Effect of customs reform strategies on customs revenue performance in Kenya: a case of Embakasi inland container depot Joram Fuchingo Khisa

Abstract

The Customs and Border Control Department (CBCD) is one of the revenue departments within the Kenya Revenue Authority. Despite Kenya’s efforts in implementing custom reforms, customs and border control department has not been performing to the treasury’s expectations. The Kenya revenue authority therefore initiated various reforms in 2004/2005 with the objective of transforming Kenya Revenue Authority (KRA) into a modem, fully integrated and Client-focused organization, with enhanced revenue performance. These reforms were necessitated by Kenya’s customs revenue 0.84 percent annual decline over 1996-2005 period as affirmed by Moye and Ronge (2006). The study sought to examine the effect of customs reform strategies on customs revenue performance in Kenya, focusing on Embakasi Inland Container Depot (ICD) station, Nairobi County. In particular, the study interrogated the effect of information technology, capacity building, coordinated border management initiatives and customs processes/procedures reform strategies on customs revenue performance at ICD Embakasi. The study was anchored on two theories: technology acceptance model and porter’s theory of competitive advantage theories. The study adopted a descriptive research design. The target population was drawn from key international trade players, importers, exporters, transporters, clearing and forwarding agents, and staff from KRA’s customs department working at the Embakasi Inland Container Depot. Target population comprised of 351 stakeholders who participated in international trade at ICD Embakasi. The applied sampling technique was stratified random sampling that led to the selection of 187 respondents to from the study sample. Primary data was collected using a self-administered structured questionnaire on a 5-point Likert scale. Quantitative analysis was employed using the procedures within the Statistical package for social sciences (SPSS). Data was analysed using descriptive statistics, correlation and multiple regression analysis at 95% confidence level. The study findings found a strong positive correlation, as evidenced by an R-value of 0.75, between customs reform and customs revenue performance at ICD Embakasi-Kenya. The results also uncovered a statistically significant relationship between the information technology, capacity building, coordinated border management initiatives reform strategies and customs revenue performance at ICD Embakasi, as portrayed by p-values of 0.016, 0.029, and 0.005 <0.05. However, the research found no statistically significant relationship between the customs processes and procedures reform strategy and customs revenue performance as shown by a p value of 0.179 >0.05. Therefore, the study concluded that the information technology, capacity building, coordinated border management initiatives reform strategies had a significant effect on customs revenue performance at ICD Embakasi-Kenya. The study recommends adopting a post-clearance audit policy linked to the customs processes and procedures reform strategy for export and import clearance controls at ICD Embakasi. The study also recommends the need of formulating a risk management procedure outlining the essential risk assessment, treatment, consultation, communication and recording, and review and monitoring for improved customs revenue performance. The system should also stress the importance of proactive data collation, collection, and dissemination throughout the organization