Parliament passes Equalisation Fund Bill that will see release of Ksh16.8 billion to marginalized areas

Parliament has passed the Equalisation Fund Appropriation Bill (National Assembly Bill No. 21 of 2025), setting in motion the release of Ksh. 16.8 billion to support the delivery of basic services in Kenya’s marginalised areas during the 2025/2026 financial year.

The Bill gives legal effect to Article 204(1) of the Constitution, which establishes the Equalisation Fund to finance the provision of water, roads, electricity, and health services in historically underserved areas bridging the development gap and ensuring that these communities enjoy a quality of services comparable to the rest of the country.

The Ksh. 16.8 billion comprises Ksh. 6.2 billion rolled over from the 2024/2025 financial year and Ksh. 10.6 billion earmarked for the current year. Ksh. 7.852 billion represents 0.5% of the most recent audited national revenues, while Ksh. 2.747 billion accounts for arrears approved under the Division of Revenue Bill, 2025.

A total of Ksh. 504 million has been allocated for administrative and oversight expenses of the Equalisation Fund Board and Secretariat—an amount within the 3% ceiling provided under the Public Finance Management (Equalisation Fund Administration) Regulations, 2021. The remaining Ksh. 16.296 billion will go directly to 1,424 marginalised areas.

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The Bill identifies counties with the highest levels of marginalisation based on the Second Policy on Marginalisation.

Eight counties will receive over 60% of the total allocation including Turkana County will receive the largest share at Ksh. 1.86 billion, followed by West Pokot (Ksh. 1.7 billion), Narok (Ksh. 1.3 billion), Mandera and Wajir (Ksh. 1.2 billion each), Samburu (Ksh. 1.1 billion), Garissa (Ksh. 1.0 billion), and Baringo (Ksh. 967 million).

To safeguard accountability, the Bill directs that funds shall not be deposited into the County Revenue Funds (CRF) but instead transferred to special purpose accounts opened by each beneficiary county at the Central Bank of Kenya. This measure ensures the funds are used strictly for their intended purpose. The Bill also provides that its enactment constitutes legal authority for the Controller of Budget to approve and authorise disbursements.

Further, upon the Controller of Budget’s approval and the submission of written instructions from the Secretary of the Equalisation Fund Board through the National Treasury, the Central Bank of Kenya will be authorised to effect payment—streamlining the release process.

In its report to the House, the Budget and Appropriations Committee chaired by Samuel Atandi noted that while the Bill proposed an allocation of Ksh. 10.6 billion for FY 2025/26, the budget estimates approved by the House provided only Ksh. 9.59 billion.

By Our Reporter

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