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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-718
======================================================================
WOMEN'S ENTREPRENEURSHIP AND ECONOMIC EMPOWERMENT ACT OF 2018
_______
June 8, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Royce of California, from the Committee on Foreign Affairs,
submitted the following
R E P O R T
[To accompany H.R. 5480]
[Including cost estimate of the Congressional Budget Office]
The Committee on Foreign Affairs, to whom was referred the
bill (H.R. 5480) to improve programs and activities relating to
women's entrepreneurship and economic empowerment that are
carried out by the United States Agency for International
Development, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
TABLE OF CONTENTS
Page
The Amendment.................................................... 2
Summary and Purpose.............................................. 7
Background and Need for the Legislation.......................... 8
Hearings......................................................... 12
Committee Consideration.......................................... 12
Committee Oversight Findings..................................... 13
New Budget Authority, Tax Expenditures, and Federal Mandates..... 13
Congressional Budget Office Cost Estimate........................ 13
Directed Rule Making............................................. 14
Non-Duplication of Federal Programs.............................. 14
Performance Goals and Objectives................................. 14
Congressional Accountability Act................................. 15
New Advisory Committees.......................................... 15
Earmark Identification........................................... 15
Section-by-Section Analysis...................................... 15
Changes in Existing Law Made by the Bill, as Reported............ 16
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Women's Entrepreneurship and Economic
Empowerment Act of 2018''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Because women make up the majority of the world's poor
and gender inequalities prevail in incomes, wages, access to
finance, ownership of assets, and control over the allocation
of resources, women's entrepreneurship and economic empowerment
is important to achieve inclusive economic growth at all levels
of society. Research shows that when women exert greater
influence over household finances, economic outcomes for
families improve, and childhood survival rates, food security,
and educational attainment increase. Women also tend to place a
greater emphasis on household savings which improves families'
financial resiliency.
(2) A 2016 report by the McKinsey Global Institute estimated
that achieving global gender parity in economic activity could
add as much as $28 trillion to annual global gross domestic
product (GDP) by 2025.
(3) Lack of access to financial services that address gender-
specific constraints impedes women's economic inclusion. More
than one billion women around the world are currently left out
of the formal financial system, which in turn causes many women
to rely on informal means of saving and borrowing that are
riskier and less reliable. Among other consequences, this
hampers the success of women entrepreneurs, including those
seeking to run or grow small and medium-sized enterprises
(SMEs). The International Finance Corporation has estimated
that 70 percent of women-owned SMEs in the formal sector are
unserved or underserved in terms of access to credit, amounting
to a $285 billion credit gap.
(4) Women's economic empowerment is inextricably linked to a
myriad of other women's human rights that are essential to
their ability to thrive as economic actors across the
lifecycle. This includes, but is not limited to, living lives
free of violence and exploitation, achieving the highest
possible standard of health and well-being, enjoying full legal
and human rights such as access to registration,
identification, and citizenship documents, benefitting from
formal and informal education, and equal protection of and
access to land and property rights, access to fundamental labor
rights, policies to address disproportionate care burdens, and
business and management skills and leadership opportunities.
(5) Discriminatory legal and regulatory systems and banking
practices are hurdles to women's access to capital and assets,
including land, machinery, production facilities, technology,
and human resources. Often, these barriers are connected to a
woman's marital status, which can determine whether she is able
to inherit land or own property in her name. These constraints
contribute to women frequently running smaller businesses, with
fewer employees and lower asset values.
(6) Savings groups primarily comprised of women are
recognized as a vital entry point, especially for poor and very
poor women, to formal financial services and there is a high
demand for such groups to protect and grow their savings with
formal financial institutions. Evidence shows that, once linked
to a bank, the average savings per member increases between 40
to 100 percent and the average profit per member doubles. Key
to these outcomes is investing in financial literacy, business
leadership training, and mentorship.
(7) United States support for microenterprise and
microfinance development programs, which seek to reduce poverty
in low-income countries by giving small loans to small-scale
entrepreneurs without collateral, have been a useful mechanism
to help families weather economic shocks, but many microcredit
borrowers largely remain in poverty. The vast majority of
microcredit borrowers are women who would like to move up the
economic ladder but are held back by binding constraints that
create a ``missing middle''-large numbers of microenterprises,
a handful of large firms or conglomerates, and very few SMEs in
between, which are critical to driving economic growth in
developing countries.
(8) According to the World Bank, SMEs create 4 out of 5 new
positions in emerging markets but about half of formal SMEs
don't have access to formal credit. The financing gap is even
larger when micro and informal enterprises are taken into
account. Overall, approximately 70 percent of all micro, small
and medium-sized enterprises (MSMEs) in emerging markets lack
access to credit.
SEC. 3. ACTIONS TO IMPROVE GENDER POLICIES OF THE UNITED STATES AGENCY
FOR INTERNATIONAL DEVELOPMENT.
(a) Development Cooperation Policy.--It shall be the development
cooperation policy of the United States--
(1) to reduce gender disparities in access to, control over,
and benefit from economic, social, political, and cultural
resources, wealth, opportunities, and services;
(2) to strive to eliminate gender-based violence and mitigate
its harmful effects on individuals and communities through
efforts to develop standards and capacity to reduce gender-
based violence in the workplace and other places where women
conduct work;
(3) to support activities that secure private property rights
and land tenure for women in developing countries, including
legal frameworks to give women equal rights to own, register,
use, profit from, and inherit land and property, legal literacy
to exercise these rights, and capacity of law enforcement and
community leaders to enforce such rights; and
(4) to increase the capability of women and girls to realize
their rights, determine their life outcomes, assume leadership
roles, and influence decision-making in households,
communities, and societies.
(b) Actions.--In order to advance the policy described in subsection
(a), the Administrator of the United States Agency for International
Development shall ensure that--
(1) strategies, projects, and activities of the Agency are
shaped by a gender analysis and, when applicable, use standard
indicators to provide one measure of success of such
strategies, projects, and activities; and
(2) gender equality and female empowerment is integrated
throughout the Agency's Program Cycle and related processes for
purposes of strategic planning, project design and
implementation, and monitoring and evaluation.
