Effect of dry port operational factors on trade facilitation in Kenya

Abstract

In light of global perspective, the main aim of establishing a Dry Port is to decongest the main sea port and facilitate trade by reducing trade costs and clearance time. However, the benefits that come with dry ports have not been fully realized with many stakeholders who engage with the ICDs complaining of high transaction costs and lengthy clearance times. These are against the tenets of trade facilitation. This study sought to evaluate the effect of port operational factors on trade facilitation in Kenya. The focus of the study was Nairobi Inland Container Depot. The specific objective of the study was to interrogate the effect of infrastructure development, capacity of personnel, customs automation and interagency coordination on trade facilitation at Nairobi ICD. The Queuing Theory, Stakeholder Theory, Systems Theory, Dynamic Capability Theory and The New Trade Theory are the theoretical framework that guided the study. The study adopted explanatory research design. The target population of the study consisted of 351 stakeholders in international trade comprising of KRA customs staff, exporters, importers, transporters and clearing agents. The study used primary data and adopted stratified random sampling to select the sample size of I87 participants. Primary data was collected through the use of closed ended structured questionnaires. The study employed descriptive statistics in the form of frequencies, means and standard deviations and inferential statistics in the form of correlation and multiple regression analysis to evaluate the relationship between the variables of the study. From the findings of the multiple regression analysis, it was established that a unit change in Infrastructure Development would lead to a 0.381 increase in Trade Facilitation at Nairobi ICD as shown by (β 1 =0.381, p=0.000) ; a unit change in Capacity of Personnel would lead to a 0.210 increase in Trade Facilitation at Nairobi ICD as shown by (β 2 =0.210, p=0.001) ; a unit change in Customs Automation would lead to a 0.196 increase in Trade Facilitation at Nairobi ICD as shown by (β 3 =0.196, p=0.001) ; a unit change in Interagency Coordination would lead to a 0.248 increase in Trade Facilitation at Nairobi ICD as shown by (β 4 =0.248, p=0.000). Therefore, the study concluded that Port operational factors have a significant influence on trade facilitation in Kenya. The study recommended that infrastructure development, capacity of personnel, Customs automation and interagency coordination should continuously be enhanced to increase trade facilitation in Kenya. The study suggested that future studies can evaluate other factors that influence trade facilitation in Kenya.