IIA
105TH CONGRESS
1ST SESSION
H. R. 1129
IN THE SENATE OF THE UNITED STATES
NOVEMBER 10, 1997
Received
NOVEMBER 13, 1997
Read twice and referred to the Committee on Foreign Relations
AN ACT
To establish a program to provide assistance for programs
of credit and other assistance for microenterprises in
developing countries, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Microcredit for Self-
Reliance Act of 1997’’.
SEC. 2. FINDINGS AND DECLARATIONS OF POLICY.
The Congress makes the following findings and dec-
larations:
(1) More than 1,000,000,000 people in the de-
veloping world are living in severe poverty.
(2) According to the United Nations Children’s
Fund (UNICEF), mortality for children under the
age of 5 averages 100 child deaths per thousand for
all developing countries, with nearly double that rate
in the poorest countries.
(3) Nearly 35,000 children die each day from
largely preventable malnutrition and disease.
(4)(A) Women in poverty generally have larger
work loads, and less access to educational and eco-
nomic opportunities than their male counterparts.
(B) Directly aiding the poorest of the poor, es-
pecially women, in the developing world has a posi-
tive effect not only on family incomes, but also on
child nutrition, health and education, as women in
particular reinvest income in their families.
(5)(A) The poor in the developing world, par-
ticularly women, generally lack stable employment
and social safety nets.
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(B) Many turn to self-employment to generate
a substantial portion of their livelihood.
(C) These poor entrepreneurs are often trapped
in poverty because they cannot obtain credit at rea-
sonable rates to build their asset base or expand
their otherwise viable self-employment activities.
(D) Many of the poor are forced to pay interest
rates as high as 10 percent per day to money lend-
ers.
(6)(A) On February 2–4, 1997, a global micro-
credit summit was held in Washington, District of
Columbia, to launch a plan to expand access to cred-
it for self-employment and other financial and busi-
ness services to 100,000,000 of the world’s poorest
families, especially the women of those families, by
2005.
(B) With five to a family, achieving this goal
will mean that the benefits of microcredit will there-
by reach nearly half of the world’s more than
1,000,000,000 absolute poor.
(7)(A) The poor are able to expand their in-
comes and their businesses dramatically when they
can access loans at reasonable interest rates.
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(B) Through the development of self-sustaining
microcredit programs, poor people themselves can
lead the fight against hunger and poverty.
(8)(A) Nongovernmental organizations such as
the Grameen Bank, Accion International, and the
Foundation for International Community Assistance
(FINCA) have been successful in lending directly to
the very poor.
(B) These institutions generate repayment rates
averaging 95 percent or higher, demonstrating the
bankability of the poorest.
(C) International organizations such as the
International Fund for Agricultural Development
(IFAD) and the United Nations Development Pro-
gram (UNDP) have demonstrated success in sup-
porting microcredit programs.
(9)(A) Microcredit institutions not only reduce
poverty, but also reduce the dependency on foreign
assistance.
(B) Interest income on a credit portfolio can be
used to pay recurring institutional costs, assuring
the long-term sustainability of development assist-
ance.
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(10) Microcredit institutions leverage foreign
assistance resources because loans are recycled, gen-
erating new benefits to program participants.
(11) The development of sustainable micro-
credit institutions which provide credit and training,
and mobilize domestic savings, are critical compo-
nents to a global strategy of poverty reduction and
broad based economic development.
(12)(A) In 1994, the United States Agency for
International Development launched a microenter-
prise initiative in partnership with the Congress.
(B) The initiative committed to expanding
funding for the microenterprise programs of the
Agency, and set a goal that, by the end of fiscal year
1996, half of all microenterprise resources would
support programs and institutions providing credit
to the poorest, with loans under $300.
(C) In order to achieve the goal of the micro-
credit summit, increased investment in microcredit
institutions serving the poorest will be critical.
(13) Providing the United States share of the
global investment needed to achieve the goal of the
microcredit summit will require only a small increase
in United States funding for international micro-
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credit programs, with an increased focus on institu-
tions serving the poorest.
(14)(A) In order to reach tens of millions of the
poorest with microcredit, it is crucial to expand and
replicate successful microcredit institutions.
(B) These institutions need assistance in devel-
oping their institutional capacity to expand their
services and tap commercial sources of capital.
