The Equalisation Fund is a special fund established under Article 204 of the Kenyan Constitution. Its primary goal is to provide basic services to marginalized areas, helping bridge development gaps between different regions of Kenya.
📌 1. Key Features of the Equalisation Fund
🔹 Funding Source:
- Receives 0.5% of all revenue collected by the national government every year.
- The amount is based on the most recent audited revenue accounts approved by Parliament.
🔹 Administration:
- Managed by the National Treasury and kept in a separate account at the Central Bank of Kenya.
- Cannot be overdrawn at any time.
- Controller of Budget must approve all withdrawals.
🔹 Target Areas:
- Marginalized regions as identified by the Commission on Revenue Allocation (CRA).
- The government consults the CRA before appropriating money from the fund.
📌 2. Uses of the Equalisation Fund
✔ Providing basic services in marginalized areas, including:
- 🏥 Health facilities
- 🚰 Water services
- 🔌 Electricity supply
- 🛣️ Roads infrastructure
✔ Bridging regional disparities to ensure equal access to essential services across the country.
✔ Conditional grants to counties – The fund may be used directly by the national government or distributed as conditional grants to counties with marginalized communities.
📌 3. Oversight & Controls
🔹 Parliamentary Approval:
- Parliament must pass an Appropriation Bill before any funds are spent.
- Unspent money at the end of a financial year remains in the fund for future use.
🔹 Withdrawal Process:
- National Treasury submits a request for withdrawal.
- Controller of Budget must approve the withdrawal.
- Central Bank releases funds once all approvals are granted.
📌 4. The Fund’s Expiry & Extension
🔹 The Equalisation Fund is NOT permanent.
- It expires 20 years after the effective date of the 2010 Constitution (i.e., in 2030).
- Parliament can extend its duration by enacting legislation, but this requires:
✅ Majority approval from the National Assembly.
✅ Majority approval from the Senate county delegations.
📌 Conclusion
The Equalisation Fund is critical for reducing regional inequalities and ensuring that all Kenyans enjoy basic services regardless of their location. It represents a constitutional commitment to inclusive development, economic equity, and balanced resource distribution across the country.
