“The Microenterprise Results and Accountability Act of 2004”, HR 3818, authored by Rep. Chris Smith, Vice Chairman of the House International Relations Committee, will reform the existing loan structure within the United States Agency for International Development to ensure that US funds aimed at helping the poorest of the poor through micro loans are targeted directly to those organizations best able to help them.  HR 3818 was adopted by the House during an unusual Saturday session late in November; adopted by the Senate in one of its last acts this week and is now on its way to the President for his signature.

“This legislation is a good government bill which ensures the US taxpayer gets the best value for our foreign aid dollar while at the same time helping people who want to help themselves,” Smith said.  “The Microcredit program provides small amounts of seed money to poor people who want to work and succeed.  The reforms will ensure that even more of the funds go directly to potential small business owners rather than federal bureaucrats or consultants.”

Accordingly, Smith’s bill improves oversight and establishes new methods of accountability through creating a microenterprise office within USAID and requires an annual report to Congress that will include information on specific funding decisions and grant recipients.  A new monitoring system ensures that these performance goals are met and that grant monies go to the poorest of the poor.  Changing the current structure met with strong initial resistance, but Smith prevailed.

Smith introduced the bill in response to a report by the Government Accounting Office (GAO) published at the end of last year which highlighted problems in the existing program and the need for reform.

“USAID spends $200 million a year on this important program. As we go forward, we must insist that the poorest of the poor are helped directly and that the funding available is not diluted by bureaucratic wrangling, consultant fees, or other overhead costs.  The legislation on its way to the President addresses the concerns of the GAO and will go a long way towards enhancing an already successful program,” Smith said. 

“The Microenterprise Results and Accountability Act of 2004” will be the second piece legislation authored by Congressman Smith on microenterprise that has been signed into law.  Last year, “The Microenterprise Enhancement Act of 2003,” also authored by Smith, became Public Law 108-31.  This law increased the authorization level for microenterprise programs by $65 million over two years and required the implementation of better methods to ensure poor entrepreneurs have access to microenterprise loans.    

“Microcredit is a critical program for women around the world.  Microcredit helps raise the social and economic status of women in areas where they are impoverished and vulnerable and is used to help victims of trafficking,” Smith added. 

Over 2 million clients are currently benefiting from the Microcredit small business loans of a few hundred dollars or less.  It is estimated that 70% of the grant recipients are women and that 97% of the Microcredit loans are repaid.