Integrated Customs Management System, compliance cost and trade facilitation at Busia Border in Kenya

Abstract

Customs plays an important role in the economy of any country. Customs administrations around the world have an important role in revenue collection, protection of society and supply chain security. Exchange of goods and services has been a common goal worldwide, as the world becomes a global village separated by common borders. The study aimed to determine the moderating effect of compliance cost on relationship between Integrated Customs Management System on trade facilitation at Busia border in Kenya. The specific objectives were to determine the effect of cargo clearance system, duty computation system and customs monitoring system on trade facilitation Busia border, Kenya. Theory of the study was Queueing Theory; Technological Change Theory and Transaction Cost Theory The study adopted explanatory research design. The target population was 137 clearing and forwarding agents with 83% response rate This study used primary data which was collected using structured questionnaires. The data collected was tested for validity, reliability, descriptive, and multiple regression analysis. The study found that cargo clearance system had a significant and positive effect on trade facilitation β=0.179 p<0.05. The study also found that duty computation system had a significant and positive effect on trade facilitation β=0.137 p<0.05. The study further found that those customs monitoring system had a significant and positive effect on trade facilitation β=0.176 p<0.05. The study further found that compliance cost moderates the effects of cargo clearance system on trade facilitation. β=- 0.006 p<0.05. The study also found that compliance cost moderates the effects of duty computation system on trade facilitation β=- 0.081 p<0.05. Lastly the study found that compliance cost moderates the effects of duty computation system on trade facilitation β=- 0.005 p<0.05. The negative coefficient implied that the compliance costs reduced the positive effects of cargo clearance system, duty computation system, and customs monitoring system on trade facilitation. The KRA is recommended to implement advanced cargo tracking and management systems to enhance the efficiency of cargo clearance. Integrating technologies such as RFID and blockchain can streamline procedures and reduce delays. The KRA is also recommended to provide ongoing trainings for customs officials to ensure they are adept at using new systems and can effectively manage the cargo clearance process. The government of Kenya should reduce bureaucratic hurdles and streamline compliance procedures to lower the costs associated with trade. The government of Kenya should enhance the physical infrastructure at the Busia border to support more efficient cargo processing and trade facilitation. A future study should be conducted on the effects of perceived benefit on trade facilitation. A future study should be conducted on the effects of perceived benefit on trade facilitation.By examining the impact of regulatory complexity on trade outcomes, researchers can provide insights into how various levels of administrative requirements influence clearance times, costs, and trade flows