Customs managerial practices, smuggling and trade facilitation at inland container depot in Nairobi, Kenya

Abstract

The growth of international trade is not without obstacles. These barriers include trade costs and tariff barriers, which vary from country to country. International trade at borders, including East African borders, is of particular concern with excessive documentation, lack of transparency, limited use of modern customs techniques, excessive time for permits and permits, lack of coordination and cooperation between customs and other regulatory bodies. This study's general objective was to examine the effect of customs managerial practices and smuggling on trade facilitation at Inland container depot in Nairobi, Kenya. The specific objectives of this study were to determine the effect of customs automation systems, capacity building, and process management on trade facilitation at Inland Container Depot, and to examine the moderating effect of smuggling on the relationship between customs managerial practices and trade facilitation at Inland Container Depot in Nairobi, Kenya. This study integrated the theoretical perspectives of the innovation diffusion theory, resource- based theory and fraud triangle theory. Explanatory research design was applied in the study. The target population for this study was 150 customs officers. A structured questionnaire was used for primary data collection through a census. Descriptive and inferential statistics were used for data analysis. Descriptive statistics included percentages, graphs, means and standard deviations in data presentation. Further, inferential statistics including hierarchical regression analysis helped in testing how the moderating variable affects the relationship between the independent and dependent variables. The findings revealed that customs automated systems (β = 0.228 p <.05); capacity building (β = 0.282, p <.05); and process management (β = 0.295, p <.05) had a positive and significant effect on trade facilitation. Results further indicated that smuggling (β = -0.368, p <.05) had a negative and significant effect on trade facilitation. In addition, the interaction effect of smuggling and customs automated systems was positive and significant (β = 1.955, p <.05). On the other hand, the interaction effect of smuggling and capacity building was positive but insignificant (p >.05). Similarly, the interaction effect of smuggling and proves management was positive but insignificant (p >.05). The study concluded that customs managerial practices contribute significantly to improved trade facilitation. The study also concluded that smuggling significantly reduces trade facilitation. Further, the study concluded that smuggling moderates the relationship between customs automated systems and trade facilitation. However, smuggling does not moderate the relationship between capacity building, process management and trade facilitation. The study recommended the need for management of Inland container depot to strengthen aspects on customs automated systems, capacity building and process management. The study further recommended the need for key stakeholders including the government of Kenya, customs and border control departments, traders, clearing and forwarding agents to review the anti- smuggling policy.