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| Volume 3, Issue 2: October 2005 | ||||
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In This Issue Workshop Session: Depth of Outreach: The New U.S. Law Requiring Cost-Effective Measurement Tools Workshop Session: Ownership and Governance in Microfinance Register now for the Global Microcredit Summit 2006 Archived Issues
Vol 3 Iss 2 October '05 E-News Information |
Workshop Session: Depth of Outreach: The New U.S. Law Requiring Cost-Effective Measurement ToolsRemarks by Joanne Carter
I want to give you a very brief sort of history on the specific law but more importantly a little bit of context about where that law came from. I'm legislative director of an advocacy organization that has activists in about ninety U.S. cities and has worked on microenterprise development for almost twenty years. We're quite probably the organization that was most involved in building support for this legislation. It's very important to understand that this was not a short term campaign and it was not something that was really driven by outside advocacy. It really came from almost twenty years of where the U.S. Congress has been on the issue of microenterprise development and the importance of focusing on the very poor. So there's really a bigger context for this. This law was passed in 2003. And it does the following things: It mandates that fifty percent of all microenterprise development assistance from the U.S. is targeted to the very poor. And it defines the very poor as those living on less than a dollar a day or those living in the bottom fifty percent below their country's poverty line. It also requires specifically that USAID in consultation with microenterprise practitioners and other appropriate institutions develop and certify at least two or more poverty measurement tools that should be low cost and easy to use….It also requires that once the tools have been certified organizations applying for USAID resources, with a few exceptions, as appropriate, will begin to use these tools and report what they come up with in terms of their client base. And then that USAID will produce a report on this on an annual basis. So it structures a goal in terms of reaching the very poor and then a set of tools, and then the use of those tools. This law was something that Congress has really been interested in for well over a decade. I've talked to probably a hundred Congressional offices in the United States and dozens of members of Congress and I think what's important to understand is that most of those people became interested in microenterprise and microfinance because they see the potential impact on the very poor. I think that there is an assumption that those programs are targeting and reaching very poor clients. When you talk to people and they begin to understand the process, are they interested in sustainability? Yes. Are they interested in creating formal financial institutions? Very much so. I would say that those are a means to an end. It's very much [the thing] that people are actually moved by…what they want to provide resources for and why, frankly, this program has a lot of support and has been driven by the Congress in the case of the United Sates. It is really because of the potential to provide benefits, economic benefits to very poor people. And I think it's just important to understand this because it explains where the law came from and also where the continued attention … of the U.S. is going to be. Just very quickly a little history. Even in the 1980s and 1990s the U.S. Congress was pushing for a focus on microenterprise development programs supporting the very poor. In 1994 Congress and USAID signed an agreement to help develop this and there was legislation passed in 2000 that at that point mandated that that money should go to very poor clients and should benefit programs serving very poor clients. But what happened [was], over the intervening years it became clear that loan size was not really an effective proxy to measure whether or not institutions were reaching very poor clients. It was found that loan size said more about the product that was being provided by the institution then about the clients that you were serving. And so I think that was when Congress began to get interested in the idea of what needs to be developed. And I would say what came from this legislation was a very clear mandate to say we do want to make sure that half these resources are benefiting very poor clients. We want a way to measure this and then we want to give the institutions, the practitioners, and the aid agency the mandate to figure out how to create measurement tools. So it opened up this space, the political space to then develop those tools. And ultimately that legislation was agreed to among practitioners, the congress and USAID. What I would say as a take-away message is that my sense with the U.S. Congress is that this will be maintained as a priority of the United States. I think they're very interested and the U.S. Congress holds the purse strings, so that's an important role that they play They're very interested in seeing how this is developing and we are, I think, pleased with the fact that USAID is working with practitioners to move this forward. And we will really want to see how this is being reported on and will continue to track the results on this. I think that there's a lot of potential with this legislation and with the work that USAID is doing to not just have this applied to the United States but actually to take this to other donors [with] all the work that's being done and what's being learned from this…. That's certainly our hope…it's not just U.S. members of Congress that care about this but also parliamentarians in other countries. Over seven hundred parliamentarians from the U.S., UK, Canada, Japan, Australia, India, and Mexico sent a letter to the President of the World Bank, the Head of the African Development Bank, and the other regional banks, and UNDP, calling on them to increase their investment in microfinance and microenterprise development, They also called on these agencies to begin to do the same things that the U.S. has laid out legislatively… I think there's a value in building on the work that's already being done… What I can see is not only this creating an impact certainly in the United States and U.S. programs, but I think it has the real potential to create an impact globally among donors and I think it's important for us to figure out both how to take that forward and what the implications that could have for the field…I think that's sort of the exciting piece for the future. |