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Union Calendar No. 44
106th CONGRESS
1st Session
H. R. 1143
[Report No. 106-82]
_______________________________________________________________________
A BILL
To establish a program to provide assistance for programs of credit and
other financial services for microenterprises in developing countries,
and for other purposes.
_______________________________________________________________________
April 12, 1999
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
Union Calendar No. 44
106th CONGRESS
1st Session
H. R. 1143
[Report No. 106-82]
To establish a program to provide assistance for programs of credit and
other financial services for microenterprises in developing countries,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 17, 1999
Mr. Gilman (for himself, Mr. Gejdenson, Mr. Houghton, Mr. Hall of Ohio,
Mr. Bereuter, Mr. Goodling, Ms. Ros-Lehtinen, Mr. Payne, Mr.
Rohrabacher, Mr. Lantos, Mr. Oberstar, Mr. Bilbray, Mr. Meehan, Mr.
Delahunt, Mr. Andrews, Mrs. Meek of Florida, Mrs. Morella, Mr. Pomeroy,
Mr. McHugh, Mr. Filner, Mr. Tancredo, Mr. Brown of Ohio, Mr.
Faleomavaega, Mr. LaFalce, and Mr. Greenwood) introduced the following
bill; which was referred to the Committee on International Relations
April 12, 1999
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
_______________________________________________________________________
A BILL
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 Representatives of the
United States of America in Congress assembled,
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 declarations:
(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 economic opportunities than
their male counterparts.
(B) Directly aiding the poorest of the poor, especially
women, in the developing world has a positive 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, particularly
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, 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 reasonable 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 lenders.
(5)(A) The poor are able to expand their incomes 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 Microcredit Summit
was held in Washington, District of Columbia, to launch a plan
to expand access to credit for self-employment and other
financial and business services to 100,000,000 of the world's
poorest families, especially the women of those families, by
2005. While this scale of outreach may not be achievable in
this short timeframe, the realization of this goal could
dramatically alter the face of global poverty.
(B) With an average family size of five, achieving this
goal will mean that the benefits of microfinance 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
Assistance (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 reduce
poverty, but also reduce the dependency on foreign assistance.
(B) Interest income on the credit portfolio is used to pay
recurring institutional costs, assuring the long-term
sustainability of development assistance.
(9) Microfinance institutions leverage foreign assistance
resources because loans are recycled, generating new benefits
to program participants.
(10)(A) The development of sustainable microfinance
institutions that provide credit and training, and mobilize
domestic savings, are critical components 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 architecture,
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 powerful tool for building a more inclusive financial
sector 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.
Additionally, the United States Department of the Treasury and
the Department of State have used their authority to promote
microenterprise in the development programs of international
financial institutions and the United Nations.
(11)(A) In 1994, the United States Agency for International
Development launched the ``Microenterprise 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 that provide
credit to the poorest, with loans under $300.
(C) In order to achieve the goal of the microcredit 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 microcredit programs, with an increased focus on
institutions 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 developing their
institutional capacity to expand their services and tap
commercial sources of capital.
(14) Nongovernmental organizations have demonstrated
competence in developing networks of local microfinance
institutions and other assistance delivery 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 effective
partnerships with nongovernmental organizations, and that the
Agency will have fewer missions to carry out its work, the
Agency should place priority 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 create a global
infrastructure to provide financial services to the world's
poorest families.
(17)(A) The United States can provide leadership 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 investment of the United States
with that of other donor nations.
(18) Through increased support for microenterprise,
especially credit for the poorest, the United States can
continue to play a leadership role in the global effort to
expand financial services and opportunity 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 important
element of United States foreign economic policy and
assistance;
(2) to provide for the continuation and expansion 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 organization intermediaries to
provide credit, savings, training and technical services to
microentrepreneurs;
(4) to increase the amount of assistance devoted to credit
activities designed to reach the poorest 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 microfinance policy, in consultation
with the Department of the Treasury and the Department of
State, and to provide global leadership in promoting
microenterprise for the poorest among bilateral and
multilateral donors.
SEC. 4. MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE.
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 section:
``SEC. 131. MICROENTERPRISE DEVELOPMENT GRANT ASSISTANCE.
``(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 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 assist the development of microenterprises in
developing countries; and
``(3) the support of microenterprise can be served by
programs providing credit, savings, training, 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, savings, and other
financial services to microentrepreneurs;
``(B) training, technical assistance, and other support for
microenterprises to enable them to make better use of credit,
to better manage their enterprises, and to increase their
income and build their assets;
``(C) capacity building for microfinance institutions in
order to enable them to better meet the credit and training
needs of microentrepreneurs; and
``(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, including 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 nongovernmental
organizations; or
``(D) business development services, including indigenous
craft programs.
``(3) In carrying out sustainable poverty-focused programs under
paragraph (1), 50 percent of all microenterprise resources shall be
used for direct support of programs under this subsection through
practitioner institutions that provide credit and other financial
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