(c) Gender Analysis Defined.--In this section, the term ``gender
analysis''--
(1) means a socio-economic analysis of available or gathered
quantitative and qualitative information to identify,
understand, and explain gaps between men and women which
typically involves examining--
(A) differences in the status of women and men and
their differential access to and control over assets,
resources, opportunities, and services;
(B) the influence of gender roles, structural
barriers, and norms on the division of time between
paid employment, unpaid work (including subsistence
production and care for family members), and volunteer
activities;
(C) the influence of gender roles, structural
barriers, and norms on leadership roles and decision
making; constraints, opportunities, and entry points
for narrowing gender gaps and empowering women; and
(D) potential differential impacts of development
policies and programs on men and women, including
unintended or negative consequences; and
(2) includes conclusions and recommendations to enable
development policies and programs to narrow gender gaps and
improve the lives of women and girls.
SEC. 4. DEVELOPMENT ASSISTANCE FOR MICRO, SMALL AND MEDIUM-SIZED
ENTERPRISES.
(a) Findings and Policy.--Section 251 of the Foreign Assistance Act
of 1961 (22 U.S.C. 2211) is amended--
(1) in paragraph (1)--
(A) by striking ``microenterprise'' and inserting
``micro, small and medium-sized enterprise'';
(B) by striking ``and in the development'' and
inserting ``, in the development''; and
(C) by adding at the end before the period the
following: ``, and in the economic empowerment of the
poor, especially women'';
(2) in paragraph (2)--
(A) by striking ``microenterprise'' and inserting
``micro, small and medium-sized enterprise''; and
(B) by adding at the end before the period the
following: ``, particularly those enterprises owned,
managed, and controlled by women'';
(3) in paragraph (3), by striking ``microenterprises'' and
inserting ``micro, small and medium-sized enterprises'';
(4) in paragraph (4), by striking ``microenterprise'' and
inserting ``micro, small and medium-sized enterprise'';
(5) in paragraph (5)--
(A) by striking ``should continue'' and inserting
``should continue and be expanded''; and
(B) by striking ``microenterprise and microfinance
development assistance'' and inserting ``development
assistance for micro, small and medium-sized
enterprises''; and
(6) in paragraph (6)--
(A) by striking ``have been successful'' and
inserting ``have had some success'';
(B) by striking ``microenterprise programs'' and
inserting ``development assistance for micro, small and
medium-sized enterprises''; and
(C) by striking ``, such as countries in Latin
America''.
(b) Authorization; Implementation; Targeted Assistance.--Section 252
of the Foreign Assistance Act of 1961 (22 U.S.C. 2211a) is amended as
follows:
(1) In subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``credit, savings, and other
services'' and inserting ``credit, including
the use of innovative credit scoring models,
savings, financial technology, financial
literacy, insurance, property rights, and other
services''; and
(ii) by striking ``microfinance and
microenterprise clients'' and inserting
``micro, small and medium-sized enterprise
clients'';
(B) in paragraph (1), by striking ``microfinance and
microenterprise clients'' and inserting ``micro, small
and medium-sized enterprise clients, particularly those
clients owned, managed, and controlled by women'';
(C) in paragraph (2)--
(i) by striking ``microenterprises'' and
inserting ``micro, small and medium-sized
enterprises''; and
(ii) by inserting ``acquire United States
goods and services,'' after ``United States
markets,'';
(D) in paragraph (3)--
(i) by striking ``microfinance and
microenterprise institutions'' and inserting
``financial intermediaries'';
(ii) by striking ``microfinance and
microenterprise clients'' and inserting
``micro, small and medium-sized enterprises'';
and
(iii) by striking ``and'' at the end;
(E) in paragraph (4)--
(i) by striking ``microfinance and
microenterprise clients and institutions'' and
inserting ``micro, small and medium-sized
enterprises, financial intermediaries, and
capital markets''; and
(ii) by striking ``the poor and very poor.''
and inserting ``the poor and very poor,
especially women;''; and
(F) by adding at the end the following:
``(5) assistance for the purpose of promoting the economic
empowerment of women, including through increased access to
financial resources and improving property rights, inheritance
rights, and other legal protections; and
``(6) assistance for the purpose of scaling up evidence-based
graduation approaches, which include targeting the very poor
and households in ultra-poverty, consumption support, promotion
of savings, skills training, and asset transfers.''.
(2) In subsection (b)--
(A) in paragraph (1) to read as follows:
``(1) In general.--There is authorized to be established
within the Agency an office to support the Agency's efforts to
broaden and deepen local financial markets, expand access to
appropriate financial products and services, and support the
development of micro, small and medium-sized enterprises. The
Office shall be headed by a Director who shall possess
technical expertise and ability to offer leadership in the
field of financial sector development.'';
(B) in paragraph (2)--
(i) in subparagraph (B)--
(I) by striking ``Use of central
funding mechanisms.--'' and all that
follows through ``In order to ensure''
and inserting ``Use of central funding
mechanisms.--In order to ensure'';
(II) by striking ``the office shall''
and all that follows through ``and
other practitioners'' and inserting
``the office shall provide coordination
and support for field-implemented
programs, including through targeted
core support for micro, small and
medium-sized enterprises and local
financial markets''; and
(III) by striking clause (ii);
(ii) in subparagraph (C)--
(I) by inserting ``, particularly by
protecting the use and funding of local
organizations in countries in which the
Agency invests,'' after ``and
sustainability''; and
(II) by inserting ``, especially
women'' after ``the poor and very
poor''; and
(C) by striking paragraph (3).
(3) In subsection (c)--
(A) by striking ``all microenterprise resources'' and
inserting ``all micro, small and medium-sized
enterprise resources''; and
(B) by striking ``clients who are very poor.'' and
all that follows and inserting ``activities that reach
the very poor, and 50 percent of all small and medium-
sized enterprise resources shall be targeted to
activities that reach enterprises owned, managed, and
controlled by women.''.
(c) Monitoring System.--Section 253(b) of the Foreign Assistance Act
of 1961 (22 U.S.C. 2211b(b)) is amended--
(1) in paragraph (1), by inserting ``, including goals on a
gender disaggregated basis, such as improvements in employment,
access to financial services, enterprise development, earnings
and control over income, and property and land rights,'' after
``performance goals'';
(2) in paragraph (2), by striking ``include performance
indicators'' and all that follows through ``the achievement''
and inserting ``incorporate Agency planning and reporting
processes and indicators to measure or assess the
achievement''; and
(3) by striking paragraph (4).
