Analysis of PFM Regulations on Equalization Fund

The Commission is mandated under Article 216(4) to determine, publish and regularly review a policy setting out the criteria to identify marginalized areas for purposes of Article 204(2).

In view of this mandate, the following are issues noted upon review of the Public Finance Management (Equalization Fund Administration) Regulations, 2021:

No. Clause Recommendation Justification for Change
1.        Regulation 2


In the definition of the phrase “eligible county” add the word “Revenue” to Commission on Revenue….


Cite the proper name of the Commission on Revenue Allocation

To correct an editorial error
In the definition of the phrase “unutilized balance”

Add a new paragraph (e) to include in the definition money set aside as per Article 204 of the Constitution and not yet appropriated.

To factor unappropriated monies set aside for the Equalization Fund
2.       Regulation 4

Establishment of the Board

        i.            Paragraph 4(1)(g) proposes CEO of the Board as a member.

Delete the CEO as member and separately provide for his or her appointment by the Board.


ii.            Paragraph (1)(h) recommends membership of-

three other persons nominated from organizations working in equalization fund beneficiary counties and special interest group, appointed by the Cabinet Secretary.


a)     This provision is vague, it is unclear how the three slots will be distributed among the organizations and special interest groups. There is therefore need for clarity.

b)     The organizations referred to here should be restricted to those entities operating in at least three beneficiary counties.

        i.            To enhance the Board’s control over its internal operations.


ii.            For clarity and to enhance Board input which would be informed by the extensive experience drawn from presence of such non-state organizations in more than one county.

3.       Regulation 8

Functions of the Board





Paragraph (a) provides for one of the Board functions as follows-

(a)    advise and make recommendations to the Cabinet Secretary on the distribution of resources for the provision of the basic services to the marginalized areas under Article 204 of the Constitution;


        i.            Delete the word ‘distribution’ and substitute with the word ‘appropriation’


ii.            Add the following phrase after the word ‘Constitution’…. “in line with the Commission on Revenue Allocation Policy recommendations


        i.            To alleviate an apparent overlap with the CRA mandate under Article 216 of the Constitution on making recommendations on the Equalization Fund


ii.            To clarify that the function has to be in line with the CRA Policy.

Paragraphs (b) and (c) provide for the following functions of the Board-

(b)appraise and evaluate projects proposed under the

workplans submitted by county technical committees to

ensure compliance with the Constitution and the

recommendations issued by the Commission on Revenue



(c) make recommendations on the priority areas requiring

financing and implementation in accordance with the

workplans considered under paragraph (b);


Delete these two paragraphs.

The content of the two paragraphs overlaps with functions of the  committees established in the regulations.
4.      Regulation 10

Expenses of the Board

Clarify content to include the fact that the Board expenses shall include facilitation costs/expenses of the three committees established in the regulations i.e. county technical committee, sub county technical Committee and the project identification and implementation Committee For clarity and prudent financial management
5.       Regulation 14

Establishment of County Technical Committee



        i.            Specify under paragraph (e) that the ‘representatives of implementing sectors’ shall be from the national government


ii.            Delete chairperson of CDF recommended as a member under paragraph 14(f) 

        i.            The Equalization Fund is a national government fund


ii.            CDF representation is too heavy in the committee

6.      Regulation 15

Functions of the county technical committee

Add the phrase ‘as received from the sub county technical committee” at the end of the provision. For clarity
7.       Regulation 17

Functions of the sub county technical committee

Paragraph (b) substitute the phrase “development proposals” with “funding proposals” For uniformity of terms and to avoid confusion
Paragraph (d) provides for the following function of the committee-

submit project proposals and funding requests received from the Project Identification and Implementation

Committees to the county government;


Delete the term “county government” and replace with “county technical committee”

To align with the functions of the county technical committee as outlined in the regulations
8.      Regulation 18

Establishment of the project identification and implementation Committee

Remove representation of religious groups To alleviate a conflict of choice between the religious groups and NGOs
9.      Regulation 19

Functions of the project identification and implementation Committee

Delete the oversight role of the committee For efficacy. The committee cannot be an implementor and also oversight implementation.
10.              Regulation 24

Utilization of funds and preparation of workplans

Delete sub regulations (2) and (3)

Generally, review the role of the CECM Finance in the regulations.

For coherence and to avoid function overlap with the proposed structure of committees as per the regulations

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