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Table of Contents
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References ..................................................................................................................................... 26
Abstract page
Acronyms page
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CHAPTER ONE: INTRODUCTION
1.1 Background
Trade facilitation refers to the readjustments and legitimization of traditions and other
managerial procedures that delays or increment the cost of moving stock crosswise over global
borders. On the other hand, custom procedure refers to spiteful formality at the border or airports
for importers and exporters so that products are conveyed in the most proficient and cost-
effective way.
In the present international business condition, the amounts of products that move across
the borders have enlarged detectably because of changes in the global trading conditions. These
progressions result from the global incorporation of present production and conveyance
procedures, the expanding essentialness of Just-in-Time management and new types of electronic
trade (Milner et al, 2008). Organizations engaged with universal trade need to verify that all
procedures are characterized within the timeframe. Delays in the customs procedure of the
supply network can affect other operations in the port. Every delay prompts increments in
business costs, as well as diminishes the nature of merchandise, especially perishable and
sensitive products, for example, horticultural products, dairy products, daily papers, and
In this trade condition in which taxes have been continuously decreased, customs
procedures and practices are viewed as the foremost outstanding barriers to international trade.
The World Bank has presumed that the cost of transporting merchandise between destinations
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and crosswise over global boundaries, together with delays in customs handling, is as essential as
formal exchange barriers, especially in developing nations. Furthermore, world Bank contends
that consistently spent in customs procedures adds the cost of the product to almost one, and this
influences the intensity of nations, especially in the exportation of merchandise. The United
Nations Conference on Trade and Development (UNCTAD) evaluated that the exchange cost in
the mid-1990’s was roughly 7-10 percent of the estimation of world trade, and the assessed cost
of ports customs was around 27 percent of the cost of merchandise. These expenses of trade and
Despite the fact that trade facilitation is vital for both developing and developed nations,
exchange since their customs procedures are ordinarily less effective than those countries
(Milner et al, 2008). Consequently, there is a specific requirement for developing nations to
upgrade customs procedures proficiency and ability to encourage international trade. In a tropical
custom administration in many developing nations, shipments mostly face capricious delays of
not less than 20 days before the discharging of products from customs control. These postpones
add to business costs and can influence the aggressiveness of the export price of products,
especially for landlocked developing nations that depend on transit to get their merchandise to
export market.
Therefore, the term trade facilitation has developed as a focal point of studies aimed for
diminishing these transaction costs forced through international exchange. WTO characterizes
trade facilitation as the rearrangements and harmonization of global trade strategies covering the
exercises, practices, and conventions involved with gathering, introducing, conveying and
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(Milner et al, 2008). Trade facilitation has been perceived as a critical method for reducing
exchanging costs. It has been unequivocally advanced by universal associations and the
exchanging network since it is normal that trade facilitation can expand global exchange volume
and diminish the cost of business in the meantime. Unmistakably customs procedures shape a
noteworthy piece of the inventory network. The rearrangements and harmonization of customs
strategies are, in this manner, imperative in adding to the expansion in the volume of
international exchange, the advancement of economies and the flourishing of the global
exchanging network.
It is normal that change in customs procedures can likewise prompt a decline in the time
and the cost of global exchange transactions. In order to manage international exchange
necessities, various global associations have taken activities in trade facilitation , for example,
the World Customs Organization (WCO), World Trade Organization (WTO), the Organization
for Economic Co-operation and Development (OECD), the World Bank, the United Nations
Conference on Trade and Development (UNCTAD) and the United Nations Centre for Trade
international exchange, the WTO is one of the supreme associations engaged with the
trade facilitation through multilateral exchange agreements and collaboration among concerned
parties, in both the private and government sector. Trade facilitation is one of the issues which
Trade facilitation is not only the main vital factor in global exchange. Effective customs
commitments in the contemporary customs condition. The role of customs administration was
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introduced in various countries following number occurrences terrorism. For instance, the United
States Custom and Border Protection have started measures to upgrade supply network security,
for example, the Container Security Initiative (Buyonge and Kireeva, 2008). Custom procedures
depend on the use of propelling cargo information and administration of risks hence enabling
customs procedures around the globe were advocated by universal associations, for example,
other significant associations to embrace a powerful role in supply network security with a
Customs procedures are one of the tools used by government agencies to regulate the
movement of goods across the boundary. Therefore, in reacting to this new security condition
and grow their role and duties to encourage production network security, these custom
procedures need to guarantee the certainty of traders in a global exchange with proper levels. In
an open economy like Kenya applies an overwhelming interest for trade facilitation with respect
to Customs procedures and other government offices assigned to port responsibilities. Customs
procedures in Jomo Kenyatta International Airport (JKIA) have recognized that streamlining and
improving leeway systems is helpful to their merchants, exporters and the national economies in
general (Awitta, 2010). This is so since it has a heading on the effectiveness of traders in
addressing the difficulties for better item quality, lower expenses, and speedier conveyance.
