Determinants of level of illicit trade across selected border stations in Kenya

Abstract

Illicit trade poses a serious socio-economic challenge to Kenya, just like other countries across the globe. Illicit trade undermines the concept of a free and open market, which is fundamental to improving competitiveness, increasing investment, creating jobs and improving the economic situation of Kenya and other trading partner states. Illicit trade undermines industries in the region, poses health risks to consumers, sabotages tourism, stunts innovation and breeds lawlessness. This study broadly sought to explore the factors influencing the level of illicit trade across selected boarder stations in Kenya focusing on Mombasa port, Namanga and Taveta borders in, Kenya. The study specific objectives were to investigate how consumer tolerance, trade networks and porous borders influence the level of illicit trade across selected boarder stations in Kenya. The study was anchored on theory of marketing ethics, institutional theory and theory of reasoned action. The study adopted an explanatory design on cross border station is Kenya with a population of 516 officers of state agencies working at the port of Mombasa, Namanga border and Taveta border. A sample of 225 officers was selected based on a Yamane formula. The study was carried out between the months of May and June 2022 at Mombasa port, Namanga and Taveta borders. The study used a questionnaire to collect data, then collated, cleaned and sorted before analysis. A descriptive statistics was performed on response and data collected to validate the data for representation. Inferential statistics involved correlation and regression analysis to establish the relationship between the determinants and the illicit trade using ordinary least square (OLS) technique. The correlation results revealed that consumer tolerance, trade networks and porous borders have a strong, positive and significant association with the level of level of illicit trade. From the OLS results; model summary revealed that consumer tolerance, trade networks and porous borders explain 62.5% of the variations in level of illicit trade with the difference being explained by other factors beyond the study. The ANOVA results also revealed that the overall model was significant with p=0.000<0.05. The model coefficient revealed that consumer tolerance (β=0.285, 0.00< 0.05), trade networks (β=0.172, 0.016<0.05), porous borders (β=0.379, 0.000<0.05) has a positive significant effect on illicit trade respectively. The study concludes that consumer tolerance, trade networks and porous borders have a significant effect on the level of illicit trade and therefore the null hypotheses were rejected. The study recommends that the government should conduct sensitization programs to educate consumers on the harm associated with illicit trades and the role they play in encouraging illicit trade, invest in advanced technologies that will enable its officials curb the levels of illicit trade and invest more resources in the border stations to curb illicit trade. The study recommends the need for future studies to focus on other determinants of illicit trade in Kenya.