(15) Nongovernmental organizations have dem-
onstrated competence in developing networks of local
microcredit institutions so that they reach large
numbers of the very poor, and achieve financial sus-
tainability.
(16) Recognizing that the United States Agency
for International Development has developed very ef-
fective partnerships with nongovernmental organiza-
tions, and that the Agency will have fewer missions
to carry out its work, the Agency should place prior-
ity on investing in these nongovernmental network
institutions through the central funding mechanisms
of the Agency.
(17) By expanding and replicating successful
microcredit institutions, it should be possible to cre-
ate a global infrastructure to provide financial serv-
ices to the world’s poorest families.
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(18)(A) The United States Agency for Inter-
national Development can provide leadership to
other bilateral and multilateral development agencies
as such agencies expand their support to the micro-
enterprise sector.
(B) The United States Agency for International
Development should seek to improve coordination of
donor efforts at the operational level to promote the
use of best practices in the provision of financial
services to the poor and to ensure that adequate in-
stitutional capacity is developed.
(19) Through expanded support for microcredit,
especially credit for the poorest, the United States
Agency for International Development can continue
to play a leadership role in the global effort to ex-
pand 
financial 
services 
and 
opportunity 
to
100,000,000 of the poorest families on the planet.
SEC. 3. PURPOSES.
The purposes of this Act are—
(1) to provide for the continuation and expan-
sion of the commitment of the United States Agency
for International Development to the development of
microenterprise institutions;
(2) to make microenterprise development the
centerpiece of the overall economic growth strategy
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of the United States Agency for International Devel-
opment;
(3) to support and develop the capacity of Unit-
ed States and indigenous nongovernmental organiza-
tion intermediaries to provide credit, savings, and
training services to microentrepreneurs;
(4) to increase the amount of assistance de-
voted to credit activities designed to reach the poor-
est sector in developing countries, and to improve
the access of the poorest, particularly women, to
microenterprise credit in developing countries; and
(5) to encourage the United States Agency for
International Development to provide global leader-
ship in promoting microenterprise for the poorest
among bilateral and multilateral donors.
SEC. 4. MICRO- AND SMALL ENTERPRISE DEVELOPMENT
CREDITS.
Section 108 of the Foreign Assistance Act of 1961
(22 U.S.C. 2151f) is amended to read as follows:
‘‘SEC. 108. MICRO- AND SMALL ENTERPRISE DEVELOPMENT
CREDITS.
‘‘(a) FINDINGS AND POLICY.—The Congress finds
and declares that—
‘‘(1) the development of micro- and small enter-
prise, including cooperatives, is a vital factor in the
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stable growth of developing countries and in the de-
velopment and stability of a free, open, and equi-
table international economic system;
‘‘(2) it is, therefore, in the best interests of the
United States to assist the development of the pri-
vate sector in developing countries and to engage the
United States private sector in that process;
‘‘(3) the support of private enterprise can be
served by programs providing credit, training, and
technical assistance for the benefit of micro- and
small enterprises; and
‘‘(4) programs that provide credit, training, and
technical assistance to private institutions can serve
as a valuable complement to grant assistance pro-
vided for the purpose of benefiting micro- and small
private enterprise.
‘‘(b) PROGRAM.—To carry out the policy set forth in
subsection (a), the President is authorized to provide as-
sistance to increase the availability of credit to micro- and
small enterprises lacking full access to credit, including
through—
‘‘(1) loans and guarantees to credit institutions
for the purpose of expanding the availability of cred-
it to micro- and small enterprises;
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‘‘(2) training programs for lenders in order to
enable them to better meet the credit needs of
micro- and small entrepreneurs; and
‘‘(3) training programs for micro- and small en-
trepreneurs in order to enable them to make better
use of credit and to better manage their enterprises.
‘‘(c) ELIGIBILITY CRITERIA.—The Administrator of
the United States Agency for International Development
shall establish criteria for determining which entities de-
scribed in subsection (b) are eligible to carry out activities,
with respect to microenterprises, assisted under this sec-
tion. Such criteria may include the following:
‘‘(1) The extent to which the recipients of credit
from the entity do not have access to the local for-
mal financial sector.
‘‘(2) The extent to which the recipients of credit
from the entity are among the poorest people in the
country.
‘‘(3) The extent to which the entity is oriented
toward working directly with poor women.
‘‘(4) The extent to which the entity recovers its
cost of lending to the poor.