(d) Poverty Measurement Methods.--Section 254 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2211c) is amended to read as follows:
``SEC. 254. POVERTY MEASUREMENT METHODS.
``The Administrator of the Agency, in consultation with financial
intermediaries and other appropriate organizations, should have in
place at least one method for implementing partners to use to assess
poverty levels of their current incoming or prospective clients.''.
(e) Additional Authorities.--Section 255 of the Foreign Assistance
Act of 1961 (22 U.S.C. 2211d) is amended--
(1) by striking ``assistance for microenterprise development
assistance'' and inserting ``development assistance for micro,
small and medium-sized enterprises''; and
(2) by striking ``and, to the extent applicable'' and all
that follows and inserting a period.
(f) Microenterprise Development Credits.--Section 256 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2212) is amended--
(1) in the section heading, by striking ``microenterprise
development credits'' and inserting ``development credits for
micro, small and medium-sized enterprises'';
(2) in subsection (a)--
(A) in paragraph (1), by striking ``micro- and small
enterprises'' and inserting ``micro, small and medium-
sized enterprises''; and
(B) in paragraph (2), by striking
``microenterprises'' and inserting ``micro, small and
medium-sized enterprises'';
(3) in subsection (b), in the matter preceding paragraph (1),
by inserting ``and other financial services'' after ``credit'';
(4) by striking ``microenterprise households'' each place it
appears and inserting ``micro, small and medium-sized
enterprises and households''; and
(5) by striking ``microfinance institutions'' each place it
appears and inserting ``financial intermediaries''.
(g) United States Microfinance Loan Facility.--Section 257 of the
Foreign Assistance Act of 1961 (22 U.S.C. 2213) is amended--
(1) in the section heading, by striking ``united states
microfinance loan facility'' and inserting ``united states
micro, small and medium-sized enterprise loan facility'';
(2) in subsection (a)--
(A) by striking ``United States Microfinance Loan
Facility'' and inserting ``United States Micro, Small
and Medium-Sized Enterprise Loan Facility''; and
(B) by striking ``United States-supported
microfinance institutions'' and inserting ``United
States-supported financial intermediaries'';
(3) in subsection (b)--
(A) by striking ``United States-supported
microfinance institutions'' each place it appears and
inserting ``United States-supported financial
intermediaries''; and
(B) in paragraph (2), by striking ``microfinance
institutions'' and inserting ``financial
intermediaries''.
(h) Contents of Report.--Subsection (b) of section 258 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2214) is amended to read as follows:
``(b) Contents.--To the extent practicable, the report should contain
the following:
``(1) Information about assistance provided under section
252, including--
``(A) the amount of each grant or other form of
assistance;
``(B) the name and type of each intermediary and
implementing partner organization receiving assistance;
``(C) the name of each country receiving assistance;
and
``(D) the methodology used to ensure compliance with
the targeted assistance requirements in subsection (c)
of such section.
``(2) The percentage of assistance provided under section 252
disaggregated by income level, including for the very poor, and
gender.
``(3) The estimated number of individuals that received
assistance provided under section 252 disaggregated by income
level, including for the very poor, and gender, and by type of
assistance, including loans, training, and business development
services.
``(4) The results of the monitoring system required under
section 253.
``(5) Information about any method in place to assess poverty
levels under section 254.''.
(i) Definitions.--Section 259 of the Foreign Assistance Act of 1961
(22 U.S.C. 2214a) is amended--
(1) in paragraph (3), by striking ``Committee on
International Relations'' and inserting ``Committee on Foreign
Affairs'';
(2) in paragraph (4), by striking ``microenterprises'' and
inserting ``micro, small and medium-sized enterprises'';
(3) in paragraph (6)--
(A) in subparagraph (E), by striking
``microenterprise institution'' and inserting ``micro,
small and medium-sized enterprise institution''; and
(B) in subparagraph (F), by striking ``microfinance
institution'' and inserting ``financial intermediary'';
(4) in paragraph (7) to read as follows:
``(7) Micro, small and medium-sized enterprise institution.--
The term `micro, small and medium-sized enterprise institution'
means an entity that provides services, including finance,
training, or business development services, for micro, small
and medium-sized enterprises in foreign countries.'';
(5) in paragraph (8) to read as follows:
``(8) Financial intermediary.--The term `financial
intermediary' means the entity that acts as the intermediary
between parties in a financial transaction, such as a bank,
credit union, investment fund, a village savings and loan
group, or an institution that provides financial services to a
micro, small or medium-sized enterprise.'';
(6) by striking paragraph (9);
(7) by redesignating paragraphs (10) through (14) as
paragraphs (9) through (13), respectively;
(8) in paragraph (9) (as redesignated), by striking ``of
microenterprise development'';
(9) in paragraph (10) to read as follows:
``(10) Practitioner institution.--The term `practitioner
institution' means a not-for-profit entity, financial
intermediary, information and communications technology firm
with a mobile money platform, a village and savings loan group,
or any other entity that provides financial or business
development services authorized under section 252 that benefits
micro, small and medium-sized enterprise clients.'';
(10) in paragraph (12) (as redesignated)--
(A) in the heading, by striking ``united states-
supported microfinance institution'' and inserting
``united states-supported financial intermediary''; and
(B) by striking ``United States-supported
microfinance institution'' and inserting ``United
States-supported financial intermediary'';
(11) in subparagraph (B) of paragraph (13) (as redesignated)
to read as follows:
``(B) living below the International Poverty Line, as
defined by the International Bank for Reconstruction
and Development and the International Development
Association (collectively referred to as the `World
Bank').''.
(j) Technical and Conforming Amendments.--Title VI of chapter 2 of
part I of the Foreign Assistance Act of 1961 is amended as follows:
(1) In the title heading, by striking ``MICROENTERPRISE
DEVELOPMENT ASSISTANCE'' and inserting ``DEVELOPMENT ASSISTANCE
FOR MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES''.