What's more, trade-related costs, for example, cargo charges and other strategic costs are a
significant determinant of JKIA’s capacity to take an interest aggressively facilitates global trade
(Buyonge and Kireeva, 2008). A few issues that add to the expenses of trade in JKIA includes
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port blockage that influences pivot time for feeder vessels, complex customs administration,
and high expenses for processing data resulting from constrained automation.
for the appraisal and accumulation of obligations and charges, the assemblage of measurements
and the use of customs Law (Awitta, 2010). The time period inside which the material
obligations and charges are evaluated is to be stipulated in the national enactment and the
appraisal is required the soonest after the Goods statement is stopped or the risk is generally
incurred.
Obligations and taxes. Kenya legislators are required to characterize the conditions when
the risk to obligations and expenses is to be incurred, the period inside which the
appropriate obligations and duties are evaluated and the conditions and factors on which
the appraisal is based (Awitta, 2010). The time is taken to decide the rates, techniques
that might be utilized to pay the obligations and assessments, people in charge of the
instalment, the period inside which the customs may make lawful move to gather
obligations and expenses not paid on due date likewise should be administered. The rate
of intrigue chargeable on duties and expenses not paid on the due date and the states of
use of such intrigue likewise must be enacted. The rates of obligations and duties are to
be distributed authoritatively.
and indicate frames in which the security is to be given and the customs is to decide the
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measure of such security. Charges on the security are to be as low as could reasonably be
expected and are not to surpass the sum possibly chargeable on assessments and
obligations.
Customs procedures in JKIA, including methods for transport, entering or leaving the
custom domain are liable to the customs control. Therefore, the control procedures are
any way to be restricted to that necessary to guarantee consistency with the Customs Law
as enacted by the parliament. Risk administration is utilized to figure out which people or
products, including methods for transport and how they ought to be inspected and to what
degree (Awitta, 2010). Custom administration in JKIA incorporate review based controls
which utilize information technology and electronic business to the best conceivable
technology to help customs activities, where it is cost effective and productive for the
international trade (Awitta, 2010). These incorporate use of computer systems, which
The connection between the custom and the outsiders. Persons concerned may execute
their behalf and the national enactment has set such conditions and in addition, the
conditions under which they are not to execute business with an outsider.
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The Customs administration in JKIA is faced with too great unique difficult. Firstly, there
is expanding the volume of trade which needs to be controlled inside the order given by the
government and to the desires of the general community (Buyonge and Kireeva, 2008).
Secondly, there is expanded request by traders for quicker clearance of freight and the Kenya
administration's regularly expanding income expectation (Buyonge and Kireeva, 2008). The
Customs administrators in this way need to address these challenges and desires against the
foundation of human and monetary resources requirements. It is accordingly basic that customs
utilizes its assets all the more effectively by grasping current innovation and working strategies.
It is evident that customs is fully dedicated to facilitate trade between Kenya and other
-declaration process
-verification process
-enforcement processes
-cargo clearance
Unfortunately these procedures really delay fast clearance of goods which in turns slows
trade
1.3 Objectives
The general objective of this study is to establish the effects of customs procedures on trade
facilitation at J.K.I.A
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Specific objectives
-To determine how the verification process inhibits fast movement of goods from the port.
One of the most sensational and huge world patterns in the current decades has been the
quick, managed development of global business. Global trade have expanded from 6% in the
year 1950 to 50% as per today. Therefore, recently, trade facilitation has turned out to be a
greater importance in the global trade and however defending a strong national Customs
administration has been of less significance. Trade facilitation in past generations tried to fit
advancement of technology that is filling the requirement for reinventing custom administration
It is clear, trade facilitation boast economic integration through enhancing bilateral and
regional trade agreement that regularly include complex customs necessities. Technological
advancement in the world has likewise presented quicker and less expensive types of custom
administration, for example, utilization of electronic customs control system in the ports.
