CRA presents insights on Equalisation Fund Appropriation Bill 2023 to Senate Committee

On October 12, 2023, the Commission on Revenue Allocation (CRA), led by Chairperson Mary Chebukati, had the opportunity to share its insights on the Equalisation Fund Appropriation Bill, 2023 (Senate Bills No. 30 of 2023) to the Senate Standing Committee on Finance and Budget.

The Equalisation Fund Appropriations Bill, 2023 seeks to ensure monies from the Equalisation Fund are disbursed to the areas identified by CRA as marginalised for the FY2023/4.

In CRA’s Second Policy and Criteria for Sharing Revenue Among Marginalised Areas, 7,131 areas were ranked from most to least deprived. This was based on safe water access, school attendance, sanitation, and electricity availability. After the ranking, 1424 areas identified as marginalised were listed to benefit from the Equalisation Fund. This comprised on the top 25% most deprived areas.

The Equalisation Fund Appropriation Bill, 2023, is a critical step in Kenya’s journey towards reducing regional disparities and ensuring equitable development.

The Bill have five clauses, each serving a unique purpose:

1. Short Title and Commencement: The bill is formally titled the “Equalisation Fund Appropriation Act, 2023” and became effective on July 1, 2023.
2. Issue of Monies out of the Fund: The Equalisation Fund Advisory Board is empowered to issue a sum of Ksh 10,867,478,000 from the Fund for the financial year 2023/24. This allocation will support crucial public services and the Board’s operational expenses.
3. Appropriation of Funds: The sum allocated for public services is specified to be used in beneficiary counties, constituencies, and wards, as detailed in the attached Schedule. This ensures that resources are directed where they are needed most.
4. Exclusion from County Revenue Fund: Funds designated for beneficiary counties will not be channeled into the County Revenue Fund. Instead, beneficiary counties will establish dedicated accounts at the Central Bank of Kenya to receive their allocations.
5. Withdrawals from the Fund: Monies from the Equalisation Fund can only be used with the authorization of the Controller of Budget in consultation with the Equalisation Fund Advisory Board. The Central Bank of Kenya facilitates these withdrawals based on approved instructions.

CRA is required under Article 204-4 and 216-4 of the Constitution “to review and determine the policy identifying marginalised areas for purposes of sharing of the Equalisation Fund.” The Fund comprises 0.5% of the revenue collected by the National Government.