(2) In the heading for subtitle C, by striking ``United
States Microfinance Loan Facility'' and inserting ``United
States Micro, Small and Medium-Sized Microfinance Loan
Facility''.
SEC. 5. REPORT AND BRIEFING BY UNITED STATES AGENCY FOR INTERNATIONAL
DEVELOPMENT.
(a) In General.--Not later than one year after the date of the
enactment of this Act, the Administrator of the United States Agency
for International Development shall provide a briefing and submit to
the Committee on Foreign Affairs of the House of Representatives and
the Committee on Foreign Relations of the Senate a report on the
implementation of this Act and the amendments made by this Act,
including actions to improve the gender policies of the United States
Agency for International Development pursuant to section 3.
(b) Public Availability.--The report required under paragraph (1)
shall be posted and made available on a text-based, searchable, and
publicly-available internet website.
SEC. 6. REPORT BY COMPTROLLER GENERAL OF THE UNITED STATES.
(a) In General.--Not later than two years after the date of the
enactment of this Act, the Comptroller General of the United States
shall submit to the Committee on Foreign Affairs of the House of
Representatives and the Committee on Foreign Relations of the Senate a
report on development assistance for micro, small and medium-sized
enterprises administered by the United States Agency for International
Development.
(b) Matters to Be Included.--The report required under subsection (a)
shall include an assessment of the following:
(1) What is known about the impact of such development
assistance on the economies of developing countries.
(2) The extent to which such development assistance is
targeting women and the very poor, including what is known
about how such development assistance benefits women.
(3) The extent to which the United States Agency for
International Development has developed a methodology used to
ensure compliance with the targeted assistance requirement in
section 252(c) of the Foreign Assistance Act of 1961, as
amended by section 4 of this Act, and the quality of such
methodology.
(4) The monitoring system required in section 253(b) of the
Foreign Assistance Act of 1961, as amended by section 4 of this
Act, including the quality of such monitoring system.
Summary and Purpose
H.R. 5480, the Women's Entrepreneurship and Economic
Empowerment Act, seeks to address impediments to women's
economic inclusion in developing countries, including gender
inequalities in access to finance, ownership of assets, and
control over the allocation of resources. The legislation does
this primarily by requiring all strategies, projects, and
activities of the United States Agency for International
Development (USAID) to be shaped by a gender analysis, and by
expanding the Agency's microenterprise assistance authorities
to include programs in developing countries to increase the
availability of credit, including the use of innovative credit
scoring models, savings, financial technology, financial
literacy, insurance, property rights, and other services for
small and medium-sized enterprises (SMEs), particularly those
enterprises owned, managed, and controlled by women.
Background and Need for the Legislation
Across the globe, women make up the majority of the world's
poor due in part to gender-specific constraints to economic
empowerment, including lack of access to financial services and
discriminatory legal and regulatory systems that inhibit
ownership and inheritance of assets such as real property. In
2015, the World Bank Group's Women Business and the Law found
that 155 of 173 economies still have at least one law
restricting women's economic opportunities. Yet research shows
that when women exert greater influence over household
finances, they reinvest up to 90 percent of their wages on
household expenses, which improves childhood survival rates,
food security, educational attainment for their children, and
economic outcomes for families.
More than 1 billion women are left out of the formal
financial system and women-owned SMEs face a nearly $300
billion credit gap. Significant research underscores the
potential gains to global growth through women's increased
economic participation. A 2014 analysis by Goldman Sachs Global
Market Institute found that closing the gender gap in access to
credit for women-owned SMEs could increase per-capita gross
domestic product (GDP) in developing countries by 12 percent. A
2015 study by the International Labor Organization found that
countries with high female labor force participation rates are
more resilient to economic shocks and suffer fewer slowdowns in
economic growth. And a 2016 report by the McKinsey Global
Institute estimated that achieving global gender parity in
economic activity by 2025 could add as much as $28 trillion to
annual global GDP--an amount roughly equal to the combined
economies of the United States and China.
Key to driving this growth is looking beyond microfinance
to support for SMEs, which create four out of five new jobs in
developing economies, as well as confronting other barriers
women face. This bill brings attention to the need to protect
the legal and human rights of women, which is integral to their
economic participation and ability to live free of violence and
exploitation.
Lack of Secure Property Rights.
Women in more than half of the world's countries face
limits on their ability to own, inherit, or manage land by law
or custom. For example, laws governing inheritance (a primary
means of land transfer) often favor male relatives, or
administrative practices and officials may not recognize a
wife's joint ownership of land with her husband. While many
countries have worked to make their existing laws more
equitable, at the local level custom tends to uphold persistent
disparities in recognized ownership and control. For example,
despite a formal ownership of property, women may come under
pressure to give their land to male relatives upon demand.
This lack of secure property rights prevents women from
turning their land (and other movable assets) into economic
opportunity. Without confidence in their ability to ensure
long-term ownership of property, women are discouraged from
investing to improve its productivity and increase its value,
and cannot use the property as collateral for a loan. The
effect on female farmers is particularly acute as women operate
a significant number of smallholder farms throughout much of
Africa and Asia.
To help address these challenges, Section 3 of H.R. 5480
declares that it is the development cooperation policy of the
United States to support activities that secure private
property rights and land tenure for women in developing
countries, including legal frameworks to give women equal
rights to own, register, use, profit from, and inherit land and
property, legal literacy to exercise these rights, and capacity
of law enforcement and community leaders to enforce such
rights. Furthermore, Section 4 amends Section 252 of the
Foreign Assistance Act of 1961 (22 U.S.C. 2211a) to explicitly
authorize the President to provide assistance on a non-
reimbursable basis for programs in developing countries to
support women's property rights.
Lack of Access to the Financial System.
A lack of access to financial institutions and products
also impedes women's economic inclusion, which in turn causes
many women to rely on informal means of saving and borrowing
that are riskier and less reliable, or to not seek out
alternative financing at all. According to a 2017 Global Index
report, women in developing economies remain 9 percentage
points less likely than men to have a bank account. Even as
millions of individuals enter the formal financial system, this
gender gap in account ownership has not narrowed. Moreover,
many women with a formal bank account only have access to it
through a joint account with family members, which in practice
may limit their control over account assets.
