The national government has committed to release at least Sh40 billion owed to marginalised counties under the equalisation fund after years of delays.
The latest development follows an Intergovernmental Budget and Economic Council meeting’s resolution where it was agreed that the National Treasury release the funds in tranches of Sh10 billion annually.
Under the Fund, the marginalised counties are entitled to Sh54 billion, but Parliament has only approved Sh26.2 billion for disbursement out of which Sh12.4 billion has been appropriated.
The Fund, which came into place in 2010 with the promulgation of the Constitution, was to last for 20 years with 2030 being the sunset year.
However, there have been delays in the rollout of the fund which had to wait until 2018 when the first batch was released.
“IBEC resolves that the National Treasury commits to disburse approximately Sh10 billion annually of the arrears owed to Counties in terms of equalisation fund beginning the financial year ending June 30, 2025,” said Deputy President Rigathi Gachagua.
At first, the fund was to benefit the 14 traditional counties but the list has since been expanded to include 34 counties covering some 1,424 marginalised areas.
The Equalisation Fund is provided for under Article 204 of the Constitution to provide basic services including water, roads, health facilities and electricity to marginalized areas.
The Article provides that 0.5 percent of the all revenue collected by the national government would be allocated to the Fund.
The Fund aims to catalyse development in historically marginalised areas by providing financial resources for provision of basic services including water, roads, health facilities and electricity to marginalised areas to the extent necessary to bring the quality of those services in the areas to the level generally enjoyed by the rest of the nation.
Nonetheless, governors have been up in arms over delays in disbursement of the funds, demanding the release of Sh13.8 billion for stalled projects being rolled out in marginalised counties, accusing the National Treasury of frustrating the completion of the projects.
The county chiefs also raised concerns over some 112 projects financed by the equalisation fund which are yet to be handed over to the devolved units despite being completed over pending bills.
Council of Governors vice chairperson, Wajir Governor Ahmed Abdullahi, said that contractors have held onto the projects as they are yet to be paid by the National Treasury.
He explained that a number of projects under the first policy of the equalisation fund in 14 counties have either stalled or not been handed over as a result of the pending bills amounting to Sh3 billion.
On the balance of Sh13.8 billion, he said they had budgeted for the same in the financial year ending June 2024, only for the National Assembly’s Budget committee to slash the allocation by Sh3.2 billion.
He said in the recent supplementary budget, the Exchequer considered and included Sh6.8 billion being the budget for the financial year ended June 2022 and Sh7.8 billion for the financial year ending June 2024.
“The original vision of the equalisation fund appears to have been hijacked. The Fund was never meant to be shared by all counties but only the 14 counties that had originally been identified in 2015 by CRA,” said Kakamega Senator Boni Khalwale.
The Senate Majority Whip argued that spreading the money thin makes no sense calling for the Board to approach Parliament to have CRA return to the original marginalised counties.
“Approach Parliament to come up with a law to have the funds only target the marginalised areas as there is no county that lacks a poor place even Nairobi,” he said.
Turkana Senator James Lomenen said the original purpose of the fund has been hijacked by politics resulting in continued suffering of the historically marginalised areas with the entry of new beneficiaries.
“What CRA is doing is politics and it is making other areas continue being marginalised. There are areas which have taken advantage of the Fund,” said Mr Lomenen.
“In Turkana for example, we identified many projects, which have been assessed, but very few are being implemented yet money is lying at the Treasury and has not reached targeted areas.”
Wajir Senator Abass Mohamed said the Fund has missed its purpose and spreading the money to Sh1 million for a project is not making sense at all.
“We will have to summon both the Treasury and CRA over this issue. Otherwise, 20 years will end and the 14 counties will have nothing to show, and will continue being marginalised,” said Senator Kisang’.
