Browsing by Author "Marwa, Nyankomo"

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    Efficiency and profitability analysis of agricultural cooperatives in Mpumalanga, South Africa
    (International Foundation for Research and Development, 2018) Xaba, Thembi; Marwa, Nyankomo; Mathur-Helm, Babita
    Agricultural cooperatives are expected to generate sustainable profit as they are established as a vehicle of economic development. Efficiency and profitability analysis measures the performance of a firm, and assists management in decision-making through benchmarking with other firms (Marwa & Aziakpono, 2014). To understand the performance of agricultural cooperatives, our study analysed efficiency and profitability using an efficiency-profitability matrix to provide for multi-dimensional analysis. The study used secondary data from annual financial statements for the financial years 2015/16 collected from 19 agricultural cooperatives. Technical efficiency was estimated using Data Envelopment Analysis (DEA) and profitability was estimated using Returns on Assets (ROA). The median scores were 68% for technical efficiency and 10% for profitability. Using the 68% efficiency and 10% profitability benchmark, the matrix separated best performers from low performers. The matrix indicated that 26% of the cooperatives had high-efficiency levels with high profitability (stars), however there was an even distribution between the stars and sleepers: 5 out of 19 cooperatives were sleepers and 5 out of 19 were stars. The majority of the decision-making units (DMUs) at 42% (8 out of 19) are in quadrant 3, categorised as ‘question mark’. These DMUs had low-efficiency scores and low profitability ratios. Only 1 out of 19 cooperatives had high-efficiency levels and low profitability scores. The results demonstrate that technically efficient firms do not always translate to profitable firms: in this regard, management needs to investigate how best to allocate resources in order to remain relevant within the business context and competition. Policy makers need to investigate other drivers of efficiency and profitability when measuring the performance of a firm to influence future policy directives.
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    Efficiency and profitability of Tanzanian saving and credit cooperatives : who is a star?
    (International Foundation for Research & Development, 2014-08) Marwa, Nyankomo; Aziakpono, Meshach
    The objective of this paper is to evaluate and benchmark the performance of Tanzanian Saving and Credit Cooperatives (SACCOs). Measuring the performance of these organizations is useful in helping them to monitor and control their performance and business processes and improve productivity and profitability. The study used secondary data from audited financial statements from 103 SACCOs. Technical efficiency was estimated using the data envelopment analysis approach and profitability was measured using return on assets. Then an efficiency-profitability matrix was employed to distinguish best performers from struggling SACCOs. This particular approach has been selected to account for multiple dimensions of performance measures. Using the top 25% as a cut-off for profitability and efficiency we found that only 12% of the firms were diagnosed as best performers (stars). The majority of the firms (61%) were classified under the low efficiency low profitability category. Fourteen SACCOs were highly profitable but had low efficiency scores, which demonstrate a potential for performance improvement by increasing their efficiency. Another group of 14 SACCOs were classified as potential candidates for divestiture because they had high efficiency scores but low profitability. Conclusively the performance of the industry in Tanzania needs a well-thought turnaround strategy to make it commercially viable. For the majority of the SACCO both profit-increasing and efficiency-increasing strategies are required.