The Interplay of Perceived Social Capital, Financial Inclusion, Financial Literacy, and Micro Takaful in Sudan’s Post-Conflict Economic Rehabilitation

The Interplay of Perceived Social Capital, Financial Inclusion, Financial Literacy, and Micro Takaful in Sudan’s Post-Conflict Economic Rehabilitation

Afaf Eltahir Mohamed Haroun*, Mohd Effandi Bin Yusoff

Faculty of Management, Universiti Teknologi Malaysia, Johor Bahru, Johor, Malaysia

*Correspondence Author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.9010145

Received: 05 January 2025; Accepted: 09 January 2025; Published: 07 February 2025

ABSTRACT

Purpose: This study investigates the perceived interplay of social capital, financial inclusion, financial literacy, and micro takaful in fostering post-conflict economic rehabilitation in Sudan. Methodology: A quantitative research design employing a survey questionnaire was utilized to collect data from a purposive sample of 98 respondents. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to analyze the data. Findings: Micro takaful and social capital exhibited statistically significant positive effects on post-conflict economic rehabilitation, with medium effect sizes. Financial inclusion showed a positive but smaller effect, while financial literacy had no significant impact. The model demonstrated substantial explanatory power (R² = 0.490) and strong predictive validity. Importance-Performance Map Analysis (IPMA) highlighted micro takaful and social capital as key drivers of rehabilitation. Practical Implications: Policymakers should prioritize interventions strengthening micro takaful and social capital. Efforts to enhance financial inclusion should address contextual challenges limiting its effectiveness. The study’s predictive model can guide resource allocation for post-conflict recovery programs. Originality: The study provides an indepth understanding of the interplay between social capital, financial inclusion, financial literacy, and micro takaful in a post-conflict setting, offering suggestions for promoting economic rehabilitation in Sudan and potentially other similar contexts.

Keywords: Post-Conflict Rehabilitation, Micro Takaful, Financial Inclusion, Social Capital, Financial Literacy.

INTRODUCTION

Sudan has experienced protracted periods of conflict, most recently erupting into intense violence in April 2023. This renewed conflict exacerbates existing vulnerabilities stemming from decades of political instability, economic mismanagement, and recurrent humanitarian crises (UNHCR, 2023). The devastating impact of conflict disrupts economic activities, destroys infrastructure, displaces populations, and undermines social cohesion, creating significant barriers to economic rehabilitation and sustainable development (World Bank, 2022). Rebuilding livelihoods, fostering economic inclusion, and promoting sustainable peace in such a fragile context requires a multifaceted approach that addresses both immediate needs and long-term development goals. This study investigates the potential role of social capital, financial inclusion, financial literacy, and micro takaful – a faith-compatible form of microinsurance – in facilitating post-conflict economic rehabilitation in Sudan (Haroun & Yusoff, 2024), particularly among marginalized communities.

The importance of social capital in post-conflict recovery has been widely acknowledged (Collier, 2000). Social networks, trust, and reciprocity can facilitate collective action, resource mobilization, and the rebuilding of social institutions crucial for economic recovery (Putnam, 2000). In Sudan, where traditional social structures and community ties remain influential, understanding how social capital can be leveraged for economic rehabilitation is of paramount importance. Similarly, access to formal financial services (financial inclusion) is crucial for enabling individuals and businesses to participate in economic activities, rebuild assets, and manage risks (Beck et al., 2007). Financial inclusion can empower marginalised groups, promote entrepreneurship, and stimulate economic growth in post-conflict settings (Claessens & Perotti, 2007; Trokic, 2017).

Furthermore, financial literacy plays a vital role in enabling individuals to make informed financial decisions, manage their finances effectively, and utilize financial services optimally (Huston, 2010). In a context where access to financial services may be expanding, equipping individuals with the necessary knowledge and skills to navigate the financial landscape is critical for achieving meaningful economic empowerment. Finally, Micro Takaful, a form of Islamic microinsurance, can provide a crucial safety net for vulnerable populations by mitigating the impact of shocks and facilitating risk management (Billah, 2012). By offering affordable and accessible insurance products, Micro Takaful can protect livelihoods, encourage investment, and contribute to financial stability, particularly among marginalized communities in post-conflict settings.

