THE EQUALISATION FUND APPROPRIATION BILL
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Projects Protected from End-of-Year Fund Rollover Rules
To prevent project stagnation, the bill stipulates that funds issued for specific constituency projects will remain available until those projects are completed. This protects key local developments from having their unused allocations returned to the general fund at the end of the financial year.
KSh 16.8 Billion Allocated for Local Development
The bill authorizes the Equalisation Fund Secretariat to issue KSh 16,800,000,000 for the 2025/2026 financial year. Out of this, KSh 504,000,000 will cover administrative expenses for the Secretariat, while KSh 16,296,000,000 will fund basic services in constituencies across 34 designated counties.
Funds Bypassing County Revenue Accounts
The bill explicitly excludes the appropriated monies from being sent to county revenue funds as would normally be done under Article 207(1) of the Constitution. Instead, the funds will be administered directly through the Equalisation Fund mechanisms to target local constituencies.
Strict Dual-Authorization Required for Bank Withdrawals
The Central Bank of Kenya may only disburse funds from the Equalisation Fund Account upon receiving two distinct verifications:
- An explicit authorization of withdrawal from the Controller of Budget.
- Written instructions from the Secretary of the Equalisation Fund Advisory Board, routed through the National Treasury.
Bill No.
Senate Bills No. 7 of 2025
Gazette No.
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Sponsor
Sen. (Capt.) Ali Ibrahim Roba, EGH, MP
Background
Article 204(1) of the Constitution of Kenya establishes the Equalisation Fund, which receives one-half percent (0.5%) of all revenue collected by the National Government each year, calculated on the basis of the most recently audited and approved accounts. Under Article 204(2), these funds must be used exclusively to provide basic services—specifically water, roads, health facilities, and electricity—to marginalized areas.
Article 204(3) mandates that expenditure from this fund can only occur through an Appropriation Bill enacted by Parliament. Currently, there is no active law authorizing disbursements for the 2025/2026 financial year, as the previous legislation (the Equalisation Fund Appropriation Act, No. 7 of 2023) only covered the 2022/2023 financial year. This bill resolves this legal gap.
Key Provisions
- Fund Authorization: Empowering the Equalisation Fund Secretariat to issue KSh 16,800,000,000 out of the Equalisation Fund for the 2025/2026 financial year.
- Administrative Budget: Allocates KSh 504,000,000 to the Equalisation Fund Secretariat to settle its own administrative and operational expenses.
- Constituency Allocations: Allocates KSh 16,296,000,000 to resolve development expenses for critical infrastructure (water, roads, health, and electricity) within targeted constituencies located in 34 marginalized counties.
- Targeted Counties: Funding will support projects in Baringo, Bomet, Bungoma, Busia, Elgeyo Marakwet, Garissa, Homa Bay, Isiolo, Kajiado, Kericho, Kilifi, Kisumu, Kitui, Kwale, Laikipia, Lamu, Machakos, Mandera, Marsabit, Meru, Migori, Murang’a, Nakuru, Nandi, Narok, Samburu, Siaya, Taita Taveta, Tana River, Tharaka Nithi, Trans Nzoia, Turkana, Wajir, and West Pokot.
- Revenue Fund Exclusion: Monies appropriated under this Bill are specifically prohibited from being redirected into county revenue funds under Article 207(1) of the Constitution and section 109(2)(c) of the Public Finance Management Act.
New Obligations
- Multi-Year Project Management: The Controller of Budget is required to authorize continued withdrawals for projects that span more than one financial year, ensuring they remain active until completion.
- Payment Clearances: The Central Bank of Kenya must verify that any withdrawal request from the Equalisation Fund Account is backed by both a Controller of Budget approval and official written instructions from the Secretary of the Equalisation Fund Advisory Board, transmitted via the National Treasury.
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