Equalisation Fund; reflecting on the decade lost to squabbling

Commission on Revenue Allocation

Commission on Revenue Allocation officials present a report on the second policy identifying marginalised areas of Kenya and the criteria for sharing revenue from the Equalisation Fund to President Uhuru Kenyatta at State House, Nairobi.

Photo credit: File | Nation Media Group

Some counties and communities in Kenya have been exposed to extreme marginalisation for decades. The role played by the colonial government in framing policies and practices which set the stage for marginalisation in Kenya cannot be gainsaid.

The Closed District Policy of 1902 stands out for its notoriety in dividing Kenya into two. The policy had been used to separate Northern Frontier Districts (NFD) from the rest of Kenya and so followed a systemic methodical exclusion of the NFD and its people from the participation in integrated social and economic development.


Ubiquity of marginalisation is also evident in other parts of the country, especially the colonial era practice of encouraging white settler investment and settlement along the Kenya-Uganda Railway relegated other areas to ghost towns.

The successive post-colonial governments did not do much to quell the impact of the colonial era policies. In fact, the Sessional Paper No. 10 of 1965 is one of the most regressive policy papers that had openly perpetuated marginalisation.

The policy emphasised investment in high potential areas such as towns with high agricultural output, this had entrenched extreme marginalisation for nearly 50 years until the promulgation of the 2010 Constitution.

Stakeholders’ squabbles

The Equalisation Fund is a special fund established under Article 204 of the 2010 Constitution. Constitutionalising the fund was meant to achieve two things. Firstly, it was meant to establish a corrective redistributive mechanism for marginalised areas to enable them catch-up with the rest of the country and, secondly, Article 204 was intended to ring-fence the fund from misapplication and thus the Article deliberately highlighted the priory areas of water, health, roads and electricity as the sectors for which the fund should be expended.

The effective date of the fund was the financial year of 2011/2012 with a life span of 20 years. Sadly though, a decade later, the Equalisation Fund has not had much impact on the intended beneficiaries.

This can be attributed majorly to the lack of proper legal framework guiding the utilisation of the fund. This has slowed down the uptake of the fund.

The CS Treasury and National Planning in a gazette notice 1711 of 2015, came up with the guidelines on the administration of the Equalisation Fund whose purpose was to provide guidance on the administration and management of the fund.

The CS constituted the Equalisation Fund and advisory board which was assigned the function of managing the fund. It hasn’t taken long before the Council of Governors moved to the High Court to question the legality of the regulations.

The governors averred that the National Government had no role in the management of the fund and that the board wasn’t properly constituted due to lack of stakeholder consultations.

The litigation went on for three years until 2019 when the High Court declared the 2015 regulations unconstitutional and further directed the Treasury CS to formulate new regulations. The court also ruled that the funds be released to the respective marginalised county governments directly.

Way forward

Following the annulment of the 2015 regulation, Treasury CS Ukur Yatani last year came up with new rules that will govern the administration and management of the fund.

With this regulation, a new board has been constituted to help with the management of the fund. The board which is yet to commence its work has a full in-tray of activities to undertake. The board has the onerous task of achieving so much within the shortest time possible since the fund would lapse within ten years unless the Parliament extends it.

The priority areas of the board shall include broadened public participation and consultative processes. The board should also be very specific in its priority sectors to avoid spanning the scope of the fund and straying into many non-priority sectors.

The board must also develop a collaborative framework between the National and County Governments to forestall stakeholder squabbles.

The CS Treasury and the National Assembly should also fastrack the disbursement of the fund. If all the stakeholders work harmoniously, the Equalisation Fund would undoubtedly change the lives of the forgotten many who have been condemned to the annals of extreme marginalisation.

Mr. Khalif is a commentator on socio-economic and legal issues. He holds Bachelor of Economics and Bachelor of Laws from the University of Nairobi.