Efficiency and Profitability of Tanzanian Saving and Credit Cooperatives

This paper aims to evaluate and benchmark the performance of Savings and Credit Cooperatives (SACCOs) in Tanzania. It states that measuring the performance of these organizations helps them monitor their business processes, and improve productivity and profitability. The research is based on secondary data from audited financial statements from 103 SACCOs. The paper uses data envelopment analysis and return on assets approach to estimate efficiency and profitability, respectively. It also uses an efficiency-profitability matrix to distinguish best performers from struggling SACCOs. The paper covers the following sections in detail:

• Overview of SACCOs in Tanzania;
• Literature review with a focus on definition of profitability and performance evaluation;
• Methodology of the study with a focus on profitability estimation, efficiency estimation, and efficiency and profitability matrix construction;
• Results with a focus on discussion of profitability and efficiency results of all SACCOs, top 25%, and the best performing SACCOs;
• Recommendations for regulators, managers, and key stakeholders to improve the performance of SACCOs in Tanzania.