Women face barriers to accessing financial products beyond
just savings accounts, such as credit, loans and insurance.
This hampers the success of women entrepreneurs, particularly
those seeking to run or grow SMEs. The International Finance
Corporation has estimated that 70 percent of women-owned SMEs
in the formal sector are unserved or underserved in terms of
access to credit.
Reasons for the gender gap in access to the formal
financial system include the fact that women generally control
fewer assets than men, may be misunderstood by financial
institutions, or harder to reach, and women themselves may be
less familiar with the benefits of formal financial services.
For example, in addition to being restricted or banned from
ownership or inheritance of certain assets, women may also face
legal or cultural limitations on their financial independence
from family members--all of which means fewer controlled assets
to facilitate their borrowing and banking. Restrictions on
travel and access to technology make women harder to reach
through both traditional and digital channels. Also, many
financial institutions are unfamiliar with the barriers women
face to using their services, with loan officers failing to
consider how their processes for opening bank accounts or
credit approval may disadvantage women who are less likely to
have formal identification or evidence of income. Likewise,
higher rates of illiteracy among women combined with a greater
tendency towards risk aversion mean women often report feeling
less comfortable or aware of the benefits of formal banking.
To address this barrier, Section 3 of H.R. 5480 declares
that it is the development cooperation policy of the United
States to reduce gender disparities in access to, control over,
and benefit from economic, social, political, and cultural
resources, wealth, opportunities, and services. Furthermore,
Section 4 expands USAID's microenterprise assistance
authorities to include support for SMEs, particularly those
owned, controlled, and managed by women, and also by
modernizing the Agency's financial assistance toolkit to
increase women's access to credit, including through the use of
innovative credit scoring models, savings, financial
technology, financial literacy, insurance, and other services.
Lack of Access to Technology.
Women in the developing world are significantly less likely
than men to use or have access to the internet--the so-called
``digital gender divide.'' A 2012 study by Intel Corporation
found that, in low- and middle-income countries, women are
about 25 percent less likely than men to be online, with this
discrepancy increasing to as much as 30 to 40 percent in parts
of Asia, Africa, and the Middle East. The report estimated
that, in total, there are about 200 million fewer women and
girls online than men and boys in developing countries, largely
due to cultural norms around the appropriateness of women's
access to technology, cost concerns, and higher illiteracy
rates among women. Similar discrepancies can be seen in mobile
phone usage. USAID estimates that 1.7 billion women in low- and
middle-income countries still do not own mobile phones, and the
gap between the number of men and women using the internet has
grown steadily over the past 3 years. This lack of access to
technology limits opportunities for female business owners and
entrepreneurs, particularly as new financial technologies
become available.
The Digital Global Access Policy Act (or the ``Digital GAP
Act''), which commits the United States to increase efforts and
coordination to promote affordable and gender-equitable
internet access, among other things, has been the primary
legislative vehicle through which the committee has sought to
address this disparity. However, Section 4 of H.R. 5480 also
modernizes USAID's microenterprise assistance authorities to
include support for women's access to financial technology as a
means of economically empowering women.
Gender-based Violence.
Women's economic empowerment also requires freedom from
violence. According to some estimates, as many as one in three
women worldwide experience physical or sexual violence in their
lifetime. Section 3 of H.R. 5480 states that it shall be the
development cooperation policy of the United States to strive
to eliminate gender-based violence and mitigate its harmful
effects on individuals and communities through efforts to
develop standards and capacity to reduce gender-based violence
in the workplace and other places where women conduct work.
Microenterprise and the ``Missing Middle.''
Beginning with his work in the slums of Bangladesh in the
mid-1970s, Nobel laureate Muhammad Yunus touched off a global
movement in support of ``microcredit'' investing, which seeks
to reduce poverty in low-income countries by giving small loans
to microentrepreneurs without collateral. But decades later,
microcredit's record remains mixed. It is now generally viewed
as a useful mechanism to help families weather economic shocks,
but microcredit borrowers have largely remained in poverty.
Microenterprise development assistance, administered by
USAID, has enjoyed strong support in Congress as demonstrated
through annual appropriations and the enactment of numerous
authorizing statutes. The Microenterprise for Self-Reliance and
International Anti-Corruption Act of 2000 (Public Law 106-82)
specifically required that 50 percent of all microenterprise
resources be targeted to the very poor. However, a report by
the Comptroller General in 2003 found, among other things, that
despite studies and academic analyses that microenterprise
activities generally serve the poor, few loans appeared to be
reaching the very poor. This in turn prompted additional
legislation in the 108th Congress--H.R. 192, which amends 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
programs under those Acts (Public Law 108-31) and H.R. 3818,
the Microenterprise Results and Accountability Act of 2004
(Public Law 108-484)--both of which established important
reforms to promote accountability and effectiveness of
microenterprise programs. Specifically, H.R. 192 provided a
framework for USAID to certify and put into use at least two
poverty measurement methods to ensure that 50 percent of USAID
microenterprise development resources are benefiting very poor
clients. H.R. 3818 went further, establishing a monitoring
system to ensure that the 50 percent standard would be met.
H.R. 5840 improves this 50 percent requirement and
monitoring system under current law by mandating that 50
percent of all SME resources authorized in the bill benefit
enterprises owned, managed, and controlled by women and by
requiring the monitoring system to include performance goals on
a gender disaggregated basis. The committee notes that the
bill's amendments to Section 252(c) of the Foreign Assistance
Act of 1961 should not be misconstrued as requiring 50 percent
of all dollars to be directly appropriated to the populations
described in that section; rather 50 percent of all
appropriated dollars should target activities that benefit
those populations described in such section. Likewise, the
bill's amendments to the monitoring system--specifically
language in Section 4(b) regarding improvements in employment,
access to financial services, enterprise development, earnings
and control over income, and property and land rights--are
examples of the types of performance goals USAID should use as
part of its monitoring system, to the extent they are
practicable.
The Women's Entrepreneurship and Economic Empowerment Act
further improves current law by expanding microenterprise
assistance authorities to include support for SMEs,
particularly those enterprises owned, managed, and controlled
by women. Better awareness of the factors impeding women's
economic participation has converged with increased attention
to the importance of SMEs in driving the kind of broad-based
economic growth in emerging markets that microenterprises alone
have not been able to achieve.
