The Role of Social Enterprises in Urban Poverty Alleviation: The Malaysian Perspective

Introduction

Poverty eradication has always been at the forefront of the Malaysian national agenda, and the government has put substantial efforts into helping the poor. With the government as the main player in poverty alleviation initiatives (Nair & Sagaran, 2017), recent data from the Department of Statistics Malaysia (2020) shows that absolute and relative poverty has been successfully lowered over the years. However, the same data reports that there remain pockets of poverty, especially in urban areas (Nair & Sagaran, 2017). These pockets of urban poverty have grown deeper over the last decade (Leng et al., 2018). Data published by the Department of Statistics Malaysia (2020) indicates an increase in the urban-to-rural absolute poverty ratio in 2019, from an almost equal ratio in 2016 (see Figure 1). In 2019, there were 220,654 absolute poor families living well below the Poverty Line Index in modern cities, and 12.8% of households were considered relatively poor. In comparison, there were 182,280 absolute poor families in rural areas at the time. Moreover, homes in urban areas are reportedly overcrowded, with almost 10% having to share rooms with more than two people. Worse still, although public schooling in Malaysia is almost free, there are still Malaysians who have less than six years of education.

From the perspective of relative poverty, the number of poor families in urban areas has been higher than that of poor families in rural areas over the last decade (see Figure 2). Despite a drop from around 800,000 households in 2012 to 600,000 in 2016, the number rose to 743,258 in 2019. This rise is attributed to a larger urban population following rural to urban migration, rural urbanization, and realignment of local authority coverage into rural areas. Nonetheless, the trend supports the legitimacy of concerns about urban poverty in Malaysia.

Alarming as it is, scholars have suggested that strategies for urban poverty alleviation should consider different approaches given its complex and multidimensional nature (Leng et al., 2018; Nair & Sagaran, 2017). In this regard, the business model of the social enterprise has shown that it brings societal and economic advantages to companies and the beneficiaries, and when the beneficiaries are the poor, eradication of poverty may no longer be the sole responsibility of the government. Operating in the private sector, the social enterprise could be the new approach in tackling poverty (Lateh, 2018) and sharing societal responsibility (Defourny & Nyssens, 2017), as it integrates the government’s poverty eradication efforts with that of the civil society (McKague et al., 2015). However, there has been limited research on the contribution of Malaysian social enterprises to urban poverty alleviation. It has also been highlighted that while the concept of social entrepreneurship is not new, its role in poverty alleviation is still not well understood (Lateh, 2018).

Figure 1.

Number of urban and rural households in absolute poverty in 2016 and 2019

Source: Department of Statistics Malaysia (2020)

Figure 2.

Number of urban and rural households in relative poverty since 2009

Source: Department of Statistics Malaysia (2020)