Skepticism Toward Formal Finance and Its Roots in Historical Institutional Betrayal: Why South Sudanese Farmers Prefer Informal Savings Groups

This article examines why rural farmers in South Sudan continue to prefer Community Group Saving and Lending (CGSL) mechanisms over formal financial institutions, even when formal finance is theoretically positioned as a driver of agricultural modernization. Using evidence from a mixed-methods doctoral study conducted in Eastern Equatoria, Jonglei and Lakes States between 2022 and 2025, the article reframes farmers' skepticism toward banks, microfinance institutions and credit cooperatives as a historically grounded response to institutional betrayal rather than as simple financial illiteracy. Quantitative data from 81 valid survey responses and qualitative evidence from 17 interviews were analysed through institutional theory, social capital theory, financial inclusion theory and behavioural finance theory. The findings show that 73% of respondents agreed or strongly agreed that skepticism in rural agricultural finance exists, while mean scores also indicated strong perceptions that formal institutions are reluctant to serve rural areas and that poor households lack meaningful access to the formal financial system. Statistical tests further showed a significant association between CGSL participation and agricultural productivity indicators (χ² = 15.92, p = 0.0001), and logistic regression indicated that access to CGSL credit significantly influenced investment in modern agricultural technologies (β = 1.9459, p = 0.026). The article argues that CGSLs are trusted because they convert social proximity, flexible rules and shared risk into locally legitimate financial governance. However, the same informality that makes them trusted also limits their ability to finance long-term agricultural transformation. The article concludes that rural financial inclusion in fragile states must be built through trust-repair, patient institutional linkage and protection of community autonomy rather than through simple formalization.