress has demonstrated its support for microenterprise 
    development assistance programs through the enactment of two 
    comprehensive microenterprise laws:
            (A) The Microenterprise for Self-Reliance Act of 2000 
        (title I of Public Law 106-309; 114 Stat. 1082).
            (B) Public Law 108-31 (an Act entitled ``An Act to amend 
        the Microenterprise for Self-Reliance Act of 2000 and the 
        Foreign Assistance Act of 1961 to increase assistance for the 
        poorest people in developing countries under microenterprise 
        assistance program under those Acts, and for other purposes'', 
        approved June 17, 2003).
        (2) The report on the effectiveness of the United States Agency 
    for International Development's microfinance program, prepared by 
    the Consultative Group to Assist the Poor, rated the Agency in the 
    top tier of the 17 donors in this field.
        (3) The Comptroller General, in a report dated November 2003, 
    found that the United States Agency for International Development 
    has met some, but not all, of the key objectives of such 
    microenterprise development assistance programs.
        (4) The Comptroller General's report found, among other things, 
    the following:
            (A) Microenterprise development assistance generally can 
        help alleviate some impacts of poverty, improve income levels 
        and quality of life for borrowers and provide poor individuals, 
        workers, and their families with an important coping mechanism.
            (B) Microenterprise development assistance programs of the 
        United States Agency for International Development have 
        encouraged women's participation in microfinance projects and, 
        according to data of the Agency, women have comprised two-
        thirds or more of the micro-loan clients in Agency-funded 
        microenterprise projects since 1997.
        (5)(A) The Comptroller General's report recommends that the 
    Administrator of the United States Agency for International 
    Development review the Agency's ``microenterprise results 
    reporting'' system with the goal of ensuring that its annual 
    reporting is complete and accurate.
        (B) Specifically, the Administrator should review and 
    reconsider the methodologies used for the collection, analysis, and 
    reporting of data on annual spending targets, outreach to the very 
    poor, sustainability of microfinance institutions, and the 
    contribution of Agency's funding to the institutions it supports.

SEC. 3. MICROENTERPRISE DEVELOPMENT ASSISTANCE.

     Chapter 2 of part I of the Foreign Assistance Act of 1961 (22 
U.S.C. 2166 et seq.) is amended by inserting after title V the 
following new title:

           ``TITLE VI--MICROENTERPRISE DEVELOPMENT ASSISTANCE

``SEC. 251. FINDINGS AND POLICY.

    ``Congress finds and declares the following:
        ``(1) Access to financial services and the development of 
    microenterprise are vital factors in the stable growth of 
    developing countries and in the development of free, open, and 
    equitable international economic systems.
        ``(2) It is therefore in the best interest of the United States 
    to facilitate access to financial services and assist the 
    development of microenterprise in developing countries.
        ``(3) Access to financial services and the development of 
    microenterprises can be supported by programs providing credit, 
    savings, training, technical assistance, business development 
    services, and other financial services.
        ``(4) Given the relatively high percentage of populations 
    living in rural areas of developing countries, and the combined 
    high incidence of poverty in rural areas and growing income 
    inequality between rural and urban markets, microenterprise 
    programs should target both rural and urban poor.
        ``(5) Microenterprise programs have been successful and should 
    continue to empower vulnerable women in the developing world. The 
    Agency should work to ensure that recipients of microenterprise and 
    microfinance development assistance under this title communicate 
    and work with nongovernmental organizations and government 
    organizations to identify and assist victims of trafficking as 
    provided for in section 106(a)(1) of the Trafficking Victims 
    Protection Act of 2000 (22 U.S.C. 7104(a)(1); Public Law 106-386) 
    and women who are victims of or susceptible to other forms of 
    exploitation and violence.
        ``(6) Given that microenterprise programs have been successful 
    in empowering disenfranchised groups such as women, microenterprise 
    programs should also target populations disenfranchised due to race 
    or ethnicity in countries where a strong relationship between 
    poverty and race or ethnicity has been demonstrated, such as 
    countries in Latin America.

``SEC. 252. AUTHORIZATION; IMPLEMENTATION; TARGETED ASSISTANCE.