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Chapter Two: Literature Review
2.0 Introduction
This chapter tends to address different hypotheses, ideas, empirical works and audits on
on Customs administration and their impact on trade facilitation. Broad literature audits
covering, among others, pertinent national-levels studies and reports on custom procedures,
working research and different wellsprings of information will be investigated in this chapter.
In Kenya, as in numerous different nations, Customs is in the front line of the different
offices that intercedes in global trade merchandise. Various custom administrators are
profoundly associated with controlling products which cross border, deciding merchandise origin
and classification, collection of revenue and additionally regulating trade policies (Mbithi, 2005).
Thus the way in which custom procedure is administered profoundly influence trade facilitation
either adversely or emphatically. In other words, the way in which custom is administered in
major ports can either convolute or improve global trade merchandise (McIntyre, 2005).
Furthermore, this acquaints us with the idea of how custom procedures affect trade facilitation.
In Kenya, all the custom operation are authorized and managed by the Kenya Revenue Authority
The idea of trade facilitation is receiving uncommon consideration and is at the core of various
activities inside the Customs world. In addition, trade facilitation has turned into a substantive
item inside WTO arrangements and therefore there needs to have a supply chain security
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activities in the ports, and is an element in numerous customs administration programs.
Therefore, trade facilitation conceivably covers a huge number of issues that are applicable to the
smooth and effective flow of global trade (McIntyre, 2005). Trade facilitation involves various
initiatives such as Non-Tariff Barriers for example, import permitting, products testing and
administration has resulted in enhanced economic development for nations and enhanced
Majority of the countries involves the various ministry maintain a sound harmony between the
custom operational strategies and stakeholders’ prerequisites in order to facilitate global trade
(McIntyre, 2005). The global trading network has for quite some time been striving to move
towards the idea of paperless exchange in order to reduce lengthy custom procedures. This infers
a move towards automation and the virtual relinquishment of all printed material in the custom
The reception of Customs electronic administration has greatly affected trade facilitation effort in
most of the countries. The Customs electronic administration has enormously decreased the
normal lodgement time and also the clearance time in the ports. The cost and lodgement costs
have likewise been definitely diminished due to the appropriation of customs electronic
administration (Mbithi, 2005).From these perceptions, we can presume that with the reception of
customs electronic strategies, there is currently speedier movement of products, thus it has has
greatly affected on trade facilitation. Therefore, trade facilitation is one of those key areas on
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accumulating from the expulsion/decrease on custom administration under the different trade
administrations.
current setting of nullification of formal trade hindrances at both the local and the universal
levels, therefore custom administration in any country should be faster and effective in order to
realize this objective (Mbithi, 2005). This is on the grounds that; exports will be proficient and
cost effective, imports of crude materials for the for manufacturing sector will be less expensive
and small and medium-sized ventures will have the capacity to take part in global trade as the
Technological advancement that enables linking various customs administers in the world
has created new opportunities for nations to outfit global markets for economic development and
advancement. In any case, custom administration exercise has boosted supply chains and
and cost effective manner (Buyonge and Kireeva, 2008). Today, in high competitive world, the
nature of logistics in port can have a noteworthy bearing on a international company's choices
about which nation to locate to, which providers to purchase from, and which markets to enter.
High custom administration costs, more particularly low level logistics administrations are a
barriers to international trade and also, foreign direct investment (FDI) and thusly to economic
development of the country (Mbithi, 2005). Nations with high in customs administration costs
will probably miss the chances of globalization. This is the reason trade facilitation, in particular
custom procedures, has turned out to be one of the key issues of trade negotiation inside the
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2.4 Custom administration at global perceptive
2.4.1 World Customs Organization (WCO)
The WCO provides gauges and technical bolster for empowering custom administrators
across the world to operate adequately. The Revised Kyoto Convention (RKC) traces standards
and practices for applying present day improved blended and institutionalized techniques by the
custom administrators in order to boast trade facilitation in the world. It is pivotal in the
improvement of global trade strategy and portrayal of merchandise for the reasons for customs
that products be depicted and characterized in standard codes. The WCO perceives that effective
custom administration initiative benefits both the government and business network.
