Legislation aimed at reforming a US foreign aid program that provides small business loans to people – mostly women in developing nations – today passed the House of Representatives and was expected to be fast-tracked through the Senate. 

    “The Microenterprise Result 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 are targeted directly those organizations best able to help them.

    “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 creates a microenterprise office within USAID to improve oversight and establish new methods of accountability including an annual report to Congress on specific funding decisions and information on grant recipients.

    The bill also requires a new monitoring system to ensure that performance goals are met and that grant monies go to the poorest of the poor.

    “Microcredit is a key vehicle to assist victims of trafficking and to raise the social and economic status of women around the world,” Smith said. 

    Over 2 million clients are currently benefiting from the Microcredit small business loans of a few hundred dollars or less. It is estimated that 97% of the Microcredit loans are repaid. The program compliments the principles President Bush has instituted for more effective foreign aid through the Millenium Challenge Account.