Is It Time For Us To Introduce Conditional Cash Transfers?

The nation waits with bated breath for the budget to be unveiled by the Minister of Finance, Tengku Zafrul this Friday. It would be a budget of hope, recovery, and resuscitation of the economy that was once humming briskly.

The pandemic that besieged us and the world had backpaddled many of the initiatives made before and the last couple of weeks has seen many making suggestions as to how to stir the economy out of the doldrums.

While the various suggestions were made purely from their respective vantage point, it’s incumbent for the Minister to stir the economy as a whole and ensure that the expenditure from the government would have the greatest multiplier effect on the whole economy.

In this respect, it is perhaps time to consider “conditional cash transfers” to the people or to give money to the segment of the population in return for fulfilling certain behavioural conditions. These conditions include children’s school attendance, tuition for children, purchase of nutritional food for their well-being, or regular health check-ups.

All of the above would render direct assistance to the poor with the hope of allowing them, in the long run, to free themselves from the shackles of poverty and move up their social mobility. 

It would have a positive impact on the recipient’s health education and well-being. It combats poverty and builds human capital in the long run and prevents the transmission of poverty from one generation to the other. 

There is evidence of success in countries that have implemented it. It started in the late 1990s in Latin America including Mexico, Brazil Honduras, and Ecuador. There is evidence that suggests that it had assisted in the long run in reducing poverty as it had raised school attendance and health service utilisation.

It was proven to be an effective way for breaking poverty as education and healthcare can catapult one’s efficiency and ability and add to the pool of human talent, critical to economic growth in the future.

In the past, Malaysia did introduce BRIM payments which did have an immediate impact on the increase in household disposable income of B40 which translated into the higher purchase of essential items such as food and housing.

However, it is time for a targeted approach to be taken as it not only would meet the conditions of unconditional cash transfers (BRIM Payments) such as bolstering consumption and shoring up the economy but also ensuring long-term human capital needs and reducing poverty.

While the benefits of this would be immense, designing such a system would be considerably difficult. Many factors need to be considered such as the design and enforcement of the conditions and the efficiency and targeting and transparency of its administration.

For example, if a transfer of payments be given to B40 households on the condition that students attend tuition, then the tuition centres must be registered to receive payments and ensure that the student attends his classes and shows progress in his studies.

While stirring the people to fulfil the various incentives, it is also important that supply conditions are met such as ensuring as well there are sufficient tuition centres in both the rural and urban areas to ensure the demand is met.

Government must also see the supply-side interventions to deal with problems such as low quality, staff shortage, or lack of supplies to make the programme more successful.

While stirring the people to fulfil the various incentives, it is also important that supply conditions are met such as ensuring as well there are sufficient tuition centres in both the rural and urban areas to ensure the demand is met.

Government must also see the supply-side interventions to deal with problems such as low quality, staff shortage, or lack of supplies to make the programme more successful.

While the government had been successful in doling out the various assistance to the vulnerable groups in the past, the desired effects of that can be hastened through conditional cash transfers. This would not only reduce poverty but will also be an avenue for them in invest in human capacity by sending their children to tuition classes to shore their academic performance or take supplements that would bolster their productivity at work.

While CCT can bolster the demand and stimulate the economy very much like unconditional cash transfers (BRIM payments), it would also bring about desired effects of long-term human capital development and a healthier workforce.

It is hoped that it would not be late to consider the above proposal in Budget 2022, but it is certainly “food for thought” for policy-makers for the future.

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