[108th Congress Public Law 484]
[From the U.S. Government Printing Office]
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[DOCID: f:publ484.108]
[[Page 3921]]
MICROENTERPRISE RESULTS AND ACCOUNTABILITY ACT OF 2004
[[Page 118 STAT. 3922]]
Public Law 108-484
108th Congress
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. <<NOTE: Dec. 23, 2004 - [H.R. 3818]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Microenterprise Results and
Accountability Act of 2004.>> assembled,
SECTION 1. <<NOTE: 22 USC 2151 note.>> SHORT TITLE.
This Act may be cited as the ``Microenterprise Results and
Accountability Act of 2004''.
SEC. 2. FINDINGS AND <<NOTE: 22 USC 2211 note.>> 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.
[[Page 118 STAT. 3923]]
(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. <<NOTE: 22 USC 2211.>> 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.
[[Page 118 STAT. 3924]]
``SEC. <<NOTE: 22 USC 2211a.>> 252. AUTHORIZATION; IMPLEMENTATION;
TARGETED ASSISTANCE.
``(a) Authorization.--The <<NOTE: President.>> 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 <<NOTE: Establishment.>> 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--
[[Page 118 STAT. 3925]]
``(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, <<NOTE: Termination date.>> 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. <<NOTE: 22 USC 2211b.>> 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.
[[Page 118 STAT. 3926]]
``(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. <<NOTE: 22 USC 2211c.>> 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 <<NOTE: Deadline.>> 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 <<NOTE: Effective date.>> 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. <<NOTE: 22 USC 2211d.>> 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 <<NOTE: 22 USC 2212.>> 108 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151f) is hereby--
[[Page 118 STAT. 3927]]
(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 <<NOTE: 22 USC 2151f, 2212.>> 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) <<NOTE: 22 USC 2212.>> 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 <<NOTE: 22 USC 2213.>> 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 <<NOTE: 22 USC 2152b, 2213.>> 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) <<NOTE: 22 USC 2213.>> 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).
[[Page 118 STAT. 3928]]
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. <<NOTE: 22 USC 2214.>> 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.
[[Page 118 STAT. 3929]]
``(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 <<NOTE: Internet.>> report
required by this section shall be made available to the public on the
Internet website of the Agency.
``SEC. 259. <<NOTE: 22 USC 2214a.>> 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).
[[Page 118 STAT. 3930]]
``(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. <<NOTE: 22 USC 2211 note.>> 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
[[Page 118 STAT. 3931]]
(5) <<NOTE: Deadline.>> 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 <<NOTE: 22 USC 2151f note.>> is amended by striking ``(a)''
and all that follows through ``Not later'' and inserting ``Not
later''.
SEC. 9. <<NOTE: 22 USC 2211 note.>> 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.
Approved December 23, 2004.
LEGISLATIVE HISTORY--H.R. 3818 (S. 3027):
---------------------------------------------------------------------------
HOUSE REPORTS: No. 108-459 (Comm. on International Relations).
CONGRESSIONAL RECORD, Vol. 150 (2004):
Nov. 20, considered and passed House.
Dec. 8, considered and passed Senate.
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