Despite the potential contributions of these factors to post-conflict economic rehabilitation, there remains a limited understanding of their interplay in the Sudanese context, especially in the face of ongoing conflict. This study addresses this gap by exploring the following research questions: (1) Can social capital contribute to post-conflict rehabilitation in Sudan? (2) Can financial inclusion contribute to post-conflict rehabilitation in Sudan? (3) Can financial literacy contribute to post-conflict rehabilitation in Sudan? (4) Can micro takaful contribute to post-conflict rehabilitation in Sudan? Answers to these questions may provide actionable insights into how the study factors can be effectively leveraged to promote sustainable economic recovery and build resilience among marginalized communities in Sudan’s challenging post-conflict environment.

Theoretical Framework and Hypotheses

This study adopts the Sustainable Livelihoods Framework (SLF) (Chambers & Conway, 1992) as its primary theoretical lens. The SLF provides a holistic understanding of how individuals and communities in vulnerable contexts, such as post-conflict settings, strive to achieve their livelihood goals. It emphasizes the interplay of five key capital assets: human capital (skills, knowledge, health), social capital (networks, trust, reciprocity), natural capital (environmental resources), physical capital (infrastructure, technology), and financial capital (savings, credit, insurance). This research focuses on social and financial capital, recognizing their crucial role in post-conflict economic rehabilitation. Financial literacy is considered a component of human capital, enhancing the ability to utilize financial services effectively, while Micro Takaful contributes to financial security, thereby influencing financial capital.

Social capital, encompassing trust, social networks, and shared norms, can be a powerful driver of post-conflict recovery. In Sudan, where traditional social structures and community support systems often play a significant role in livelihoods, social capital can facilitate access to resources, information, and opportunities (Woolcock & Narayan, 2000). It can also foster collective action, promote resilience, and support the re-establishment of social order, all of which are crucial for economic rehabilitation (Collier, 2000). Financial inclusion, broadly defined as access to and usage of formal financial services, is essential for economic recovery. It enables individuals and businesses to save, invest, manage risks, and participate in market activities, thereby contributing to economic growth and poverty reduction (Beck et al., 2007).

Financial literacy empowers individuals to make informed financial decisions and effectively utilize available financial services. By enhancing financial knowledge and skills, individuals can better manage their finances, access credit responsibly, and build financial resilience, particularly in the face of post-conflict vulnerabilities (Huston, 2010). Finally, Micro Takaful, as a faith-based microinsurance mechanism, can play a significant role in protecting vulnerable populations from shocks and promoting financial stability in post-conflict settings (Billah, 2012). It provides a safety net that mitigates the impact of unexpected events, such as illness or loss of assets, thereby safeguarding livelihoods and facilitating economic recovery.

In view of the foregoing discourse, this study proposes the following hypotheses:

H₁:  Social capital is positively associated with post-conflict economic rehabilitation among marginalized communities in Sudan.

H₂:  Access to and usage of financial services (financial inclusion) is positively associated with post-conflict economic rehabilitation among marginalized communities in Sudan.

H₃:  Financial literacy is positively associated with post-conflict economic rehabilitation among marginalized communities in Sudan.

H₄:  Micro takaful schemes positively contribute to post-conflict economic rehabilitation among marginalized communities in Sudan.

METHODOLOGY

This quantitative study employed a survey design, using structured questionnaires to gather data on the perceived interplay of social capital, financial inclusion, financial literacy, and Micro Takaful in post-conflict economic rehabilitation in Sudan. Respondents’ perceptions and experiences related to these variables were captured using Likert-scale items, generating numerical data suitable for analysis within the PLS-SEM framework. This approach, consistent with descriptive research designs (Creswell & Creswell, 2018), facilitated standardized data collection across a substantial sample. Adhering to established survey design principles (Dillman et al., 2014), the instrument was meticulously constructed to ensure clarity, minimize respondent burden, and maximize response rates, enhancing data reliability and validity. To ensure methodological transparency, the complete questionnaire and data set will be made available upon request, allowing for replication and further analysis.

