THE EQUALISATION FUND APPROPRIATION (NO. 2) BILL, 2023
Status Timeline
Proposed
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Public Review
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Debate
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Executive
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Final
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KSh 10.5 Billion Transferred for Local Infrastructure
Allocates KSh 10,541,378,000 specifically for development projects across designated marginalized counties, constituencies, and wards. These funds must be applied toward basic services contemplated under Article 204(2) of the Constitution, which includes the provision of:
- Water
- Roads
- Health facilities
- Electricity
Mandatory Special Purpose Accounts at the CBK
Requires beneficiary counties to open a dedicated special purpose account at the Central Bank of Kenya to receive their allocations (Section 5(2)). The Bill expressly prohibits these funds from being paid directly into the general County Revenue Fund (Section 5(1)).
Advisory Board Secretariat Expenses Limited
Directs KSh 326,022,000 toward the administrative and operating expenses of the Equalisation Fund Advisory Board (Section 3(a)). This allocation is guided by regulation 10(3) of the Public Finance Management (Equalisation Fund Administration) Regulations, 2021.
Funding Protection for Multi-Year Projects
Safeguards long-term projects by providing that the authority to issue monies from the Fund remains active until all specified projects are complete (Section 7(1)). This acts as multi-year authorization for the Controller of Budget to approve withdrawals beyond a single financial year (Section 7(2)).
Bill No.
Bill No. 30 of 2023
Gazette No.
Supplement No. 113 of 2023
Background
The Equalisation Fund is established under Article 204(1) of the Constitution of Kenya, requiring the national government to set aside a portion of revenue to improve basic services in marginalized regions. Under Article 204(2), these funds must address regional disparities in water, roads, health facilities, and electricity. The Equalisation Fund Appropriation (No. 2) Bill, 2023 provides the legislative framework and authority for the National Treasury and the Controller of Budget to issue and direct the necessary finances for the fiscal year ending 30th June, 2024.
New Obligations
The Bill imposes several critical financial management rules and compliance requirements on beneficiary counties and the Equalisation Fund Advisory Board:
- Exclusive CBK Accounts: Each beneficiary county must open a special purpose account in the Central Bank of Kenya specifically to receive and maintain its allocated share of the Equalisation Fund.
- Separation of Funds: Counties are strictly prohibited from mixing Equalisation Fund allocations with standard county revenues; under Section 5(1), these funds cannot be deposited into any general County Revenue Fund.
- Triple-Tier Disbursement Mapping: Monies must be applied to the precise counties (Column A of the Schedule), constituencies (Column B), and wards (Column C) mapped out in the bill's detailed schedules.
- Withdrawal Approvals: The Controller of Budget may only authorize withdrawals from the Equalisation Fund upon receiving a written instruction from the Secretary of the Equalisation Fund Advisory Board, routed through the National Treasury.
Transitional Provisions
To ensure that ongoing infrastructure works do not stall due to calendar deadlines, the Bill outlines specific transitional rules for project execution:
- Continuity of Spending Authority: The authority of the Board to issue monies for identified projects does not lapse at the end of the financial year. Instead, it remains in force until every project specified in the target wards is completed.
- Multi-Year Withdrawal Rights: The Act serves as continuous legal authority for the Controller of Budget to authorize the withdrawal of funds across financial years for long-term project implementation.
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