Effects of single window system on trade facilitation in Kenya; a case of clearing and forwarding companies in Nairobi CBD

Abstract

In Kenya challenges continue to be experienced amidst the advancement in trade among clearing and forwarding companies due to high transaction costs, long lead times and too much bureaucracies as well as corruption. The concept of a Single Window System was thus developed to simplify the entire process and facilitate trade. Despite the clear benefits that SWS offers to both businesses and government agencies, the sovereign interests of the different individual agencies spark resistance to the new way of doing business. Further, the expected outcomes in trade facilitation among clearing and forwarding companies are yet to be realized with most firms reporting dismal performance. The study aimed to investigate the effect of SWS on trade facilitation in Kenya. The study was guided by the following specific objectives: to determine the effect of information sharing on trade facilitation in clearing and forwarding companies in Nairobi, to evaluate the effect of documentation on trade facilitation in clearing and forwarding companies in Nairobi and to determine the effect of electronic payment on trade facilitation in clearing and forwarding companies in Nairobi. The study was guided by The Theory of Customs Union, Behavioural Theory and Technology Acceptance Model. An explanatory research design was adopted in collecting data from employees of chosen clearing and forwarding companies in Nairobi area. The study target population was 161 registered companies operating in Nairobi. A sample size of 114 firms was arrived at using Slovin’s formula which was chosen using purposeful sampling with one manager per firm being selected. All the independent variables were found to influence trade facilitation positively and significantly namely; Information Sharing (β1 = 0.275, P <0.05), Documentation (β2 = 0.227, P <0.05) and Electronic Payment (β3 = 0.213, P <0.05). This implies that an increase in these practices will result in improved trade facilitation. The findings from the regression analysis further obtained a coefficient of determination R square of 0.275 which implies that 27.5% of changes in the trade facilitation are explained by the studied factors. The study therefore concludes that Single Window system has a significant positive effect on trade facilitation in Kenya. The study recommends that appropriate mechanisms should be put in place in ensuring seamless flow of information. The study also recommends that the government needs to look at conflicting/ duplication roles of some regulatory agencies managing the clearance procedures during documentation. Further, the study recommends that the government of Kenya should continue developing regulations that enhance the legal and the development of electronic payment solutions. Proper awareness and marketing should also be done to the public to educate them on electronic payment systems benefits.