    ``(a) Authorization.--The President is authorized to provide 
assistance on a non-reimbursable basis for programs in developing 
countries to increase the availability of credit, savings, and other 
services to microfinance and microenterprise clients lacking full 
access to capital, training, technical assistance, and business 
development services, through--
        ``(1) assistance for the purpose of expanding the availability 
    of credit, savings, and other financial and non-financial services 
    to microfinance and microenterprise clients;
        ``(2) assistance for the purpose of training, technical 
    assistance, and business development services for microenterprises 
    to enable them to make better use of credit, to better manage their 
    enterprises, to conduct market analysis and product development for 
    expanding domestic and international sales, particularly to United 
    States markets, and to increase their income and build their 
    assets;
        ``(3) capacity-building for microfinance and microenterprise 
    institutions in order to enable them to better meet the credit, 
    savings, and training needs of microfinance and microenterprise 
    clients; and
        ``(4) policy, regulatory programs, and research at the country 
    level that improve the environment for microfinance and 
    microenterprise clients and institutions that serve the poor and 
    very poor.
    ``(b) Implementation.--
        ``(1) Office of microenterprise development.--There is 
    established within the Agency an office of microenterprise 
    development, which shall be headed by a Director who shall be 
    appointed by the Administrator and who should possess technical 
    expertise and ability to offer leadership in the field of 
    microenterprise development.
        ``(2) Additional provisions.--
            ``(A) Use of implementing partner organizations.--
        Assistance under this section shall emphasize the use of 
        implementing partner organizations that best meet the 
        requirements of subparagraph (C).
            ``(B) Use of central funding mechanisms.--
                ``(i) Program.--In order to ensure that assistance 
            under this title is distributed effectively and 
            efficiently, the office shall also seek to implement a 
            program of central funding under which assistance is 
            administered directly by the office, including through 
            targeted core support for microfinance and microenterprise 
            networks and other practitioners.
                ``(ii) Funding.--Of the amount made available to carry 
            out this subtitle for a fiscal year, not less than 
            $25,000,000 should be made available to carry out clause 
            (i).
            ``(C) Efficiency and cost-effectiveness.--Assistance under 
        this section shall meet high standards of efficiency, cost-
        effectiveness, and sustainability and shall especially provide 
        the greatest possible resources to the poor and very poor. When 
        administering assistance under this section, the Administrator 
        shall--
                ``(i) take into consideration the percentage of funds a 
            provider of assistance intends to expend on administrative 
            costs;
                ``(ii) take all appropriate steps to ensure that the 
            provider of assistance keeps administrative costs as low as 
            practicable to ensure the maximum amount of funds are used 
            for directly assisting microfinance and microenterprise 
            clients, for establishing sustainable microfinance and 
            microenterprise institutions, or for advancing the 
            microenterprise development field; and
                ``(iii) give preference to proposals from providers of 
            assistance that are the most technically competitive and 
            have a reasonable allocation to overhead and administrative 
            costs.
        ``(3) Approval of strategic plans.--With respect to assistance 
    provided under this section, the office shall be responsible for 
    concurring in the microenterprise development components of 
    strategic plans of missions, bureaus, and other offices of the 
    Agency and providing technical support to field missions to help 
    the missions prepare such components.
    ``(c) Targeted Assistance.--In carrying out sustainable poverty-
focused programs under subsection (a), 50 percent of all 
microenterprise resources shall be targeted to clients who are very 
poor. Specifically, until September 30, 2006, such resources shall be 
used for--
        ``(1) support of programs under this section through 
    practitioner institutions that--
            ``(A) provide credit and other financial services to 
        clients who are very poor, with loans in 1995 United States 
        dollars of--
                ``(i) $1,000 or less in the Europe and Eurasia region;
                ``(ii) $400 or less in the Latin America region; and
                ``(iii) $300 or less in the rest of the world; and
            ``(B) can cover their costs in a reasonable time period; or
        ``(2) demand-driven business development programs that achieve 
    reasonable cost recovery that are provided to clients holding 
    poverty loans (as defined by the regional poverty loan limitations 
    in paragraph (1)(A)), whether they are provided by microfinance 
    institutions or by specialized business development services 
    providers.

``SEC. 253. MONITORING SYSTEM.

    ``(a) In General.--In order to maximize the sustainable development 
impact of assistance authorized under section 252(a), the Administrator 
of the Agency, acting through the Director of the office, shall 
strengthen its monitoring system to meet the requirements of subsection 
(b).
    ``(b) Requirements.--The requirements referred to in subsection (a) 
are the following:
        ``(1) The monitoring system shall include performance goals for 
    the assistance and expresses such goals in an objective and 
    quantifiable form, to the extent feasible.
        ``(2) The monitoring system shall include performance 
    indicators to be used in measuring or assessing the achievement of 
    the performance goals described in paragraph (1) and the objectives 
    of the assistance authorized under section 252.
        ``(3) The monitoring system provides a basis for 
    recommendations for adjustments to the assistance to enhance the 
    sustainability and the impact of the assistance, particularly the 
    impact of such assistance on the very poor, particularly poor 
    women.
        ``(4) The monitoring system adopts the widespread use of proven 
    and effective poverty assessment tools to successfully identify the 
    very poor and ensure that they receive adequate access to 
    microenterprise loans, savings, and assistance.

