I 
108TH CONGRESS 
2D SESSION 
H. R. 3818 
To amend the Foreign Assistance Act of 1961 to improve the results and 
accountability of microenterprise development assistance programs, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 24, 2004 
Mr. SMITH of New Jersey (for himself, Mr. HYDE, Mr. LANTOS, Mr. ROHR-
ABACHER, Mr. BELL, Mr. GREEN of Texas, Ms. ROS-LEHTINEN, Mr. 
PAYNE, Mr. PITTS, Ms. HARRIS, Mr. DICKS, Mr. SANDERS, Mr. SMITH 
of Washington, Mr. BAIRD, Mr. FALEOMAVAEGA, and Mr. BROWN of 
Ohio) introduced the following bill; which was referred to the Committee 
on International Relations 
A BILL 
To amend the Foreign Assistance Act of 1961 to improve 
the results and accountability of microenterprise develop-
ment assistance programs, 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 ‘‘Microenterprise Re-
sults 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 micro-
enterprise 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 Assist-
ance 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 United States Agency for International 
Development, the agency responsible for imple-
menting microenterprise development assistance pro-
grams authorized under sections 108 and 131 of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2151f 
and 2152a), is not presently organized to adequately 
coordinate, implement, and monitor such programs, 
as evidenced by the late submission by the Agency 
of the report required by section 108 of the Micro-
enterprise for Self-Reliance Act of 2000.
(3) The Comptroller General, in a report dated 
November 2003, found that the United States Agen-
cy 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) Although studies and academic anal-
yses funded by the United States Agency for 
International Development have found that 
microenterprise activities generally serve the 
poor clustered around the poverty line, few 
loans appear to be reaching the very poor. 
(C) 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 rec-
ommends 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 re-
porting is complete and accurate. 
(B) Specifically, the Administrator should re-
view and reconsider the methodologies used for the 
collection, analysis, and reporting of data on annual 
spending targets, outreach to the very poor, sustain-
ability of microfinance institutions, and the contribu-
tion of Agency’s funding to the institutions it sup-
ports. 
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 devel-
opment of microenterprise are vital factors in the
stable growth of developing countries and in the de-
velopment 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 serv-
ices and assist the development of microenterprise in 
developing countries. 
‘‘(3) Access to financial services and the devel-
opment of microenterprises can be supported by pro-
grams 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 coun-
tries, 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) Microenteprise programs have been suc-
cessful and should continue to empower vulnerable 
women in the developing world. Such programs 
should take into account the risks faced by women 
who are potential victims of severe forms of traf-
ficking and the need for assistance for women who 
become victims of severe forms of trafficking, as pro-
vided for in section 106(a)(1) of the Trafficking Vic-
tims Protection Act of 2000 (22 U.S.C. 7104(a)(1); 
Public Law 106–386). 
‘‘SEC. 252. AUTHORIZATION; IMPLEMENTATION; TARGETED 
ASSISTANCE. 
‘‘(a) AUTHORIZATION.—The President is authorized 
to provide assistance on a grant basis for programs in de-
veloping countries to increase the availability of credit, 
savings, and other services to microenterprises lacking full 
access to capital, training, technical assistance, and busi-
ness development services, through— 
‘‘(1) grants to microfinance institutions for the 
purpose of expanding the availability of credit, sav-
ings, and other financial services to microentreprise 
clients; 
‘‘(2) grants to microenterprise institutions 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, and to increase their in-
come and build their assets; 
‘‘(3) capacity-building for microenterprise insti-
tutions in order to enable them to better meet the 
credit, 
savings, 
and 
training 
needs 
of 
microentreprise clients; and
‘‘(4) policy and regulatory programs at the 
country level that improve the environment for 
microentreprise clients and microenterprise institu-
tions that serve the poor and very poor. 
‘‘(b) IMPLEMENTATION.— 
‘‘(1) OFFICE OF MICROENTERPRISE DEVELOP-
MENT.— 
‘‘(A) ESTABLISHMENT.—There is estab-
lished within the Agency an Office of Micro-
enterprise Development, which shall be headed 
by a Director who shall be appointed by the Ad-
ministrator and who should possess technical 
expertise and ability to offer leadership in the 
field of microenterprise development. 
‘‘(B) DUTIES.—The Office shall coordinate 
and be responsible for the provision of assist-
ance under this title. 
‘‘(2) ASSISTANCE THROUGH GRANTS TO ELIGI-
BLE ORGANIZATIONS.—Assistance under subsection 
(a) shall be provided through grants executed, ap-
proved, or reviewed by the Office to eligible imple-
menting partner organizations that have a capacity 
to develop and implement microenterprise programs. 
