Report On Consideration Of Equalization Fund Appropriation Bill (senate Bill No. 7 Of 2025)

REPUBLICOFKENYA THENATIONALASSEMBLY

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025 SELECTCOMMITTEEONBUDGETANDAPPROPRIATIONS

REPORTONEQUALIZATIONFUNDAPPROPRIATIONBILL,2025 (SENATE BILLNO.7 OF2025)

The Clerk's Chambers National Assembly Parliament Buildings NAIROBI

DATE:

2 3 SEP 2025

Table of Contents

| CHAIRPERSON'SFOREWORD... | CHAIRPERSON'SFOREWORD... | |------------------------------------------|-----------------------------------------------------| | 1.0 | PREFACE | | 1.1EstablishmentandMandateoftheCommittee | 1.1EstablishmentandMandateoftheCommittee | | 1.2MembershipoftheCommittee.. | 1.2MembershipoftheCommittee.. | | 1.3CommitteeSecretariat. | 1.3CommitteeSecretariat. | | 1.4TechnicalSupport totheCommittec | 1.4TechnicalSupport totheCommittec | | 1.5Acknowledgements... | 1.5Acknowledgements... | | 2.0 | Background of theBill. | | 3.0 | HighlightsofEqualisationFundAppropriationBill,2025. | | 4.0 | Submissionsby theNational Treasury.... | | 5.0 | SubmissionsbytheCouncilofGovernors.. 10 | | 6.0 | Submissions by the IBEC. 10 | | 7.0 | ObservationsandRecommendationsby theCommittee 10 | | CommittccObscrvations 11 | CommittccObscrvations 11 | | CommitteeRecommendations | CommitteeRecommendations |

CHAIRPERSON'SFOREWORD

The Equalisation Fund Appropriation Bill, 2025 (Senate Bill No. 7 of 2025) was published on 18th June 2025, considered and passed by the Senate on 22nd July 2025, and subsequently referred to the National Assembly for concurrence. Thereafter, it was committed to the Budget and Appropriations Committee for consideration and appropriation of monies from the Equalisation Fund for utilisation in the identified beneficiary regions during the FY 2025/2026.

The Equalisation Fund is established under Article 204(l) of the Constitution, which provides that one-half per cent (0.5%) of all revenue collected by the National Government each year shall be paid into the Fund. The amount is determined on the basis of the most recent audited accounts of revenue received, as approved by the NationalAssembly.

The constitutional rationale of the Fund is to address historical marginalisation by financing programmes and projects aimed at improving access to basic services such as water, roads, health facilities, and electricity in disadvantaged areas. By doing so, the Fund seeks to elevate the quality of services in these regions to a level comparable with the rest of the country, thereby promoting equity, inclusivity, and balanced development in line with the principles of Article 20l of the Constitution.

In line with Article 2l6(4), allocations from the Fund are made in accordance with a i e d s marginalisedareas across34countiesanddistributesfundstoeachbasedonan allocation factor determined by the CRA. This framework ensures that the Equalisation objectives.

The Equalisation Fund Appropriation Bill, 2025, seeks to allocate a total of Ksh. 16.8 billion to the identified areas. This amount comprises Ksh. 6.2 billion carried forward from the 2024/2025financial year, and Ksh.10.6 billion earmarked for FY 2025/2026.

1.0 PREFACE

I.IEstablishmentandMandateoftheCommittee

• 1.Article221(4 and 5)of theConstitution andSection7of thePublic Finance Management Act, Cap 4l2A,provide for the establishment of a Committee of the National Assemblywhosemainroleistotaketheleadinbudgetaryoversightbythe National Assembly.Pursuant to this constitutional provision,Standing Order 207 establishes theBudget andAppropriations Committeewithspecificmandates,among which is to:
• i.Investigate, inquire into, and report on all matters relating to the coordination, control, and monitoring of the national budget;
• iil.Discuss/Review the budget estimates and make recommendations to the House;
• ili. Examine theBudgetPolicyStatementpresented to theHouse;
• iv. Examine bills related to the national budget, including appropriation bills;
• v.Evaluate tax estimates, economic and budgetary policies, and programmes with direct budget outlays; and
• vi.ExaminetheDivisionofRevenueBill.