``SEC. 254. DEVELOPMENT AND CERTIFICATION OF POVERTY MEASUREMENT 
              METHODS; APPLICATION OF METHODS.

    ``(a) Development and Certification.--
        ``(1) In general.--The Administrator of the Agency, in 
    consultation with microenterprise institutions and other 
    appropriate organizations, shall develop no fewer than two low-cost 
    methods for implementing partner organizations to use to assess the 
    poverty levels of their current incoming or prospective clients. 
    The Administrator shall develop poverty indicators that correlate 
    with the circumstances of the very poor.
        ``(2) Field testing.--The Administrator shall field-test the 
    methods developed under paragraph (1). As part of the testing, 
    institutions and programs may use the methods on a voluntary basis 
    to demonstrate their ability to reach the very poor.
        ``(3) Certification.--Not later than April 1, 2005, the 
    Administrator shall, from among the low-cost poverty measurement 
    methods developed under paragraph (1), certify no fewer than two 
    such methods as approved methods for measuring the poverty levels 
    of current, incoming, or prospective clients of microenterprise 
    institutions for purposes of assistance under section 252.
    ``(b) Application.--The Administrator shall require that, with 
reasonable exceptions, all implementing partner organizations applying 
for microenterprise assistance under this title use one of the 
certified methods, beginning not later than October 1, 2006, to 
determine and report the poverty levels of current, incoming, or 
prospective clients.

``SEC. 255. ADDITIONAL AUTHORITIES.

    ``Notwithstanding any other provision of law, amounts made 
available for assistance for microenterprise development assistance 
under any provision of law other than this title may be provided to 
further the purposes of this title. To the extent assistance described 
in the preceding sentence is provided in accordance with such sentence, 
the Administrator of the Agency shall include, as part of the report 
required under section 258, a detailed description of such assistance 
and, to the extent applicable, the information required by paragraphs 
(1) through (11) of subsection (b) of such section with respect to such 
assistance.''.

SEC. 4. MICROENTERPRISE DEVELOPMENT CREDITS.

    (a) Transfer.--Section 108 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2151f) is hereby--
        (1) transferred from chapter 1 of part I of the Foreign 
    Assistance Act of 1961 to title VI of chapter 2 of part I of such 
    Act (as added by section 3 of this Act); and
        (2) inserted after section 255 of the Foreign Assistance Act of 
    1961.
    (b) Redesignation.--Title VI of chapter 2 of part I of the Foreign 
Assistance Act of 1961 is amended by redesignating section 108 (as 
added by subsection (a)) as section 256.
    (c) Conforming Amendments.--Title VI of chapter 2 of part I of the 
Foreign Assistance Act of 1961 is amended--
        (1) by inserting after the title heading the following:

                   ``Subtitle A--Grant Assistance'';

        (2) by inserting after section 255 the following:

                 ``Subtitle B--Credit Assistance''; and

        (3) in section 256 (as redesignated by subsection (b))--
            (A) in the matter preceding paragraph (1) of subsection 
        (c), by striking ``Administrator of the agency primarily 
        responsible for administering this part'' and inserting 
        ``Administrator of the Agency''; and
            (B) in subsection (f)(1)--
                (i) by striking ``section 131'' and inserting ``this 
            part''; and
                (ii) by striking ``$1,500,000 for each of fiscal years 
            2001 through 2004'' and inserting ``such sums as may be 
            necessary for each of the fiscal years 2005 through 2009''.

SEC. 5. UNITED STATES MICROFINANCE LOAN FACILITY.

    (a) Transfer.--Section 132 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2152b) is hereby--
        (1) transferred from chapter 1 of part I of the Foreign 
    Assistance Act of 1961 to title VI of chapter 2 of part I of such 
    Act (as added by section 3 of this Act); and
        (2) inserted after section 256 of the Foreign Assistance Act of 
    1961 (as added by section 4 of this Act).
    (b) Redesignation.--Title VI of chapter 2 of part I of the Foreign 
Assistance Act of 1961 is amended by redesignating section 132 (as 
added by subsection (a)) as section 257.
    (c) Conforming Amendments.--Title VI of chapter 2 of part I of the 
Foreign Assistance Act of 1961 is amended--
        (1) by inserting after section 256 the following:

     ``Subtitle C--United States Microfinance Loan Facility''; and

        (2) in section 257 (as redesignated by subsection (b))--
            (A) in subsection (b)(3), by striking ``2001 and 2002'' and 
        inserting ``2005 through 2009'';
            (B) in the matter preceding subparagraph (A) of subsection 
        (d)(1), by striking ``this part for the fiscal year 2001, up to 
        $5,000,000'' and inserting ``this part for each of the fiscal 
        years 2005 through 2009, such sums as may be necessary''; and
            (C) by striking subsection (e).

