Effect of non-tariff barriers on performance of registered small- scale importers in Gikomba Market, Nairobi City County, Kenya

Abstract

The performance of small-scale importers has been greatly affected by the non-tariff barriers. The government of Kenya has therefore been making several efforts to minimize the non-tariff barriers that prevent small scale traders from benefiting from trading opportunities. Small scale importers in Gikomba market have been closing operations owing to volatile business environment featured by high licensing levies and rising competitions from Chinese traders. Numerous small-scale importers have closed shops since 2019 due to unfavorable import procedures and unfair competition. According to the Nairobi Importers and Small Traders Association (NISTA), about 5,000 small-scale traders in Gikomba have closed shops in the past one year. The proposed study sought to determine the effect of non-tariff barriers on performance of small- scale importers in Gikomba Market, Nairobi County, Kenya. The specific objectives were to determine the effect of import licenses, quality control, documentation and procedures on performance of small-scale importers in Gikomba Market, Nairobi County. Import licenses were measured using number of licenses, procedures to acquire licenses, and kinds of licenses. Quality control was measured in terms of availability of quality control equipment, time taken to perform quality controls, and quality control guidelines. The dependent variable was performance of small- scale importers, which was measured in terms of sales revenue, profit margins and customer base. The study was anchored on Customs Union Theory, Ricardian theory of Free trade and the Balanced scorecard theory. This study employed explanatory research design. The study population was 3692 registered small- scale importers in Gikomba market as registered in the Nairobi City County Government. The respondents were the owners of the small-scale importers. The sample population was 360 small- scale importers who were selected using stratified random sampling technique. The questionnaires were administered through the drop and pick later method. The data was summarized using descriptive statistics such as frequencies, percentages, mean, and standard deviation. Multiple regression technique was employed to determine the effect of import licenses, quality control, documentation and procedures on performance of small-scale importers. Regression coefficients showed that import licenses had a positive and significant effect on performance of small- scale importers (r=0.127, p=0.017). Further, results showed that quality control had a positive and significant effect on the performance of small- scale importers (r=0.696, p=0.000). In addition, results showed that documentation & procedures had a positive and significant effect on the performance of small- scale importers (r=0.130, p=0.016). The study concluded that the requirement of licenses while carrying out import business facilitates trade performance. Availability of quality control equipment during importation of goods was key to the performance of the small-scale importers. In addition, documentation and procedures are critical in the identification and recording of goods. Taking reasonable time during documentation process enhanced performance of small-scale importers. The government should ensure the small-scale importers have all the necessary licenses. The government should also make sure that the process of applying for the licenses is not tedious so as not to cause delay in the import of business product for the small-scale traders The government through the ministry of industrialization, trade and enterprise development should ensure quality control equipment are always available every time there is importation of goods. The government should also make sure the importing businesses have import documents with them at the import-export entry points. The importing businesses should have a manual of procedures for documentation in their imports departments. Further studies can focus on other markets in Kenya such as city market, Muthurwa market, Ngara market. Further study should also be done on other non-tariff barriers such as quotas, embargoes that were not covered in this study.