Loss Aversion, Risk Perception and Agricultural Investment Reluctance among CGSL Members in South Sudan: A Behavioural Economics Analysis

This article examines why access to community group savings and lending mechanisms does not automatically translate into high agricultural investment among rural smallholders in South Sudan. It develops a behavioural economics interpretation of Community Group Saving and Lending (CGSL) participation by focusing on loss aversion, risk perception and investment reluctance. The argument is based on mixed-methods thesis evidence collected in Eastern Equatoria, Jonglei and Lakes State between 2022 and 2025, including 81 valid survey responses from a target of 85 respondents and qualitative interviews with community stakeholders. The empirical results show very strong agreement that working capital scarcity is a binding constraint, that modern agricultural technologies are capital intensive, and that rural finance remains surrounded by scepticism. Chi-square results indicate significant associations between CGSL participation and productivity-related outcomes, while logistic regression shows that access to credit significantly increases the likelihood of investing in modern agricultural technologies. The article argues that these results should be interpreted through prospect theory and behavioural finance: farmers do not only calculate expected returns; they also protect fragile household assets from losses that could threaten food security, social status and survival. CGSLs can reduce this behavioural barrier by converting individual risk into shared and socially monitored risk, but their impact remains limited where loan sizes are small, repayment cycles are short, insurance is absent and markets remain unstable. The article concludes that rural agricultural finance policy in South Sudan should combine CGSL strengthening with risk-sharing instruments, financial literacy, market access and patient capital for productive investment.