BUSINESS PROCESS OPTIMIZATION STRATEGIES AND PERFORMANCE OF CUSTOMS REVENUE IN KENYA REVENUE AUTHORITY
Abstract
Purpose of the study: The study examined the effect of business process optimization strategies on performance of customs revenue in Kenya Revenue Authority.
Problem statement: Revenue targets have been increasing over the years. Kenya Revenue Authority has been missing revenue targets piling pressure on the government to borrow loans to finance its budget. From past revenue performances, customs revenue accounts for approximately 35% of actual revenue collected. Therefore, examining existing customs cargo clearance process optimization strategies towards improving performance of customs revenue is a step forward towards achieving revenue targets. It is important to emphasize that there are very few comparable studies conducted in Kenya, and those that exist do not share the same context.
Methodology: The study adopted a secondary research approach whereby a desktop research design was adopted. The study relied on publicly available materials including revenue performance reports on the Kenya Revenue Authority website as well as previous studies to examine the identified customs process optimization strategies on performance of customs revenue collection.
Findings: The study established that automation of customs processes has a favourable impact on the performance of customs revenue. Coordination between agencies at the border has a positive impact on trade facilitation. The impact of risk management on the performance of customs revenue depends on the techniques or methods being applied.
Conclusion: The study concludes that the automation of customs processes, inter-agency cooperation, and coordinated border management have a positive influence on the performance of customs revenue collection. The study also concludes that the impact of risk management on the performance of customs revenue depends on the specific techniques or methods applied.
Recommendations: The Kenya Revenue Authority should accelerate the automation of customs processes, strengthen inter-agency cooperation and coordination, and develop a comprehensive coordinated border management strategy to enhance revenue performance. The risk management techniques employed should be regularly reviewed and updated to align with evolving trade patterns and best practices. Continuous capacity building and training programs for customs officials and stakeholders are crucial to effectively implement the recommended strategies.
Keywords: Kenya Revenue Authority, Automation, Inter-agency Cooperation, coordinated border management, risk management, performance of customs revenue
References
Alsbeai, A. (2023). Mastering Desk Research: A Deep Dive into Business Success. Retrieved from https://medium.com/@m.sbeai/mastering-desk-research-a-deep-dive-into-business-success-61db1a676bf2
Al-Shbail, T. (2020). The impact of risk management on revenue protection: An empirical evidence from Jordan customs. Transforming Government: People, Process and Policy, 14(3), 453-474. doi:DOI 10.1108/TG-02-2020-0025
Amboko, J. (2023). KRA misses revenue target by Sh107bn. Business Daily. Retrieved March 24th, 2024, from https://www.businessdailyafrica.com/bd/economy/kra-misses-revenue-target-by-sh107bn-4303186
Angalwa, H. M. (2022). Effects of Automation of Customs Systems on Revenue Performance in Kenya. Nairobi: [Post Graduate Diploma, KESRA/JKUAT - Unpublished research project].iKESRA Repository.
Arifin, R., & Nurkumalawati, I. (2021). Towards an Integration of Immigration and Customs Agency in Indonesia: A Step-by-Step Process. Journal of Government and Civil Society, 5(1), 129-146. doi:DOI: 10.31000/jgcs.v5i1.2990
Berman, M. (1996). Shadow Side of Systems Theory. Journal of Humanistic Psychology, 36(1), 28-54. Retrieved from https://doi.org/10.1177/00221678960361005
Bertalanffy, L. v. (1968). General System Theory: Foundations, Development, Applications. New York: George Braziller.
Bertalanffy, L. V. (1972). The History and Status of General Systems Theory. The Academy of Management Journal, 15(4), 407-426. doi:https://doi.org/10.2307/255139
BLOC. (2021). Challenges at the Mombasa port and hefty taxes. Retrieved March 28th, 2024, from https://www.begislaw.com/challenges-at-the-mombasa-port-and-hefty-taxes/
Bornay-Barrachina, M., López-Cabrales, Á., & Salas-Vallina, A. (2023). Sensing, seizing, and reconfiguring dynamic capabilities in innovative firms: Why does strategic leadership make a difference? BRQ Business Research Quarterly, 0(0). doi:https://doi.org/10.1177/23409444231185790
Chinnapareddy, V. K., & Zemede, D. D. (2019). Assessment of the challenges of customs import clearance procedures in the case of Addis Ababa Airport Customs Branch of ERCA, Ethiopia. European Journal of Accounting, Finance and Business, 9(19), 47-74.