1.2Membershipofthe Committee

• 2.Pursuant to Standing Order 207(2),the Budget and Appropriations Committee,as currentlyconstituted,comprisesthefollowingHonourableMembers:

CHAIRPERSON

Hon. Atandi, Samuel Onunga, M.P. Alego Usonga Constituency ODMPARTY

VICECHAIRPERSON

Hon.(Dr.)RobertPukose,CBS,M.P. Endebess Constituency UDAPARTY

MEMBERS

Hon. (Dr.) Adan Wehliye Keynan, CBS, M.P. Eldas Constituency JUBILEE PARTY

Hon.Chumel,Samwel Moroto,M.P. Kapenguria Constituency UDAPARTY

Hon.Mulu,Makali,PhD,CBS,M.P Kitui Central Constituency WDM-KENYA

Hon.Lesuuda,Josephine Naisula, OGW,M.P. SamburuWestConstituency KANUPARTY

Hon. Lekuton, Joseph, M.P. Laisamis Constituency UDMPARTY

Hon.Ochieng,David Ouma,M.P. Ugenya Constituency MDGPARTY

Hon.Robi, Mathias Nyamabe, M.P. Kuria West Constituency UDAPARTY

Hon. Muchira, Michael Mwangi, M.P. Ol Jorok Constituency UDAPARTY

Hon. Wangaya, Christopher Aseka, M.P. Khwisero Constituency ODMPARTY

Hon. (Dr.) Gogo, Lilian Achieng, M.P. Rangwe Constituency ODMPARTY

Hon. Guyo, Ali Wario, M.P. Garsen Constituency ODMPARTY

Hon. Murumba, John Chikati, PhD, M.P. Tongaren Constituency FORD-KENYA

Hon.Busia,Ruth Adhiambo Odinga,M.P. Kisumu County ODMPARTY

Hon. Mokaya, Nyakundi Japheth, M.P. Kitutu Chache North Constituency UDAPARTY

Hon.Abdirahman Mohamed Abdi,M.P. Lafey Constituency JUBILEE PARTY

Hon. (Dr.) Mugo, Edwin Gichuki Mathioya Constituency UDAPARTY

1.3 Committee Secretariat

3. The Committee Secretariat comprises the following:

Mr. Danson Kachumbo

Senior Fiscal Analyst/ Lead Clerk

Ms. Sylvia Ocharo SeniorResearchOfficer/ClerkAssistant Mr. Ringine Mutwiri Fiscal Analyst/ClerkAssistant Hon.Ongili,Babu Owino Paul,M.P. EmbakasiEastConstituency ODMPARTY

Hon. Mwirigi, John Paul, M.P. Igembe South Constituency UDAPARTY

Hon.Mwakuwona,Danson Mwashako,M.P. Wundanyi Constituency WDM-Kenya

Hon. Wanjiku, John Njuguna, M.P. Kiambaa Constituency UDAPARTY

Hon. Masara,Peter Francis, M.P. Suna West Constituency ODMPARTY

Hon.Kitilai,Ole Ntutu,M.P NarokSouth INDEPENDENT

Sergon,Flowrence Jematiah, M.P. Baringo County UDA PARTY

Hon. Mutuse, Eckomas Mwengi, OGW, M.P. Kibwezi West Constituency MCC PARTY

Hon. Kagiri, Jane Wangechi, OGW, M.P. Laikipia County UDAPARTY

| FA.Loice Olesia Fiscal Analyst | Mr. Moses Mwariri Legal Counsel | |----------------------------------|-----------------------------------| | Ms. Fridah Ngari Media Relations | Mr. Simon Ouko Serjeant-at-arms | | Mr. Nimrod Ochieng Audio Officer | Mr. Jared Amara Office Assistant |

1.4 Technical Support to the Committee

• 4.TheCommitteereceivedtechnicalsupportfromthefollowingofficersofthe ParliamentaryBudget Office:

FA (Dr.)Martin Masinde

Director,ParliamentaryBudgetOffice

Dr. Abel Nyagwachi Senior Fiscal Analyst

Mr. Kioko Kiminza Fiscal Analyst Il

Mr. Onyango Adera Fiscal Analyst II

1.5 Acknowledgements

2. The Budget and Appropriations Committee is grateful to the Office of the Speaker of theNational Assembly,the Officeof theClerkof theNationalAssembly,and the ParliamentaryBudgetOfficeforthesupportextendedinfulfillingthismandateof Committee,it is my pleasant duty and privilege to table the Report and recommend ittotheHousefor adoption.

