subpart vi - microenterprise development assistance

Division A - Grant Assistance

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 subpart communicate and work with nongovernmental organizations and government organizations to identify and assist victims of trafficking as provided for in section 7104 (a)(1) of this title 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.

22 USC 2211a - Authorization; implementation; targeted assistance

(a) Authorization 
The 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 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 subpart 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 division 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
(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) of this section, 50 percent of all microenterprise resources shall be targeted to clients who are very poor. Specifically, 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.

22 USC 2211b - Monitoring system

(a) In general 
In order to maximize the sustainable development impact of assistance authorized under section 2211a (a) of this title, the Administrator of the Agency, acting through the Director of the office, shall strengthen its monitoring system to meet the requirements of subsection (b) of this section.
(b) Requirements 
The requirements referred to in subsection (a) of this section 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.
(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 2211a of this title.
(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.

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 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 2211a of this title.
(b) Application 
The Administrator shall require that, with reasonable exceptions, all implementing partner organizations applying for microenterprise assistance under this subpart 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.

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 subpart may be provided to further the purposes of this subpart. 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 2214 of this title, 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.

Division B - Credit Assistance

22 USC 2212 - Microenterprise development credits

(a) Findings and policy 
Congress finds and declares that
(1) the development of micro- and small enterprises is a vital factor in the stable growth of developing countries and in the development and stability 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 access to financial services and the development of microenterprises in developing countries and to engage the United States private sector in that process.
(b) Program 
To carry out the policy set forth in subsection (a) of this section, the President is authorized to provide assistance to increase the availability of financial services to microenterprise households lacking full access to credit, including through
(1) loans and guarantees to microfinance institutions for the purpose of expanding the availability of savings and credit to poor and low-income households;
(2) training programs for microfinance institutions in order to enable them to better meet the financial services needs of their clients; and
(3) training programs for clients in order to enable them to make better use of credit, increase their financial literacy, and to better manage their enterprises to improve their quality of life.
(c) Eligibility criteria 
The Administrator of the Agency shall establish criteria for determining which microfinance institutions described in subsection (b)(1) of this section are eligible to carry out activities, with respect to microenterprise households, assisted under this section. Such criteria may include the following:
(1) The extent to which the recipients of financial services from the entity do not have access to the local formal financial sector.
(2) The extent to which the recipients of financial services 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.
(5) The extent to which the entity implements a plan to become financially sustainable.
(d) Additional requirement 
Assistance provided under this section may only be used to support programs for microenterprise households and may not be used to support programs not directly related to the purposes described in subsection (b) of this section.
(e) Procurement provision 
Assistance may be provided under this section without regard to section 2354 (a) of this title.
(f) Availability of funds 

(1) In general 
Of the amounts authorized to be available to carry out subchapter I of this chapter, there are authorized to be available such sums as may be necessary for each of the fiscal years 2005 through 2009 to carry out this section.
(2) Coverage of subsidy costs 
Amounts authorized to be available under paragraph (1) shall be made available to cover the subsidy cost, as defined in section 661a (5) of title 2, for activities under this section.

Division C - United States Microfinance Loan Facility

22 USC 2213 - United States Microfinance Loan Facility

(a) Establishment 
The Administrator is authorized to establish a United States Microfinance Loan Facility (in this section referred to as the Facility) 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 development of United States-supported microfinance institutions.
(b) Disbursements 

(1) In general 
The Administrator shall make disbursements from the Facility to United States-supported microfinance institutions to prevent the bankruptcy of such institutions caused by
(A) natural disasters;
(B) national wars or civil conflict; or
(C) national financial crisis or other short-term financial movements that threaten the long-term development of United States-supported microfinance institutions.
(2) Form of assistance 
Assistance under this section shall be in the form of loans or loan guarantees for microfinance institutions that demonstrate the capacity to resume self-sustained operations within a reasonable time period.
(3) Congressional notification procedures 
During each of the fiscal years 2005 through 2009, funds may not be made available from the Facility until 15 days after notification of the proposed availability of the funds has been provided to the congressional committees specified in section 2394–1 of this title in accordance with the procedures applicable to reprogramming notifications under that section.
(c) General provisions 

(1) Policy provisions 
In providing the credit assistance authorized by this section, the Administrator should apply, as appropriate, the policy provisions in subchapter I of this chapter that are applicable to development assistance activities.
(2) Default and procurement provisions 

(A) Default provision 
The provisions of section 2370 (q) of this title, or any comparable provision of law, shall not be construed to prohibit assistance to a country in the event that a private sector recipient of assistance furnished under this section is in default in its payment to the United States for the period specified in such section.
(B) Procurement provision 
Assistance may be provided under this section without regard to section 2354 (a) of this title.
(3) Terms and conditions of credit assistance 

(A) In general 
Credit assistance provided under this section shall be offered on such terms and conditions, including fees charged, as the Administrator may determine.
(B) Limitation on principal amount of financing 
The principal amount of loans made or guaranteed under this section in any fiscal year, with respect to any single event, may not exceed $30,000,000.
(C) Exception 
No payment may be made under any guarantee issued under this section for any loss arising out of fraud or misrepresentation for which the party seeking payment is responsible.
(4) Full faith and credit 
All guarantees issued under this section shall constitute obligations, in accordance with the terms of such guarantees, of the United States of America, and the full faith and credit of the United States of America is hereby pledged for the full payment and performance of such obligations to the extent of the guarantee.
(d) Funding 

(1) Allocation of funds 
Of the amounts made available to carry out subchapter I of this chapter for each of the fiscal years 2005 through 2009, such sums as may be necessary may be made available for
(A) the subsidy cost, as defined in section 661a (5) of title 2, to carry out this section; and
(B) the administrative costs to carry out this section.
(2) Relation to other funding 
Amounts made available under paragraph (1) are in addition to amounts available under any other provision of law to carry out this section.

Division D - Miscellaneous Provisions

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 subpart 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 2211a of this title, 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 2211a of this title.
(2) The results of the monitoring system required under section 2211b of this title.
(3) The process of developing and applying poverty assessment procedures required under section 2211c of this title.
(4) The percentage of assistance furnished under section 2211a of this title that was allocated to the very poor based on the data collected using the certified methods required by section 2211c of this title.
(5) The estimated number of the very poor reached with assistance provided under section 2211a of this title.
(6) The amount of assistance provided under section 2211a of this title through central mechanisms.
(7) The name of each country that receives assistance under section 2212 of this title 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 subpart, including the use of the poverty measurement tools required by section 2211c of this title, or additional information on assistance provided by the United States to support microenterprise development under this subpart or any other provision of law.
(10) An estimate of the percentage of beneficiaries of assistance under this subpart in countries where a strong relationship between poverty and race or ethnicity has been demonstrated.
(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 report required by this section shall be made available to the public on the Internet website of the Agency.

22 USC 2214a - Definitions

In this subpart:
(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 subpart 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 2211a (b)(1) of this title.
(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 subchapter I of this chapter 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).