worldwide markets due to decrease in delays and costs which are accomplished with
unsurprising and proficient movement of products crosswise over border. WCO has additionally
valued the requirement for security of supply chains as an aggregate test, consequently the need
to work in a united effective risk administration arrangement around the world. This implies
anchoring each phase of the journey made by products, from the point where they are packed to
their last destination, this has facilitated faster custom administration. Subsequently it is
indispensable to the achievement of this enterprise alongside traditions, each connection in the
supply network, regardless of whether private of public, be focused on handling this challenge
successfully. Fortifying co-operation and trade of information between the different players of
As result of substantive meetings between the universal Customs, business networks, the
WCO has built up a custom administration that will upgrade the security and assistance of
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international trade which is known as the WCO SAFE Framework .This framework is viewed as
a response to the potential risk of terrorists’ movement of products around the globe. WCO
SAFE Framework is a union of different settled upon security and facilitation measures that
ought to be adopted and actualized by Customs' administrators and their business accomplices in
order to facilitate global trade. WCO SAFE Framework is gone for giving consistency and
uniformity to the global trade condition by defending the end- to-end security of the in
international trade even encouraging the entry of legitimate products through faster customs
control.
WCO SAFE Framework was created in view of four standards components, in particular;
customs procedures focus on fitting advanced electronic in order to manifest the necessary
information to permit risk appraisal of cargos, apply a typical risk custom administration
approach, utilize non-nosy detection gear to impact cargo checking and give a benefit to
international firms that meet insignificant supply network security measures and best practices.
combined to ensure simplicity of understanding and fast global execution. In addition, this
instrument draws specifically from existing WCO security and help measures and projects
created by Member organizations in order to facilitate international trade (Devas et al, 2001). On
one side, the Customs-to-Customs pillar advances the consistent development of merchandise
through secure global international supply chains (Lesser and Moisé-Leeman, 2009). Therefore,
this pillar has enabled exchange of timely and precise information between customs
administrators in the situation of overseeing risks on a more compelling premise. On the other
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organizations that offer a high level of security ensures in regard of their role in the trade
network.
Organizations that satisfy the criteria characterized in the WCO SAFE Framework are
regarded as accomplices and are qualified for a host of unmistakable advantages that include;
quicker movement of generally safe freight through customs, minimized customs control
mediations, enhanced production network costs through security efficiencies, enhanced trade
organizations and Customs administrates thus, facilitating international trade (Lesser and Moisé-
Leeman, 2009). Nevertheless, effective execution of the SAFE Framework is one of the key
Changes to the multilateral trade rules can help in advancing transparency and
unsurprising custom procedures for both importers and exporters. Achieving the trade facilitation
objectives in a more extensive and more profound setting, however, will require activity from
outside as well past the WTO standards and WCO structure (Devas et al, 2001). More viable
bolsters public agencies that declare and oversee customs (Devas et al, 2001). At regional level,
At the regional level, Kenya custom procedures are controlled the by COMESA and East
African Community (EAC). The two bodies have been dynamic in inventing custom facilitation
programs to orchestrate strategies and directions for the smooth movement of merchandise and
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people in the region. Various instruments and regular models have been acquainted to facilitate
easier administration of customs such as pivot stack limits, fit transit charges, provincial
EAC, and OAU and seeks after special trade assentation as a method for expanding the stream of
trade Kenya has amended some of custom legislation, such as countervailing and licensed
innovation to facilitate international trade which are in conformity with WTO Agreements
(Lesser and Moisé-Leeman, 2009). The 2002 improvement plan illuminates a faster custom
strategy to be executed; the proceeded with decrease and possibly eliminate lengthy custom
procedures and government role route from control and direction toward the help of private
sector advancement.
Kenya presently depends on the tax as its primary custom approach instrument. Kenya
likewise perceives the significance of trade facilitation and plays a huge role towards
international trade strategy particularly with the real advancements occurring in the different
trade agreements (Buyonge and Kireeva, 2008). Kenya is executing all the WTO Agreements
which identify with trade facilitation. These incorporate the Customs Valuation Agreement, and
concurrences with global application. for example, the Harmonized System Convention that
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structures the reason for levy characterization of products exchanged the global market , thus
enabling the country to attracts more traders in the country. WCO helps with growing best global
different individuals and associations that have a stake in global trade, such as the International
Chamber of Commerce, and UNCTAD (Buyonge and Kireeva, 2008). Furthermore, in 2008/09
financial year, Kenya has set out on a Customs Services Department Reform and Modernization
Project (CRM) in order to improve custom administration into a cutting edge in order to facilitate
global trade.