According to the World Bank, formal SMEs contribute up to
60 percent of total employment and up to 40 percent of GDP in
emerging economies. While some emerging markets have thriving
SME sectors, particularly in East Asia, most developing
countries suffer from what has been called the ``missing
middle''--large numbers of informal microenterprises, a handful
of large firms or conglomerates, and very few SMEs in between.
Overall, approximately 70 percent of all micro, small and
medium-sized enterprises (MSMEs) in emerging markets lack
access to credit. The current credit gap for formal SMEs is
estimated to be $1.2 trillion; the total credit gap for both
formal and informal SMEs is as high as $2.6 trillion.
Women-owned SMEs represent slightly more than one-third of
formal SMEs in emerging markets, or about 8-10 million firms
(representing 31 to 38 percent of all SMEs in emerging
markets); women also own another 40 percent of the 340 million
SMEs operating in the informal economy. However, the average
growth rate of women-owned SMEs is significantly lower than
those run by men. A number of factors have been cited as
contributing to the slow growth of these women-owned
businesses, including lack of access to finance, lower levels
of business education or management training, risk aversion,
and disparate household responsibilities. Women's
entrepreneurship is also skewed towards smaller firms and less
profitable sectors, and women are more likely to operate home-
based businesses than men. This performance gap among women-
owned SMEs is now being viewed as a possible area for increased
return on investment and broader economic growth.
To help ensure sustainable and inclusive economic
development at scale, the committee encourages USAID to use its
expanded authorities to focus its support for SMEs with the
greatest potential for growth and impact on their communities.
Given the limited resources available, it is important to
prioritize those SMEs that demonstrate an ability to leverage
additional investment to grow their company by revenue and by
jobs created. Investing in growth-oriented enterprises will
help ensure a strong return on investment in both traditional
and growing sectors of local economies, as well as the
sustainability of these investments over time.
Hearings
Most recently, the Foreign Affairs Committee held a hearing
on July 12, 2017, entitled ``Beyond Microfinance: Empowering
Women in the Developing World'' related to the contents of H.R.
5480. The bill is an additional result of the committee's
extended focus on empowering women and girls through U.S.
foreign policy, which has been the subject of five full
committee hearings since 2014, other subcommittee hearings in
recent Congresses, and the consideration of significant
legislation related to women's empowerment, including the Girls
Count Act of 2015, the Protecting Girls' Access to Education in
Vulnerable Settings Act, and the Women, Peace, and Security Act
of 2017, among others.
Committee Consideration
On April 17, 2018, the Committee on Foreign Affairs marked
up H.R. 5480 in open session, pursuant to notice. An amendment
(offered by Chairman Royce) was considered en bloc with the
underlying bill, and both were agreed to by voice vote.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of Rules of
the House of Representatives, the committee reports that
findings and recommendations of the committee, based on
oversight activities under clause 2(b)(1) of House Rule X, are
incorporated in the descriptive portions of this report,
particularly in the ``Background and Need for the Legislation''
and ``Section-by-Section Analysis'' sections.
New Budget Authority, Tax Expenditures, and Federal Mandates
In compliance with clause 3(c)(2) of House Rule XIII and
the Unfunded Mandates Reform Act (Public Law 104-4), the
committee adopts as its own the estimate of new budget
authority, entitlement authority, tax expenditure or revenues,
and Federal mandates contained in the cost estimate prepared by
the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 23, 2018.
Hon. Edward R. Royce, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5480, the Women's
Entrepreneurship and Economic Empowerment Act of 2018.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sunita
D'Monte, who can be reached at 226-2840.
Sincerely,
Keith Hall.
Enclosure
cc: Honorable Eliot L. Engel
Ranking Member
H.R. 5480--Women's Entrepreneurship and Economic Empowerment Act of
2018.
As ordered reported by the House Committee on Foreign
Affairs on April 17, 2018.
H.R. 5480 would authorize the assistance provided to
microenterprises by the U.S. Agency for International
Development (USAID) to be expanded to include small and medium-
sized enterprises (SME), particularly those owned or managed by
women. It also would require the agency to update its
monitoring and reporting on that assistance. Finally, it would
require the Government Accountability Office (GAO) to report on
the agency's programs for microenterprises and SMEs and require
USAID to brief the Congress and report on the implementation of
the bill.
The Consolidated Appropriations Act of 2018 directed USAID
to make available not less than $265 million for
microenterprise programs. According to USAID, many of its
ongoing assistance programs in sectors such as agricultural
development and health care support both microenterprises and
SMEs, including those owned or managed by women. On the basis
of that information, CBO expects that USAID would not increase
assistance to SMEs under the bill. USAID indicated that it
would need one additional employee and a contractor for up to
two years to update its monitoring and reporting under the
bill; on that basis, CBO estimates those efforts would cost
about $500,000 each year. In total, CBO estimates that
implementing the updated monitoring and reporting and providing
the required USAID and GAO reports would cost $1 million over
the 2018-2023 period, subject to the availability of
appropriated funds.
Enacting H.R. 5480 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting H.R. 5480 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 5480 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Sunita D'Monte.
The estimate was reviewed by Leo Lex, Deputy Assistant Director
for Budget Analysis.
Directed Rule Making
Pursuant to clause 3(c) of House Rule XIII, as modified by
section 3(i) of H. Res. 5 during the 115th Congress, the
committee notes that H.R. 5480 contains no directed rule-making
provisions.
Non-Duplication of Federal Programs
Pursuant to clause 3(c)(5) of House Rule XIII, the
committee states that no provision of this bill establishes or
reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Performance Goals and Objectives
The objective of this legislation is to improve the
policies of USAID related to gender considerations and women's
economic empowerment. Section 3 establishes a development
cooperation policy of the United States to support women's
economic empowerment which will be advanced by requiring USAID
to ensure that all of its strategies, projects and activities
are shaped by a gender analysis using standard indicators.