SIGNED

HON.ATANDI,SAMUELONUNGA,M.P.

CHAIRPERSON,THEBUDGETANDAPPROPRIATIONSCOMMITTEE

DATE

2.0Background of the Bill

• ( l s published on 18th June 2025, considered and passed by the Senate on 22nd July 2025, and subsequently referred to the National Assembly. It was thereafter committed to the Budget and Appropriations Committee for consideration and reporting to the House. The Bill seeks to provide legal authority for the appropriation of monies from the Equalisation Fund for utilisation in the designated beneficiary regions during the FY 2025/2026.

2. The Equalisation Fund was established through Article 204(l) of the Constitution of Kenya with the purpose of addressing regional disparities in development. It mandates that 0.5% of all revenue collected annually by the national government be allocated to this fund. This amount is calculated using the most recent audited revenues, as reviewed and approved by the National Assembly. 3. The Equalisation Fund is specifically designated for delivering basic services such as clean water, accessible roads, health facilities, and electricity to marginalised areas. Its purpose is to elevate the quality of these services to match the national standard, thereby promoting equitable and sustainable development. 4. To safeguard the efficient and purposeful utilisation of the Fund, Article 204(5) of the Constitution and Section I8(6) of the Public Finance Management Act, Cap. an e asd o ls p r s as d thefinancialyear.Instead,suchbalances are carried forward and remain available exclusively for the original objectives of the Fund. 5. Pursuant to Article 204(3) of the Constitution, monies from the Equalisation Fund may only be expended once Parliament has enacted an Appropriation Bill. This legislative requirement promotes transparency and accountability in the disbursement of the funds. Further, the Constitution empowers the national conditional grants to county governments hosting marginalised communities.

6. The identification of marginalised areas eligible for Equalisation Fund support is guided by Articles 204(4) and 216(4) of the Constitution, which assign this responsibility to the Commission on Revenue Allocation (CRA). The CRA is mandated to formulate, publish, and regularly update a comprehensive policy outliningthecriteriausedtodeterminemarginalisedareas. 7. The Commission on Revenue Allocation (CRA), in its Second Policy on Marginalisation, identified 1,424 marginalised sub-locations distributed across 34 counties and Io7 constituencies. The identification was based on indicators of deprivation in access to basic services such as water, health, education, roads, and which serves as the basis for determining the share of resources under the EqualisationFund. 8. This policy framework is intended to ensure that resources are allocated equitably and in a manner that targets the most underserved communities. By directing funds to historically marginalised areas,the Equalisation Fund seeks to reduce regional disparities and uplift the quality of basic services to levels comparable with the rest of the country, thereby advancing the constitutional principles of equity, inclusivity, andbalanceddevelopment.

3.0HighlightsofEqualisationFundAppropriationBill,2025.

• e e sd o r e Ksh.16.8 billion to1,424 marginalised areas in the 2025/2026 financial year. This amount comprises Ksh.6.2 billion carried forward from the 2024/2025 financial year andKsh.10.6billionforFY2025/26.
• 10.The Bill proposes an allocation of Ksh. 504 million to cater for Board expenses, including administrative and oversight functions necessary for the management of the Fund. This provision is in line with Regulation l0(3) of the Public Finance allocation. This complies with the legal ceiling and is therefore reasonable, as it

• preserves the bulk of the Fund for financing development projects in marginalised areas while still ensuring adequate resources for effective governance and oversight.
• I1.The remaining Ksh.16.296 billion will be channelled to marginalised areas, with allocations determined by the formula set out in the Second Policy on Marginalisation. The Bill further specifies the amounts to be disbursed to each county and its constituencies,with the full breakdownprovided in the First Schedule of this Report.
• I2. Eight counties account for over 60 per cent of the total allocation to the Equalisation fund. Turkana receives the largest share at Ksh. I.86 billion, followed by West Pokot at Ksh. 1.7 billion. Other counties with substantial allocations include Narok (Ksh. I.3 billion), Mandera and Wajir (Ksh. I .2 billion each), Samburu (Ksh. 1.1 billion), Garissa (Ksh. 1.0 billion), and Baringo (Ksh. 967 million). This concentration of resources corresponds to the high number of marginalised areas within these counties and reflects their continued prioritisation in efforts to reduce regional disparities in access to basic services.

