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Economy

MPs lose bid to control Sh6.9bn Equalisation Fund

Treasury secretary Henry Rotich has gazetted guidelines on the administration of the Equalisation Fund. PHOTO | FILE
Treasury secretary Henry Rotich has gazetted guidelines on the administration of the Equalisation Fund. PHOTO | FILE 

MPs and governors’ quest to control the multi- billion shilling Equalisation Fund has suffered a major setback after the Treasury created a board that will manage and administer the fund.

Treasury secretary Henry Rotich has gazetted guidelines on the administration of the Equalisation Fund, establishing a board largely dominated by principal secretaries to administer the fund on behalf of the national government.

Both MPs and governors have been seeking control of the fund—which is targeted at 14 underdeveloped counties and meant to fund short-term projects that address food insecurity, health, water and sanitation, education as well as electricity and energy needs.

The Equalisation Fund, which aims to uplift the living standards of people in poor areas, is supposed to be equivalent to 0.5 per cent of latest audited annual government revenue.

But the billions have never been disbursed since 2012 due to failure by the Treasury and MPs to agree on the model for the fund in line with the Public Finance management Act.

The Treasury has been vouching for the formation of a committee of principal secretaries to oversee and ensure proper use of the funds while legislators want the money to be under their watch through the Constituency Development Fund.

“The purpose of these guidelines is to establish an Equalisation Fund Board to advise the Cabinet secretary on the proper and effective performance of the fund,” the new rules, tabled in the National Assembly by Leader of Majority Aden Duale last week states.

“The regulations are made to operationalise the Fund established under Article 204 of the Constitution by providing mechanism for use of this fund directly by the national government or indirectly through conditional or unconditional transfers to marginalised counties.”

The board will advise the minister on the allocation of funds among various basic services in the marginalised areas in accordance with Article 204 of the Constitution.

It will include the principal secretaries in charge of Finance, Devolution and Planning, Water, Roads, Health, Energy and National Co-ordination.

Four other members of either gender appointed by the Cabinet secretary from outside the Public Service will also sit in the board. Cash allocation for poor counties will nearly double from the 2015 fiscal year in a bid to compensate the devolved governments for non-disbursement since 2012.

The 14 underdeveloped counties will receive Sh6.1 billion in the year starting July 2015 and Sh6.9 billion after a year from the current allocation of Sh3.4 billion, which has remained unchanged over the last two years.

In 2012, 14 counties were picked to benefit from the affirmative programme for three years. They include Turkana, Mandera, Wajir, Marsabit, Samburu, West Pokot, Tana River, Narok, Kwale, Garissa, Kilifi, Taita Taveta, Isiolo and Lamu.

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