Licensed SACCOS in Tanzania face persistent challenges in attaining their full financial performance potential. This study evaluated the financial efficiency of licensed SACCOS in the Arusha and Dar es Salaam regions, Tanzania. A panel research design was used and Data Envelopment Analysis (DEA) was used to calculate financial efficiency. A bootstrap confidence interval for the mean efficiency was used to test whether the average efficiency differed significantly from 1. Random-effects Generalized Least Squares (GLS) was used to determine the trend in financial efficiency over the study period. The Mann–Whitney U test examined differences in financial efficiency between category A and category B SACCOS. Findings indicate that the average financial efficiency of licensed SACCOS (FeCRS = 0.38, FeVRS = 0.47, SE = 0.85) diverges significantly from 1. The findings also indicate no significant improvement in the financial efficiency of licensed SACCOS over the study period. Further results indicate significant variations in FeCRS, FeVRS, and FeSE between licensed SACCOS. This study contributes to the growing body of knowledge on licensed SACCOS and offers useful insights for managers, regulators, and policymakers seeking to enhance their financial efficiency. The study recommends strengthening cost-control mechanisms, improving the allocation of mobilized financial resources, promoting income diversification, and implementing category-specific managerial improvement strategies to enhance the financial efficiency of licensed SACCOS.
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Keywords: Data Envelopment Analysis, Licensed SACCOS, category A SACCOS, category B SACCOS, financial efficiency
