The Equalisation Fund Bill, 2022
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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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Establishment of the Equalisation Fund Board
The Bill establishes a new body corporate to administer and manage the Fund. The Board will consist of a Chairperson appointed by the President, five Principal Secretaries (representing Water, Roads, Health, National Treasury, and ASAL areas), and four members appointed by the Cabinet Secretary to represent marginalised communities.
Constituency-Level Committees to Identify Local Projects
Section 20 establishes a Local Equalisation Fund Committee in each constituency within a marginalised area. These seven-member committees are tasked with identifying local projects in consultation with residents and submitting proposals to the Board for funding.
KSh 4 Million Fine for Fund Misappropriation
Under Section 38, any person who misappropriates any funds or assets from the Fund, or assists in doing so, commits an offence. Upon conviction, the individual is liable to a fine not exceeding KSh 4 million, imprisonment for a term not exceeding 10 years, or both.
Five Percent Administrative Spending Caps
Section 31 places strict caps on expenses. The Board must set aside a sum not exceeding 5% of the Fund's total allocation for its administrative expenses. Similarly, a sum not exceeding 5% of the total allocation for a project may be used for local committee administration.
Bill No.
No. 47 of 2022
Gazette No.
Supplement No. 172
Sponsor
Kassait Kamket
Background
Article 204 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 recent audited accounts as approved by the National Assembly. This Bill aims to replace the previous bureaucratic administration under the National Treasury with a direct administration model to accelerate service delivery to marginalised areas.
Key Amendments
- Repeal of Public Finance Management Act Provisions: Section 40 of the Bill amends the Public Finance Management Act, 2012 by repealing Section 18.
- Revocation of Guidelines: Section 41 revokes the existing Guidelines on the administration of the Equalisation Fund established under the Public Finance Management Act, 2012.
- Establishment of the Board: Sets up the Equalisation Fund Board to directly disburse monies, approve projects, and manage fund assets.
New Obligations
- Project Submissions: Local Committees must submit proposed projects to the Board within one month of the enactment of the Equalisation Fund Appropriation Bill by the National Assembly (Section 24).
- Quarterly Reporting: The Board is required to submit a quarterly report to the National Assembly detailing project proposals, disbursement statuses, and project implementation progress (Section 26).
- Bank Account Mandate: The Board must open and maintain a bank account at the Central Bank of Kenya into which all monies of the Fund are paid (Section 34).
- Auditing Requirements: The Board must submit its accounts to the Auditor-General within three months after the end of each financial year (Section 32).
Penalties
- Misappropriation of Funds: Section 38 establishes that any individual who misappropriates or misapplies monies or assets from the Fund commits an offence and, upon conviction, faces a fine up to KSh 4 million, a prison term of up to 10 years, or both.
Transitional Provisions
- Winding Up the Fund: Section 36 provides that when the Fund is wound up pursuant to Article 204 of the Constitution, cash balances will be transferred to the National Exchequer Account, and other assets will be transferred to the State Department responsible for finance.
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