I
105TH CONGRESS
1ST SESSION
H. R. 1129
To establish a program to provide assistance for programs of credit and
other assistance for microenterprises in developing countries, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 19, 1997
Mr. HOUGHTON (for himself, Mr. HALL of Ohio, Mr. DAN SCHAEFER of Colo-
rado, Mr. TORRES, Mr. GREENWOOD, Mr. FILNER, Mr. WALSH, Mr.
ABERCROMBIE, Mr. HULSHOF, Mr. ANDREWS, Mr. BOEHLERT, Mr.
MEEHAN, Mrs. MORELLA, Mr. MORAN of Virginia, Mr. PAYNE, Mr.
BLUMENAUER, Mr. DELLUMS, Ms. RIVERS, Mr. BROWN of Ohio, Mrs.
CLAYTON, Mr. BARRETT of Wisconsin, Mr. VENTO, Mr. LAFALCE, Mrs.
TAUSCHER, Mr. LEVIN, and Mr. MCDERMOTT) introduced the following
bill; which was referred to the Committee on International Relations
A BILL
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,
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.
(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.
(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 Foundation for Agricultural Develop-
ment (IFAD) and the United Nations Development
Program (UNDP) have demonstrated success in
supporting 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.
(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-
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.
(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.
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.
(b) AUTHORIZATION.—(1) The President, acting
through the Administrator of the United States Agency
for International Development, is authorized to provide as-
sistance for programs of credit and other assistance for
microenterprises in developing countries.
(2) Microenterprise credit and related activities as-
sisted under this section shall be carried out primarily
through United States and indigenous nongovernmental
organizations and United States and indigenous credit
unions, cooperative organizations, and other private finan-
cial intermediaries, that have the capacity to develop and
to implement microenterprise programs, and that are ori-
ented toward working directly with the poor, especially
women.
(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)(2) are eligible to carry out activi-
ties assisted under this section. Such criteria shall 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.
(d) FUNDING LEVELS FOR FISCAL YEARS 1998 AND
1999.—
(1) IN GENERAL.—Of the amounts made avail-
able to carry out chapter 1 of part I of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151 et seq.)—
(A) not less than $170,000,000 for fiscal
year 1998 shall be made available for assistance
under this section; and
(B) not less than $180,000,000 for fiscal
year 1999 shall be made available for assistance
under this section.
(2) ADDITIONAL REQUIREMENTS.—(A) Of the
amounts made available under each of subpara-
graphs (A) and (B) of paragraph (1) for fiscal years
1998 and 1999, not less than $85,000,000 for fiscal
year 1998 and not less than $90,000,000 for fiscal
year 1999 shall be used to support poverty lending
as defined in paragraph (3).
(B) Of the amounts made available under each
of subparagraphs (A) and (B) of paragraph (1) for
fiscal years 1998 and 1999, not less than
$50,000,000 of such amounts for each such fiscal
year shall be provided through the central mecha-
nisms of the United States Agency for International
Development for support of United States and indig-
enous nongovernmental organizations.
(3) DEFINITIONS.—(A) For purposes of this
subsection, the term ‘‘to support poverty lending’’
means—
(i) funds lent to members of the poverty
target population (as defined in subparagraph
(B)) within low-income countries in amounts
equivalent to $300 or less in 1997 United
States dollars; and
(ii) funds used for institutional develop-
ment of an entity described in subsection
(b)(2), which is engaged in making loans of
$300 or less in 1997 United States dollars to
members of the poverty target population (as
defined in subparagraph (B)) or the portion of
a mixed program which makes such loans.
(B) The term ‘‘poverty target population’’
means the poorest 50 percent of those individuals
living below the poverty line, defined by the national
government of the foreign country.
SEC. 4. PROGRAM PERFORMANCE CRITERIA.
(a) STRENGTHENING
OF
APPROPRIATE
MECHA-
NISMS.—The Administrator of the United States Agency
for International Development shall strengthen appro-
priate mechanisms, including mechanisms for central
microenterprise programs, for the purpose of strengthen-
ing the institutional development of the entities described
in section 3(b)(2).
(b) MONITORING SYSTEM.—In order to maximize the
sustainable development impact of the assistance author-
ized under section 3, the Administrator of the United
States Agency for International Development shall estab-
lish a monitoring system that—
(1) establishes performance goals for such as-
sistance and expresses such goals in an objective and
quantifiable form;
(2) establishes performance systems or indica-
tors to measure the extent to which projects are
achieving such goals; and
(3) provides a basis for recommendations for
adjustments to such assistance to enhance the sus-
tainable development impact of such assistance on
the very poor, particularly women.
(c) ADDITIONAL MONITORING REQUIREMENTS.—As
a part of the monitoring system established under sub-
section (b), the Administrator of the United States Agency
for International Development—
(1) using data provided by lending institutions,
shall monitor the actual amount of microenterprise
credit and number of loans made available to the
poverty target population as a result of each project
or program carried out pursuant to this Act;
(2) using data provided by lending institutions,
shall monitor the amount of funding provided pursu-
ant to this Act which is allocated to organizations
engaged in making loans of under $300 to the pov-
erty target population, or to the poverty lending por-
tion of mixed programs;
(3) shall report annually on the compliance of
United States Agency for International Development
missions with the microenterprise initiative described
in section 2(12); and
(4) shall include a summary of the information
collected under paragraphs (1) and (2) in the annual
congressional presentation document of the United
States Agency for International Development to the
Congress.
SEC. 5. CONTRIBUTIONS TO THE INTERNATIONAL FUND
FOR AGRICULTURAL DEVELOPMENT.
(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-
enterprise and other microfinance institutions which
serve the very poor through support for nongovern-
mental organizations and other community based
microcredit institutions.
(b) UNITED STATES CONTRIBUTIONS TO IFAD.—
(1) IN GENERAL.—(A) There are authorized to
be appropriated $20,000,000 for each of the fiscal
years 1998 and 1999 for United States contribu-
tions to the International Fund for Agricultural De-
velopment for the purpose of establishing and carry-
ing out a special initiative to provide grants to non-
governmental organizations and other private com-
munity-based microenterprise institutions serving
the very poor, especially women.
(B) Funds authorized to be appropriated under
subparagraph (A) are in addition to amounts other-
wise available for such purposes.
(2) 
ADDITIONAL
REQUIREMENTS.—(A)
Amounts contributed to IFAD under paragraph (1)
shall be available only for the following:
(i) Loans to members of the poverty target
population (as defined in section 3(d)(3)(B))
within low-income countries in amounts equiva-
lent to $300 of less in 1997 United States Dol-
lars.
(ii) The institutional development of finan-
cial intermediaries that primarily or exclusively
make loans to members of the poverty target
population (as defined in section 3(d)(3)(B)) in
amounts equivalent to $300 or less in 1997
United States Dollars, or for training of such
borrowers.
(B) Microenterprise credit and related activities
assisted under this section shall be carried out pri-
marily through nongovernmental organizations, cred-
it unions, cooperative organizations, and other pri-
vate financial intermediaries, that have the capacity
to develop and to implement microenterprise pro-
grams, and that are oriented toward working di-
rectly with the poor and women.
(c) OTHER CONTRIBUTIONS TO IFAD.—The Presi-
dent shall urge other donor nations to the International
Fund for Agricultural Development to support and con-
tribute to the microenterprise and microfinance activities
of the Fund (as described in subsection (b)).
SEC. 6. 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
(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.
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