Abstract

This research sought to appraise the effect of Customs Tariffs on the financial performance of
Textile and Apparel Firms in Kenya. The research employed explanatory research design and
used primary data. Primary data involved the use of closed ended structured questionnaire
administered through face to face interviews using five-point Likert scale. The Senior managers
and finance section heads of textile and apparel firms in Kenya formed the respondents.
Stratified random sampling was employed to stratify sample of senior managers and finance
section heads of the respective textile and apparel firms in Kenya. Proportionate random
sampling was further used to select the sample from each stratum and then convenient sampling
finally employed to draw sample and collect data. Among the 170 respondents, 166 completed
their questionnaires thus the study attained a response rate of 97.6%. The study employed both
descriptive and inferential statistics to conduct data analysis.
A multiple regression analysis was conducted on cross-section data at 5% level of significance.
The study result revealed that there was a 63.9% variation in the financial performance of textile
and apparel firms due to changes in the Customs Tariffs of Apparel, Fabric and Yarn. The
findings also revealed that for any unit increase in the Customs Tariff of Apparel, Fabric and
Yarn there was a 0.542, 0.539 and 0.112 units increase in the financial performance of Textile
and Apparel firms in Kenya. Thus, the results revealed that Customs Tariff was a fundamental
factor and had a positive and significant effect on the financial performance of Textile and
Apparel firms in Kenya. Unique Contribution to Theory, Practice and Policy: Based on the
study findings, the study recommended that the Government of Kenya (GOK) should increase
the Import Tariffs of Apparel and Fabric to enable the Kenyan Textile and Apparel Firms
improve their financial performance and achieve growth. The research suggest that future
research can examine other cost elements and measures that affect the financial performance
the Textile and Apparel firms in Kenya.