SEC. 6. MISCELLANEOUS PROVISIONS.

    Title VI of chapter 2 of part I of the Foreign Assistance Act of 
1961 (as added by section 3 of this Act and amended by sections 4 and 5 
of this Act) is further amended by adding at the end the following new 
subtitle:

                 ``Subtitle D--Miscellaneous Provisions

``SEC. 258. REPORT.

    ``(a) In General.--Not later than June 30, 2006, and each June 30 
thereafter, the Administrator of the Agency, acting through the 
Director of the office, shall submit to the appropriate congressional 
committees a report that contains a detailed description of the 
implementation of this title for the previous fiscal year.
    ``(b) Contents.--The report shall contain the following:
        ``(1) The number of grants, cooperative agreements, contracts, 
    contributions, or other form of assistance provided under section 
    252, with a listing of--
            ``(A) the amount of each grant, cooperative agreement, 
        contract, contribution, or other form of assistance;
            ``(B) the name of each recipient and each developing 
        country with respect to which projects or activities under the 
        grant, cooperative agreement, contract, contribution, or other 
        form of assistance were carried out; and
            ``(C) a listing of the number of countries receiving 
        assistance authorized by section 252.
        ``(2) The results of the monitoring system required under 
    section 253.
        ``(3) The process of developing and applying poverty assessment 
    procedures required under section 254.
        ``(4) The percentage of assistance furnished under section 252 
    that was allocated to the very poor based on the data collected 
    using the certified methods required by section 254.
        ``(5) The estimated number of the very poor reached with 
    assistance provided under section 252.
        ``(6) The amount of assistance provided under section 252 
    through central mechanisms.
        ``(7) The name of each country that receives assistance under 
    section 256 and the amount of such assistance.
        ``(8) Information on the efforts of the Agency to ensure that 
    recipients of United States microenterprise and microfinance 
    development assistance work closely with nongovernmental 
    organizations and foreign governments to identify and assist 
    victims or potential victims of severe forms of trafficking in 
    persons and women who are victims of or susceptible to other forms 
    of exploitation and violence.
        ``(9) Any additional information relating to the provision of 
    assistance authorized by this title, including the use of the 
    poverty measurement tools required by section 254, or additional 
    information on assistance provided by the United States to support 
    microenterprise development under this title or any other provision 
    of law.
        ``(10) An estimate of the percentage of beneficiaries of 
    assistance under this title in countries where a strong 
    relationship between poverty and race or ethnicity has been 
    demonstrated.
        ``(11) The level of funding provided through contracts, the 
    level of funding provided through grants, contracts, and 
    cooperative agreements that is estimated to be subgranted or 
    subcontracted, as the case may be, to direct service providers, and 
    an analysis of the comparative cost-effectiveness and 
    sustainability of projects carried out under these mechanisms.
    ``(c) Availability to Public.--The report required by this section 
shall be made available to the public on the Internet website of the 
Agency.

``SEC. 259. DEFINITIONS.

