Trade facilitation and revenue enhancement nexus in Zimbabwe

Abstract

Many developing countries currently base their trade policy modifications on the execution of trade facilitation reforms. There exists a gap between the policy intervention aimed at reform and the practical capacity to implement these trade facilitation reforms. This research employed a straightforward regression model to evaluate the effect of trade facilitation on revenue collections in Zimbabwe from 2009 to 2022, utilising the Logistics Performance Index as a proxy for trade facilitation. Total tax revenue, the variable of interest, is quantified as a percentage of gross domestic product, indicating the efficiency of government tax collection. The findings demonstrate that the efficiency of border clearance and the competence and quality of logistical services positively influence revenue collections, whereas the quality of trade and transport infrastructure negatively affects revenue collection . The findings indicate that governments should prioritise enhancing the efficiency of border processes and the quality of logistics services to increase revenue, while also mitigating the adverse effects of inadequate trade and transport infrastructure. The implementation of public-private partnerships, investment in alternative energy sources, automation of customs processes, and the establishment of quality management systems in customs administrations can facilitate this achievement. This study confirms that effectively implemented trade facilitation initiatives can realise their intended economic benefits, including reduced trade costs, enhanced efficiency, and increased access to international markets.