The National Treasury building in Nairobi.
The National Treasury still holds Sh39.7 billion in special funds budgeted to assist counties in marginalised areas across the country, new disclosures showed.
The arrears had been approved by Parliament for disbursement into the Equalisation Fund for the financial year that ended June 30, 2024.
“The cumulative entitlement to the financial year 2023/24 to the fund amounts to Sh62.4 billion. A total of Sh12.4 billion and Sh10.3 billion was appropriated under the first and second policies identifying marginalised areas policy. The outstanding arrears to the fund amounts to Sh 39.7 billion,” the Treasury said in its newly released draft 2024 Budget Review and Outlook Paper.
The Equalisation Fund is a creation of Article 204(7) of the Constitution to help uplift regions of the country that have previously been secluded from the national cake. The Constitution demands that 0.5 per cent of the National government's annual revenue be specifically allocated to marginalised areas.
The Fund is meant to provide basic services, including water, roads, health facilities and electricity to marginalised areas. Beneficiaries of the fund are Turkana, Lamu, Mandera, Wajir, Marsabit, Samburu, West Pokot, Tana River, Narok, Kwale, Garissa, Kilifi, Taita Taveta and Isiolo counties.
Under the first marginalisation policy, which covered 14 counties, a total of Sh12.4 billion was appropriated to implement 360 projects in 14 counties.
“The second marginalisation policy covering 34 counties currently being implemented, has appropriated Sh10.3 billion being allocation for the financial year 2021/22 and financial year 2022/23. As at the end of May 2024, the Fund had approved 1,249 projects out of the 1,347 projects received. The value of approved projects amounted to Sh 8.1 billion,” the Treasury said.
A key committee of the National Assembly last month backed a Bill that seeks to extend the life of the Equalisation Fund by another 10 years.
The National Assembly’s Finance and National Planning Committee approved the Equalisation Fund Bill, 2023 that originated from the Senate.
The Bill seeks to suspend the application of Article 204 (7) of the Constitution and extend the pendency of the Fund.
Established in the Constitution in 2010, the fund is expected to be wound up in the year 2030. The fund was scheduled to lapse 20 years after the effective date of the Constitution which was promulgated in 2010.
The Controller of Budget (CoG), the Commission on Revenue Authority (CRA), the Council of Governors (CoG), the Law Society of Kenya (LSK), and the Equalisation Fund Board have backed provisions of the Bill.
The new Bill provides a framework for the administration and management of the Equalisation Fund, provides for the completion of ongoing projects under the First and Second policies, provides a framework for the identification, selection, and implementation of projects for purposes of the Fund, suspend the application of Article 204(7) of the Constitution and extend the pendency of the Fund, and provide for the procedures concerning winding up of the Fund.
The Bill also establishes the Equalisation Fund Advisory Board whose functions will be among others advise and make recommendations to the Cabinet Secretary on the distribution of resources for the provision of basic services to the marginalised areas under Article 204 of the Constitution in line with the recommendations of the Commission on Revenue Allocation.