Respondents

The study employed a non-probability purposive sampling technique (Memon et al., 2025) to recruit a total of n = 98 respondents. The sample comprised two key groups: religious and community leaders (RCLs) (n = 32) and members of low-income communities (LICs) (n = 66). These groups were selected due to their relevance to the research topic, with RCLs often playing a key role in disseminating information and promoting financial practices within their communities, and LICs representing the target beneficiaries of microfinance and takaful initiatives. Data collection involved direct engagement at mosques and community centres for RCLs and door-to-door outreach and group sessions at community centres for LICs, facilitated by collaborations with local NGOs and community-based organizations. The structured questionnaire was administered in settings convenient for respondents, ensuring clarity and accessibility. All data collection activities were guided by ethical research principles, including obtaining informed consent and ensuring the confidentiality of participant data. This approach allowed for a targeted and contextually relevant sample, capturing the perspectives of individuals familiar with and potentially impacted by micro takaful and other financial inclusion initiatives in Sudan’s post-conflict context.

Measures

Financial Inclusion was measured using a 5-item Likert scale. The scale items were adapted and contextualized drawing upon the work of Beck et al. (2007) and Demirgüç-Kunt et al. (2018) to reflect the specific financial landscape in Sudan. Participants responded to each item on a five-point scale ranging from 1 = Strongly Disagree to 5 = Strongly Agree, indicating their level of access to and usage of formal financial services such as bank accounts, credit, and other financial products.

Financial Literacy was measured using a 7-item Likert scale. The scale drew upon items from Huston (2010) and Lusardi and Mitchell (2014), modified to reflect the specific financial context of Sudan. Participants responded to each item on a five-point scale ranging from 1 = Strongly Disagree to 5 = Strongly Agree, assessing their understanding of basic financial concepts, including saving, budgeting, borrowing, and risk management.

Micro Takaful was measured using a 10-item Likert scale. The scale items were adapted and refined from existing scales measuring insurance usage and perceptions (Churchill, 2006; Dror et al., 2006; Giesbert et al., 2011; Matul et al., 2010; Roth et al., 2007) and tailored to specifically address Micro Takaful within the Sudanese context. Participants responded to each item on a five-point scale ranging from 1 = Strongly Disagree to 5 = Strongly Agree, reflecting their level of participation in, understanding of, and perceived benefits of Micro Takaful products and services.

Social Capital was measured using an 8-item Likert scale. The scale items were adapted from the work of Putnam (2000) and Woolcock and Narayan (2000) and contextualized for the Sudanese post-conflict setting. Participants responded to each item on a five-point scale ranging from 1 = Strongly Disagree to 5 = Strongly Agree, indicating their level of trust, social connections, and participation in community networks.

Post-Conflict Economic Rehabilitation was measured using a 9-item Likert scale. The scale was developed by drawing upon indicators from the Sustainable Livelihoods Framework (Chambers & Conway, 1992) and relevant literature on post-conflict recovery (Collier, 2000; Stewart, 2008) and adapted to the Sudanese context. Participants responded to each item on a five-point scale ranging from 1 = Strongly Disagree to 5 = Strongly Agree, reflecting their perceived improvement in various aspects of their economic well-being, including income generation, asset ownership, access to resources, and market participation, following the conflict.

Pilot Study

Prior to the main study, the adapted scales measuring the five constructs were pilot tested using data collected from a sample of 31 respondents in Sudan to assess their internal consistency reliability. Cronbach’s α was used as the reliability metric. The 5-item financial inclusion scale demonstrated acceptable reliability (α = 0.85). The 7-item financial literacy scale exhibited good internal consistency (α = 0.92). The 10-item micro takaful scale showed high reliability (α = 0.89). The 8-item social capital scale also demonstrated good internal consistency (α = 0.86). The 9-item post-conflict economic rehabilitation scale exhibited acceptable reliability (α = 0.79). These alpha values suggest that the scales used in this study are internally consistent and reliable measures of their respective constructs, meeting the generally accepted threshold of 0.70 for adequate internal consistency (Nunnally & Bernstein, 1994).

