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

Has the USAID been able to meet its microfinance objectives and reporting requirements?
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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.