How to grant delegated user pemissions to managed-service-identity - azure-active-directory

Question

TL;DR
How can I delegate my user permissions to a service principal in Azure Ad when the usual interactive way (e.g. web app with consent screen popup) is not feasible? This is because I cannot configure the MSI in the Azure Portal properly to work that way.
More detail
I want to grant an application permission to access the Graph API on behalf of a user. Usually, this is a well-documented scenario in which you create an app registration, acquire delegated user permissions by asking permission for the needed scopes, and then use these permissions in the app.
The app that needs Graph access is a background service that is to work on its own without user intervention/activity. For this use case, the common approach is to use application permissions. In my case this is not feasible, because application permissions require admin-consent and are all-or-nothing kind of permissions. There is no way this will be granted for me. Rightfully so, because its overkill.
But on the other hand that's really a pity. A pity, because I've found an example on how to assign Graph API application permissions directly to a Managed Service Identity rather than to a self-registered app. And my service (as an Azure Functions app) already has a MSI assigned to it. So this would be the perfect fit, b then again, there is no way I'll get those application permissions.
So what is the workaround? We have this one user principal which has all the required permissions we need for our background service. What I want to do is to delegate this user's permissions to the Function App/MSI. In order to do this, I used this SPA-template by the MSAL team to have something that will prompt me the permissions popup.
This however failed because the implicit oauth flow was not enabled. To remedy this, you usually need to update the app manifest in the portal. However, since this is a MANAGED service identity, and not a self-registered one, the MSI is not listed in the portal under app registrations. So I cannot set this property to true.
Doing the same via Azure CLI also failed because apparently the MSI is not identified as an app.
az ad app update --oauth2-allow-implicit-flow true --id <appId_of_MSI>
This yields the following error:
ResourceNotFoundError: Resource '<appId_of_MSI>' does not exist or one of its queried reference-property objects are not present.
It shows fine when doing this
az ad sp show --id <appId_of_MSI>
So in summary: I cannot complete the process of delegating that user's permissions interactively. Is there any other way? Maybe via CLI?
The fallback the solution is to create a separate unmanaged/self-registered app identity. But I want to really avoid this because then I would need to manage and rotate client (app) credentials again, which the MSI took care of for me.
Why o why can't I just assign fine-scoped application permissions 😒
Any help on this is greatly appreciated. Cheers.

Answer 1

In my experience Managed Identities don't support the scenario you are suggesting.
They do not have an app registration and in that way cannot authenticate users interactively.
I would go with your fallback solution; a normal app registration and use that to access Graph API on behalf of the user.
This is what we do in our projects at least.
App permissions -> Managed Identity if possible. Delegated permissions -> normal app registration + secret/certificate in Key Vault, retrieved with Managed Identity.