RESULTS

Descriptives

The data in Table 1 reveal a predominantly male sample (M = 1.316) with an average age of 42.122 years (SD = 7.502). Means for post-conflict rehabilitation (M = 3.093, SD = 0.737), micro takaful (M = 3.080, SD = 0.845), financial literacy (M = 2.930, SD = 0.753), and social capital (M = 2.781, SD = 0.652) suggest moderately positive perceptions and experiences slightly below the midpoint of the 5-point Likert scales. Financial inclusion (M = 3.212, SD = 0.738) shows slightly more positive perceptions. The moderate standard deviations indicate sufficient variability for exploring relationships between constructs. Slight negative skewness and platykurtic distributions (except for categorical variables gender and class) characterize most variables. These findings suggest potential for improvement in social capital, financial literacy, and micro takaful utilization, highlighting the need for targeted interventions to enhance these factors and their contribution to post-conflict economic rehabilitation in Sudan.

Table 1. Descriptive Statistics

Correlations

Correlation analysis (Table 2) revealed significant positive associations between post-conflict rehabilitation and micro takaful (r = .55, p < .001), financial literacy (r = .45, p < .001), social capital (r = .58, p < .001), and financial inclusion (r = .52, p < .001). Furthermore, significant positive intercorrelations were observed between micro takaful, financial literacy (r = .39, p < .001), social capital (r = .53, p < .001), and financial inclusion (r = .52, p < .001); financial literacy and social capital (r = .53, p < .001) and financial inclusion (r = .37, p < .001); and social capital and financial inclusion (r = .52, p < .001). Demographic variables showed weak, non-significant correlations. These findings highlight the interconnectedness of the study variables in post-conflict recovery, suggesting that integrated interventions targeting these areas concurrently may yield synergistic benefits for sustainable economic rehabilitation in Sudan.

Table 2. Pearson’s Correlations

* p < .001

Measurement Model Analysis

Reliability

The reliability of the study’s measurement scales were assessed using Cronbach’s alpha (α) for internal consistency reliability, and Dijkstra-Henseler’s rho (ρD) for indicator reliability, and Jöreskog’s rho (ρJ) for composite reliability (Salisu, 2023). Acceptable values for α are generally considered to be 0.70 or higher (Nunnally & Bernstein, 1994), while values above 0.70 for both ρD and ρJ indicate good reliability (Hair et al, 2022). Table 3 shows that the financial inclusion scale (α = 0.787; ρD = 0.793; ρJ = 0.856), financial literacy scale (α = 0.836; ρD = 0.853; ρJ = 0.877), micro takaful scale (α = 0.910; ρD = 0.915; ρJ = 0.925), post-conflict rehabilitation scale (α = 0.875; ρD = 0.886; ρJ = 0.900), and social capital scale (α = 0.880; ρD = 0.882; ρJ = 0.905) all demonstrated acceptable to excellent internal consistency reliability, indicating that these scales are reliable instruments for measuring the study constructs.

Table 3. Reliability Indices

Validity

The measurement model demonstrated strong convergent and discriminant validity (Table 4). All constructs exhibited Average Variance Extracted (AVE) values exceeding the 0.50 threshold (Hair et al, 2022): financial inclusion (AVE = 0.547), financial literacy (AVE = 0.511), micro takaful (AVE = 0.556), post-conflict rehabilitation (AVE = 0.505), and social capital (AVE = 0.544), indicating that each construct explains more than half of the variance in its indicators (Salisu, 2023). Also, all Heterotrait-Monotrait Ratio of Correlations (HTMT) values were below the recommended 0.85 threshold (Kline, 2016), with the highest observed value being 0.651, confirming the distinctiveness of the constructs (Henseler et al., 2015). This evidence of both convergent and discriminant validity supports the adequacy of the measurement model for subsequent structural model analysis.