4.0 Submissions by the National Treasury

• I3. The National Treasury submitted that the utilization of the Equalization Fund has been guided by the marginalization policies developed by the Commission on counties for support, while the Second Policy (20l8) expanded coverage to I,424 sub-locationsacross34counties.

14. Under the first policy, 360 projects were appropriated, out of which 285 were completed by June 30, 2025, with a total of KSh.10.7 billion disbursed to implementing MDAs. Under the second policy, I,595 projects were proposed by county technical committees, of which 1,556 valued at KSh. 9.76 billion were approved, with KSh. 2.85 billion disbursed to 15 counties. Despite this progress, stalled and deteriorating projects, and pending bills.

5.0Submissions by the Council of Governors

• Appropriation Bill, 2025, which seeks to allocate KSh. I6.8 billion for public services inlinewithArticle204of theConstitution,butraisedconcernsoverinefficiencies thathaveunderminedtheFund'sobjectives.
• a a s absorption rates due to administrative bottlenecks, the absence of a third marginalization policy by CRA, and revisions of allocations through supplementary budgets.Itwasnoted thatonlyKSh.15.93billionhasbeen transferredtotheFund out of the KSh. 80.09 billion entitlement since inception, leaving a balance of KSh. 64.16billion.

17. To address these challenges, the Council recommended that up to 3% of each county'sallocationbesetasidefor administrativecosts,CRAurgentlydevelop a withdrawalsberemoved tostreamlineimplementation.

6.0Submissions by the IBEC

18. The Intergovernmental Budget and Economic Council (IBEC) noted that an allocationofKSh.16.8billionforFY2025/26isinconsistentwithIBEC's resolutionthattheNational Treasuryshouldbeginclearingarrearsowedtothe Equalization Fund by disbursing KSh. 10 billion annually from FY 2024/25 until the outstanding KSh. 49 billion is fully settled. IBEC emphasized that the Bill, in its current form, does not provide for both arrears and current allocations as recommended by the Commission on Revenue Allocation (CRA).

7.0Observations and Recommendations by the Committee

Based on the interrogation of the provisions of the Bill and ensuing deliberations, the Committeemadethefollowingobservationsandrecommendations:

CommitteeObservations

19. TheCommitteeobservedthatwhile theSenateBillmirrorstheNational Assembly Bill in proposing the appropriation of Ksh. 16.8 billion, including Ksh. 10.6 billion for FY2025/26,theenactmentoftheDivisionofRevenueAct,2025,byParliamenthas since revised the actual allocationfor FY 2025/26toKsh.9.59billion. 20. The Committee observed inconsistencies in the commencement dates under Clauses I and 3, creating ambiguity as to whether the Act was intended to operate retrospectively.It further noted that the Bill lacked clear definitions of key terms, including "Board" and "Equalisation Fund,"" and erroneously assigned the role of fund management to the Secretariat instead of the Equalisation Fund Advisory Board, contrary to the Public Finance Management (Equalisation Fund Administration) Regulations, 202l. The Committee cautioned that such gaps and inconsistencies could undermine the proper interpretation and effective implementation of the Act. 3. 21。 The Committee observed that although Clause 4 excluded the Equalisation Fund from being paid into the County Revenue Fund, it failed to establish a clear framework for managing the funds at the county level. In particular, the absence of a legal requirement for counties to open dedicated special-purpose accounts at the Central Bank of Kenya poses risks of diversion or absorption of allocations into general county accounts. This gap undermines the objective of financing basic services in marginalised areas and runs contrary to the principles of accountability and prudent useofpublicresourcesunderArticle20lof theConstitution.

Committee Recommendations

• 22.The Committee, having reviewed, scrutinized, and examined the Equalization Fund following amendments.
• i.THAT, Clause I of the Bill be amended by deleting the words "the date of publication in the Gazette"and substituting therefor the words "Ist July, 2025", sincethecommencementdateinClauseIconflictswithClause 3,which deems the amount appropriated as of Ist July, 2025, the amendment harmonises the commencement provisions and aligns them with the standard

practice for Appropriation Acts, which ordinarily take effect on Ist July of the relevantfinancialyear.

