FINDINGS AND DECLARATIONS OF POLICY.

SEC. 102. FINDINGS AND DECLARATIONS OF POLICY. Congress makes the following findings and declarations: (1) According to the World Bank, more than 1,200,000,000 people in the developing world, or one-fifth of the world’s population, subsist on less than $1 a day. (2) Over 32,000 of their children die each day from largely preventable malnutrition and disease. (3)(A) Women in poverty generally have larger work loads and less access to educational and economic opportunities than their male counterparts. (B) Directly aiding the poorest of the poor, especially women, in the developing world has a positive effect not only on family incomes, but also on child nutrition, health and education, as women in particular reinvest income in their families. (4)(A) The poor in the developing world, particularly women, generally lack stable employment and social safety nets. (B) Many turn to self-employment to generate a substantial portion of their livelihood. In Africa, over 80 percent of employment is generated in the informal sector of the self-employed poor. (C) These poor entrepreneurs are often trapped in poverty because they cannot obtain credit at reasonable rates to build their asset base or expand their otherwise viable self-employment activities. (D) Many of the poor are forced to pay interest rates as high as 10 percent per day to money lenders. (5)(A) The poor are able to expand their incomes and their businesses dramatically when they can access loans at reasonable interest rates. (B) Through the development of self-sustaining microfinance programs, poor people themselves can lead the fight against hunger and poverty. (6)(A) On February 2–4, 1997, a global Microcredit Summit was held in Washington, District of Columbia, to launch a plan to expand access to credit for self-employment and other financial and business services to 100,000,000 of the world’s poorest families, especially the women of those families, by 2005. While this scale of outreach may not be achievable in 114 STAT. 1080this short time-period, the realization of this goal could dramatically alter the face of global poverty. (B) With an average family size of five, achieving this goal will mean that the benefits of microfinance will thereby reach nearly half of the world’s more than 1,000,000,000 absolute poor people. (7)(A) Nongovernmental organizations, such as those that comprise the Microenterprise Coalition (such as the Grameen Bank (Bangladesh), K-REP (Kenya), and networks such as Accion International, the Foundation for International Community Assistance (FINCA), and the credit union movement) are successful in lending directly to the very poor. (B) Microfinance institutions such as BRAC (Bangladesh), BancoSol (Bolivia), SEWA Bank (India), and ACEP (Senegal) are regulated financial institutions that can raise funds directly from the local and international capital markets. (8)(A) Microenterprise institutions not only reduce poverty, but also reduce the dependency on foreign assistance. (B) Interest income on the credit portfolio is used to pay recurring institutional costs, assuring the long-term sustainability of development assistance. (9) Microfinance institutions leverage foreign assistance resources because loans are recycled, generating new benefits to program participants. (10)(A) The development of sustainable microfinance institutions that provide credit and training, and mobilize domestic savings, is a critical component to a global strategy of poverty reduction and broad-based economic development. (B) In the efforts of the United States to lead the development of a new global financial architecture, microenterprise should play a vital role. The recent shocks to international financial markets demonstrate how the financial sector can shape the destiny of nations. Microfinance can serve as a powerful tool for building a more inclusive financial sector which serves the broad majority of the world’s population including the very poor and women and thus generate more social stability and prosperity. (C) Over the last two decades, the United States has been a global leader in promoting the global microenterprise sector, primarily through its development assistance programs at the United States Agency for International Development. Additionally, the Department of the Treasury and the Department of State have used their authority to promote microenterprise in the development programs of international financial institutions and the United Nations. (11)(A) In 1994, the United States Agency for International Development launched the “Microenterprise Initiative” in partnership with the Congress. (B) The initiative committed to expanding funding for the microenterprise programs of the Agency, and set a goal that, by the end of fiscal year 1996, one-half of all microenterprise resources would support programs and institutions that provide credit to the poorest, with loans under $300. (C) In order to achieve the goal of the microcredit summit, increased investment in microfinance institutions serving the poorest will be critical. 114 STAT. 1081 (12) Providing the United States share of the global investment needed to achieve the goal of the microcredit summit will require only a small increase in United States funding for international microcredit programs, with an increased focus on institutions serving the poorest. (13)(A) In order to reach tens of millions of the poorest with microcredit, it is crucial to expand and replicate successful microfinance institutions. (B) These institutions need assistance in developing their institutional capacity to expand their services and tap commercial sources of capital. (14) Nongovernmental organizations have demonstrated competence in developing networks of local microfinance institutions and other assistance delivery mechanisms so that they reach large numbers of the very poor, and achieve financial sustainability. (15) Recognizing that the United States Agency for International Development has developed very effective partnerships with nongovernmental organizations, and that the Agency will have fewer missions overseas to carry out its work, the Agency should place priority on investing in those nongovernmental network institutions that meet performance criteria through the central funding mechanisms of the Agency. (16) By expanding and replicating successful microfinance institutions, it should be possible to create a global infrastructure to provide financial services to the world’s poorest families. (17)(A) The United States can provide leadership to other bilateral and multilateral development agencies as such agencies expand their support to the microenterprise sector. (B) The United States should seek to improve coordination among G-7 countries in the support of the microenterprise sector in order to leverage the investment of the United States with that of other donor nations. (18) Through increased support for microenterprise, especially credit for the poorest, the United States can continue to play a leadership role in the global effort to expand financial services and opportunity to 100,000,000 of the poorest families on the planet.