The Impact of Single Customs Territory Framework on Kenyan Customs Revenue
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Date
18-08-21
Authors
Sindiga, Edwin
Journal Title
Journal ISSN
Volume Title
Publisher
Kenya School of Revenue Administration
Abstract
Single Customs Territory (SCT) is a trade facilitation framework to enhance intra East African
Communities (EAC) trade. The implementation of a Single Customs Territory (SCT)
framework in Kenya is meant to ease movement of goods and cut cost and time. This is done
by harmonization and simplification of customs procedures, documentation and automation of
customs systems. Introduction of SCT framework in 2013 has facilitated trade flows among the
EAC partner states: Kenya, Tanzania, Uganda, Rwanda, Burundi and South Sudan (Kamau A.
and Odongo M.2020). Some researchers have investigated the effectiveness of SCT in a given
geographical area. A few of the researchers have analyzed the impact of SCT in the East African
Community. Nevertheless, little is known on its impact on the customs revenue generated in
Kenya. The main objective of this study is to establish the impact of Single Customs Territory
framework on Kenyan customs revenue. The specific objects were to determine the effect of
SCT on imports volumes and value in Kenya and exports volumes and value in Kenya. This
was captured in a panel econometric model using customs data in Kenya Revenue Authority
(KRA) spanning from the year 2010 to the year 2020. To determine the impact of SCT
framework on customs revenue in Kenya, this study utilized regression discontinuity (RD) and
difference-in-differences (DiD) study designs. The regression discontinuity and difference in
difference designs are quasi experimental approaches. These methods are the most effective in
estimating the impact of policy reforms when implemented. RD measures the effect of the size
of the discontinuity in regression. The regression discontinuity (RD) and difference-indifferences
(DiD) study model analyzed the trend before and after the introduction of the SCT
framework. To determine whether SCT really facilitates trade, a gravity model was used to
estimate the effect of the framework on imports and exports from countries trading with Kenya.
The results show that import values (CIF) increased by an average of Kshs. 1.104 while import
volumes increased by an average of Kshs. 1.062 following the introduction of SCT framework.
However, introduction of SCT framework led to a decline of exports values (FOB) by an
average of Ksh. 2.128 and export volumes by an average of Ksh.1.917.
Description
Keywords
single customs territory, customs
Citation
Sindiga, E. (2021). The Impact of Single Customs Territory Framework on Kenyan Customs Revenue. African Tax and Customs Review, 4(2), 13. Retrieved from https://atcr.kra.go.ke/index.php/atcr/article/view/80