The iTEKAD initiative, launched by Bank Negara Malaysia (BNM) in May 2020, is a social finance initiative that combines blended finance, including philanthropic funds such as zakat, and business development training to support low-income microentrepreneurs in Malaysia. With support from BNM, this report provides a comprehensive review of the implementation of the iTEKAD initiative. The review employed a mixed methods approach, utilizing surveys and interviews to gather information on iTEKAD implementation from Participating Financial Institutions (PFIs) and Implementation Partners (IPs).
The iTEKAD program’s implementation has primarily adhered to its original design, demonstrating a commitment to established objectives. Collaboration between PFIs and IPs has helped PFIs reach more low-income microentrepreneurs, as well as improve capacity to evaluate and strengthen participants’ creditworthiness, thus supporting their move toward greater financial resilience. However, only a few PFIs have developed frameworks to measure and track participants’ credit scoring development.
Notwithstanding, this suggests room for improvement, particularly in refining the participant selection process to ensure greater effectiveness and long-term impact. Reviewing participant profiles and demographics helps target resources and design effective interventions. An integrated screening framework that includes socio-economic and non-credit data enables fairer, more informed selection of low-income microentrepreneurs.
Secondly, while the variety of training interventions promotes effective learning, it can also result in inconsistencies in program delivery. Hence, PFIs and IPs need to ensure consistent training for all participants by evaluating interventions and establishing a standardized program. Collaborating with technology providers can further enhance training access and delivery quality.
Additionally, further enhancements are needed to establish a more comprehensive monitoring and evaluation (M&E) framework that strengthens the assessment of program effectiveness. A well-structured M&E system enables continuous participant progress tracking, identifying gaps, and measuring long-term impact. It also facilitates a feedback loop for continuous improvement.
The review also highlighted the need for an appropriate platform to facilitate knowledge sharing between PFIs and IPs. This knowledge exchange would be mutually advantageous, promoting capacity building and enhancing outcomes for all parties involved.
While the review aimed to be comprehensive, some limitations suggest further research is needed. Key areas for future studies include a cost-benefit analysis of the program, an examination of microentrepreneurs’ repayment behaviors, as well as a longitudinal study on economic and financial impacts – particularly for women and youth. Comparative analysis with other microfinance initiatives could also provide valuable insights for more effective resource allocation, improved risk management, and enhanced program design.
Based on the findings of the review, the World Bank has shared some key recommendations:
? Develop a robust participant selection framework. Establish a comprehensive internal screening framework for microentrepreneurs that captures credit and non-credit data.
? Develop a standardized training intervention. Define and establish clear minimum standards for training interventions.
? Establish a standard methodology for M&E. Define and establish clear minimum standards for indicators and targets, measurement bases, data collection methods, M&E plan, and data governance.
? Facilitate knowledge sharing and documenting learnings. Conduct annual roundtable discussions with relevant stakeholders.
? Develop a long-term evaluation plan. Identify and plan for future research studies to evaluate the effectiveness of the initiative.
Policy makers and stakeholders can consider these recommendations for enhancing implementation of iTEKAD. In pursuing the practical application of these recommendations, stakeholders should consider the trade-offs between the costs and benefits.