Parliament Approves KSh16.8 Billion Equalisation Fund for Marginalised Counties

Marginalised counties are set to receive KSh16.8 billion for basic services after Parliament approved the Equalisation Fund Appropriations Bill, 2025, paving the way for presidential assent.

The Bill, sponsored by Budget and Appropriations Committee Chairperson Samuel Atandi, seeks to authorise the withdrawal and use of funds from the Equalisation Fund for the financial year ending June 30, 2026.

According to the brief presented to the President for assent, the National Assembly passed the Bill with amendments on July 30, 2025, before forwarding it to the Senate, which approved it without amendments on May 12, 2026.

The Equalisation Fund, established under Article 204 of the Constitution, is intended to finance basic services such as water, roads, healthcare facilities and electricity in marginalised areas to help bridge development disparities across the country.

Of the KSh16.8 billion allocation, KSh6.2 billion was allocated in the 2024/25 financial year, while KSh10.6 billion comes from the 2025/26 allocation and arrears approved through the Division of Revenue Bill, 2025.

The Bill allocates KSh16.296 billion directly to 34 counties identified as marginalised by the Commission on Revenue Allocation under its Second Marginalisation Policy. The funds will finance development projects across constituencies within the beneficiary counties.

An additional KSh504 million has been set aside for administrative expenses of the Equalisation Fund Secretariat and Board, in line with the legal requirement capping such expenses at three percent of the annual allocation.

The legislation also introduces safeguards aimed at preventing misuse of the funds by county governments.

Under the Bill, the money will not be deposited into County Revenue Funds as provided under Article 207(1) of the Constitution. Instead, beneficiary counties will be required to open special purpose accounts at the Central Bank of Kenya where the funds will be held and managed separately.

The move is intended to ring-fence the funds and ensure they are used strictly for development projects in marginalised areas rather than general county expenditure.

Parliament said the Bill is aimed at ensuring constitutional compliance by directing resources toward reducing inequality in access to basic services across historically underserved regions.

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