How can I set custom order use this function

You will need to add term meta to your categories. In this metafield you will store the string or number that you want to use as a base for your custom order (tutorial). Let’s say you have generated a meta field called my_cat_meta which holds integers that say in which order you want them to be displayed.

Now you can pass this metakey to wp_list_categories. This function ultimately relies on get_terms, which explains which arguments the function can take. You can limit the search to terms that have the metakey defined and order according to that metakey. This amounts to:

$args = array (
  'title_li' -> '',
  'meta_key' -> 'my_cat_meta',
  'orderby'-> 'meta_key');
wp_list_categories ($args);

A slightly hacky way would be to use the ‘description’ field that is a default field in WP categories. Many themes don’t display it, so you could use it to store metadata. In that case you could skip building your own metafield and use:

$args = array (
  'title_li' -> '',
  'orderby'-> 'description');
wp_list_categories ($args);