IIB
106TH CONGRESS
1ST SESSION
H. R. 1143
IN THE SENATE OF THE UNITED STATES
APRIL 14, 1999
Received; 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 financial services 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 ‘‘Microenterprise for
Self-Reliance Act of 1999’’.
SEC. 2. FINDINGS AND DECLARATIONS OF POLICY.
The Congress makes the following findings and dec-
larations:
(1) According to the World Bank, more than
1,200,000,000 people in the developing world, or
one-fifth of the world’s population, subsist on less
than $1 a day.
(2) Over 32,000 of their children die each day
from largely preventable malnutrition and disease.
(3)(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.
(4)(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. In Africa,
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over 80 percent of employment is generated in the
informal sector of the self-employed poor.
(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.
(5)(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
microfinance programs, poor people themselves can
lead the fight against hunger and poverty.
(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 an average family size of five, achiev-
ing this goal will mean that the benefits of micro-
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finance will thereby reach nearly half of the world’s
more than 1,000,000,000 absolute poor people.
(7)(A) Nongovernmental organizations, such as
those that comprise the Microenterprise Coalition
(such as the Grameen Bank (Bangladesh,) K–REP
(Kenya), and networks such as Accion International,
the Foundation for International Community Assist-
ance (FINCA), and the credit union movement) are
successful in lending directly to the very poor.
(B) Microfinance institutions such as BRAC
(Bangladesh), BancoSol (Bolivia), SEWA Bank
(India), and ACEP (Senegal) are regulated financial
institutions that can raise funds directly from the
local and international capital markets.
(8)(A) Microenterprise institutions not only re-
duce poverty, but also reduce the dependency on for-
eign assistance.
(B) Interest income on the credit portfolio is
used to pay recurring institutional costs, assuring
the long-term sustainability of development assist-
ance.
(9) Microfinance institutions leverage foreign
assistance resources because loans are recycled, gen-
erating new benefits to program participants.
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(10)(A) The development of sustainable micro-
finance institutions that provide credit and training,
and mobilize domestic savings, are critical compo-
nents to a global strategy of poverty reduction and
broad-based economic development.
(B) In the efforts of the United States to lead
the development of a new global financial architec-
ture, microenterprise should play a vital role. The
recent shocks to international financial markets
demonstrate how the financial sector can shape the
destiny of nations. Microfinance can serve as a pow-
erful tool for building a more inclusive financial sec-
tor which serves the broad majority of the world’s
population including the very poor and women and
thus generate more social stability and prosperity.
(C) Over the last two decades, the United
States has been a global leader in promoting the
global microenterprise sector, primarily through its
development assistance programs at the United
States Agency for International Development. Addi-
tionally, the United States Department of the Treas-
ury and the Department of State have used their au-
thority to promote microenterprise in the develop-
ment programs of international financial institutions
and the United Nations.
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(11)(A) In 1994, the United States Agency for
International Development launched the ‘‘Micro-
enterprise Initiative’’ in partnership with the Con-
gress.
(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 that provide cred-
it 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.
(12) 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.
(13)(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.
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(14) Nongovernmental organizations have dem-
onstrated competence in developing networks of local
microfinance institutions and other assistance deliv-
ery mechanisms so that they reach large numbers of
the very poor, and achieve financial sustainability.
(15) 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 pri-
ority on investing in those nongovernmental network
institutions that meet performance criteria through
the central funding mechanisms of the Agency.
(16) 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.
(17)(A) The United States can provide leader-
ship to other bilateral and multilateral development
agencies as such agencies expand their support to
the microenterprise sector.
(B) The United States should seek to improve
coordination among G–7 countries in the support of
the microenterprise sector in order to leverage the
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investment of the United States with that of other
donor nations.
(18) Through increased support for microenter-
prise, especially credit for the poorest, the United
States can continue to play a leadership role in the
global effort to expand financial services and oppor-
tunity to 100,000,000 of the poorest families on the
planet.
SEC. 3. PURPOSES.
The purposes of this Act are—
(1) to make microenterprise development an im-
portant element of United States foreign economic
policy and assistance;
(2) 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 as outlined in its 1994
Microenterprise Initiative;
(3) to support and develop the capacity of
United States and indigenous nongovernmental or-
ganization intermediaries to provide credit, savings,
training and technical services to microentre-
preneurs;
(4) to increase the amount of assistance de-
voted to credit activities designed to reach the poor-
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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 coordinate micro-
finance policy, in consultation with the Department
of the Treasury and the Department of State, and
to provide global leadership in promoting micro-
enterprise for the poorest among bilateral and multi-
lateral donors.
