The Equalisation Fund Appropriation Bill, 2025, introduced in Parliament this week for the second reading, seeks approval for the issuance of KSh 16.8 billion to support basic infrastructure in more than 30 marginalised counties.
- •The proposal includes KSh 16.3 billion for direct county-level development and KSh 504 million for administration through the Equalisation Fund Advisory Board.
- •The biggest beneficiaries of this slated fund will be Turkana (KSh 1.86 billion), West Pokot (KSh 1.66 billion), Narok (KSh 1.25 billion), and Mandera (KSh 1.2 billion).
- •However, Treasury Cabinet Secretary John Mbadi, in his budget address for FY 2025/26, proposed a lower commitment of KSh 7.85 billion, plus an additional KSh 2.74 billion to settle outstanding arrears.
This discrepancy reflects a long-standing issue with the Equalisation Fund, where parliament routinely authorizes large amounts, while actual Treasury disbursements fall significantly behind.
In the latest Auditor General’s report, only KSh 13.4 billion of the KSh 59.9 billion legally earmarked for marginalized communities had been disbursed since the Fund’s inception in 2011; a shortfall of KSh 46.5 billion (Read More). The constitutional framework requires 0.5% of national revenue to go into the Fund annually, but that target has rarely been met.
In the 2024/25 fiscal year, although KSh 8.67 billion was allocated, Treasury released only KSh 8.26 billion, and KSh 156 million went into stalled or redundant projects. An audit of ten projects under the Fund’s First Policy Phase found six completed but unused. Four projects were incomplete, with KSh 32 million in undelivered equipment. Additionally, 57 projects initiated over five years ago remain under 50% completion.
Meanwhile, some constituencies received as little as KSh 5 million in recent years, a sum the Auditor General dismissed as unlikely to make meaningful impact. Without a credible project monitoring framework or impact assessments from earlier phases, it is unclear whether the additional KSh 2.74 billion in arrears payment proposed by Treasury will make any significant impact in the marginalised counties.
There is also growing debate over whether the Equalisation Fund should be extended. The Fund was constitutionally designed to last 20 years, expiring in 2030. Parliament is considering a non-renewable 10-year extension arguing that consistent underfunding has crippled progress. However, due to worsening fiscal constraints, it is probable that an extension of the Fund without fixing its structure may simply prolong its inefficiency and rampant misappropriation.
As Parliament now debates the 2025 appropriation alongside a record KSh 4.34 trillion national budget, the fate of the Equalisation Fund could serve as a litmus test for the country’s commitment to equitable development.