‘‘(3) REVIEW AND APPROVAL.—With respect to 
assistance under subsection (a) that is furnished
through field missions of the Agency, the Office 
shall be responsible for— 
‘‘(A) reviewing or approving each grant 
agreement prior to obligation of funds under 
the agreement in order to ensure that activities 
to be carried out using such funds are effica-
cious, technically sound, and suitable for the 
economic and security climate of the country or 
region where the activities will be conducted; 
and 
‘‘(B) approving microenterprise develop-
ment components of strategic plans of missions, 
bureaus, and offices of the Agency. 
‘‘(c) TARGETED ASSISTANCE.—In carrying out sus-
tainable poverty-focused programs under subsection (a), 
50 percent of all microenterprise resources shall be tar-
geted to very poor clients, defined as those individuals liv-
ing in the bottom 50 percent below the poverty line as 
established by the national government of the country. 
Specifically, 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 Amer-
ica 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 pro-
grams 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. 
‘‘(d) SUPPORT FOR CENTRAL MECHANISMS.—The 
Administrator should increase the use of central mecha-
nisms through microenterprise, microfinance, and practi-
tioner institutions in the implementation of this title. 
‘‘SEC. 253. MONITORING SYSTEM. 
‘‘(a) ESTABLISHMENT.—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 establish
a monitoring system that meets the requirements of sub-
section (b). 
‘‘(b) REQUIREMENTS.—The requirements referred to 
in subsection (a) are the following: 
‘‘(1) The monitoring system establishes per-
formance goals for the assistance and expresses such 
goals in an objective and quantifiable form, to the 
extent feasible. 
‘‘(2) The monitoring system establishes per-
formance indicators to be used in measuring or as-
sessing the achievement of the performance goals de-
scribed 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 wide-
spread use of proven and effective poverty assess-
ment tools to successfully identify the very poor and 
ensure that they receive adequate access to micro-
enterprise loans, savings, and assistance.
‘‘SEC. 254. DEVELOPMENT AND CERTIFICATION OF POV-
ERTY MEASUREMENT METHODS; APPLICA-
TION OF METHODS. 
‘‘(a) DEVELOPMENT AND CERTIFICATION.— 
‘‘(1) IN GENERAL.—The Administrator of the 
Agency, in consultation with microenterprise institu-
tions and other appropriate organizations, shall de-
velop no fewer than two low-cost methods for eligible 
implementing partner organizations to use to assess 
the poverty levels of their current or prospective cli-
ents. The Administrator shall develop poverty indica-
tors 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 pro-
grams may use the methods on a voluntary basis to 
demonstrate their ability to reach the very poor. 
‘‘(3) CERTIFICATION.—Not later than October 
1, 2004, 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 or prospective clients of 
microenterprise institutions for purposes of assist-
ance under section 252.
‘‘(b) APPLICATION.—The Administrator shall require 
that, with reasonable exceptions, all eligible implementing 
partner organizations applying for microenterprise assist-
ance under this title use one of the certified methods, be-
ginning not later than October 1, 2005, to determine and 
report the poverty levels of current or prospective clients. 
‘‘SEC. 255. AUTHORIZATION OF APPROPRIATIONS; ADDI-
TIONAL AUTHORITIES. 
‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to the President to carry 
out this subtitle $200,000,000 for fiscal year 2005 and 
such sums as may be necessary for fiscal year 2006. 
‘‘(b) ADDITIONAL AUTHORITIES.—(1) Amounts ap-
propriated pursuant to the authorization of appropriations 
under subsection (a)— 
‘‘(A) may be referred to as the ‘Microenterprise 
Development Assistance Account’; 
‘‘(B) shall be allocated to the Office, and upon 
approval by the Director of the Office, may be re-
allocated to field missions of the Agency in further-
ance of the purposes of this title; 
‘‘(C) are authorized to remain available until 
expended; and 
‘‘(D) are in addition to amounts otherwise 
available for such purposes.
‘‘(2) 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 pre-
ceding sentence is provided in accordance with such sen-
tence, 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 applica-
ble, the information required by paragraphs (1) through 
(9) of subsection (b) of such section with respect to such 
assistance.’’. 
SEC. 4. MICROENTERPRISE DEVELOPMENT CREDITS. 
(a) TRANSFER.—Section 108 of the Foreign Assist-
ance 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 chap-
ter 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.