As per globally acknowledged customs models, Kenya has not yet endorsed the Revised
Kyoto Convention. Currently, trade facilitation in Kenya remains a challenge in spite of the
marking of the different multilateral agreements with other countries due to unfavourable custom
administrative structure, institutional and human limit, poor ports, and the wastefulness of
exchange documentation forms keep influencing the exchange network by exacting deferrals in
the development and freedom of merchandise at the different passage and leave focuses. This has
brought about the whole procedure being related with high exchange costs which decreases the
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CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction
This chapter highlights the techniques and methods that are employed in conducting this research
study. Therefore, this chapter incorporates the research design, research techniques, sample size
population and data collection procedures, that is instruments and methods used to collect data.
Thus, this chapter delineates the techniques associated in reviewing necessary data to be used in
this study. In accordance with the nature of this study, a mix of qualitative and quantitative
procedures is used. The chapter additionally addresses the issues of the unwavering quality and
Research methodology refers to the hypothetical examination of the research techniques, which
looks to clarify the justification behind the chose investigate outline and particular methodology.
Methodology is a plan of activity that connections methods to results, which gives a general view
methodology isn't valuable for showing the idea of the examination issues or research questions,
but can prompt the assurance of conceptual framework, including the determination of proper
This study has assumed quantitative research and qualitative research, where it has customarily
used diminutive sample size. Quantitative researchers do not think about variable yet deals cases
that are data rich and data in particular (Riff, 2004). As frequently happens, the analysts do not
examine the individuals but mostly looks for particular occasions, encounters, or occurrences.
The objective of inspecting and data accumulation is to build up a data index that catches the
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phenomenon at the level of many-sided quality, which is proper for the planning while in the
meantime keeping the investigation achievable through the available of resources.This study
information comes from international standards relating to trade facilitation, as well as from the
experience and viewpoints of customs administrators and partners and in addition the physical
Blended strategy approach is characterized with the utilization of both qualitative and
quantitative procedures, either simultaneously or consecutively, at some stage starting with the
information gathering process, from which understandings are made in either a parallel, an
Some components of quantitative investigation, for example, giving numerical correlations with
the recurrence of certain coded classifications are utilized to give a signifies to assess the
from that point, news content in the informational index are broke down qualitatively with
regards to those numerical outcomes to investigate the dormant and more profound implications
of significations.
Qualitative research gives a detailed and in-depth description of circumstances, occasions, and
interprets comprehension of the social world by finding out about individuals' encounters, points
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The qualitative approach was utilized in this examination since the exploration questions are
complex about complex issues of custom administration and trade facilitation occurring inside
the specific setting of current consignment tasks. Qualitative approach has provided the
opportunity to discover peoples perspective on the issue under investigation and encounters the
This research study uses descriptive method, to determine effects of customs procedures on trade
facilitation at Jomo Kenyatta international airport (JKIA). Descriptive method is employed when
the purpose is to depict characters of specific objectives, assess the proportion of individuals who
behave in a definite manner and make particular predictions (Kothari, 2004). Descriptive method
is preferred to be used in this study since it takes into consideration depiction of the impact of
3.3 Population
Mugenda and Mugenda (2003) defined population as the 'universe'. In addition, population can
object in which an analyst generalize the outcomes of the investigation (Mugenda and Mugenda
2003). The objective population of this research study comprised of the 100 respondents from
This research study employs stratified sampling system, which was suitable in creating a sample
for the research. This is on the grounds that the population to be examined is heterogeneous in
nature. Stratified sampling method considers certain characters such as size, kind of principle
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business what's more, custom administration. In addition, the study at some point utilized
custom procedure in Kenya. Purposive sampling strategy guaranteed that the study accomplished
considered. The study had sampled out 50% of the total respondents interviewed, hence making
Data Collection in social research study regularly refers to the strategies for taking an interest in
the setting, direct observation or interview. The selection of data collection method for this
investigation depends on the nature of the learning and data required to answer the exploration
questions. The researcher employees both primary and secondary sources to gather the necessary
data used in this study. These sorts of sources are basic for this study and can be gotten to by
qualitative research procedures including various data gathering techniques. On one hand,
primary sources involved the utilization of semi-organized questionnaires with both open and
closed ended questions directed to respondents in custom department in JKIA. On the other side,
secondary sources involve accessing custom administrators’ organization profiles and records
and previous studies done. Questionnaire is designed with two sections. The first section was
intended to accumulate general data on individual and authoritative profile of employees and
customs administration. The second section comprised of questions to determine how they
In this research study, the contextual investigation of custom procedures at the Jomo Kenyatta
International Airport was inspected and analysed through various strategies for data collection,
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which includes direct observation, interviews and structured questionnaire. These techniques
were utilized to get an all holistic perspective of the custom procedures so as to answer the
phenomenon being examined. The ways to deal with meetings can be ordered into organized,
semi-organized and unstructured interviews as per the degree to which the questions are
designed.
