Beyond blueprint failure: vernacular finance as hybrid governance in fragile states

Purpose This study aims to examine the collapse of external financial institutions in fragile states and propose a framework for understanding community financial systems that endure. Design/methodology/approach Using concept development methods, it synthesises hybrid governance theory, economic anthropology and critical development studies to construct “vernacular finance” – socially embedded systems enacting ethical principles through practice. Five propositions are advanced and illustrated through triangulated analysis of academic, grey and civil society sources on Sudan’s 2023 crisis. Findings The analysis suggests Rotating Savings and Credit Associations bundled with community governance structures can crystallise into visible hybrid sovereignty, not merely survival mechanisms. These bundles practise vernacular Islamic finance through risk sharing and mutual aid, contrasting with donor-dependent institutions optimised for external legibility. Propositions specify the conditions, mechanisms and boundaries of this process. Research limitations/implications As a conceptual piece, this study advances testable propositions rather than empirical findings. Future ethnographic and comparative research is needed to validate the framework across diverse fragile settings. Practical implications The framework suggests shifting from template-driven reconstruction towards diagnostic mapping of existing community financial governance. Politically attuned pathways include tiered regulatory recognition and community-governed grant modalities with safeguards. Social implications Centring vernacular finance challenges development hierarchies that privilege external expertise over community capacity, suggesting that sustainable peace may depend on the sovereignties communities construct when states withdraw. Originality/value This study introduces “vernacular finance” as a bridging concept between the critique of blueprint failure and positive engagement with community systems, offering a framework for identifying legitimate governance partners in fragile contexts.