Corona, K. (2024). Business Process Optimization: Step-by-Step Guide to BPO in 2024. Retrieved March 24th, 2024, from https://www.pipefy.com/blog/business-process-optimization/
Easterby-Smith, M., Lyles, M. A., & Peteraf, M. A. (2009). Dynamic Capabilities: Current Debates and Future Directions. British Journal of Management, 20(1). doi: https://doi.org/10.1111/j.1467-8551.2008.00609.x
Friedman, B. D., & Allen, K. M. (2014). Systems Theory (1 ed.). (J. R. Brandell, Ed.) Sage. doi:DOI:10.13140/2.1.1132.9281
Gajardo, L. B., Koningsveld, M. v., & Taneja, P. (2022). Desktop Research into Historic Automation Projects of Brownfield Container Terminals. Journal of Marine Science and Engineering, 10(704), 1-15. doi:https://doi.org/10.3390/jmse10050704
Gell, T. (2023). Desk Research: What It Is and How You Can Use It. Retrieved from https://www.driveresearch.com/market-research-company-blog/desk-research-what-it-is-and-how-you-can-use-it/
Helfat, C. E., Finkelstein, S., Mitchell, W., Peteraf, M., Singh, H., Teece, D., & Winter, S. G. (2007). Dynamic Capabilities: Understanding Strategic Change in Organizations. Wiley-Blackwell. Retrieved from https://www.wiley.com/en-us/Dynamic+Capabilities%3A+Understanding+Strategic+Change+in+Organizations-p-9781405135757
Hoffman, A., Grater, S., Venter, W. C., Maree, J., & Liebenberg, D. (2020). An explorative study into the effectiveness of a customs operation and its impact on trade. World Customs Journal, 12(2), 63-86.
Jerono, D. K. (2020). Effect of customs reforms on performance of Customs and Border Control department in Mombasa. [Post Graduate Diploma, KESRA/JKUAT - Unpublished research project].iKESRA Repository. Retrieved from https://ikesra.kra.go.ke/server/api/core/bitstreams/31ceb1bf-5a65-44da-8bc7-a4931d222c5f/content
KRA. (2023). Annual Revenue Performance Report. Nairobi: Kenya Revenue Authority. Retrieved March 24th, 2024, from https://kra.go.ke/images/publications/ANNUAL-REVENUE-PERFORMANCE-FY-2022-2023-1372023-Final-Version.pdf
Kyenche, P. R. (2023). Effects of customs system automation on revenue collection performance: A case of Customs Department in Kilimanjaro, Tanzania. Moshi: [Masters Thesis, Moshi Co-operative University - Unpublished Thesis].iKESRA Repository.
Matunda, L. K. (2019). Factors influencing cargo clearance efficiency at inland container depot-Nairobi, Kenya. [PGD research project, KESRA/JKUAT].iKESRA Repository. Retrieved from https://ikesra.kra.go.ke/server/api/core/bitstreams/5d1cee94-fc5b-458c-a17e-bcc2b1fa0007/content
Metet, M. C. (2021). Effectiveness of risk management strategies on performance of the Customs and Border Control Department in Kenya. Nairobi: [Mastters Thesis, Moi University - Unpublished Thesis].iKESRA Repository. Retrieved from https://ikesra.kra.go.ke/server/api/core/bitstreams/8a60f6ce-5b2b-4635-a37c-8550d2b919b0/content
Mishi, S., & Mushonga, F. (2023). Scoping Study: Skills Gap in the Banking Sector in South Africa. [Nelson Mandela University - Unpublished research project]. Retrieved from https://bankseta.org.za/wp-content/uploads/2023/03/Scoping-Study-Skills-Gap-in-the-Banking-Sector-in-South-Africa..pdf
Moraa, O. C. (2021). Coordinated Border Management and Trade Facilitation at Namanga Border Post, Kenya. Nairobi: [Masters Thesis, Moi University - Unpublished Thesis].Moi University Access Repository. Retrieved from http://ir.mu.ac.ke:8080/jspui/handle/123456789/5595
Mutua, D., & Kilonzi, F. (2023). Effects of Coordinated Border Management Techniques on Trade Facilitation in Kenya. African Tax and Customs Review, 2(6), 1-27.
