Foreign Assistance

Pursuant to a congressional request, GAO reviewed the Agency for International Development's (AID) microenterprise development program, focusing on whether: (1) AID implemented congressional guidance concerning microenterprise credit assistance; and (2) accurately reported to Congress on its program.

GAO found that: (1) prior to 1988 legislation, AID lacked a policy for structuring microenterprise activities and directing resources to support them; (2) in response to the legislation, AID issued and distributed a policy determination that incorporated congressional guidance regarding microenterprise to its overseas missions, but did not make it mandatory; (3) AID microenterprise guidance allowed mission officials considerable flexibility in adapting their program to specific country conditions; (4) AID missions in Guatemala, Senegal, and Honduras used the full range of available approaches in supporting microenterprises, including small credit associations and intermediary organizations; (5) the typical $300 loans missions provided to microenterprises were appropriate as start-up loans, but were inadequate to meet the needs of expanding microenterprises; (6) despite congressional recommendations, none of the three missions targeted their projects to the poorest 50 percent of the population or emphasized credit assistance to women or the poorest 20 percent of the population; (7) data in the March 1990 AID report to Congress were of questionable validity, since AID lacked a system to track detailed information concerning its microenterprise credit activities; (8) at the three missions, which represented approximately 27 percent of microenterprise loans for 1989, most of the specific data concerning loan size and the recipient's gender and economic status were based on estimates; and (9) AID was taking steps to establish an information system for better oversight of its microenterprise development program.