Cash Transfers: International Insights and the Malaysian Experience

Cash transfers have been the most widely used policy response worldwide, taking up the largest proportion of social assistance spending. In times of crisis such as the COVID-19 pandemic, national social protection systems including cash transfers, play an important role. Broadly, cash transfers contribute to improving social protection and security, inducing development and economic growth, enhancing human capital development and social mobility, and promoting rights, equality, and fairness.

A review of international studies suggests a wide range of cash transfer outcomes, particularly on poverty, education, health, savings, investments, employment, and empowerment. Studies generally found positive findings in the immediate- to medium-term, indicating cash transfers as a transformative social protection instrument. However, negative outcomes have also been reported. In the longer term, findings on the impact of cash transfers have shown mixed results. Establishing a consensus on the long-term impact of cash transfers is challenging due to the complex and nuanced nature of the findings.

The cash transfer landscape in Malaysia consists of a variety of programmes undertaken by the public sector, the private sector, and the third sector (Civil Society Organisations, CSOs). This paper suggests the need for a clear definition of the roles of the public sector, the private sector, and the third sector (CSOs) to optimise collaborative efforts and encourage a wider coverage of social protection. The government should be responsible for providing the ‘social protection floor’ to society, complemented by the private sector and CSOs that can provide deeper and more specialised assistance. In addition, a thorough and periodic review of existing programmes, as well as the establishment of a National Social Protection Registry, is essential to ensure effective coordination and enhanced outcomes.

This paper also identifies several areas for improvement in the administration of cash transfers:

  • The programmes’ monitoring, evaluation, and reporting should focus on outcomes, which extend beyond expenditure and coverage figures. It should include an assessment of the wellbeing of recipients or at the very least, the tracking of basic outcome indicators such as income, consumption, education, and health. It is also important for programmes in Malaysia to be monitored and evaluated within the socio-cultural context.
  • In the case of poverty-targeted programmes, the eligibility assessment can be enhanced by considering demographic and geographic characteristics. Using a uniform national threshold may overlook the diverse living conditions experienced by households. Assessments should consider regional variations to better address the needs of prospective beneficiaries.
  • A programmes’ graduation or exit strategy should be sustainable where a comprehensive social protection strategy (e.g. skills training) must be in place to ensure beneficiaries are equipped with income-generating capabilities and are not left worse off upon exit of the programme

This edition of KRI and Hasanah Discussion Paper is published in collaboration with Yayasan Hasanah.