USAID Takes Initiative
![[Atwood]](/graphics/atwood.jpg)
Briefly describe USAID's Microenterprise Initiative.
USAID's Microenterprise Initiative is an agency-wide initiative designed to integrate
microenterprise more fully into USAID's programming. It was developed in consultation with
key members of congress and with practitioners represented by the Microenterprise Coalition [a
policy group of microenterprise practitioners]. It involves commitments by USAID to certain
funding levels, such as annual targets for microenterprise funding; certain results, such as a
percentage of clients of USAID microenterprise programs who are women; and action within
USAID to strengthen our capability in the micro-enterprise field, such as staff training.
The primary themes of the Microcredit Summit include reaching the poorest; focusing on
women; developing sustainable institutions; and demonstrating a positive, measurable impact on
clients. How does USAID focus on these themes?
USAID's program is fully consistent with the goals of the Microcredit Summit. We believe very
strongly in creating sustainable institutions that serve the poor. That is the whole purpose of our
microenterprise program. We hope to do this in a number of ways: by supporting local NGOs,
credit union networks, and financial institutions such as BancoSol. Of course we also support
international NGOs that have local affiliates.
We want to keep building on our contributions so that more money every year is available to the
poor through sustainable organizations such as Grameen Bank and other organizations that have
proven sustainability is possible.
What measurements are used to ensure program success, especially in terms of the Summit's
themes?
Measuring results is a constant. We have set certain benchmarks as part of USAID's overall
results orientation. We also are investing in analyzing microenterprise best practice. We have
two programs, Microenterprise Best Practices and Assessing the Impact of Microenterprise
Services (AIMS) [see information in italics at the end of this article], that allow us not only to
look at our own programs, but also to be leaders in the microfinance field.
We have an agency evaluations unit that studies all USAID programs, which has looked at
microenterprise. We have an Inspector General to make sure that we are able to audit what we
do. We have others that oversee our work. In microenterprise we are particularly focused on
measuring whether the numbers of clients served increases steadily, and whether most of those
served are very poor, particularly very poor women. We measure the movement toward
sustainability of the institutions we support by looking for low loan loss rates and high levels of
cost recovery.
How much funding does USAID currently provide for microenterprise, and how much of
that funding is targeted toward fulfilling the Microcredit Summit's very specific goal?
In fiscal year 1996 we worked in about 40 countries around the world and obligated around 138
million dollars to microenterprise programs--in both dollar-denominated and local currency
equivalent funds.
. . . All the funds were spent on programs that provide financial and business development services to poor
microentrepreneurs. And, of course, most of the clients--two-thirds--were poor women.
Also, a very large number of our programs are in the village banking area. We know we're
reaching the extremely poor in these village banking programs. USAID is a major funder of
village banking, particularly of programs sponsored by U.S. NGOs. A recent practitioner study
identified 68 village banking programs supported by U.S. NGOs. We discovered that USAID is a
significant funder of 62 of those--or 90 percent.
How would an established microcredit institution apply for USAID funds?
A local organization should contact the USAID mission operating in its own country. In
almost all countries where USAID has a full-scale mission, it is active in microenterprise [see list
in italics at the end of this article]. In each country, USAID's approach differs, reflecting the
needs of the microenterprise sector in that particular country. That's why the first step is a
conversation with the local mission staff.
Experienced international organizations or U.S. NGOs should contact the Microenterprise
Development Office of our Global Bureau, which is our Agency's focal point for expertise on
microenterprise [phone: (1) 202-712-5538]. That office provides information on what is
happening with microfinance throughout USAID. It also offers a competitive grant program, the
Microenterprise Implementation Grant Program, aimed at organizations with a strong track
record in microenterprise. It focusses on increasing the outreach and sustainability of local
implementing organizations. Organizations can apply to that program in October and November
each year.
Is USAID's program suited for new or fledgling institutions?
Several of our programs were created to help new organizations get into this business. That's one
reason I think the number of organizations working with USAID has increased exponentially
since our Microenterprise Initiative began three years ago.