‘‘(5) The extent to which the entity implements
a plan to become financially sustainable.’’.
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SEC. 5. MICROENTERPRISE DEVELOPMENT GRANT ASSIST-
ANCE.
Chapter 1 of part I of the Foreign Assistance Act
of 1961 (22 U.S.C. 2151 et seq.) is amended by adding
at the end the following new section:
‘‘SEC. 129. MICROENTERPRISE DEVELOPMENT GRANT AS-
SISTANCE.
‘‘(a) AUTHORIZATION.—(1) In carrying out this part,
the Administrator of the United States Agency for Inter-
national Development is authorized to provide grant as-
sistance for programs of credit and other assistance for
microenterprises in developing countries.
‘‘(2) Assistance authorized under paragraph (1) shall
be provided through organizations that have a capacity to
develop and implement microenterprise programs, includ-
ing particularly—
‘‘(A) United States and indigenous private and
voluntary organizations;
‘‘(B) United States and indigenous credit
unions and cooperative organizations; or
‘‘(C) other indigenous governmental and non-
governmental organizations.
‘‘(3) Approximately one-half of the credit assistance
authorized under paragraph (1) shall be used for poverty
lending programs, including the poverty lending portion
of mixed programs. Such programs—
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‘‘(A) shall meet the needs of the very poor
members of society, particularly poor women; and
‘‘(B) should provide loans of $300 or less in
1995 United States dollars to such poor members of
society.
‘‘(4) The Administrator should continue support for
mechanisms that—
‘‘(A) provide technical support for field mis-
sions;
‘‘(B) strengthen the institutional development
of the intermediary organizations described in para-
graph (2); and
‘‘(C) share information relating to the provision
of assistance authorized under paragraph (1) be-
tween such field missions and intermediary organiza-
tions.
‘‘(b) MONITORING SYSTEM.—In order to maximize
the sustainable development impact of the assistance au-
thorized under subsection (a)(1), the Administrator shall
establish a monitoring system that—
‘‘(1) establishes performance goals for such as-
sistance and expresses such goals in an objective and
quantifiable form, to the extent feasible;
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‘‘(2) establishes performance indicators to be
used in measuring or assessing the achievement of
the goals and objectives of such assistance; and
‘‘(3) provides a basis for recommendations for
adjustments to such assistance to enhance the sus-
tainable development impact of such assistance, par-
ticularly the impact of such assistance on the very
poor, particularly poor women.’’.
SEC. 6. MULTILATERAL COOPERATION WITH THE INTER-
NATIONAL FUND FOR AGRICULTURAL DE-
VELOPMENT.
(a) FINDINGS.—The Congress finds the following:
(1)(A) The International Fund for Agricultural
Development (‘‘IFAD’’) has as its mission serving
the poorest of the poor in rural areas.
(B) IFAD has had two decades of experience in
assisting the economic development of the rural
poor.
(2) IFAD has been a significant supporter of
microenterprise and other microfinance activities for
the rural poor almost since its inception and it was
the first international institution to assist the
Grameen Bank.
(3) IFAD can make a significant contribution
to developing a global network of sustainable micro-
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enterprise and other microfinance institutions which
serve the very poor through support for nongovern-
mental organizations and other community-based
microcredit institutions.
(b) SENSE OF THE CONGRESS.—It is the sense of
the Congress that—
(1) the United States Agency for International
Development, in carrying out sections 108 and 129
of the Foreign Assistance Act of 1961, as added by
sections 4 and 5 of this Act, respectively, shall seek
to cooperate with IFAD in order to compliment and
expand the activities of IFAD, especially with re-
spect to institutional development; and
(2) the United States should continue to sup-
port and contribute to the activities of IFAD, espe-
cially activities related to microenterprise and micro-
finance, including the Microfinance Capacity Build-
ing Grant Initiative.
SEC. 7. UNITED NATIONS DEVELOPMENT PROGRAM’S
MICROSTART PROGRAM.
It is the sense of the Congress that—
(1) the Microstart Program established by the
United Nations Development Program (UNDP) rep-
resents an important new initiative; and
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(2) the President should instruct the United
States representative to the United Nations to use
the voice and vote of the United States to support
the Microstart Program of the United Nations De-
velopment Program.
Passed the House of Representatives November 9,
1997.
Attest:
ROBIN H. CARLE,
Clerk.