Section 4 of the bill expands USAID's microenterprise
assistance authorities to include support for small and medium
enterprises, particularly those enterprises owned, managed, and
controlled by women. The bill stipulates that at least 50
percent of all micro, small and medium-sized enterprise
resources shall be targeted to activities that reach the very
poor, and 50 percent of small and medium-sized enterprise
resources shall be targeted to activities that reach
enterprises owned, managed, and controlled by women. These
requirements are reinforced by an annual USAID report to
Congress and a monitoring system which shall include enhanced
performance goals beyond what is required under current law,
including on a gender disaggregated basis. Finally, the bill
requires the Comptroller General to report to Congress on
development assistance for micro, small and medium-sized
enterprises, including the impact of such assistance on the
economies of developing countries, the extent to which such
assistance is targeting women and the very poor, the extent to
which USAID has developed a methodology to ensure compliance
with the targeted assistance requirement, and the quality of
USAID's monitoring system. This will enable Congress to conduct
effective oversight of performance and results.
Congressional Accountability Act
H.R. 5480 does not apply to terms and conditions of
employment or to access to public services or accommodations
within the legislative branch.
New Advisory Committees
H.R. 5480 does not establish or authorize any new advisory
committees.
Earmark Identification
H.R. 5480 contains no congressional earmarks, limited tax
benefits, or limited tariff benefits as described in clauses
9(e), 9(f), and 9(g) of House Rule XXI.
Section-by-Section Analysis
Section 1. Short Title. This Act may be cited as the
``Women's Entrepreneurship and Economic Empowerment Act of
2018.''
Section. 2. Findings. Includes eight congressional findings
related to barriers facing women's economic empowerment,
financial inclusion, and United States support for
microenterprise and microfinance development programs.
Section. 3. Actions to Improve Gender Policies of the
United States Agency for International Development. Establishes
a development cooperation policy of the United States to reduce
gender disparities related to economic participation and
opportunity, strive to eliminate gender-based violence, support
women's property rights, and improve the ability of women and
girls to actively shape their futures.
To advance the development cooperation policy, this section
requires USAID to ensure that all strategies and projects of
the Agency are shaped by a gender analysis that considers
differences in the status of women and men and their access to
resources, and integrates efforts to empower women throughout
USAID's programs.
Section. 4. Development Assistance for Micro, Small and
Medium-Sized Enterprises. Expands USAID's microenterprise
development assistance authority to include small and medium-
sized enterprises, with an emphasis on supporting enterprises
owned, managed, and controlled by women. The purpose of this
section is to prioritize women's economic advancement and
address the ``missing middle'' of small and medium-sized
enterprises in developing countries, which are critical to
driving economic growth.
Though exact definitions vary, the committee understands
that USAID's definition of SMEs means enterprises employing
between 10 and 250 employees.
This section also modernizes USAID's development assistance
toolkit to include innovative credit scoring models, financial
technology, financial literacy, insurance, and actions to
improve property and inheritance rights.
Section. 5. Briefing and Report. Requires USAID to produce
a publicly available report and brief Congress on the
implementation of this Act.
Section. 6. Report by the Comptroller. Requires the
Government Accountability Office to report to Congress on
development assistance for micro, small and medium-sized
enterprises administered by USAID, including how such
assistance benefits women.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
FOREIGN ASSISTANCE ACT OF 1961
* * * * * * *
TITLE VI--[MICROENTERPRISE DEVELOPMENT ASSISTANCE] DEVELOPMENT
ASSISTANCE FOR MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES
Subtitle A--Grant Assistance
SEC. 251. FINDINGS AND POLICY.
Congress finds and declares the following:
(1) Access to financial services and the
development of [microenterprise] micro, small and
medium-sized enterprise are vital factors in the stable
growth of developing countries [and in the
development], in the development of free, open, and
equitable international economic systems, and in the
economic empowerment of the poor, especially women.
(2) It is therefore in the best interest of the
United States to facilitate access to financial
services and assist the development of
[microenterprise] micro, small and medium-sized
enterprise in developing countries, particularly those
enterprises owned, managed, and controlled by women.
(3) Access to financial services and the
development of [microenterprises] micro, small and
medium-sized enterprises 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] micro, small
and medium-sized enterprise programs should target both
rural and urban poor.
(5) Microenterprise programs have been successful
and [should continue] should continue and be expanded
to empower vulnerable women in the developing world.
The Agency should work to ensure that recipients of
[microenterprise and microfinance development
assistance] development assistance for micro, small and
medium-sized enterprises 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]
development assistance for micro, small and medium-
sized enterprises [have been successful] have had some
success 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].
SEC. 252. 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] credit, including the use of
innovative credit scoring models, savings, financial
technology, financial literacy, insurance, property rights, and
other services to [microfinance and microenterprise clients]
micro, small and medium-sized enterprise 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] micro, small and medium-sized
enterprise clients, particularly those clients owned,
managed, and controlled by women;
(2) assistance for the purpose of training,
technical assistance, and business development services
for [microenterprises] micro, small and medium-sized
enterprises 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, acquire United States goods and
services, and to increase their income and build their
assets;
(3) capacity-building for [microfinance and
microenterprise institutions] financial intermediaries
in order to enable them to better meet the credit,
savings, and training needs of [microfinance and
microenterprise clients] micro, small and medium-sized
enterprises; [and]
(4) policy, regulatory programs, and research at
the country level that improve the environment for
[microfinance and microenterprise clients and
institutions] micro, small and medium-sized
enterprises, financial intermediaries, and capital
markets that serve [the poor and very poor.] the poor
and very poor, especially women;
(5) assistance for the purpose of promoting the
economic empowerment of women, including through
increased access to financial resources and improving
property rights, inheritance rights, and other legal
protections; and
(6) assistance for the purpose of scaling up
evidence-based graduation approaches, which include
targeting the very poor and households in ultra-
poverty, consumption support, promotion of savings,
skills training, and asset transfers.
(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.]
(1) In general.--There is authorized to be
established within the Agency an office to support the
Agency's efforts to broaden and deepen local financial
markets, expand access to appropriate financial
products and services, and support the development of
micro, small and medium-sized enterprises. The Office
shall be headed by a Director who shall possess
technical expertise and ability to offer leadership in
the field of financial sector 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]
Use of central funding mechanisms._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] the
office shall provide coordination and
support for field-implemented programs,
including through targeted core support
for micro, small and medium-sized
enterprises and local financial
markets.
