The Effects of the Automation of Customs Process on the Export of Bulk Petroleum Products From Kenya

Abstract

The purpose of the study was to find out the effect of the automation of customs processes on the exportation of hulk petroleum products from Kenya as implemented by the Kenya Revenue Authority in 2005Thc researcher carried out a survey of all the 25 oil companies with operations in Kenya, and that sold petroleum products in the region at the time. A descriptive research design was used to guide the research process. Thirty senior executives drawn from oil marketers in the region were purposively targeted for the research. Data was collected using a structured questionnaire. The data was analyzed using descriptive statistical techniques and inferential statistics. This entailed summaries in frequency tables and bar charts. Spearman's Rank Correlation Coefficients were computed to establish the relationships between the study variables. Major findings of the study revealed that automation had a significant positive effect in the customs business processes on a number of fronts. The study established a strong and significant positive correlation between change in corruption initiated by customs officials and customs automation (r=.632, /><.()()!). Equally, there was a positive change in perceived corruption according to 60% of the respondents. Similar findings were registered on both perceived and actual corruption initiated by oil marketers. Improvements were also registered in the accuracy of declarations with a strong and significant positive correlation between accuracy of declaration and automation of customs processes (/-=.085, /><.()()!). Majority of the respondents also observed positive change in the sealing of revenue leakage points. However, the study revealed an inverse relationship between customs automation and the speeds of both in-coming and outgoing cargo declaration and release. Further findings revealed a negative and significant relationship between customs automation and oil marketers’ business performance indicators such as ROCE, profitability, turnover and lead time. The oil companies experienced challenges in business processes, time frames, human resource capacity and online communication with Kenya Revenue Authority officials.

The automation of customs on transit and export of bulk petroleum products has had both positive and negative effects to its key stakeholders. Kenya Revenue Authority have achieved its key objectives of customs automation as seen through reduction in corruption actual ami perceived corruption at customs, widening of tax-payer base, accuracy of cargo declarations and the sealing of revenue leakage points. Oil marketers also benefit in terms of integration with regional affiliates. However, the impact on exporters of bulk petroleum products has been largely negative. This is seen in reduced return on investment, profitability and turnover, due to longer lead-time occasioned by delayed access to goods. In order to establish more accurate results, at individual firm level.further studies could be extended in the subject of the impact of customs automation on oil marketers by controlling for lirm-specilic factors such as strategy organizational culture. The possibility of using the automated process to become authorized economic opearators also provides an area of further research, on how both KRA and oil marketers have taken advantage of the automation to implement the concept of authorized economic operators, and impact of the same on oil marketers in the East African region.