Governors’ quest to control the multi-billion shilling Equalisation Fund has suffered a major setback after the Treasury said it will channel Sh6 billion allocated to the fund directly to counties.
Treasury secretary Henry Rotich has told Parliament that governors will not receive the billions and that the national government will determine how the funds will be used in the counties.
Mr Rotich has already created a board, largely dominated by principal secretaries, to administer the fund, signalling that MPs and county chiefs would have little say in the control of the billions.
“It should be noted that the national government intends to channel the Equalisation Fund directly to counties and not as conditional grants and there will be no flow of funds to county governments,” Mr Rotich told Parliament.
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 fund 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 its model in line with the Public Finance Management Act.
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 programme for three years. They are Turkana, Mandera, Wajir, Marsabit, Samburu, West Pokot, Tana River, Narok, Kwale, Garissa, Kilifi, Taita Taveta, Isiolo and Lamu.
Turkana will receive the largest allocation of Sh646.5 million, followed by Mandera (Sh618 million), Kilifi (Sh531 million), Wajir (Sh517million) and Narok (Sh476 million). The Treasury has been vouching for the formation of a committee of principal secretaries to oversee the funds while legislators want the money to be under their watch through the Constituency Development Fund.
The board will have the PSs in charge of Finance, Devolution and Planning, Water, Roads, Health, Energy and National Co-ordination.
Four other members will come from outside Public Service.