concerning the present routine with regards to trade facilitation and administrative in JKIA.
Semi-organized interviews are proper for this investigation in that they are more adaptable than
organized interviews and more engaged than unstructured interviews. The interview was directed
with the planning of theme guides and interview question developed in accordance with the
research questions and conceptual framework used in this study. The interviews were employed
to answer the research inquiries on the criteria required for determining the effect of custom
administration on trade facilitation. In addition, this study employs purposive sampling to choose
hypothetical purposes that connect to the examination center. Purposive sampling was employed
to choose the key personnel who have broad knowledge to give data and contribute significant
information in the custom procedure. The planned interviews were led with interviewees from
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administration and operational levels of customs department and different stakeholders whose
work is associated with trade facilitation in Kenya such as KRA officials. Meetings with
administration levels give a general photo of the strategy or basic leadership on exchange
assistance and traditions administrative control. Interviews with administrative levels are
essential in that they know the overall circumstances and the functional activities in connection
Reliability is about the replicability of research findings and the degree to which similar
outcomes are rehashed when the same or comparative techniques are connected to a similar
gathering under similar conditions. The reliability of research instruments used in this study
aims at minimizing any errors and biases in the research. The reliability of the data collection
can be accomplished by employing the proper methods and strategies for leading the study. This
incorporates the procedure of cross-checking data, applying numerous sources and confirmation,
utilizing diverse strategies for data estimation, and including different analysts in the data
collection and analysis. To guarantee the reliability of the study finding, this research was
directed in a similar way through planned interviews and direct observation under similar
conditions each time. Interviews and direct observation were led over various customs
information gathered from the Customs Department, the four fundamental express enterprises
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3.7.2 Validity of research instruments
precision of the study. In this research, validity is guaranteed through different sources used to
collect data, including existing literature reviews, interview and direct observation. This is steady
with the literature, which proposes that scientists utilize different sources of evidence, build up a
chain of confirmation and have critical informants to survey the case study under investigation.
A researcher can boast the validity of research instruments using various sources and strategies,
Any research study including human subjects needs to think about ethical issues, which may
emerge as follows; ethical endorsement from the relevant authorities; confidentiality and privacy
of information; voluntary and educated assent of members used in the research; risks and
benefits of the research study; and participants rights to stop or withdraw their support from the
research. In this research study, confidentiality and privacy, and data protection is considered and
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References
Awitta, M. (2010). Effectiveness of revenue collection strategies at Kenya Revenue Authority in
Buyonge, C., & Kireeva, I. (2008). Trade facilitation in Africa: challenges and possible
Devas, N., Delay, S., & Hubbard, M. (2001). Revenue authorities: are they the right vehicle for
Lesser, C., & Moisé-Leeman, E. (2009). Informal cross-border trade and trade facilitation reform
in Sub-Saharan Africa.
McIntyre, M. M. A. (2005). Trade integration in the East African Community: an assessment for
Mbithi, M. (2005). Trade Facilitation: Issues for Kenya and Kenya’s Position at the WTO.
Milner, C., Morrissey, O., & Zgovu, E. (2008). Trade facilitation in developing countries (No.
Mugenda, O. M., & Mugenda, A. G.(2003). Research methods quantitative and qualitative
approaches.
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