KUCHING: As cash handout programmes have become more prevalent in the fight against poverty, economists are debating whether they are truly effective.
While they agree that such programmes can provide temporary relief, there are concerns about long-term sustainability and dependency.
New Sarawak Tribune spoke with three economists to get their thoughts on whether cash handouts can truly eradicate poverty or if additional measures are needed to ensure long-term success.
According to Universiti Malaysia Sarawak (UNIMAS) economist Jerome Kueh, handout programmes alone may not have been able to eradicate poverty thoroughly.
“While it is a good initiative, it only serves as a temporary measure to reduce the burden of the people in the short run.
“Moreover, the concern about how the cash received is going to be utilised and the difficulty in monitoring its usage is a significant issue,” he stated.
Kueh acknowledged that financial management awareness at the household level was critical to ensuring that cash handouts were utilised for their intended purpose.
He further added that although the cash handouts may have been used for purchasing daily necessities, there was a possibility that they were not used for their intended goal in some cases, which could have been counterproductive.
In his opinion, skill development was crucial for equipping people with the necessary knowledge and abilities to become less reliant on cash handouts in the future.
“The development of skills and knowledge should encompass all the entrepreneurial elements in the value chain, including input, process, and output,” he stated.
Kueh explained that this was essential to ensure that society became more independent and self-sustaining. For instance, it would have allowed individuals to plant crops, harvest them, access processing and distribution facilities, and eventually sell their products in the market, leading to a reduced reliance on cash handouts.
He also warned of the potential risks of relying solely on cash handouts, highlighting that households may develop a tendency to depend on them in the future.
“Relying solely on cash handouts may have unintended consequences and could perpetuate the cycle of poverty,” he cautioned.
Kueh was not alone in his assessment of cash handouts. I-CATS University College economist Shazali Abu Mansor also weighed in, stating that “giving cash handouts should be temporary while recipients embark on generating extra income.”
Shazali, who is also its pro vice chancellor, however, acknowledged that there were certain situations where cash handouts were necessary, such as for the elderly or single mothers taking care of many children while stressing that the ultimate goal should be to help people become self-sufficient and independent.
Meanwhile, Centre for Market Education (CME) economist Carmelo Ferlito offered a different perspective, stating that the main issue with previous cash hand-out programmes was that they nurtured a dependence mentality and a passive attitude towards cash, making people more lazy.
Ferlito expressed optimism about the state government’s initiatives, noting that it represents a significant step forward by linking support to educational initiatives aimed at spurring entrepreneurship.
However, he also pointed out a significant risk associated with any new initiatives, stating that people may participate in the training programme solely for financial gain, rather than using the knowledge and funds to start their own businesses.
“The big risk here is that people will follow the training for the sake of the money, so that it still remains a bet how many will actually use money and training to start entrepreneurial activities,” he warned.
In a recent statement, Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg reiterated his stance that the best way to improve the livelihood of the people, especially those living in poverty, would be to eradicate poverty through education, rather than relying on cash handouts.
