Microenterprise Results and Accountability Act of 2004

MICROENTERPRISE RESULTS AND ACCOUNTABILITY ACT OF 2004 -- (House of Representatives - November 20, 2004)

Mr. SMITH of New Jersey. Mr. Speaker, I ask unanimous consent to take from the Speaker's table the bill (H.R. 3818) to amend the Foreign Assistance Act of 1961 to improve the results and accountability of microenterprise development assistance programs, and for other purposes, and ask for its immediate consideration in the House.

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AMENDMENT IN THE NATURE OF A SUBSTITUTE OFFERED BY MR. SMITH OF NEW JERSEY

Mr. SMITH of New Jersey. Mr. Speaker, I offer an amendment in the nature of a substitute in lieu of the amendment reported by the Committee on International Relations.

The SPEAKER pro tempore. The Clerk will report the amendment in lieu of the committee amendment.

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Mr. SMITH of New Jersey (during the reading). Mr. Speaker, I ask unanimous consent that the amendment be considered as read and printed in the RECORD.

The SPEAKER pro tempore. Is there objection to the request of the gentleman from New Jersey?

There was no objection.

The amendment in the nature of a substitute was agreed to.

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Mr. SMITH of New Jersey. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of H.R. 3818, "The Microenterprise Results and Accountability Act of 2004." I introduced this bill at the beginning of the 108th Congress, and this final product represents the culmination of months of hard work and discussion by Republicans and Democrats in both the House and Senate, members of the microenterprise community, and USAID, to build upon one of our most progressive and successful foreign aid programs.

I would like to thank Mr. DELAY and our leadership for scheduling this bill. We know that the House has been considering numerous important pieces of foreign affairs legislation in recent months-from the Foreign Aid appropriations bill to legislation reorganizing our intelligence community and better securing our borders to fight the War on Terrorism-and I am grateful that our leadership took time to schedule this important measure.

I would like to thank Chairman HYDE, who has shown strong support for this bill every step of the way and moved it promptly at the beginning of this year. I would also like to thank Mr. LANTOS, Mr. WELDON, and 81 other Members of Congress who cosponsored this legislation.

Mr. Speaker, this legislation is primarily about ensuring better results, not authorizing additional money. A comprehensive GAO report completed in November 2003 revealed that oversight and accountability of microenterprise programs administered by AID is weak, and that programs are not having the desired effect of reaching the very poor-those earning less than the equivalent of $1/day-to the greatest extent possible.

In response to those concerns, H.R. 3818 builds-in accountability through a focus on cost-effectiveness and efficiency. H.R. 3818 establishes a dedicated Microenterprise Office within USAID which will approve strategic plans of field missions, establish a monitoring system in order to maximize the impact of programs and measure results, and coordinate preparation of a yearly report to Congress. The legislation also ensures that more funds go to the "poorest of the poor" through the development and implementation of easy-to-use, cost-effective poverty assessment techniques. Identifying and targeting the poorest potential clients who would stand to benefit most from microenterprise loans has proven to be more difficult than originally anticipated. I am hopeful that once developed, these poverty assessment techniques may prove useful not only for microenterprise but also in other areas of our foreign aid.

This bill also stipulates that USAID should emphasize the use of global microfinance networks and other non-profit voluntary organizations in the implementation of microenterprise and microfinance programs. In the last two years, I am concerned that USAID has been shifting its focus away from non-profit organizations and networks to contractors in the implementation of the Agency's microenterprise program. While for-profit entities such as consulting firms are making excellent contributions in the areas of technical assistance, research and policy reform, global microfinance networks and non-profit voluntary organizations have the operational experience and track record in microenterprise and microfinance service delivery to poor people. These organizations are able to get resources directly to clients, and are well positioned to reach the very poorest economically active entrepreneurs in the countries where they work. Further, such networks have built self-sustaining microfinance institutions that now cover, on average, almost all of their operating costs. More than $150 million in earned revenue was captured by these institutions in 2002 to cover their operating costs, in addition to private donations that have added significant leverage to USAID's investments. These networks have excelled in rapidly developing microfinance institutions in volatile and risky situations, including during the early stages of a country's transition from war to peace. However, while H.R. 3818 also encourages the use of indigenous governmental organizations as implementing partners for microenterprise and microfinance programs, these governmental organizations should be used only when necessary, efficient and effective, and, in particular, only when they use the best practices in this field. Since the reforms in H.R. 3818 are so comprehensive, we expect USAID will work in close consultation with the appropriate Congressional committees and offices regarding this and other issues.

The term "foreign aid" often has a bad connotation-and there are some good reasons why, too. Many times in the past, foreign aid was sent in a "top-down" manner to corrupt governments and organizations where it never really reached the intended recipients.

Microenterprise, on the other hand, takes a totally different approach. It's a "trickle-up" approach that focuses on helping the poorest people on the planet build themselves up, little by little, into self-sufficiency. The success of microenterprise lending programs to empower entrepreneurs and borrowers in the developing world cannot be overstated.

Over two million clients are currently benefiting from USAID-assisted programs that provide the necessary capital through small loans, usually of a few hundred dollars or less, for entrepreneurs to start and expand their own small businesses. It is estimated that 97 percent of microenterprise loans are successfully repaid and 70 percent to women, who are often very vulnerable, subjected to abuse, and in need of economic opportunities in the developing world. Microenterprise is a key vehicle to assist victims of trafficking and to raise the social and economic status of women around the world.

Microenterprise also complements the principles President Bush has outlined for more effective foreign aid through the Millennium Challenge Account. Business owners assisted by micro-lending are not only able to increase their own incomes, but through their efforts, they create jobs and help economies grow.

Success stories from the beneficiaries of microenterprise are quite numerous. Take for example, Dorothy Eyiah (EYE-ee-ah) from Ghana. Dorothy was resourceful, but she had no idea how she was going to support her AIDS-stricken sister and family when she brought them into her home in Ghana. She used to support herself selling ice, but that wasn't going to pay for the food and medicines she now needed. She started praying. All doors seemed shut until Dorothy met some women within her village who were part of an Opportunity International Trust Bank. The Trust Bank could help her grow a small business-providing her with financing, training, support. Five loans later, Dorothy is the secretary of her Trust Bank and runs 3 businesses, employing 9 people from her village. She is content. Her sister is comfortable, all the children are in school, and their needs are being met. "God has been so good to me," she says.

Success stories such as this are what microfinance and H.R. 3818 are all about. By building the best possible microenterprise program, our goal is to reach the greatest possible number of poor people with services that truly have an impact on their lives. As we compare the effectiveness of various methods of implementation of funds, success will be measured by the ability to reach very poor people and other underserved populations, including women, and by the kind of impact these programs have on poor families. We are concerned not only with the efficient delivery of financial services, but also with the well-being of those who receive those services. We want to see poor people work their way out of poverty, increase their income, build their assets, and grow their businesses, and we also want to see them educate their children, achieve greater self-esteem, strengthen their families, and improve the quality of their lives.

When we provide micro loans for the developing world, we export values upon which our nation is based upon, including the ideal that if you work hard and dream big, you can succeed. Again, I thank my colleagues who have supported this legislation and I urge the rest of my colleagues to do the same.

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The bill was ordered to be engrossed and read a third time, was read the third time, and passed, and a motion to reconsider was laid on the table.