    `` In this title:
        ``(1) Administrator.--The term `Administrator' means the 
    Administrator of the Agency.
        ``(2) Agency.--The term `Agency' means the United States Agency 
    for International Development.
        ``(3) Appropriate congressional committees.--The term 
    `appropriate congressional committees' means the Committee on 
    International Relations of the House of Representatives and the 
    Committee on Foreign Relations of the Senate.
        ``(4) Business development services.--The term `business 
    development services' means support for the growth of 
    microenterprises through training, technical assistance, marketing 
    assistance, improved production technologies, and other related 
    services.
        ``(5) Director.--The term `Director' means the Director of the 
    office.
        ``(6) Implementing partner organization.--The term 
    `implementing partner organization' means an entity eligible to 
    receive assistance under this title which is--
            ``(A) a United States or an indigenous private voluntary 
        organization;
            ``(B) a United States or an indigenous credit union;
            ``(C) a United States or an indigenous cooperative 
        organization;
            ``(D) an indigenous governmental or nongovernmental 
        organization;
            ``(E) a microenterprise institution;
            ``(F) a microfinance institution; or
            ``(G) a practitioner institution.
        ``(7) Microenterprise institution.--The term `microenterprise 
    institution' means a not-for-profit entity that provides services, 
    including microfinance, training, or business development services, 
    for microenterprise clients in foreign countries.
        ``(8) Microfinance institution.--The term `microfinance 
    institution' means a not-for-profit entity or a regulated financial 
    intermediary that directly provides, or works to expand, the 
    availability of credit, savings, and other financial services to 
    microfinance and microenterprise clients in foreign countries.
        ``(9) Microfinance network.--The term `microfinance network' 
    means an affiliated group of practitioner institutions that 
    provides services to its members, including financing, technical 
    assistance, and accreditation, for the purpose of promoting the 
    financial sustainability and societal impact of microenterprise 
    assistance.
        ``(10) Office.--The term `office' means the office of 
    microenterprise development established under section 252(b)(1).
        ``(11) Practitioner institution.--The term `practitioner 
    institution' means a not-for-profit entity or a regulated financial 
    intermediary, including a microfinance network, that provides 
    services, including microfinance, training, or business development 
    services, for microfinance and microenterprise clients, or provides 
    assistance to microenterprise institutions in foreign countries.
        ``(12) Private voluntary organization.--The term `private 
    voluntary organization' means a not-for-profit entity that--
            ``(A) engages in and supports activities of an economic or 
        social development or humanitarian nature for citizens in 
        foreign countries; and
            ``(B) is incorporated as such under the laws of the United 
        States, including any of its states, territories or the 
        District of Columbia, or of a foreign country.
        ``(13) United states-supported microfinance institution.--The 
    term `United States-supported microfinance institution' means a 
    financial intermediary that has received funds made available under 
    this part for fiscal year 1980 or any subsequent fiscal year.
        ``(14) Very poor.--The term `very poor' means those 
    individuals--
            ``(A) living in the bottom 50 percent below the poverty 
        line established by the national government of the country in 
        which those individuals live; or
            ``(B) living on less than the equivalent of $1 per day (as 
        calculated using the purchasing power parity (PPP) exchange 
        rate method).''.

SEC. 7. SENSE OF CONGRESS.

    It is the sense of Congress that, in carrying out title VI of 
chapter 2 of part I of the Foreign Assistance Act of 1961 (as added by 
section 3 of this Act and amended by sections 4 through 6 of this Act), 
the Administrator of the United States Agency for International 
Development--
        (1) where applicable, should ensure that microenterprise 
    development assistance provided under such title is matched by 
    recipients with an equal amount of assistance from non-United 
    States Government sources, including private donations, 
    multilateral funding, commercial and concessional borrowing, 
    savings, and program income;
        (2) should include in the report required by section 258 of the 
    Foreign Assistance Act of 1961 (as added by section 6 of this Act) 
    a description of all matching assistance (as described in paragraph 
    (1)) provided for the prior year by recipients of microenterprise 
    development assistance under such title;
        (3) should ensure that recipients of microenterprise 
    development assistance under such title do not expend an 
    unreasonably large percentage of such assistance on administrative 
    costs;
        (4) should not use recipients of microenterprise development 
    assistance under such title to carry out critical management 
    functions of the Agency, including functions such as strategy 
    development or overall management of programs in a country; and
        (5) should consult with the appropriate congressional 
    committees with respect to the implementation of title VI of 
    chapter 2 of part I of the Foreign Assistance Act of 1961 not later 
    than 90 days after the date of the enactment of this Act.

SEC. 8. REPEALS.

    (a) Foreign Assistance Act of 1961.--Section 131 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2152a) is hereby repealed.
    (b) Public Law 108-31.--
        (1) In general.--Section 4 of Public Law 108-31 (22 U.S.C. 
    2151f note) is amended by striking subsection (b).
        (2) Conforming amendment.--Section 4 of Public Law 108-31 is 
    amended by striking ``(a)'' and all that follows through ``Not 
    later'' and inserting ``Not later''.

SEC. 9. REFERENCES.

    Any reference in a law, regulation, agreement, or other document of 
the United States to section 108, 131, or 132 of the Foreign Assistance 
Act of 1961 shall be deemed to be a reference to subtitle B of title VI 
of chapter 2 of part I of the Foreign Assistance Act of 1961, subtitle 
A of title VI of chapter 2 of part I of such Act, or subtitle C of 
title VI of chapter 2 of part I of such Act, respectively.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
```