Table 4. Convergent (AVE)and Discriminant (HTMT) Validities

Model Fit

The model fit indices (Table 5) suggest mixed results regarding the model’s representation of the data. The SRMR = 0.095 indicates a good fit, falling below the recommended threshold of 0.08 (Hu & Bentler, 1999). However, the chi-square statistic (χ² = 1299.442) is large and statistically significant, typically indicating a poor fit. However, it is important to note that the chi-square statistic is sensitive to sample size (Hair et al., 2022). Notably, the d_ULS = 7.025 and d_G = 3.018―both indices are not affected by sample size―suggest a good fit, being significantly lower than the 95% quantile values associated with a well-fitting model in the bootstrap procedure. Finally, the Normed Fit Index (NFI) of 0.557 falls below the conventionally accepted threshold of 0.90 (Bentler & Bonett, 1980), suggesting a less than ideal fit. The conflicting results highlight the importance of considering multiple fit indices when evaluating model fit. While the SRMR and d_ULS/d_G suggest a good fit, the NFI and chi-square suggest otherwise. The adequate SRMR indicates a relatively small difference between the observed and predicted covariance matrices. However, the low NFI suggests that the model does not substantially improve fit compared to a null model.

Table 5. Model Fit Indices

Structural Model Analysis

Prior to interpreting the regression coefficients, the variance inflation factor (VIF) values were assessed to ensure the absence of multicollinearity. All VIF values were below the threshold of 5 (Hair et al., 2022), ranging from 1.536 to 1.947, indicating that multicollinearity is not a concern in this model (Table 6). Subsequently, the path coefficients were examined. Financial inclusion (β = 0.217, p = .013), micro takaful (β = 0.267, p = .018), and social capital (β = 0.260, p = .017) all had statistically significant positive effects on post-conflict economic rehabilitation. These results indicate that higher levels of financial inclusion, participation in micro takaful, and social capital are associated with greater perceived post-conflict economic rehabilitation. Financial literacy (β = 0.130, p = .124), however, did not have a statistically significant effect on post-conflict economic rehabilitation. In terms of effect size, as assessed by f², micro takaful (f² = 0.083) and social capital (f² = 0.068) exhibited medium effect sizes, while financial inclusion (f² = 0.061) showed a small effect size, according to Cohen’s (1988) guidelines (f² = 0.02, 0.15, and 0.35 for small, medium, and large effects respectively). The non-significant effect of financial literacy had a negligible f² value (0.023). These findings suggest that while financial literacy might play a role, financial inclusion, micro takaful, and social capital are more prominent drivers of perceived post-conflict economic rehabilitation in the studied context.

Table 6. Regression Coefficients

Model’s Relevance and Predictive Power

The study’s coefficient of determination (R² = 0.490) indicates that financial inclusion, financial literacy, micro takaful, and social capital, collectively explain 49% of the variance in post-conflict rehabilitation. This can be considered a substantial explanatory power, suggesting that the model captures a significant portion of the factors influencing perceived post-conflict economic recovery. The adjusted R² = 0.468 accounts for the number of predictors in the model and provides a more conservative estimate of the variance explained. While slightly lower than the R² value, the adjusted R² still suggests a substantial level of explanatory power. According to Cohen’s (1988) interpretation schema, the observed R² in this study indicates a large effect size, further emphasizing the substantial explanatory power of the model. This finding supports the overall validity of the model and highlights the combined influence of the predictors in shaping post-conflict economic rehabilitation in Sudan. This strong explanatory power reinforces the practical relevance of the study’s findings, suggesting that interventions targeting these factors can potentially contribute significantly to enhancing post-conflict economic rehabilitation in Sudan.

