IIB
115th CONGRESS
2d Session
H. R. 5480
IN THE SENATE OF THE UNITED STATES
July 18, 2018
Received; read twice and referred to the Committee on Foreign Relations
AN ACT
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.
Short title
This Act may be cited as the Women’s Entrepreneurship and Economic Empowerment Act of 2018
.
Findings
Congress finds the following:
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.
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.
Lack of access to financial services that address gender-specific constraints impedes women’s economic inclusion. More than 1 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.
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.
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.
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.
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.
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.
Actions to improve gender policies of the United States Agency for International Development
Development cooperation policy
It shall be 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;
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;
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
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.
Actions
In order to advance the policy described in subsection (a), the Administrator of the United States Agency for International Development shall ensure that—
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
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.
Gender analysis defined
In this section, the term gender analysis—
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—
differences in the status of women and men and their differential access to and control over assets, resources, opportunities, and services;
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;
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
potential differential impacts of development policies and programs on men and women, including unintended or negative consequences; and
includes conclusions and recommendations to enable development policies and programs to narrow gender gaps and improve the lives of women and girls.
Development assistance for micro, small and medium-sized enterprises
Findings and policy
Section 251 of the Foreign Assistance Act of 1961 (22 U.S.C. 2211) is amended—
in paragraph (1)—
by striking microenterprise
and inserting micro, small and medium-sized enterprise
;
by striking and in the development
and inserting , in the development
; and
by adding at the end before the period the following: , and in the economic empowerment of the poor, especially women
;
in paragraph (2)—
by striking microenterprise
and inserting micro, small and medium-sized enterprise
; and
by adding at the end before the period the following: , particularly those enterprises owned, managed, and controlled by women
;
in paragraph (3), by striking microenterprises
and inserting micro, small and medium-sized enterprises
;
in paragraph (4), by striking microenterprise
and inserting micro, small and medium-sized enterprise
;
in paragraph (5)—
by striking should continue
and inserting should continue and be expanded
; and
by striking microenterprise and microfinance development assistance
and inserting development assistance for micro, small and medium-sized enterprises
; and
in paragraph (6)—
by striking have been successful
and inserting have had some success
;
by striking microenterprise programs
and inserting development assistance for micro, small and medium-sized enterprises
; and
by striking , such as countries in Latin America
.
Authorization; implementation; targeted assistance
Section 252 of the Foreign Assistance Act of 1961 (22 U.S.C. 2211a) is amended as follows:
In subsection (a)—
in the matter preceding paragraph (1)—
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
by striking microfinance and microenterprise clients
and inserting micro, small and medium-sized enterprise clients
;
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
;
in paragraph (2)—
by striking microenterprises
and inserting micro, small and medium-sized enterprises
; and
by inserting acquire United States goods and services,
after United States markets,
;
in paragraph (3)—
by striking microfinance and microenterprise institutions
and inserting financial intermediaries
;
by striking microfinance and microenterprise clients
and inserting micro, small and medium-sized enterprises
; and
by striking and
at the end;
in paragraph (4)—
by striking microfinance and microenterprise clients and institutions
and inserting micro, small and medium-sized enterprises, financial intermediaries, and capital markets
; and
by striking the poor and very poor.
and inserting the poor and very poor, especially women;
; and
by adding at the end the following:
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
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.
.
In subsection (b)—
in paragraph (1) to read as follows:
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.
;
in paragraph (2)—
in subparagraph (B)—
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
;
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
by striking clause (ii);
in subparagraph (C)—
by inserting , particularly by protecting the use and funding of local organizations in countries in which the Agency invests,
after and sustainability
; and
by inserting , especially women
after the poor and very poor
; and
by striking paragraph (3).
In subsection (c)—
by striking all microenterprise resources
and inserting all micro, small and medium-sized enterprise resources
; and
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.
.
Monitoring system
Section 253(b) of the Foreign Assistance Act of 1961 (22 U.S.C. 2211b(b)) is amended—
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
;
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
by striking paragraph (4).
Poverty measurement methods
Section 254 of the Foreign Assistance Act of 1961 (22 U.S.C. 2211c) is amended to read as follows:
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.