• ii. THAT, the Bill be amended by inserting the following new clause immediately after Clause I Interpretation IA. In this Act, unless the context otherwise under regulation 4 of the Public Finance Management (Equalisation Fund Fund established under Article 204(l) of the Constitution to provide clear definitions of key terms, ensure consistency with existing legal and regulatory frameworks, and enhance the effective interpretation and implementation of the Act.
• iii. THAT, Clause 3 of the Bill be amended by deleting the words"is deemed to words "shall be applied towards". The Clause provides for the appropriation arising from the change to Clause I.
• iv. THAT, Clause 4 of the Bill be amended by inserting the following new are to be transferred shall open a special purpose account at the Central Bank of Kenya intowhich shall bepaid that county's allocationof the EqualisationFundfor therespectiveyear."This amendment ensures compliancewithArticle20lof the Constitution on transparency and accountability in public financial matters. ExcludingtheFundfrombeingpaidintotheCountyRevenueFundwithout specifying an alternative account would defeat the Fund's purpose.

SIGNED

HON.ATANDI,SAMUELONUNGA,M.P. CHAIRPERSON,THEBUDGETANDAPPROPRIATIONSCOMMITTEE

OS. 0q. 202S

DATE

FirstSchedule:Allocationper County and Constituency.

| SN | CONSTITUENCY | AMOUNT(Ksh) | Constituency %benefit | County overall Benefit | |------|----------------------------------------------|----------------------------------------------|-------------------------|--------------------------| | | Baringo North | 86,554,756 | 8.9% | 5.9% | | 乙 | Baringo South | 134,368,950 | 13.9% | 5.9% | | 3 | Mogotio | 164,233,062 | 17.0% | 5.9% | | 4 | Tiaty | 582,524,558 | 60.2% | 5.9% | | | Total for Baringo County | 967,681,326 | | 5.9% | | | Chepalungu | 31,249,275 | 100% | 0.2% | | | Total for Bomet County | 31,249,275 | | 0.2% | | | Mt Elgon | 95,592,537 | 100% | 0.6% | | | Total for Bungoma County | 95,592,537 | | 0.6% | | 一 | Budalangi | 9,710,807 | 33.2% | 0.2% | | 2 | Teso North | 19,529,167 | 66.8% | 0.2% | | | Total ForBusiaCounty | 29,239,974 | | 0.2% | | | Keiyo South | 9,039,410 | 8.5% | 0.6% | | 2 | Marakwet East | 87,509,704 | 82.6% | 0.6% | | | Marakwet West Total for Elegeyo Marakwet | 105,894,890 | | 0.6% | | | Balambala | 256,507,727 | 25.0% | 6.3% | | 2 | Dadaab | 152,216,367 | 14.8% | 6.3% | | 3 | Fafi | 144,459,455 | 14.1% 2.3% | 6.3% | | 4 | Garissa Township | 23,942,133 | | 6.3% | | 5 | ljara | 287,356,119 | 28.0% | 6.3% | | | Lagdera Total for Garissa County | 1,026,040,684 | | 6.3% | | | Homa Bay Town | 10,440,869 | 4.9% | 1.3% | | 2 | Ndhiwa | 120,305,473 | 56.2% | 1.3% | | 3 | Suba North | 29,748,410 | 13.9% | 1.3% | | 4 | Suba South | 53,529,213 | 25.0% | 1.3% | | | Total for Homabay | 214,023,965 | | 1.3% | | | | 162,425,832 | 60.1% | 1.3% | | 2 | IsioloSouth | 107,793,378 | 39.9% | 1.3% | | | | 270,219,210 | | 1.3% | | 2 | | 233,919,794 102,681,312 | 15.2% | 4.1% | | | TotalforIsiolo Kajiado Central Kajiado South | TotalforIsiolo Kajiado Central Kajiado South | | 4.1% | | | | | 34.7% | 4.1% |