Mwamutsi, D. M. (2022). Factors Affecting Cargo Clearance Efficiency at the Port of Lamu Kenya. [PGD research project, KESRA/JKUAT].iKESRA Repository. Retrieved from https://ikesra.kra.go.ke/server/api/core/bitstreams/681b6e95-ae61-4dff-91c3-462845f1002a/content
Njoroge, M. M. (2019). Effect of risk management tools on trade facilitation: A case of Kenya Revenue Authority Customs and Border Control Department. Nairobi: [Post Graduate Diploma, KESRA/JKUAT - Unpublished research project].iKESRA Repository. Retrieved from https://ikesra.kra.go.ke/handle/123456789/601
Omosa, A. M. (2021). Effect of systems automation on customs revenue performance in Kenya. [PGD research project, KESRA/JKUAT].iKESRA Repository. Retrieved from https://ikesra.kra.go.ke/server/api/core/bitstreams/4e60e078-d4ff-4ce9-b89b-2bf265ef6658/content
Owa, M. (2023). Desk Research: Definition, Types, Application, Pros & Cons. Retrieved from https://www.formpl.us/blog/desk-research-definition-types-application-pros-cons
Owili, R. (2024, February 16th). KRA misses half year revenue collection by Ksh 186B. KBC. Retrieved March 24th, 2024, from https://www.kbc.co.ke/kra-misses-half-year-revenue-collection-by-ksh-186b/
Pille, P. (2023). Process Optimization: Identifying and optimizing Revenue Operations processes to improve efficiency and effectiveness. Retrieved March 28th, 2024, from https://www.linkedin.com/pulse/part-4-7-process-optimization-identifying-optimizing-patrick-pille/
Recio, N. (2024). Customs Optimization: Strategies and Tools to Streamline Foreign Trade. Bogota. Retrieved from https://cms.law/en/col/publication/customs-optimization-strategies-and-tools-to-streamline-foreign-trade
Salikhova, A. V., Isavnin, A. G., Eremina, I. I., Lysanov, D. M., & Ishmuradova, I. I. (2019). Optimization of tax system business processes. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies, 10(16), 1-9. doi:DOI: 10.14456/ITJEMAST.2019.219
Sang, K. (2023). KRA records 6.7% increase in tax collection as revenue hits Ksh2.16 trillion. People Daily. Retrieved March 24th, 2024, from https://www.pd.co.ke/news/kra-revenue-hits-2-trillion-190867/
Shaheen, S. (2024). Role of Business Process Optimization in an Organization. 10. doi:http://dx.doi.org/10.2139/ssrn.4679827
Stephen, K., & DaSilva-Glasgow, D. (2023). Enhancing Trade Facilitation in Guyana: The Case for Improved Inter-Agency Coordination. Journal of International Law and Trade Policy, 24(2), 9 6 - 1 0 6.
Swaleh, M. A. (2020). Effect of One Stop Border Post on Trade Fcailitation at the Lunga Lunga-Horo Horo. Nairobi: [Masters Thesis, University of Nairobi - Unpublished Thesis].erepository.uonbi.ac.ke.
Tavares, I., & Castañeda-Ayarza, J. A. (2022). Import and Export Process: The Impact of Bureaucratic Simplification in Customs Clearance. Independent Journal of Management & Production, 13(2), 548-569. doi:DOI: 10.14807/ijmp.v13i2.1626
Teece, D. J. (2016). Dynamic Capabilities. The Palgrave Encyclopedia of Strategic Management. doi:https://doi.org/10.1057/978-1-349-94848-2_689-1
Teece, D., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management . Strategic management journal, 18(7), 509-533.
UNCTAD. (2021). Kenya Container Port Throughput. CEIC. Retrieved March 24th, 2024, from https://www.ceicdata.com/en/indicator/kenya/container-port-throughput
Wahid, N., Amin, U., Khan, M. A., Warraich, N. F., & Siddique, N. (2023). Mapping the desktop research in Pakistan: a bibliometric analysis. Global Knowledge Memory and Communication, 1-19. doi: Global Knowledge Memory and Communication
