World Bank Review Urges Reforms to Strengthen Malaysia’s iTEKAD Social Finance Model

A new World Bank-supported review of Malaysia’s iTEKAD initiative, launched by Bank Negara Malaysia (BNM) in May 2020, highlights the program’s achievements in promoting financial inclusion for low-income microentrepreneurs while identifying key areas for improvement to ensure long-term sustainability and impact.

The iTEKAD initiative—a pioneering social finance program—combines blended finance mechanisms, including philanthropic funds such as zakat, with entrepreneurship training and business support to help microentrepreneurs strengthen their financial resilience and improve livelihoods. The review provides an in-depth assessment of the initiative’s implementation and offers recommendations to enhance its effectiveness and scalability.

A Pioneering Model of Inclusive Finance

The iTEKAD program was conceived as part of Malaysia’s broader agenda to promote shared prosperity and support the B40 segment—the bottom 40% of income earners. By integrating social finance principles with conventional financial mechanisms, iTEKAD seeks to empower low-income entrepreneurs through access to financing, financial literacy, and capacity-building support.

Since its inception, the initiative has been implemented through Participating Financial Institutions (PFIs) in collaboration with Implementation Partners (IPs), such as training institutions, NGOs, and zakat agencies. This partnership model has enabled PFIs to reach underserved communities more effectively, strengthening the link between financial inclusion and social impact.

Key Findings: Promising Outcomes, Room for Growth

According to the World Bank’s review, the program has largely adhered to its original design and objectives, demonstrating a strong commitment to its founding vision. Collaboration between PFIs and IPs has expanded outreach to low-income entrepreneurs, helping participants improve their creditworthiness and financial management skills.

However, the review also notes several areas requiring improvement to maximize impact and ensure long-term program sustainability. While some PFIs have developed mechanisms to track participants’ progress, only a few have established comprehensive frameworks to measure credit scoring development—a crucial element for monitoring beneficiaries’ advancement toward financial independence.

The report also emphasizes the need for a more consistent approach to training delivery. The diversity of training interventions has enhanced learning opportunities but also led to inconsistencies in program quality and outcomes. Establishing a standardized training framework, supported by digital tools and partnerships with technology providers, could ensure equitable access and improved learning outcomes.

Strengthening Monitoring, Evaluation, and Knowledge Sharing

The review calls for the development of a comprehensive monitoring and evaluation (M&E) system to assess program performance, track participant progress, and identify areas for improvement. A well-structured M&E framework, the report argues, would enable continuous learning, data-driven decision-making, and stronger accountability.

Furthermore, the World Bank recommends the creation of a platform for knowledge exchange between PFIs and IPs. Such collaboration would promote shared learning, improve institutional capacity, and enhance overall program outcomes. Annual roundtable discussions could serve as a mechanism for reflection, innovation, and coordination among stakeholders.

Recommendations for Strengthening iTEKAD

Based on the review’s findings, the World Bank outlined several policy and operational recommendations for policymakers and program stakeholders:

1. Develop a robust participant selection framework: Establish a unified internal screening system that incorporates both credit and non-credit data to ensure fair and evidence-based selection of eligible microentrepreneurs.

2. Standardize training programs: Define minimum standards for training interventions to ensure consistency and quality across PFIs and regions.

3. Establish a clear M&E methodology: Introduce standardized indicators, targets, and data collection methods with an emphasis on transparency, data governance, and results measurement.

4. Encourage continuous learning: Facilitate annual roundtable discussions and documentation of lessons learned to strengthen collaboration and promote innovation.

5. Plan for long-term evaluation: Conduct longitudinal studies and cost-benefit analyses to measure the initiative’s economic and social impact—particularly among women, youth, and marginalized groups.

The Road Ahead: Scaling Impact and Building Resilience

While the iTEKAD initiative has made meaningful progress in supporting Malaysia’s financial inclusion agenda, the review suggests that enhancing monitoring systems, improving training consistency, and refining participant selection processes could further boost the program’s reach and effectiveness.

By strengthening data-driven evaluation and fostering collaboration between stakeholders, iTEKAD has the potential to serve as a regional model for Islamic social finance and inclusive entrepreneurship. The integration of philanthropic funds, financial institutions, and development partners demonstrates how innovative financing mechanisms can advance both economic empowerment and social equity.

As Malaysia continues its journey toward a more inclusive and resilient economy, the lessons from iTEKAD could inform future strategies for scaling sustainable microfinance solutions—bridging the gap between finance, social welfare, and human development.