(JUBA, SOUTH SUDAN) – Of 26 licensed banks in South Sudan, only 14 were still operating when Dr Takoy carried out his doctoral research, raising the question of why banks facing the same war, currency crisis and poor infrastructure fared so differently.
Some expanded, some survived by restructuring, and others left. The answers hold lessons for regulators, investors and development partners across fragile economies.
When South Sudan gained independence in July 2011, banks were among the first businesses to arrive. Regional lenders, domestic investors and joint ventures opened branches in Juba and other towns, betting that oil revenue, public spending and a large aid community would drive demand for financial services.
The bet soured within three years. Conflict erupted in late 2013, and branches were looted or closed. In the years that followed, the South Sudanese pound collapsed, inflation surged, and foreign currency dried up.
The study looks beyond war as the only source of fragility. It treats fragility as a web of pressures: dependence on oil and humanitarian flows, weak institutions and regulation, thin infrastructure, low public trust in banks and rapid technological change.
Conflict may trigger a crisis, but these conditions determine how deeply it hits banks, and they outlast any single episode of fighting.
Dr Takoy, a seasoned banker, brings an insider’s understanding of how the sector works. For the study, 61 of the 73 senior and middle managers he approached responded, an 84% rate.
Drawing on theories of dynamic capabilities, contingency, resilience and institutions, he argues that the environment alone does not decide survival. What matters is an institution’s ability to read that environment and adapt.
Managers rated a long term strategic agenda, sustained despite uncertainty, as their banks’ strongest growth practice, at 4.47 out of 5. Partnerships and alliances scored lowest, pointing to an untapped opportunity.
Growth, the study finds, has come not from branch expansion and aggressive lending but from digital channels, a broader customer base, cautious credit and tight risk management. In a fragile state, staying open matters as much as winning customers.
Private sector credit stood at just 1.9% of Gross Domestic Product (GDP) in 2021, according to World Bank data cited in the study, and few adults hold bank accounts. Branches are costly and exposed. Mobile banking, agent networks and digital transfers let banks serve customers even when insecurity closes roads. Equity Bank South Sudan, for example, reported that about 98% of its transactions ran through self service channels.
Dr Takoy’s conclusion is that digitalisation belongs in business continuity planning, not the innovation budget.
Surviving banks closed unprofitable branches, cut staff and overheads, and redesigned operations as conditions shifted. Many found a niche in the humanitarian economy, handling payroll, cash transfers, foreign exchange and project accounts for aid agencies, and reaching refugees and displaced people through digital payments.
Dr Takoy is careful not to overclaim. Efficiency gains do not guarantee profits while inflation, currency swings and insecurity suppress demand. Realignment buys the capacity to survive and expand gradually, not certain success.
The study’s central contribution is a five stage framework. A fragile environment prompts a strategic response. Organisational realignment turns that response into capability. Capability builds resilience. Resilience supports sustainable growth. Regulation, supervision, payment infrastructure, governance, development partners and financial literacy underpin every stage.
Each group involved in the sector can draw its own lesson from it.
For governments and regulators, a smaller number of well capitalised, well supervised banks serves an economy better than many weak ones. The Bank of South Sudan’s payment system reforms, licence revocations and recapitalisation measures point the right way.
For investors, shocks are certain. The real test is whether a bank’s governance, capital, liquidity, technology and people can absorb them. Weak internal capabilities, the study argues, amplified shocks and contributed to the failure of some of the original 26 banks.
For bank executives, the lesson is to pursue expansion and resilience together. Growth without capital and risk discipline is merely exposure.
For development partners, aid flows already run through banks, yet deeper partnerships with them remain an underused lever for extending financial services.
Most research on organisational resilience comes from stable economies. Dr Takoy’s evidence comes from banks operating through real conflict in one of the world’s hardest business environments, which gives his findings practical weight.
His conclusion is one every banker in a fragile market would recognise. Resilience, he writes, “should not be understood as the absence of disruption” but as the capacity to absorb shocks, adjust operations, preserve critical services and find opportunities for growth.
