Effect of systems automation on customs revenue performance in Kenya

Abstract

Customs mandate are revenue collection, border protection, collection of international trade statistics and trade facilitation (Ayuma, 2018). Collection of revenues has been used as the apex yardstick for measuring the performance of Kenya’s customs and border control department. In the year 2016/2017 and 2017/2018, KRA missed its target by 18.5 billion and 15 billion respectively. This shortfall in collection created a deficit in government project’s financing affecting performance of customs revenues. This study established the factors that affect the revenue performance of customs and border control department in Kenya in terms of actual revenue collection, trade facilitation and protection of the society. It focused on establishing the effect of Scanner technology, Cargo Tracking System and Integrated Custom Management (ICMS)on the revenue performance of the customs and border control department in Kenya. The general objective was to investigate the effects of systems automation on customs revenue performance in Kenya. The study had three independent variables which were Scanner technology, Cargo Tracking System and Integrated Custom Management (ICMS). This study was grounded by three theories: Technological Determinism Theory, General Systems theory and International Trade theory. The study adopted the explanatory research design A population of 902 clearing and forwarding companies and customs officers were used out of which a sample of 227 respondents was selected, through Taro Yamane sampling method. The study used both primary data by use of structured questionnaires and secondary data obtained from relevant materials which represent academic research, with the selected period being 2017 to 2019. Data was analyzed into descriptive statistics and inferential statistics by use of SPSS (20) and presented in tables, pie charts and cross tabulation. The data was equally tested for validity and reliability using the Cronbach Alpha Score as the test for reliability. Scanner technology (β1=0.451, p=0.00), Cargo Tracking Systems technology (β2=0.303, p=0.00) and ICMS technology (β3=0.204, p=0.00) was found to have significant effect on customs revenue performance in Kenya with a P value of less than 0.05 for all variables. The results also revealed that scanner technology, cargo tracking system and integrated customs management system caused a variation of 64.7% or (R 2 =0.652 and adjusted R 2 =0.647) on revenue performance. Findings of the study established that custom revenue performance in Kenya increased significantly after implementation of systems. As a result, regional trade activities were intensified and greater border control achieved. The Kenya Revenue Authority needs to ensure tighter enforcement measures other than implementation of systems such as scanners, Cargo Tracking Systems and ICMS. In conclusion systems automation comes with costs attributable to ICT infrastructure, synchronization hitches, training and security enhancements. Nevertheless, their implementation is important in achieving revenue growth and operational efficiencies. Regional synchronization of systems as with the Regional Cargo Tracking System allows data sharing and greater global competitiveness. Recommendations for further study was on the effects of Integrated Customs Management System on the operational performance in East Africa. Further suggestion for future research was on effects of Business Intelligence and Customs Oil Stocks Information Systems on customs performance.