SEC. 4. 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—
(1) by redesignating the second section 129 (as
added by section 4 of the Torture Victims Relief Act
of 1998 (Public Law 105–320)) as section 130; and
(2) by adding at the end the following new sec-
tion:
‘‘SEC. 131. MICROENTERPRISE DEVELOPMENT GRANT AS-
SISTANCE.
‘‘(a) FINDINGS AND POLICY.—The Congress finds
and declares that—
‘‘(1) the development of microenterprise is a
vital factor in the stable growth of developing coun-
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tries and in the development of free, open, and equi-
table international economic systems;
‘‘(2) it is therefore in the best interest of the
United States to assist the development of micro-
enterprises in developing countries; and
‘‘(3) the support of microenterprise can be
served by programs providing credit, savings, train-
ing, and technical assistance.
‘‘(b) AUTHORIZATION.—(1) In carrying out this part,
the President is authorized to provide grant assistance for
programs to increase the availability of credit and other
services to microenterprises lacking full access to capital
and training through—
‘‘(A) grants to microfinance institutions for the
purpose of expanding the availability of credit, sav-
ings, and other financial services to microentre-
preneurs;
‘‘(B) training, technical assistance, and other
support for microenterprises to enable them to make
better use of credit, to better manage their enter-
prises, and to increase their income and build their
assets;
‘‘(C) capacity building for microfinance institu-
tions in order to enable them to better meet the
credit and training needs of microentrepreneurs; and
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‘‘(D) policy and regulatory programs at the
country level that improve the environment for
microfinance institutions that serve the poor and
very poor.
‘‘(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;
‘‘(C) other indigenous governmental and non-
governmental organizations; or
‘‘(D) business development services, including
indigenous craft programs.
‘‘(3) In carrying out sustainable poverty-focused pro-
grams under paragraph (1), 50 percent of all microenter-
prise resources shall be used for direct support of pro-
grams under this subsection through practitioner institu-
tions that provide credit and other financial services to
the poorest with loans of $300 or less in 1995 United
States dollars and can cover their costs of credit programs
with revenue from lending activities or that demonstrate
the capacity to do so in a reasonable time period.
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‘‘(4) The President should continue support for cen-
tral mechanisms and missions that—
‘‘(A) provide technical support for field mis-
sions;
‘‘(B) strengthen the institutional development
of the intermediary organizations described in para-
graph (2);
‘‘(C) share information relating to the provision
of assistance authorized under paragraph (1) be-
tween such field missions and intermediary organiza-
tions; and
‘‘(D) support the development of nonprofit glob-
al microfinance networks, including credit union sys-
tems, that—
‘‘(i) are able to deliver very small loans
through a vast grassroots infrastructure based
on market principles; and
‘‘(ii) act as wholesale intermediaries pro-
viding a range of services to microfinance retail
institutions, including financing, technical as-
sistance, capacity building and safety and
soundness accreditation.
‘‘(5) Assistance provided under this subsection may
only be used to support microenterprise programs and
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may not be used to support programs not directly related
to the purposes described in paragraph (1).
‘‘(c) MONITORING SYSTEM.—In order to maximize
the sustainable development impact of the assistance au-
thorized under subsection (a)(1), the Administrator of the
United States Agency for International Development 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;
‘‘(2) establishes performance indicators to be
used in measuring or assessing the achievement of
the goals and objectives of such assistance;
‘‘(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; and
‘‘(4) provides a basis for recommendations for
adjustments to measures for reaching the poorest of
the poor, including proposed legislation containing
amendments to improve paragraph (3).
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—(A) There are authorized
to be appropriated $152,000,000 for fiscal year
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2000 and $167,000,000 for fiscal year 2001 to carry
out this section.
‘‘(B) Amounts appropriated pursuant to the au-
thorization of appropriations under subparagraph
(A) are authorized to remain available until ex-
pended.
‘‘(2) RULE OF CONSTRUCTION.—Amounts au-
thorized to be appropriated under paragraph (1) are
in addition to amounts otherwise available to carry
out this section.’’.
