National Assembly Approves Sh16.8 Billion For Marginalised Areas

The National Assembly has passed the Equalisation Fund Appropriation Bill (National Assembly Bill No. 21 of 2025), paving the way for the release of Sh16.8 billion to improve basic services in Kenya’s marginalised regions during the 2025/2026 financial year.

The Bill gives effect to Article 204(1) of the Constitution, which established the Equalisation Fund to support the provision of water, roads, electricity, and health services in historically underserved areas. The aim is to bridge development gaps and ensure all communities enjoy similar quality of services as the rest of the country.

Out of the total allocation, Sh6.2 billion is a rollover from the 2024/2025 financial year, while Sh10.6 billion is earmarked for the current fiscal year. Of this amount, Sh7.852 billion represents 0.5% of the latest audited national revenue, and Sh2.747 billion has been approved as arrears under the Division of Revenue Bill, 2025.

An additional Sh504 million has been set aside for administrative and oversight expenses of the Equalisation Fund Board and Secretariat, within the 3% limit allowed by the Public Finance Management (Equalisation Fund Administration) Regulations, 2021. The remaining Sh16.296 billion will be distributed directly to 1,424 marginalised areas across the country.

The allocation is guided by the Second Policy on Marginalisation, which identifies counties with the highest levels of underdevelopment. Eight counties will receive over 60% of the total funding. These include Turkana, which will get the largest share at Sh1.86 billion, followed by West Pokot (Sh1.7 billion), Narok (Sh1.3 billion), Mandera and Wajir (Sh1.2 billion each), Samburu (Sh1.1 billion), Garissa (Sh1 billion), and Baringo (Sh967 million).

To promote accountability and ensure proper use of the funds, the Bill requires that money not be deposited into county revenue funds. Instead, the funds will be transferred to special-purpose accounts at the Central Bank of Kenya, opened by each beneficiary county. This is aimed at making sure the money is used strictly for its intended projects.

The Bill also allows the Controller of Budget to approve and authorise the release of funds once it is enacted. Upon receiving written instructions from the Secretary of the Equalisation Fund Board through the National Treasury, the Central Bank of Kenya will be authorised to release the funds.

In its report to Parliament, the Budget and Appropriations Committee, chaired by MP Samuel Atandi, noted that although the Bill proposed Sh10.6 billion for the current year, only Sh9.59 billion had been approved in the budget estimates passed by the House.

The Committee also raised concern over the historical underfunding of the Equalisation Fund. As of June 2024, only Sh13.4 billion—or 22.4% of the total Sh59.96 billion due to the Fund—had been disbursed. Arrears currently stand at Sh46.5 billion.

If signed into law, the Equalisation Fund Appropriation Bill, 2025, will be the third of its kind. The first, passed in 2018, allocated Sh12.4 billion for the 2014/15 to 2016/17 financial years. The second, passed in 2023, allocated Sh10.3 billion for the 2021/22 and 2022/23 financial years but was never implemented after the funds were revised to zero in the supplementary budget.