The Senate Finance and Budget Committee has endorsed the allocation of Sh16.8 billion from the Equalization Fund, paving the way for expanded access to basic services in marginalized parts of the country if the Senate approves the proposal.
In its report on the Equalization Fund Appropriation Bill, 2025, the committee recommended that the House passes the Bill without any changes, clearing a key step required to unlock the funds.
The Bill, which originated from the National Assembly, seeks legal approval for spending from the Fund as required under Article 204(3) of the Constitution.
The allocation is meant to support essential services including water, roads, health facilities, and electricity in 1,424 identified marginalized areas spread across 34 counties.
According to the report, the total amount consists of Sh6.2 billion carried over from the 2024/2025 financial year and Sh10.6 billion earmarked for the 2025/2026 financial year.
The committee explained that the 2025/2026 allocation is based on 0.5 percent of audited and approved national revenue from the 2020/2021 financial year, which amounts to Sh7.852 billion. This figure has been topped up with Sh2.747 billion to help clear part of the long-standing arrears owed to the Fund.
Lawmakers, under the leadership of Mandera Senator Ali Roba, stressed that although the Bill lists allocations per county and constituency, the funds are strictly reserved for specific sub-locations identified under the Second Policy on Marginalization developed by the Commission on Revenue Allocation.
A major concern raised in the report is the persistent delay in releasing funds to the programme, which has slowed down its intended impact.
The committee noted that total arrears to the Fund, including the current allocation, now stand at Sh62.677 billion out of a total entitlement of Sh79.858 billion.
Senators warned that only Sh13.4 billion has been disbursed since the Fund was established, representing about 22.4 percent of the total amount that should have been released.
In the report, the Committee warns that “this lack of disbursements risks the realization of the Fund’s envisioned objective of providing basic services to the marginalized areas.”
To prevent misuse of the funds, the Bill introduces strict controls on how the money will be handled.
It states that the funds will not be deposited into County Revenue Funds but instead will be held in special purpose accounts opened by each beneficiary county at the Central Bank of Kenya.
The withdrawal of the funds will be approved by the Controller of Budget, based on written instructions from the Secretary of the Equalization Fund Advisory Board through the National Treasury.
The Bill also sets aside Sh504 million for administrative costs of the Secretariat and the Board, with spending capped at three percent of the annual allocation in line with public finance regulations.
Following the adoption of the report, the committee chairperson is expected to present it before the Senate for debate. If approved, the Bill will be forwarded to the President for assent.
Once signed into law, the approval will give the Controller of Budget authority to release the Sh16.8 billion, allowing development projects to begin in the targeted marginalized areas.
At the same time, the committee expects the Commission on Revenue Allocation to complete the Third Marginalization Policy, which will guide how future funds will be distributed starting from the 2026/2027 financial year.