The Senate Standing Committee on Finance and Budget has officially adopted its report on the Equalisation Fund Appropriation Bill 2025, recommending that the Senate approves the Bill without any amendments.
This legislative action fulfils the mandate under Article 204(3) of the Constitution, which requires that all expenditures from the Equalization Fund be authorised through an Act of Parliament.
The Bill seeks to appropriate Sh16.8 billion to provide essential services, specifically water, roads, health facilities, and electricity to 1,424 marginalised areas identified across 34 counties.
The proposed funding comprises a Sh6.2 billion allocation from the 2024/2025 financial year and Sh10.6 billion for the 2025/2026 financial year.
Notably, the 2025/2026 portion is based on 0.5 per cent of the most recent audited and approved revenues for the 2020/2021 financial year, totalling Sh7.852 billion, supplemented by Sh2.747 billion intended to address persistent arrears.
The Members of the Senator Ali Roba-led Committee emphasised that while the Bill outlines allocations by county and constituency, the funds are strictly ring-fenced for the specific sub-locations identified under the Second Policy on Marginalisation developed by the Commission on Revenue Allocation (CRA).
A critical portion of the Committee’s report addresses the administrative and fiscal hurdles that have historically hindered the fund’s impact.
The Committee observed that the total outstanding arrears to the Fund, including the current 2025/2026 allocation, have climbed to Sh62.677 billion out of a total constitutional entitlement of Sh79.858 billion.
Senators expressed deep concern that since the fund’s inception, only Sh13.4 billion, representing approximately 22.4 per cent of the entitled amount, has been successfully transferred.
In the report, the committee warns that “this lack of disbursements risks the realisation of the fund’s envisioned objective of providing basic services to the marginalised areas.”
To safeguard these resources against diversion, the Bill contains strict financial controls. Clause 5 mandates that the appropriated funds shall not be paid into the County Revenue Fund; instead, they must be transferred to a special purpose account opened by the beneficiary county at the Central Bank of Kenya.
Furthermore, the Bill specifies that the authorisation for withdrawal rests with the Controller of Budget, acting on written instructions from the Secretary of the Equalisation Fund Advisory Board through the National Treasury.
To support these operations, the Bill earmarks Sh504 million for the Secretariat and Board expenses, capped at three per cent of the annual allocation under the PFM Regulations.
Following the adoption of this report, the Chairperson of the Committee and Mandera Senator Ali Roba will table the report before the Senate Plenary for debate and consideration.
If the House agrees with the committee’s recommendation and passes the Bill, it will be forwarded to the President for Assent.
Once signed into law, the Act will provide the legal authority for the Controller of Budget to release the Sh16.8 billion, enabling the commencement of development projects in the 1,424 targeted marginalised sub-locations.
Simultaneously, the Committee expects the CRA to finalise the third marginalisation policy, which will determine the criteria for future allocations starting from the 2026/2027 financial year.
By Joseph Ng’ang’a