| SN | CONSTITUENCY | AMOUNT(Ksh) | Constituency % benefit | County overall Benefit | |------|---------------------------|---------------|--------------------------|--------------------------| | 3 | Kajiado West | 337,924,343 | 50.1% | | | | Total for Kajiado County | 674,525,449 | | | | | Bureti | 10,812,419 | 10.9% | 0.6% | | 2 | KipkelionWest | 10,385,463 | 10.5% | | | 3 | Sigowet/Soin | 77,813,563 | 78.6% | | | | Total forKericho | 99,011,445 | | | | | Ganze | 313,863,249 | 35.7% | 5.4% | | 2 | Kaloleni | 175,930,356 | 20.0% | | | 3 | Kilifi North | 11,584,851 | 1.3% | | | 4 | Magarini | 300,133,840 | 34.2% | | | 5 | Malindi | 53,977,354 | 6.1% | | | 6 | Rabai | 22,542,304 | 2.6% | | | | Total forKilifi County | 878,031,954 | | | | 1 | Muhoroni | 20,167,972 | 51.0% | 0.2% | | 2 | Nyando | 19,405,318 | 49.0% | | | | Total forKisumu County | 39,573,290 | | | | | Kitui East | 215,946,897 | 33.4% | 4.0% | | 2 | Kitui South | 149,954,477 | 23.2% | | | 3 | Mwingi Central | 95,410,021 | 14.8% | | | 4 | Mwingi North | 185,098,505 | 28.6% | | | | Total forKitui County | 646,409,900 | | | | 1 | Kinango | 265,266,845 | 55.7% | 2.9% | | 2 | Lunga Lunga | 130,555,678 | 27.4% | | | 3 | Matuga | 59,410,452 | 12.5% | | | 4 | Msambweni | 20,601,446 | 4.3% | | | | Total for Kwale | 475,834,421 | | | | | Laikipia North | 182,140,774 | 93.9% | 1.2% | | 2 | Laikipia West | 11,879,809 | 6.1% | | | | Total for Laikipia | 194,020,583 | | | | | Lamu East | 41,721,107 | 44.5% | 0.6% | | 2 | Lamu West | 51,976,201 | 55.5% | | | | Total forLamu | 93,697,308 | | | | | Masinga | 21,016,995 | 100% | 0.1% | | | Total for Machakos County | 21,016,995 | | |

| SN | CONSTITUENCY | AMOUNT(Ksh) | Constituency % benefit | County overall Benefit | |------|---------------------------|---------------|--------------------------|--------------------------| | | Banissa | 157,776,574 | 12.9% | 7.5% | | 2 | Lafey | 247,689,943 | 20.2% | 7.5% | | 3 | Mandera East | 209,045,527 | 17.1% | 7.5% | | 4 | Mandera North | 231,939,825 | 18.9% | 7.5% | | 5 | Mandera South | 227,192,791 | 18.5% | 7.5% | | 6 | Mandera West | 151,610,154 | 12.4% | 7.5% | | | Total for Mandera County | 1,225,254,814 | | 7.5% | | | Laisamis | 302,749,353 | 39.6% | 4.7% | | 2 | Moyale | 175,933,615 | 23.0% | 4.7% | | 3 | North Horr | 239,618,517 | 31.4% | 4.7% | | 4 | Saku | 45,472,454 | 6.0% | 4.7% | | | Total for Marsabit County | 763,773,939 | | | | 一 | IgembeSouth | 19,532,427 | 40.1% | 0.3% | | 2 | South Imenti | 9,893,322 | 20.3% | 0.3% | | 3 | Tigania East | 19,243,987 | 39.5% | 0.3% | | | Total for Meru County | 48,669,736 | | | | | Kuria West | 11,594,628 | 4.0% | 1.8% | | 2 | Nyatike | 178,265,578 | 61.7% | 1.8% | | 3 | Suna West | 77,917,858 | 27.0% | 1.8% | | 4 | Uriri | 21,316,842 | 7.4% | 1.8% | | | Total for Migori County | 289,094,906 | | | | | Gatanga | 9,236,592 | 100% | 0.1% | | | Total for Murang'a County | 9,236,592 | | 0.1% | | | Rongai | 10,465,313 | 100% | 0.1% | | | Total forNakuru County | 10,465,313 | | 0.1% | | | Nandi Hills | 20,159,824 | 10.6% | 1.2% | | 2 | Tinderet | 169,700,382 | 89.4% | 1.2% | | | Total forNandi County | 189,860,206 | | | | | Emurua Dilkirr | 36,323,860 | 2.9% | 7.7% | | 2 | Kilgoris | 350,053,482 | 27.9% | 7.7% | | 3 | Narok East | 148,337,911 | 11.8% | 7.7% | | 4 | Narok North | 246,547,591 | 19.6% | 7.7% | | 5 | Narok South | 278,241,748 | 22.2% | 7.7% | | 6 | NarokWest | 195,448,116 | 15.6% | 7.7% | | | