Equalisation Fund Bill, 2022

SPECIAL ISSUE

Kenya Gazette Supplement No. 172 (National Assembly Bills No. 47)

REPUBLIC OFKENYA

KENYA GAZETTESUPPLEMENT

NATIONALASSEMBLY BILLS,2022

NAIROB1,28th October,2022

CONTENT

| Bill for Introduction into the National Assembly -- | PAGE | |-------------------------------------------------------|--------| | The Equalisation Fund Bill, 2022 | 1185 |

THEEQUALISATIONFUNDBILL,2022 ARRANGEMENTOF CLAUSES

Clause

PARTI-PRELIMINARY

• 1 -Short title.
• 2- Interpretation.
• 3-- Purpose and object of the Act.
• 4—Application.

PARTII-THEEQUALISATION FUND

5-Monies of the Fund.

PARTII-THEEQUALISATIONFUNDBOARD

6-Establishment of the Board.

7-Membership of the Board.

8-Qualifications of members of the Board.

9-Term of office.

10-Functions of the Board.

11-Powers of the Board.

12-Conduct of business and affairs of the Board.

13-Remuneration of Board Members.

14-- Delegation by the Board.

15- Board may co-opt experts.

16-ChiefExecutive Officer.

17-Staff of the Board.

18-Common seal.

19-- Protection from personal liability.

PARTIV-LOCALCOMMITTEES

20-Local Committees.

21-Dissolution of Local Committee.

22-Staffof Local Committee.

PARTV-IDENTIFICATION AND CONSIDERATIONOFPROJECTS

• 23 Identification of projects.
• 24 —- Submission of project proposals.
• 25 -- Consideration of proposed projects.
• 26-- Reports to the National Assembly.
• 27 —- Ministry to implement projects.
• 28—- Procurement of services and works.
• PARTVI-FINANCIALPROVISIONS
• 29—Funds of the Board.
• 30-Financial Year.
• 31-Annual Estimates.
• 32—- Accounts and audit.
• 33-Annual report.

PARTVII-WITHDRAWALSFROMTHEFUND

• 34 -- Bank Account of the Fund.
• 35-Withdrawals from the Fund.

PARTVIII-MISCELLANEOUS

• 36-- Winding up of the Fund.
• 37 -- Provisions in the Act complimentary.

PARTIX-OFFENCESANDPENALTIES

• 38 - Misappropriation of the Fund.

PARTX-PROVISIONS ONDELEGATEDPOWERS

• 39-Regulations.

PARTXI-CONSEQUENTIAL AMENDMENTS

• 40-Amendment of Act No. 18 of 2012.

41 —- Revocation of Guidelines. SCHEDULE-CONDUCT OFBUSINESSAND AFFAIRS OFTHEBOARD

THEEQUALISATIONFUNDBILL,2022

A Bill for

AN ACT of Parliament to operationalise Article 204 of the Constitution; to establish structures of directly administering the Equalisation Fund and for connected purposes

ENACTED by Parliament of the Republic of Kenya as

follows-

PARTI-PRELIMINARY

1. This Act may be cited as the Equalisation Fund Act, Short title. 2022. 2. In this Act, unless the context unless the context Interpretation. 3. otherwise requires-

"Board" means the Equalisation Fund Board

established by section 6 of this Act;

"Chairperson" means the Chairperson of the Board

appointed under section 7 of this Act;

"Cabinet Secretary" means the Cabinet Secretary responsible for the National Treasury;

"Fund" means the Equalisation Fund established under Article 204 of the Constitution;

"Local Committee" means a Local Equalisation Fund

Committee established by section 20 of the Act;

"marginalised community"means—

• (a) a community that, because of its relatively small population or for any other reason, has been unable to fully participate in the integrated social and economic life of Kenya as a whole;
• (b) a traditional community that, out of a need or desire to preserve its unique culture and identity from assimilation, has remained outside the integrated social and economic life of Kenya as a
• whole;
• (c) an indigenous community that has retained and maintained a traditional lifestyle and livelihood
• based on a hunter orgatherer economy;or

• (d) pastoral persons and communities, whether they are-
• (i) nomadic; or
• (ii) a settled community that, because of its relative geographic isolation, has experienced only marginal participation in the integrated social and economic life of Kenya as a whole; and

"marginalised area" means a geographical area where a marginalised community exists as determined by the Commission on Revenue Allocation in accordance with Article216(4)of the Constitution.

3. The purpose and object of this Act is to-— 2. (a) provide a framework for the direct administration and management of the Fund; 3. (b) establish an Equalization Fund Board responsible for administering and managing the Fund; and 4. (c) establish structures and mechanisms of implementing the Fund. 4. Pursuant to Article 204(3)(b) of the Constitution, this Act shall apply to the direct use of the Equalisation Fund to provide basic services including water, roads, health facilities and electricity to marginalized areas to the extent necessary to bring the quality of those services in those areas to the level generally enjoyed by the rest of the nation,so far as possible.

PARTII-THEEQUALISATIONFUND

• 5.(1) The Equalisation Fund shall comprise-
• (a) one half percent of all revenue collected by the national government each year calculated on the basis of the most recent audited accounts of revenue received, as approved by the National Assembly;
• (b) income generated from proceeds of the Fund; and
• (c) the cumulative amount of national revenue from previous years not spent.

Purpose and object of theAct.

Application.

Monies of the Fund.

• (2) All receipts, savings and accruals to the Fund and the balance of the Fund at the end of each financial year shall be retained in the account of the Fund.

PART II-THE EQUALISATION FUND BOARD

6. (1) There is established a Board to be known as the 2. Equalisation Fund Board.

• (2) The Board is a body corporate with perpetual

4. succession and a common seal and shall, in its corporate name,be capable of— 5. (a) suing and being sued; 6. (b) taking, purchasing or otherwise acquiring, holding, or disposing of movable and immovable property; 7. (c) entering into contracts; and 8. (d) doing or performing all other acts for the proper performance of its functions under this Act which may lawfully be done or performed by a body corporate. 9. 7.(1) The Board shall comprise -- 10. (a) a Chairperson appointed by the President with the 11. approval of the National Assembly; 12. (b) the Principal Secretary in the Ministry for the time being responsible for matters relating to water or a person designated in writing by the Principal Secretary; 13. (c) the Principal Secretary in the Ministry for the time being responsible for matters relating to roads or a person designated in writing by the Principal 14. Secretary; 15. (d) the Principal Secretary in the Ministry for the time being responsible for matters relating to health or a person designated in writing by the Principal Secretary; 16. (e) the Principal Secretary in the Ministry for the time being responsible for matters relating to National Treasury or a person designated in writing by the 17. Principal Secretary;

Establishment of the Board.

Membership of

the Board.

• (f) the Principal Secretary in the Ministry for the time being responsible for Arid and Semi-Arid Lands or a person designated in writing by the Principal Secretary;
• (g) four persons appointed by the Cabinet Secretary for the time being responsible for the National Treasury to represent marginalized communities;
• (h) the Chief Executive Officer who shall be an exofficio member and secretary to the Board.
• (2) Where there is a tie in the voting of the Board, the Chairperson shall have a casting vote.
• (3) In appointing the members of the Board under subsection (1)(g), the Cabinet Secretary shall take into consideration gender balance and diversity in qualifications of persons being appointed.
• (4) A person shall not be appointed as a member of the Board ifsuchaperson-
• (a) has been convicted of an offence by a court of competent jurisdiction and sentenced to imprisonment for a term exceeding six months;
• (b) has been adjudged bankrupt or has entered into a composition, scheme or arrangement with
• creditors;or
• (c) is disqualified under the provisions of any other writtenlawfrom appointment.
• (5) A member of the Board other than an ex-officio
• member, may —-
• (a) resign from office by notice in writing to the chairperson;
• (b) be removed from office if the member-
• (i has been absent from four consecutive meetings of the Board without the permission
• of the chairperson;
• (ii) is adjudged bankrupt or enters intoa composition scheme or arrangement with the creditors;

• (iii) is convicted of an offence involving fraud;
• (iv) is convicted of a criminal offence and sentenced to imprisonment for a term exceeding six months or to a fine exceeding one hundred thousand shillings; or
• is incapable of performing his or her duties
• on account of physical or mental infirmity.

8. A person shall not be appointed as a chairperson or

• a member of the Board unless thatperson-
• (a) is a citizen of Kenya;
• (b) possesses a degree from a university recognized in
• Kenya;
• (c) has knowledge and experience of not less than ten years in-
• (i)
• economic development and planning;
• (ii) finance;
• (ii) law;
• (iv) accounting;
• (v) engineering; or
• (vi) social sciences; and
• (d) meets the requirements of Chapter Six of the Constitution.

9. The Chairperson and members of the Board shall hold office for a term of three years and shall be eligible for

• reappointment for one further and final term of three years.

10. The Board shall-

• (a) manage the Fund;
• (b) consider and approve project proposals in
• accordance with the Act;
• (c) disburse monies relating to approved projects from the Fund;
• (d) monitor and evaluate the usage of monies
• disbursed from the Fund;

Qualificationsof

members of the Board.

Term ofoffice.

Functionsof the Board.

• (e) receive and address complaints and disputes
• relating to the Fund.

11. (1) The Board shall have all powers necessary for the proper performance of its functions under this Act.

• (2) Without prejudice to the generality of subsection (1),the Board shall have power to-
• (a) manage, control and administer its assets in such manner and forsuch purposesas bestpromote the purpose for which it is established;
• (b) determine the provisions to be made for capital and recurrent expenditure and for the reserves of the Board;
• (c) receive any grants, gifts, donations or endowments andmake legitimate disbursements therefrom;
• (d) enter into association with such bodies or organizations within or outside Kenya as it may considerdesirable or appropriateandin furtherance of the purposes for which it is established;
• (e) open such bank accounts for its funds as may be necessary; and
• (f) undertake any activity necessary for the fulfilment ofany of itsfunctions.

12. The conduct and regulation of the business and affairs of the Board shall be as provided in the Schedule, but subject thereto the Board may regulate its own procedure. 13. The members of the Board shall be paid such remuneration, fees or allowances as the Cabinet Secretary may determine in consultation with the Salaries and

• Remuneration Commission.

14. The Board may, by resolution either generally or in any particular case,delegate to any of its committees or to any menmber, officer, employee or agent of the Board, the exercise of any of the powers or the perforimance of any of the functions or duties of the Board under this Act or under any otherwritten law. 15. The Board may co-opt such experts as may be

• necessary to assist it in the discharge of its functions.

Powers of the Board.

Conduct of business and affairs of the Board.

Remuneration of

Board Members.

Delegation by the Board.

Board may co-opt experts.

16. (1) There shall be a Chief Executive Officer of the Board who shall be appointed by the Board through a competitive process on such terms and conditions of employment as the Board may determine.

(2) The Chief Executive Officer shall hold office for a term of three years and shall be eligible for re-appointment for one further and final term of three years.

• (3) The Chief Executive Officer shall be the secretary to the Board and shall, subject to the directions of the Board, be responsible for --

2. (a) the day to day management of the Board; and 3. (b) the affairs and transactions of the Board, the exercise, discharge and performance of its objectives,functions and duties. 17. The Board may appoint such officers and other staff as are necessary for the proper and efficient discharge of its functions under this Act, upon such terms and conditions of service as the Board may determine in consultation with theSalaries and Remuneration Commission.

18. (1) The common seal of the Board shall be kept in

the custody of the Chief Executive Officer or of such other person as the Board may direct, and shall not be used exceptupon theorderof theBoard.

(2) The common seal of the Board, when affixed to a document and duly authenticated, shall be judicially and officially noticed, and unless the contrary is proved, any necessary order or authorization by the Board under this section shall be presumed to have been duly given.

(3) The common n seal of the Board shall be authenticated by the signature of the chairperson of the Board and the Chief Executive Officer.

(4) The Board shall, in the absence of either the chairperson or the Chief Executive Officer, in any particular matter, nominate one member of the Board to authenticate the seal of theBoard onbehalf ofeither the chairperson or the Chief Executive Officer.

19. (1) No matter or thing done by a member or staff of the Board shall, if the matter or thing is done bona fide for executing the functions, powers and duties of the Board ChiefExecutive Officer.

Staffof theBoard.

Common seal.

Protectionfrom personal liability.

under this Act, render the member personally liable to any action, claim or demand whatsoever.

• (2) The provisions of subsection (1) shall not relieve the Board of liability to pay compensation or damages to any person for any injury to him or her, his or her property s ss r s power conferred by this Act or any other written law or by the failure, wholly or partially, of any works.

PARTIV-LOCALCOMMITTEES

• 20.(1) There is established a Local Equalisation Fund Committeefor every Constituencyin a marginalised area as determined by the Commission on Revenue Allocation pursuant to Article 216(4) of the Constitution.
• (2) A Local Committee shall comprise
• (a) the national government official responsible for co-ordination of national governmentfunctions;
• (b) two men each nominated in accordance with subsection (3), one of whom shall be a youth at the date of appointment;
• (c) two women nominated in accordance with subsection (3), one of whom shall be a youth at the
• date of appointment;
• (d) one person with disability nominated bya registered group representingpersons with disabilities s in the area in accordance with
• subsection (3);
• (e) two persons nominated by therelevant constituency office established under Regulations made pursuant to the Parliamentary Service Act, 2000;
• (f) an officer of the Board seconded to the Committee by the Board who shall be an ex officio member;
• and
• (g) one member co-opted by the Board in accordance with Regulations made by the Board.
• (3) The seven persons referred to in subsection (2)(b), (c), (d) and (e) shall be selected in such manner and shall

Local Committees.

No.10 of 2000.

have such qualifications as the Board may, by Regulations, prescribe.

(4) The names of the persons selected under subsection (3) shall be submitted by the Board to the gazettement by the Board.

(5) The Regulations made under subsection (3) shall be submitted to the National Assembly for approval before publication by the Board.

(6) The quorum of a Local Committee shall be one half of the total membership.

(7) The term of office of the members of a Local Committee shall be two years and shall be renewable but shall expire upon the appointment of a new Local Committee in the manner provided for in the Act.

(8) )Whenever a vacancy occurs in the Local Committee, the vacancy shall be filled from the same category of persons where the vacancy has occurred within a period of thirty days.

(9) A Local Committee shall meet at least six times in a year but the committee shall not hold more than twentyfour meetings in the same financial year, including sub-

committee meetings.

(10) A member of a Local Committee may be

removed from office on any one or more of the following grounds-

• (a) lack of integrity;
• (b) gross misconduct;
• (c) embezzlement of public funds;
• (d) bringing the committee into disrepute through
• unbecoming personal public conduct;
• (e)promoting unethical practice;
• (f)causingdisharmonywithin the committee;
• (g) physical or mental infirmity.
• (11) A decision to remove a member under subsection (10) shall be made through a resolution of at least five

members of the Committee and the member sought to be removed shall be given a fair hearing before the resolution is made.

• (12) A vacancy arising as a result of the removal of a member under subsection (10) shall be filled in the manner set out in subsection (8) and minutes of the meeting shall indicate the fact of the removal or appointment of a member.

21. (1) A person may present a petition to the Board for the dissolution of a Local Committee setting out the alleged facts constituting one or more of the following grounds for dissolution- 3. (a) serious violation of the Constitution or any other law including a contravention of Chapter Six; 4. (b) gross misconduct,whether in performance of the members' or office holders'functions or 5. otherwise; 6. (c) incompetence; or 7. (d) any other cause as may be deemed justifiable.

• (2) Upon receiving a petition under subsection (1), the

9. Board may suspend the Local Committee pending the outcome of the complaint.

• (3) The Board shall consider the petition, hear all or

11. some of the members of the committee and where it is satisfied that the petition discloses sufficient ground for dissolution,dissolve the Local Committee.

• (4) Vacancies arising from the removal of all the

13. members of a Local Committee under subsection (3) shall be filled in the manner set out in section 20(2) and minutes of the meeting shall indicate the fact of the removal or appointment of members. 22. A Local Committee may engage such staff with the approval of the Board as may be necessary for execution ofits functions.

PARTV-IDENTIFICATIONAND

CONSIDERATIONOFPROJECTS

23. (1) A Local Committee shall identify the projects 2. to be undertaken in its Constituency.

Dissolution of Local Committee.

Staffof Local Committee.

Identificationof projects.

• (2)Despite subsection (1),the Committee shall before identifying the projects, receive presentations from marginalized communities within the Constituency.

24. A Local Committee shall submit its proposed projects to the Board in the prescribed format within one month of the enactimentof the Equalisation Fund Appropriation Bill by the National Assembly. 25. (l) The Board shall scrutinize and may approve a project proposed by a Local Committee for funding.

• (2) Where the Board does not approve a project for funding, it shall refer the matter to the Committee giving written reasons for the disapproval.

26. The Board shall submit a quarterly report to the National Assembly detailing a summary of-

• (a) the project proposals received from the Local Committees and their approval status;
• (b) the status of disbursements of funds to the Local Committees;and
• (c) status of implementation of projects.

27. (1) A project management committee appointed in accordance with the regulations made under section 39, with the assistance of the relevant government department, shall implement projects under this Act.

• (2) All payments relating to projects under this Act shall be processed in accordance with government
• regulations for the time being in force.

28. All works and services relating to projects under this Act shall be procured in accordance with the provisions of thePublicProcurement and Asset DisposalAct,2015.

PARTVI-FINANCIALPROVISIONS

29. (1) The funds of the Board shall consist of- 2. (a) such sums as may be appropriated by the National 3. Assembly; 4. (b) grants, gifts or donations as may be given to the Board; and

Submission of project proposals.

Consideration of proposed projects.

Reports to the National Assembly.

Implementation of projects.

Procurementof services and works.

No.33 of2015.

Funds of the Board.

• (c) monies from any other source provided for the Board.
• (2) There shall bepaid outof the funds of theBoard any expenditure incurred by the Board and the Local Committees in exercise of powers or the performance of
• functions under this Act.

30. The Financial year of the Board shall be the period

• of twelve months ending on the thirtieth day of June in each year.

31. (1) At least three months before 1 the commencement of each financial year, the Board shall cause to be prepared estimates of the revenue and expenditure of theBoard of thatyear.

• (2) The annual estimates shall make provision for all
• estimated expenditure of the Board for the financial year and in particular,shall provide—
• (a) the payment of the salaries, allowances and other charges in respect of members of the Board and staffoftheBoard;and
• (b) the payment of the operation costs of the Board.
• (3) The annual estimates shall be approved by the Board before thecommencement of thefinancialyear to which they relate and shall be submitted to the Cabinet Secretary for approval and after the Cabinet Secretary's approval, the Board shall not increase the annual estimates without the consent of the Cabinet Secretary.
• (4)No expenditure shall be incurred for the purposes ofthe Board except in accordancewith the annual estimates approved under subsection (3), or in pursuance of an authorization of the Board given with prior written
• approval of the Cabinet Secretary.
• (5) The Board shall set aside a sum not exceeding five per centum of the total allocation for the Fund to cater for the administration expenses of the Board.
• (6) The Board shall ensure that a sum not exceeding five per centum of the total allocation for a project shall be utilised for the administration expenses of the project.

32. (1) The Board shall cause to be kept all proper

• books and records of accounts of the income, expenditure andassetsoftheBoard.

Financialyear.

Annual estimates.

Accounts and audit.

• (2) Within a period of three months after the end of each financial year, the Board shall submit to the AuditorGeneral the accounts of theBoard togetherwith-

2. (a) a statement of the income and expenditure of the Board during that year; and 3. (b) a balance sheet of the Board on the last day of that year.

(3) The accounts of the Board shall be audited and reported upon in accordance with the Public Audit Act, 2015.

33. (1) The Board shall, within three months after the end of each financial year, prepare and submit to the Cabinet Secretary a report of the operations of Board for the immediateprecedingyear.

(2) The Cabinet Secretary shall lay the annual report before the National Assembly within three months of the day the National Assembly next sits after the report is

presented to the Cabinet Secretary.

PARTVII-WITHDRAWALSFROMTHEFUND

34. (1) The Board shall open and maintain a bank account of the Fund at the Central Bank of Kenya into which all monies of theFund shall bepaid.

(2) The Chief Executive Officer and three other persons appointed by the Board from amongst its members shall be the signatories to the account of the Fund.

(3) The signature of the Chief Executive Officer shall be mandatory on all payment cheques or instruments intendedfor actual releaseofmoneyfrom theFund.

35. (1) Where a withdrawal from the Fund is authorized under an Act of Parliament that approves the appropriation of money, the Board shall make requisition for thewithdrawal and submititto the ControllerofBudget for authorization.

(2) The authorization by the Controller of Budget of a withdrawalfrom theFund togetherwith written instructions from the Board requesting for the withdrawal, shall be sufficient authority for the Central Bank of Kenya to pay amounts from the Equalization Fund in accordance with the authorization and instructions given.

No.34of2015.

Annual report.

Bank accountof

the Fund.

Withdrawalsfrom theFund.

• (3) All withdrawals made from the Fund shall be deposited into the respective accounts of Local Committees for purposes of funding projects approved by the Board.

PARTVIII-MISCELLANEOUS

36. At the winding up of the Fund pursuant to Article 2. 204(6) or 204(7) of the Constitution-- 3. (a) the cash balances of the Fund shall be transferred to the National Exchequer Account; and 4. (b) other assets of the Fund shall be transferred to the State Department responsible for matters relating to finance. 37. (l) The provisions of this Act shall be national government and nothing in this Act shall be taken or interpreted to mean than an area may be excluded from any or other projects by the national government.

• (2) For the avoidance of doubt,national government allocations shall continue alongside the projects funded under this Act.

PARTIX-OFFENCESANDPENALTIES

38. A person who misappropriates any funds or assets from the Fund, or assists or causes any person to misappropriate or apply the funds otherwise than in the manner provided in this Act, commits an offence and shall, upon conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding four million shillings, or to both.

PARTX-PROVISIONSONDELEGATEDPOWERS

39. (1) The Cabinet Secretary may make regulations for the better carrying into effect the provisions of this Act.

• (2) Without prejudice to the generality of subsection (1), the Cabinet Secretary may makeregulations

3. prescribing- 4. (a) the manner of selection of, and the qualification of 5. members of a Local Committee; 6. (b) the procedure for appointment and removal of members of a project management committee; and 7. (c) the forms to be used under this Act.

Winding up of the Fund.

Provisions in the Act complimentary.

Misappropriation of the Fund.

Regulations.

• (3) For the purposes of Article 94 (6) of the Constitution-

2. (a) the purpose and objective of delegation under this section is to enable the Cabinet Secretary to make regulations to provide for the better carrying into effect of the provisions of this Act and to enable the Board to discharge its functions more effectively; 3. (b) the authority of the Cabinet Secretary to make regulations under this Act will be limited to bringing into effect the provisions of this Act and to fulfil the ohjectives specified under this section; 4. (c) the principles and standards applicable to the regulations made under this section are those set out in the Interpretation and General Provisions Act and the Statutory Instruments Act,2013.

PARTXI-CONSEQUENTIALAMENDMENTS

40. The Public Finance Management Act, 2012 is amended by repealing section 18. 2. 41.The Guidelines on the administration of the Equalization Fund established under Article 204 of the Constitution made under the Public Finance Management Act,2012 are revoked.

Cap 2,

No.23of2013

Amendment of No.18of2012.

Revocation of Guidelines.

No.18of2012.

SCHEDULE

CONDUCTOFBUSINESSANDAFFAIRS OFTHE BOARD (s. 12)

1. (1) The Board shall meet not less than four times in every financialyear andnot more than fourmonths shall 2. elapse between the date of the next meeting.

• (2) Unless three quarters of all the members of the Board otherwise agree, at least fourteen days written notice of every meeting of the Board shall be given to every memberoftheBoard.
• (3) The chairperson shall preside at every meeting of the Board atwhich he or she is present but in his orher absence, the members present shall elect one of their number who shall,with respect to that meeting and the business transacted thereat, have all the powers of the

5. chairperson.

• (4) Unless a unanimous decision is reached, a decision on any matter before the Board shall be reached by voting

7. through simple majority.

• (5) Subject to there being a quorum, the proceedings of the Board shall not be invalid by reason only of a vacancy among themembers.
• (6) Subject to the provisions of this Schedule,the Board may determine its own procedure and the procedure for any committee of the Board and for the attendance of any other persons at its meetings.

10. 2.(1) If a member is directly or indirectly interested in any contract, proposed contract or other matter before the Board and is present at a meeting of the Board at which the contract, proposed contract or other matter is the subject of consideration,he or she shall, at the meeting and as soon as practicable after the commencement thereof,disclose thefact and shall not take part in the consideration or discussion with respect to the contractor othermatter,orbe counted in the quorum of the meeting during consideration of the matter.

• (2) Despite subparagraph (1), if the majority of the members present are of the opinion that the experience or expertise of thatmember isvital to the deliberationsof the

Meetingsof the Board

Disclosureof

Interest.

MEMORANDUM OFOBJECTSANDREASONS

Statement of objects and reasons

The principal object of this Bill is to operationalize the Equalisation Fund as established under Article 204 of the Constitution.The Bill proposes to establish a Board to administer the Fund in instances where the Fund is directly used for the provision of basic services including water, roads, health, facilities and electricity to marginalised areas to bring the quality of the provisions of such services as nearly as possible to the same quality enjoyed by other areas in the Country. The Bill further proposes the establishment of Local Equalisation Fund Committees in each ward in marginalised area as determined by the Commission on Revenue Allocation in their report prepared pursuant to Article 216 of the Constitution. The Local Committees are tasked with identifying projects for funding in consultation with local communities with the final decision being made by the Board and implementation done by a project implementation committee.

Enactment of the Bill will reduce the current bureaucratic red-tape

that exists with regard to the administration of the Fund currently domiciled in the National Treasury. The framers of the Constitution conceptualized the Fund as a means of enabling marginalised areas to "catch-up" with the rest of the country in terms of access to basic needs. This vision is yet to be achieved eight years after the promulgation of the Constitution. The Bill seeks to propose a model of administering the Fund which will accelerate itsroll-outfor thebenefitof citizenswho continue to suffer on the fringes.

• Part I (Clauses 1-4) of the Bill contains preliminary provisions.
• Part II (Clause 5) of the Bill outlines the sources of the Fund
• Part IlI (Clauses 6-19) of theBill establishes the Equalisation Fund Board as a body corporate with perpetual succession. Under Clause 8 the Board is to comprise nine (9) members with a Chairperson appointed from a marginalised community and vetted by the National Assembly. Clause 9 limits all members of the Board to a single six (6) year term of office.
• PartIV(Clauses20-22)of theBillprovidesfor the establishmentof Local Equalisation Fund Committees in each ward of a marginalised area to assist the Board in identification and administration of projects funded by the Fund. The Committees are mandated to employ such staff as may berequired in the exercise of theirmandate.

Part V (Clauses 23-28) of the Bill contains provisions on the

identification and consideration of proposed projects proposed for funding.

Part VI (Clauses 29-33) of the Bill contains financial provisions.

Part VlI (Clauses 34-35) of the Bill contains provisions on withdrawals from the Fund.

Part VIlI (Clauses 36-37) of the Bill contains miscellaneous

provisions.

Part Ix (Clauses 38) of the Bill contains provisions on offences and

penalties.

• Part X (Clauses 39) of the Bill contains provisions on delegated
• powers.
• Part XI (Clauses 40-41) of the Bill contains consequential
• amendments. The Bill proposes the repeal of section 18 of the Public Finance Management Act on the administration of the Equalization Fund and the Guidelinesmade under the Act in relation to the Fund.

Statement on the delegation of legislative powers and limitation of

fundamental rights and freedoms

This Bill delegates legislative powers to the Cabinet Secretary

responsible for the National Treasury to make regulations for the better carrying into effect of its provisions once enacted. The Bill does it limit anyfundamental rights and freedoms.

Statement of how the Bill concerns county governments

The Bill does not affect the functions of County governments as set

out in the Fourth Schedule to the Constitution and is therefore not a Bill concerning county governments.

Statement as to whether the Bill is a money Bill within the meaning of Article 114 of the Constitution

The enactment of this Bill shall occasion additional expenditure of

public funds.

Dated the 27th October, 2022.

KASSAITKAMKET, MemberofParliament.