Microenterprise Development: USAID's Program Has Met Some Goals; Annual Reporting Has Limitations

This report, by the General Accounting Office (GAO) on the United States Agency for International Development's (USAID's) operations, aims to:

• Determine the extent to which the agency's microfinance activities are meeting the program's objectives;
• Assess the reliability of USAID's reporting on its microfinance activities;
• Examine the agency's role in identifying and disseminating micro-enterprise best practices.

The report finds that:

• Microfinance can help alleviate some impacts of poverty, but there is little evidence that it can lift and keep many over the poverty line;
• It has helped the poor clustered around the poverty line, but not the very poor;
• It has successfully encouraged the participation of women;
• It has succeeded in emphasizing microfinance institution (MFI) sustainability;
• It has identified and disseminated micro-enterprise best practices;
• It has also collaborated with micro-enterprise development provider networks to publish information about these best practices.

The paper points out inaccuracies in the reporting of:

• The amount that USAID was obligated to reserve for microfinance activities;
• Allocation of 50% of its resources to the very poor;
• The sustainability of USAID-supported institutions.

The report recommends that the administrator of USAID review the agency's MRR system to ensure that:

• It measures the program's performance;
• All data is collected, analyzed and reported completely and accurately.