U.S. NGOs wishing to develop their capacity to do microenterprise work, including those
without prior microenterprise experience, should contact the Office of Private and Voluntary
Cooperation in the Bureau for Humanitarian Response. That office manages the Matching Grant
Program, which provides support for microenterprise and a range of other programs [see
information in italics at the end of this article]. Applications for that program also are accepted
near the end of each year.
What does USAID look for when evaluating whether a microcredit program is successful
and worthy of continued funding?
We've set standards for sustainability that are increasingly accepted internationally. We want to
make sure that organizations we support have credible plans for achieving full financial viability
within about five to seven years. We also are looking at the interest expressed by Congress to
make sure we focus on the poorest. We examine the numbers of loans of US$300 or less that are
provided. We're looking at the number of women in the programs. We'd like to see our programs
show an average of 15 percent annual growth. We'd like to see delinquency rates below 10
percent and default rates below 5 percent.
The international donor community pledged to cut the number of people living in extreme
poverty in half by 2015. What role does microcredit and the Microcredit Summit Campaign play
in that goal?
USAID led the donor community in moving to adopt the goal of cutting severe poverty in half
by the year 2015. These are people who live at under US$370 a year--or about a dollar a day.
These are the poorest of the poor. There are about 1.3 billion such people who live on the face of
this earth. You can imagine that they also show up in statistics on other problems, such as
malnutrition and disease. We are intent on leading the donor community to achieve that poverty
reduction goal. There is no better way to do that than to expand the number of microenterprise
programs. Of course, there are other ways to address that goal, but I can't think of a more
important one than the microenterprise program.
Is there anything else you'd like to add?
I would like to highlight USAID's initiative as a rather unique collaborative agreement with the
U.S. Congress and with all of our partners in the NGO community. Since 1994 we have been
working together and have made significant progress in USAID's microenterprise programming.
This is very much a collaborative effort and a real partnership. We also were pleased that the
keynote participant at our recent launching was the First Lady of the United States, Hillary
Rodham Clinton. She attended this meeting not simply as the First Lady, but as one of the
pioneers in microenterprise lending in our own country. She and then-Governor Clinton started
something many years ago called the Good Faith Fund in Arkansas. The Clinton Administration
has pushed microcredit lending programs not only internationally, but through several domestic
agencies. USAID works actively to strengthen the links between the domestic and international
microenterprise movements.
The Microenterprise Best Practices Project is an action research project that examines the
best practices in microenterprise today, and disseminates that learning to the microenterprise
community around the world. It also runs a small grant program supporting exchange visits,
innovative pilots, and investments in capacity building that benefit the microenterprise field as a
whole. For more information contact Development Alternatives Incorporated at (1)
301-718-8699 or visit the program's website at http://www.mip.org.
Assessing the Impact of Microenterprise Services (AIMS) is a research project examining the
impact of microfinance and related services on clients, their enterprises, and their households. It
is conducting three major impact analyses, at a high level of academic rigor, and, at the same
time, is developing tools, which are less rigerous and less costly, for measuring impact that
NGOs and other implementing organizations can use. For more information, contact
Management Systems International at (1) 202-484-7170.
The Matching Grant Program supports activities in the microenterprise sector that expand and
strengthen U.S. NGO field programs to increase their prospects for sustainability and results.
Programs supported must be consistent with USAID policies and priorities, and must assist
NGOs in enhancing their planning systems, management systems, and technical competancies to
carry out development programs. The Matching Grant Program requires a dolar-for-dollar match
from non-U.S. government resources. For further information, call (1) 703-741-0565.
USAID is active in microenterprise in these countries:
- Africa: Cape Verde, Eritrea, Ethiopia, Ghana, Guinea, Guinea Bissau, Kenya,
Madagascar, Mali, Mozambique, Namibia, Senegal, South Africa, Tanzania, Uganda, Zambia,
Zimbabwe
- Asia/Near East: Bangladesh, Cambodia, Egypt, India, Jordan, Lebanon, Morocco, Nepal,
Philippines, Sri Lanka, West Bank/Gaza
- Europe/Newly Independent States: Albania, Armenia, Azerbaijan, Bulgaria,
Croatia, Georgia, Kazakhstan, Kyrgyzstan, Romania, Russia
- Latin America and the Caribbean: Bolivia, Dominican Republic, Ecuador, El
Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Peru
|
