Kuala Lumpur: The iTEKAD initiative, launched by Bank Negara Malaysia (BNM) in May 2020, represents a pivotal step in social finance by amalgamating blended finance, including philanthropic funds such as zakat, with business development training to bolster low-income microentrepreneurs in Malaysia. With backing from BNM, a comprehensive review of the iTEKAD initiative’s implementation has been conducted, employing a mixed methods approach through surveys and interviews to gather insights from Participating Financial Institutions (PFIs) and Implementation Partners (IPs).

According to World Bank, the iTEKAD program has stayed true to its original design, underscoring a steadfast commitment to its established objectives. The collaboration between PFIs and IPs has been instrumental in enabling PFIs to reach a larger number of low-income microentrepreneurs, enhancing their capacity to assess and improve participants’ creditworthiness, thereby supporting their journey towards greater financial resilience. However, only a limited number of PFIs have developed frameworks to measure and track participants’ credit scoring progress.

This indicates potential areas for enhancement, particularly in refining the participant selection process to ensure greater effectiveness and long-term impact. By reviewing participant profiles and demographics, resources can be better targeted, and effective interventions can be crafted. An integrated screening framework incorporating socio-economic and non-credit data would facilitate a fairer and more informed selection process for low-income microentrepreneurs.

While the review sought to be comprehensive, it highlighted some limitations, suggesting the need for further research. Future studies could focus on a cost-benefit analysis of the program, an examination of microentrepreneurs’ repayment behaviors, and a longitudinal study on economic and financial impacts, especially concerning women and youth. Comparative analysis with other microfinance initiatives could offer valuable insights for more effective resource allocation, improved risk management, and enhanced program design.

Based on the review’s findings, the World Bank has proposed several key recommendations: developing a robust participant selection framework, establishing standardized training interventions with clear minimum standards, defining a standard methodology for monitoring and evaluation, facilitating knowledge sharing through annual roundtable discussions, and devising a long-term evaluation plan to assess the initiative’s effectiveness.

Policy makers and stakeholders are encouraged to consider these recommendations to enhance the implementation of iTEKAD. In applying these recommendations practically, stakeholders should carefully weigh the trade-offs between the costs and benefits.