Equalisation Fund

 

Money in the Equalisation Fund is public finance set aside to accelerate the level of services in marginalised areas of Kenya in order to bring them up to par with the rest of the country. Oddly, this fund has never taken off to date despite allocations by the CRA.

This revenue is to be distributed among Counties that have sizeable areas that are classified as marginalised. It is a national Revenue Fund.

 
Constitutional Provision

 

The Equalisation Fund is a Constitutional Fund. Chapter 12 - Public Finance:

204. (1) There is established an Equalisation Fund ........

 

Allocation

 

The amount of revenue set aside into the Equalisation Fund is set at a fixed percentage of National Revenue whose audited receipts have obtained the approval of the National Assembly. Article 204, excerpts:

204. (1) ........ into which shall be paid one half per cent of all the revenue collected by the national government each year calculated on the basis of the most recent audited accounts of revenue received, as approved by the National Assembly.

This Fund is allocated to improve the basic infrastructure services in those areas and regions categorised as marginalised:

(2) The national government shall use the Equalisation Fund only to provide basic services including water, roads, health facilities and electricity to marginalised areas to the extent necessary to bring the quality of those services in those areas to the level generally enjoyed by the rest of the nation, so far as possible.

 

Administration 

 

Being a National Revenue, the Fund will be administered by the National Executive. However, the government may elect to delegate the administration of this Fund to the County government by converting it into a grant. Article 204, excerpts.

204. (3) The national government may use the Equalisation Fund–– (b) either directly, or indirectly through conditional grants to counties in which marginalised communities exist.

The authority to spend any money contained in the Fund cannot be granted unless there is a proper request (in the form of a motion) detailing what the money will be used for. Such a motion is what is known as an Appropriation Bill:

204. (3) The national government may use the Equalisation Fund–– (a) only to the extent that the expenditure of those funds has been approved in an Appropriation Bill enacted by Parliament; .......

The process of legislation to authorise the use of this Fund, must consider technical input from the Commission for Revenue Allocation, CRA. After all, the CRA makes the recommendations on which regions are deserving from the Fund:

(4) The Commission on Revenue Allocation shall be consulted and its recommendations considered before Parliament passes any Bill appropriating money out of the Equalisation Fund.

When the concerned government is ready to spend any equalization money, it must, as part of checks and balances, seek and obtain the approval of the Controller of Budget:

(9) Money shall not be withdrawn from the Equalisation Fund unless the Controller of Budget has approved the withdrawal.

The Equalisation Fund is expected to achieve its aims after 20 years; although both Houses of Parliament may revive the Fund after a six year break:

(6) This Article lapses twenty years after the effective date, subject to clause (7).
(7) Parliament may enact legislation suspending the effect of clause (6) for a further fixed period of years, subject to clause (8).
(8) Legislation under clause (7) shall be supported by more than half of all the members of the National Assembly, and more than half of all the county delegations in the Senate.

 

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