Congressional Hearings on Microenterprise: MicroLinks- Microenterprise Learning Information and Knowledge Sharing (4.1.3 )

July 27, 2006 Hearing on the Microenterprise Results and Accountability Act
The congressional testimony presented by USAID/EGAT Assistant Administrator Jacqueline Schafer on USAID’s progress In implementing the Microenterprise Results and Accountability Act of 2004 is now available. To access the testimony, click here.

USAID Presents Testimony at September 20, 2005 Congressional Hearing

On September 20, 2005 the House International Relations Committee’s Subcommittee on Africa, Global Human Rights and International Operations held a hearing on microenterprise development and implementation of the new microenterprise law. To access the official transcript of the proceedings, click here.

James T. Smith, the Acting Assistant Administrator of USAID’s Bureau for Economic Growth, Agriculture and Trade (EGAT), represented the Agency, making brief remarks summarizing the detailed written testimony USAID submitted to the Subcommittee for the record and responding to questions. The second panel consisted of non-profit microfinance practitioners (representatives of FINCA International, Opportunity International and the World Council of Credit Unions) and an economics professor from New York University with extensive microfinance background.

Highlights of James Smith’s remarks include the following:

For the first time, USAID’s spending for microenterprise development will exceed $200 million in Fiscal Year 2005
Non-profit organizations continued to receive about half of all USAID funding in microenterprise development, following a pattern of the past five years. Non-profit organizations include PVOs, NGOs, credit unions and cooperative organizations. For-profits, governments, and other entities receive the other half of funding. Click here for a graphic on USAID funding.
USAID has substantially increased centrally-funded competitive programs particularly relevant to non-profit partners, including more than $12 million in new grant programs and the new $350 million Leader with Associates mechanism to permit enhanced USAID mission use of leading non-profit implementers (see below and written testimony for details).

Rather than commenting narrowly on funding patterns, programs or other aspects of implementing of the law, USAID saw the hearing as an opportunity to lay out the Agency’s global vision – promoting economic growth that reduces poverty by expanding opportunities for poor households and their enterprises – and how microenterprise development and microfinance programs contribute to achieving that vision. Toward this end, for many years USAID and its partners have pursued this vision through support for work around the world for three interrelated strategies – strengthening financial institutions and making financial sectors more pro-poor and inclusive, strengthening the enterprises and livelihoods of the poor majority, and promoting more enabling policy environments for microenterprises. Acting Assistant Administrator Smith described the importance of and synergies between these three strategies. He also addressed the key roles that both our non-profit and our for-profit partners play in agency activities as we seek to draw upon the diverse competencies of our very diverse implementing partners.

The webcast of the hearing is available here. The information contained in Acting AA Smith’s remarks, and in the written testimony he submitted to the Subcommittee, describe USAID’s strategy for microenterprise support. This information will be useful to our partners as you build further relationships with Missions and other USAID operating units. Please refer to the section in the testimony on “USAID’s Vision for Microenterprise Development” for more details.

The written testimony announces that USAID funding for microenterprise development will exceed $200 million for the first time in FY2005. The section of the testimony on “Expanding the Reach of Microenterprise Development” describes some of our work with very poor clients, as well as those who are affected by HIV/AIDS, trafficking, and the tsunami and other natural disasters.

Information on USAID’s implementation of the current microenterprise law can be found in the section of the testimony on “Progress in Implementing PL 108-484,” and information on how and why we work with our diverse types of partners – a key focus of the September 20 hearing – can be found in the section on “Choice of Implementing Partners,” and in the chart that depicts USAID’s microenterprise support.

The section of the testimony on implementation of the law also provides details on new programs funded by the MD office, including grant competitions and the comprehensive Leader with Associates (LWA) mechanism . In response to a question from the Subcommittee concerning support to PVO networks, Acting AA Smith’s testimony notes that the MD office will be releasing two RFAs (estimated value $10 million) for the Implementation Grant Program in the next month. These are focused on delivery of financial services and enterprise development, with a focus on serving very poor clients and communities. The Agency has designed the new microenterprise LWA mechanism – with funding for the Leader Award planned at $10 million over five years and a total ceiling of $350 million – to mobilize the expertise of the nonprofit community, as a means to achieve the policy goals reflected in the law.

Additional grant competitions, with funding of roughly $2 million, will support learning among microfinance and microenterprise practitioners, innovations in reaching underserved populations, and linking smallholder households into growing markets. (For information on the RFA issued by the MD office on September 19, click here.) This array of grant competitions is one of a number of steps USAID has taken to ensure that it has access to the best possible combination of partners with which to implement its microenterprise programs.

Posted below are several other documents USAID distributed at the hearing. These include the findings of the CGAP Donor Peer Review of USAID’s microfinance support, and a CGAP Donor Good Practice Case Study of FINNET, a USAID-supported microfinance project in Haiti. In addition to testifying before the House International Relations Committee’s Subcommittee on Africa, Global Human Rights and International Operations, on Oct 17, USAID briefed Senate Foreign Relations Committee staff on the Agency’s microenterprise development program. To view the powerpoint presentation from this briefing, click here.

Documents

USAID MED & Implementation of PLP 108-484 SFRC Slides.ppt Publication Date 10/2005

Acting Assistant Administrator Smith Testimony James Smith Written Testimony 9-20-05.doc Publication Date 09/2005

Official Congressional Transcript Hearing Transcript.pdf Publication Date 09/20/2005

Recipients of USAID Microenterprise Funding Recipients of USAID Funding Thru 2004.xls

Microenterprise Results and Accountability Act of 2004 PL108_484.pdf Publication Date 12/20/2004

Donor Effectiveness Positioning Map Donor Effectiveness Positioning Map.doc

CGAP Donor Peer Review Letter to USAID CGAP Donor Peer Review Letter USAID.doc

CGAP Award Press Release CGAP Award Press Release.doc

CGAP Donor Peer Review: Graphic Evaluation CGAP Donor Peer Review of USAID.doc Publication Date 11/2003

CGAP Case Study in Donor Good Practices FINNET CGAP donor case study.pdf Publication Date 04/2003