The Effectiveness of Single Customs Territory Risk Management in Enhancing Cross-Border Trade: A Case of Holili Border, Tanzania

Implementation of the Single Customs Territory (SCT) in Tanzania, particularly at strategic points like the Holili border, continues to face significant challenges due to various risk factors that hinder the efficiency and effectiveness of cross-border trade. Despite the application of the SCT framework, risks related to compliance, security, and financial management remain persistent obstacles to trade facilitation. This study aims to assess the effectiveness of SCT risk management in enhancing cross-border trade by examining the influence of compliance, security, and financial risks. A convergent research design with a mixed approach was employed. The sample size of 200 respondents was selected using a convenience sampling technique. The data was collected through a structured questionnaire. The instrument was ensured through expert review, while reliability was confirmed with a Cronbach's alpha coefficient of 0.846, indicating a high level of internal consistency suitable for data collection. Multiple linear regression analysis was used for data analysis. Testing the research hypothesis showed that managing the three risk factors (compliance risk, security risk, and financial risk) has a statistically significant and positive influence on cross-border trade, with financial risk management emerging as the most dominant predictor. In particular, effective compliance measures ensuring accurate documentation and adherence to trade regulations facilitate smoother trade processes. Similarly, strengthened security mechanisms, such as cargo scanning and tracking technologies, minimize disruptions and delays. Most notably, robust financial risk management practices significantly reduce fraudulent practices, build trust among trading parties, and improve the overall integrity and efficiency of trade operations. These findings affirm the importance of an integrated risk management approach in improving cross-border trade outcomes. The Tanzania Revenue Authority and relevant regional bodies should prioritize capacity building in financial oversight and deploy advanced monitoring tools to mitigate identified risks and optimize SCT performance. In addition, the results of this research may help improve the risk management system of single customs territories in other countries.