[(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, particularly by protecting
the use and funding of local organizations in
countries in which the Agency invests, and
shall especially provide the greatest possible
resources to the poor and very poor, especially
women. 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), 50 percent of
[all microenterprise resources] all micro, small and medium-
sized enterprise 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.] activities that reach the very poor, and 50
percent of all small and medium-sized enterprise
resources shall be targeted to activities that reach
enterprises owned, managed, and controlled by women.
SEC. 253. 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, including goals on a gender disaggregated basis,
such as improvements in employment, access to financial
services, enterprise development, earnings and control
over income, and property and land rights, 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] incorporate Agency planning
and reporting processes and indicators to measure or
assess 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. 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
252.
[(b) Application.--The 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. 254. POVERTY MEASUREMENT METHODS.
The Administrator of the Agency, in consultation with
financial intermediaries and other appropriate organizations,
should have in place at least one method for implementing
partners to use to assess poverty levels of their current
incoming or prospective clients.
SEC. 255. ADDITIONAL AUTHORITIES.
Notwithstanding any other provision of law, amounts made
available for [assistance for microenterprise development
assistance] development assistance for micro, small and medium-
sized enterprises 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.].
Subtitle B--Credit Assistance
SEC. 256. [MICROENTERPRISE DEVELOPMENT CREDITS] DEVELOPMENT CREDITS
FOR MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES.
(a) Findings and Policy.--Congress finds and declares
that--
(1) the development of [micro- and small
enterprises] micro, small and medium-sized 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]
micro, small and medium-sized enterprises 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), the President is authorized to provide
assistance to increase the availability of financial services
to [microenterprise households] micro, small and medium-sized
enterprises and households lacking full access to credit and
other financial services, including through--
(1) loans and guarantees to [microfinance
institutions] financial intermediaries for the purpose
of expanding the availability of savings and credit to
poor and low-income households;
(2) training programs for [microfinance
institutions] financial intermediaries 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] financial intermediaries described in subsection
(b)(1) are eligible to carry out activities, with respect to
[microenterprise households] micro, small and medium-sized
enterprises and 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] micro, small and medium-sized
enterprises and households and may not be used to support
programs not directly related to the purposes described in
subsection (b).
(e) Procurement Provision.--Assistance may be provided
under this section without regard to section 604(a).
(f) Availability of Funds.--
(1) In general.--Of the amounts authorized to be
available to carry out this part, 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 502(5) of the Federal Credit Reform Act of
1990, for activities under this section.
Subtitle C--[United States Microfinance Loan Facility] United States
Micro, Small, and Medium-Sized Microfinance Loan Facility
SEC. 257. [UNITED STATES MICROFINANCE LOAN FACILITY] UNITED STATES
MICRO, SMALL AND MEDIUM-SIZED ENTERPRISE LOAN
FACILITY.
(a) Establishment.--The Administrator is authorized to
establish a [United States Microfinance Loan Facility] United
States Micro, Small and Medium-Sized Enterprise 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] United States-supported
financial intermediaries.
(b) Disbursements.--
(1) In general.--The Administrator shall make
disbursements from the Facility to [United States-
supported microfinance institutions] United States-
supported financial intermediaries 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] United
States-supported financial intermediaries.
(2) Form of assistance.--Assistance under this
section shall be in the form of loans or loan
guarantees for [microfinance institutions] financial
intermediaries 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 634A 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 this part that are applicable to
development assistance activities.
(2) Default and procurement provisions.--
(A) Default provision.--The provisions of
section 620(q), 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 604(a).
(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 this part 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
502(5) of the Federal Credit Reform Act of
1990, 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.
Subtitle D--Miscellaneous Provisions
SEC. 258. 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.
[(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.]
(b) Contents.--To the extent practicable, the report should
contain the following:
(1) Information about assistance provided under
section 252, including--
(A) the amount of each grant or other form
of assistance;
(B) the name and type of each intermediary
and implementing partner organization receiving
assistance;
(C) the name of each country receiving
assistance; and
(D) the methodology used to ensure
compliance with the targeted assistance
requirements in subsection (c) of such section.
(2) The percentage of assistance provided under
section 252 disaggregated by income level, including
for the very poor, and gender.
(3) The estimated number of individuals that
received assistance provided under section 252
disaggregated by income level, including for the very
poor, and gender, and by type of assistance, including
loans, training, and business development services.
(4) The results of the monitoring system required
under section 253.
(5) Information about any method in place to assess
poverty levels under section 254.
(c) Availability to Public.--The report required by this
section shall be made available to the public on the Internet
website of the Agency.
SEC. 259. 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] Committee on
Foreign Affairs 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] micro, small and medium-
sized enterprises 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] micro,
small and medium-sized enterprise institution;
(F) a [microfinance institution] financial
intermediary; 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.]
(7) Micro, small and medium-sized enterprise
institution.--The term ``micro, small and medium-sized
enterprise institution'' means an entity that provides
services, including finance, training, or business
development services, for micro, small and medium-sized
enterprises in foreign countries.
(8) Financial intermediary.--The term ``financial
intermediary'' means the entity that acts as the
intermediary between parties in a financial
transaction, such as a bank, credit union, investment
fund, a village savings and loan group, or an
institution that provides financial services to a
micro, small or medium-sized enterprise.
[(10)] (9) Office.--The term ``office'' means the
office [of microenterprise development] established
under section 252(b)(1).
[(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.]
(10) Practitioner institution.--The term
``practitioner institution'' means a not-for-profit
entity, financial intermediary, information and
communications technology firm with a mobile money
platform, a village and savings loan group, or any
other entity that provides financial or business
development services authorized under section 252 that
benefits micro, small and medium-sized enterprise
clients.
[(12)] (11) 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.--] (12) United states-supported financial
intermediary._The term ``[United States-supported
microfinance institution] United States-supported
financial intermediary'' means a financial intermediary
that has received funds made available under this part
for fiscal year 1980 or any subsequent fiscal year.
[(14)] (13) 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).]
(B) living below the International Poverty
Line, as defined by the International Bank for
Reconstruction and Development and the
International Development Association
(collectively referred to as the ``World
Bank'').
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