In assessing the out-of-sample predictive relevance of the model, Shmueli et al.’s (2019) PLS_predict was used. As the Q²_predict values for the PLS-SEM model are all greater than zero, ranging from 0.060 to 0.300 (Table 7), and the prediction errors demonstrate a symmetrical distribution (Figure 1), the Root Mean Squared Error (RMSE) was used as the primary criterion for evaluating predictive performance (Shmueli et al., 2019). The comparison of RMSE values between the PLS-SEM model and the Linear Model (LM) reveals that the PLS-SEM model outperforms the LM for all indicators of the post-conflict rehabilitation construct. This superior predictive performance is evident in the consistently lower RMSE values for the PLS-SEM model compared to the LM across all items. These findings provide strong support for the predictive validity of the PLS-SEM model, demonstrating its ability to accurately predict the indicators of post-conflict rehabilitation in a given out-of-sample population.

Table 7. PLSpredict Assessment

Figure 1. LV Prediction Errors

Figure 2. IPMA Chart

Importance–Performance Map Analysis (Ipma)

The IPMA chart visualized in Figure 2 revealed micro takaful and social capital as key drivers of post-conflict rehabilitation, exhibiting high importance (total effects of 0.267 and 0.260, respectively) and relatively high performance (latent variable scores of 51.485 and 46.387, respectively). Financial inclusion, while demonstrating substantial importance (total effect of 0.217), showed slightly lower performance (52.978), suggesting potential for enhancement. Conversely, financial literacy had lower importance (total effect of 0.130) and moderate performance (47.071), indicating a less crucial role. These findings highlight the need for prioritizing interventions targeting micro takaful and social capital, while also considering strategies to improve the performance of financial inclusion, given its substantial importance (Ringle & Sarstedt, 2016).

DISCUSSIONS

This study investigated the perceived interplay of social capital, financial inclusion, financial literacy, and micro takaful in Sudan’s post-conflict economic rehabilitation. Specifically, the observed positive relationship between financial inclusion (β = 0.217, p = .013) and post-conflict economic rehabilitation, albeit with a small effect size (f² = 0.061), aligns with existing literature highlighting the role of financial access in facilitating economic recovery by enabling credit access, saving, investment, and risk management (Beck et al., 2007; World Bank, 2018). Studies in other post-conflict settings have shown positive associations between financial inclusion and various dimensions of economic rehabilitation (Allen et al., 2016; Bruhn & Love, 2014). However, the small effect size suggests that financial inclusion’s impact in Sudan may be less pronounced than other factors, potentially due to contextual challenges related to infrastructure, institutional capacity, and limited reach of financial services, particularly in marginalized areas. This underscores the need for a nuanced understanding of contextual factors and the importance of complementary interventions, such as financial literacy and tailored financial products (Beck & Cull, 2014), to maximize the effectiveness of financial inclusion in promoting sustainable economic recovery.

Similarly, the positive effect of micro takaful (β = 0.267, p = .018) on post-conflict economic rehabilitation, with a medium effect size (f² = 0.083), supports the growing literature on microinsurance’s potential in promoting resilience and recovery in vulnerable contexts (Abdoulaye et al., 2022; Billah, 2012). Micro takaful helps in mitigating the financial impact of shocks, thereby enabling households to maintain livelihoods and invest in productive activities, aligning with studies demonstrating positive effects on well-being and asset accumulation (Carter et al., 2007; Dercon et al., 2007). The relatively larger effect size compared to financial inclusion suggests Micro Takaful’s particular relevance in Sudan, potentially due to its cultural and religious compatibility, community-based focus, and reach among marginalized populations (Mobarak & Rosenzweig, 2013). The emphasis on ethical principles and social solidarity within Takaful can further enhance social cohesion, contributing to post-conflict rehabilitation (Khan, 2015). However, further research is needed to explore the specific mechanisms and long-term effects of Micro Takaful in post-conflict settings.

Furthermore, the significant positive effect of social capital (β = 0.260, p = .017) on post-conflict economic rehabilitation, with a medium effect size (f² = 0.068), aligns with established literature emphasizing the role of social networks, trust, and reciprocity in fostering resilience and recovery in post-conflict settings (Collier, 2000; Putnam, 2000). Social capital can facilitate access to resources and support, enabling livelihood rebuilding and coping with post-conflict challenges (Adhikari et al., 2019; Grootaert & van Bastelaer, 2002), particularly in contexts like Sudan where traditional social structures remain influential. Social capital mitigates the negative impacts of conflict by promoting cooperation and access to informal safety nets (Woolcock, 2001). However, potential downsides, such as exclusion and reinforcement of inequalities (Portes & Landolt, 2000), necessitate thoughtful approaches to leveraging social capital for inclusive and equitable economic rehabilitation.