.
Additional authorities
Section 255 of the Foreign Assistance Act of 1961 (22 U.S.C. 2211d) is amended—
by striking assistance for microenterprise development assistance
and inserting development assistance for micro, small and medium-sized enterprises
; and
by striking and, to the extent applicable
and all that follows and inserting a period.
Microenterprise development credits
Section 256 of the Foreign Assistance Act of 1961 (22 U.S.C. 2212) is amended—
in the section heading, by striking microenterprise development credits
and inserting development credits for micro, small and medium-sized enterprises
;
in subsection (a)—
in paragraph (1), by striking micro- and small enterprises
and inserting micro, small and medium-sized enterprises
; and
in paragraph (2), by striking microenterprises
and inserting micro, small and medium-sized enterprises
;
in subsection (b), in the matter preceding paragraph (1), by inserting and other financial services
after credit
;
by striking microenterprise households
each place it appears and inserting micro, small and medium-sized enterprises and households
; and
by striking microfinance institutions
each place it appears and inserting financial intermediaries
.
United States Microfinance Loan Facility
Section 257 of the Foreign Assistance Act of 1961 (22 U.S.C. 2213) is amended—
in subsection (a), by striking United States-supported microfinance institutions
and inserting United States-supported financial intermediaries
; and
in subsection (b)—
by striking United States-supported microfinance institutions
each place it appears and inserting United States-supported financial intermediaries
; and
in paragraph (2), by striking microfinance institutions
and inserting “financial intermediaries”.
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:
Contents
To the extent practicable, the report should contain the following:
Information about assistance provided under section 252, including—
the amount of each grant or other form of assistance;
the name and type of each intermediary and implementing partner organization receiving assistance;
the name of each country receiving assistance; and
the methodology used to ensure compliance with the targeted assistance requirements in subsection (c) of such section.
The percentage of assistance provided under section 252 disaggregated by income level, including for the very poor, and gender.
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.
The results of the monitoring system required under section 253.
Information about any method in place to assess poverty levels under section 254.
.
Definitions
Section 259 of the Foreign Assistance Act of 1961 (22 U.S.C. 2214a) is amended—
in paragraph (3), by striking Committee on International Relations
and inserting Committee on Foreign Affairs
;
in paragraph (4), by striking microenterprises
and inserting micro, small and medium-sized enterprises
;
in paragraph (6)—
in subparagraph (E), by striking microenterprise institution
and inserting micro, small and medium-sized enterprise institution
; and
in subparagraph (F), by striking microfinance institution
and inserting financial intermediary
;
in paragraph (7) to read as follows:
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.
;
in paragraph (8) to read as follows:
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.
;
by striking paragraph (9);
by redesignating paragraphs (10) through (14) as paragraphs (9) through (13), respectively;
in paragraph (9) (as redesignated), by striking of microenterprise development
;
in paragraph (10) to read as follows:
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.
;
in paragraph (12) (as redesignated)—
in the heading, by striking united states-supported microfinance institution
and inserting united states-supported financial intermediary
; and
by striking United States-supported microfinance institution
and inserting United States-supported financial intermediary
;
in subparagraph (B) of paragraph (13) (as redesignated) to read as follows:
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
).
.
Technical and conforming amendment
Title VI of chapter 2 of part I of the Foreign Assistance Act of 1961 is amended in the title heading by striking MICROENTERPRISE DEVELOPMENT ASSISTANCE
and inserting DEVELOPMENT ASSISTANCE FOR MICRO, SMALL AND MEDIUM–SIZED ENTERPRISES
.
Report and briefing by United States Agency for International Development
In general
Not later than 1 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.
Public availability
The report required under paragraph (1) shall be posted and made available on a text-based, searchable, and publicly-available internet website.
Report by Comptroller General of the United States
In general
Not later than 2 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.
Matters To be included
The report required under subsection (a) shall include an assessment of the following:
What is known about the impact of such development assistance on the economies of developing countries.
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.
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.
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.
Passed the House of Representatives July 17, 2018.
Karen L. Haas,
Clerk