SEC. 5. 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-
prises are a vital factor in the stable growth of de-
veloping countries and in the development and sta-
bility of a free, open, and equitable international
economic system; and
‘‘(2) it is, therefore, in the best interests of the
United States to assist the development of the enter-
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prises of the poor in developing countries and to en-
gage the United States private sector in that proc-
ess.
‘‘(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;
‘‘(2) training programs for lenders in order to
enable them to better meet the credit needs of
microentrepreneurs; and
‘‘(3) training programs for microentrepreneurs
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 micro- and small enterprises, assisted
under this section. Such criteria may include the following:
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‘‘(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) ADDITIONAL REQUIREMENT.—Assistance pro-
vided under this section may only be used to support
micro- and small enterprise programs and may not be used
to support programs not directly related to the purposes
described in subsection (b).
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—(A) There are authorized
to be appropriated $1,500,000 for each of the fiscal
years 2000 and 2001 to carry out this section.
‘‘(B) Amounts authorized to be appropriated
under subparagraph (A) shall be made available for
the subsidy cost, as defined in section 502(5) of the
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Federal Credit Reform Act of 1990, for activities
under this section.
‘‘(2) ADMINISTRATIVE
EXPENSES.—There are
authorized to be appropriated $500,000 for each of
the fiscal years 2000 and 2001 for the cost of
administrative expenses in carrying out this section.
‘‘(3) RULE OF CONSTRUCTION.—Amounts au-
thorized to be appropriated under this subsection are
in addition to amounts otherwise available to carry
out this section.’’.
SEC. 6. MICROFINANCE LOAN FACILITY.
Chapter 1 of part I of the Foreign Assistance Act
of 1961 (22 U.S.C. 2151 et seq.), as amended by this Act,
is further amended by adding the following new section:
‘‘SEC. 132. UNITED STATES MICROFINANCE LOAN FACILITY.
‘‘(a) ESTABLISHMENT.—The Administrator of the
United States Agency for International Development is
authorized to establish a United States Microfinance Loan
Facility (hereinafter in this section referred to as the ‘Fa-
cility’) to pool and manage the risk from natural disasters,
war or civil conflict, national financial crisis, or short-term
financial movements that threaten the long-term develop-
ment of United States-supported microfinance institu-
tions.
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‘‘(b) SUPERVISORY BOARD OF THE FACILITY.—(1)
The Facility shall be supervised by a board composed of
the following representatives appointed by the President
not later than 180 days after the date of the enactment
of Microenterprise for Self-Reliance Act of 1999:
‘‘(A) one representative from the Department of
the Treasury.
‘‘(B) one representative from the Department
of State.
‘‘(C) one representative from the United States
Agency for International Development.
‘‘(D)(i) two United States citizens from United
States nongovernmental organizations that operate
United States-sponsored microfinance activities.
‘‘(ii) Individuals described in clause (i) shall be
appointed for a term of 2 years.
‘‘(2) The Administrator of the United States Agency
for International Development or his designee shall serve
as Chairman and an additional voting member of the
board.
‘‘(c) DISBURSEMENTS.—(1) The board shall make
disbursements from the Facility to United States-spon-
sored microfinance institutions to prevent the bankruptcy
of such institutions caused by: (A) natural disasters, (B)
national wars or civil conflict, or (C) national financial cri-
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sis or other short term financial movements that threaten
the long-term development of United States-supported
microfinance institutions. Such disbursements shall be
made as concessional loans that are repaid maintaining
the real value of the loan to microfinance institutions that
demonstrate the capacity to resume self-sustained oper-
ations within a reasonable time period. The Facility shall
provide for loan losses with each loan disbursed.
‘‘(2) During each of the fiscal years 2001 and 2002,
funds may not be made available from the Facility until
15 days after notification of the availability has been pro-
vided to the congressional committees specified in section
634A of this Act in accordance with the procedures appli-
cable to reprogramming notifications under that section.
‘‘(d) GENERAL PROVISIONS.—
‘‘(1) POLICY
PROVISIONS.—In providing the
credit assistance authorized by this section, the
board should apply, as appropriate, the policy provi-
sions in this part applicable to development assist-
ance activities.
‘‘(2) DEFAULT
AND
PROCUREMENT
PROVI-
SIONS.—
‘‘(A) DEFAULT
PROVISION.—The provi-
sions of section 620(q) of this Act, or any com-
parable provisions of law, shall not be construed