However, the non-significant effect of financial literacy (β = 0.130, p = .124) on post-conflict economic rehabilitation, with a negligible effect size (f² = 0.023), contrasts with some literature linking financial literacy to positive economic outcomes (Huston, 2010; Lusardi & Mitchell, 2014), but aligns with the inconclusive evidence in post-conflict settings (Becchetti & Conzo, 2017; Cole et al., 2013). This could be attributed to contextual barriers in post-conflict Sudan limiting the practical application of financial knowledge, complexities in measuring financial literacy (Fernandes et al., 2014), or the interplay with other factors like social capital and financial inclusion. Further research is needed to explore these relationships and identify conditions under which financial literacy interventions are most effective in promoting post-conflict economic rehabilitation.

Regarding the study model, the results supports its substantial explanatory power (R² = 0.490, adjusted R² = 0.468) for post-conflict rehabilitation. This aligns with research emphasizing the multifaceted nature of recovery processes, where financial dimensions interact with social, cultural, and individual factors (Bebbington et al., 2008). The finding that financial inclusion, financial literacy, micro takaful, and social capital collectively explain a significant portion of the variance in perceived recovery suggests that these factors play a crucial role in shaping economic well-being in post-conflict Sudan. This aligns with the broader literature on post-conflict recovery, which emphasizes the importance of integrated approaches addressing both economic and social dimensions (Snyder & Bhavnani, 2005). The large effect size (Cohen, 1988) further reinforces the practical significance of these findings.

The model’s strong out-of-sample predictive relevance, as evidenced by the positive Q²predict values (ranging from 0.060 to 0.300) and the superior performance of the PLS-SEM model compared to the linear model in terms of RMSE, highlights its robustness and generalizability (Shmueli et al., 2019). This suggests that the model can accurately predict post-conflict rehabilitation outcomes in similar contexts, enhancing its practical utility for policymakers and practitioners.

Furthermore, the IPMA results, showing the high importance and relatively high performance of micro takaful and social capital, highlight their critical roles in driving post-conflict rehabilitation (Ringle & Sarstedt, 2016). This aligns with literature emphasizing the importance of risk mitigation and social support networks in facilitating recovery in vulnerable communities (Aldrich, 2012). While financial inclusion also demonstrates substantial importance, its slightly lower performance suggests the need for targeted interventions to enhance its effectiveness. The lower importance and moderate performance of financial literacy in this context might indicate that its impact is contingent on other factors, such as access to financial services and the stability of the overall environment. These findings provide valuable insights for policymakers and practitioners, emphasizing the need for integrated interventions that prioritize micro takaful, strengthen social capital, and enhance the effectiveness of financial inclusion initiatives in promoting sustainable post-conflict economic rehabilitation in Sudan.

Implications of the Study

Theoretical Implications

This study makes several theoretical contributions. First, it extends the application of the SLF to the context of post-conflict economic rehabilitation, demonstrating the relevance of this framework in understanding the complex interplay of social and financial capital in promoting economic recovery (Chambers & Conway, 1992). Second, by examining the combined influence of financial inclusion, financial literacy, micro takaful, and social capital, the study provides a more fine-grained understanding of the factors driving post-conflict economic rehabilitation than previous research focusing on individual factors in isolation (Bebbington et al., 2008; Snyder & Bhavnani, 2005). This integrated perspective contributes to the theoretical discourse on post-conflict recovery by highlighting the interconnectedness of these factors and their combined effect on economic well-being.

Third, the study sheds light on the specific role of micro takaful in post-conflict economic rehabilitation, contributing to the limited literature on this topic. The findings suggest that micro takaful’s cultural and religious compatibility, combined with its community-based focus and reach among marginalized populations, enhances its relevance in the Sudanese context (Khan, 2015; Mobarak & Rosenzweig, 2013). This contributes to the theoretical understanding of micro takaful’s potential as a tool for promoting resilience and recovery in post-conflict settings.

Finally, the study’s findings regarding the non-significant effect of financial literacy challenge the conventional wisdom regarding its universal importance in promoting positive economic outcomes (Huston, 2010; Lusardi & Mitchell, 2014). Unravelling the role of contextual factors that may limit the effectiveness of financial literacy interventions in post-conflict environments (e.g., Sudan) represents a significant contribution towards a more in-depth understanding of the conditions under which financial literacy can truly empower individuals and communities to achieve economic well-being (Becchetti & Conzo, 2017; Cole et al., 2013; Fernandes et al., 2014).

Practical Implications

This study offers several practical contributions. First, the findings highlight the importance of micro takaful and social capital as key drivers of post-conflict economic rehabilitation in Sudan. This suggests that policymakers and development practitioners should prioritize interventions aimed at strengthening these factors. Specifically, promoting access to and participation in micro takaful schemes can provide a crucial safety net for vulnerable populations, mitigating the impact of economic shocks and fostering financial resilience (Abdoulaye et al., 2022; Billah, 2012; Carter et al., 2007; Dercon et al., 2007; Khan, 2015; Mobarak & Rosenzweig, 2013). Similarly, initiatives aimed at strengthening social networks, building trust, and fostering community participation can enhance social capital and contribute to more sustainable economic recovery (Adhikari et al., 2019; Collier, 2000; Grootaert & van Bastelaer, 2002; Portes & Landolt, 2000; Putnam, 2000; Woolcock, 2001).

Second, while financial inclusion is important for post-conflict economic rehabilitation, the study’s findings suggest that its impact in Sudan may be constrained by contextual challenges. Therefore, policymakers need to address these challenges, such as limited infrastructure and institutional capacity, to enhance the effectiveness of financial inclusion initiatives (Allen et al., 2016; Beck et al., 2007; Beck & Cull, 2014; Bruhn & Love, 2014; World Bank, 2018). This might involve investing in financial infrastructure, strengthening regulatory frameworks, and promoting financial literacy to empower individuals to make informed financial decisions.

Third, the study’s findings suggest that the effectiveness of financial literacy interventions in post-conflict settings like Sudan may be contingent on other factors, such as access to financial services and the overall stability of the environment (Becchetti & Conzo, 2017; Cole et al., 2013; Fernandes et al., 2014; Huston, 2010; Lusardi & Mitchell, 2014). This highlights the importance of adopting a holistic approach to post-conflict economic rehabilitation, where financial literacy programs are integrated with broader efforts to improve financial inclusion, strengthen social capital, and create a supportive environment for economic activity. Finally, the IPMA results emphasize the need to focus on strengthening both micro takaful and social capital while also addressing the specific challenges limiting the performance of financial inclusion (Aldrich, 2012; Ringle & Sarstedt, 2016).

CONCLUSION

This study reveals the potent influence of micro takaful and social capital in driving post-conflict economic rehabilitation in Sudan, highlighting the need for integrated interventions that prioritize community-based risk mitigation and strengthen social support networks. While financial inclusion holds promise, its impact is constrained by contextual challenges requiring targeted policy attention. The nuanced role of financial literacy suggests the importance of considering its interplay with other factors when designing interventions. The robust predictive model and IPMA results offer valuable tools for policymakers and practitioners to design and prioritize interventions. Future research should explore the long-term impacts of micro takaful, the dynamics of social capital in diverse communities, and the specific mechanisms through which financial inclusion can be enhanced in fragile contexts. Also, investigating the potential for integrating Islamic finance principles, exemplified by micro takaful’s success, into broader global recovery frameworks could offer valuable pathways towards building more resilient and inclusive post-conflict economies.

Conflict of Interest: The authors declare no conflict of interest.

Data Availability: The survey data are available from corresponding author upon reasonable request.

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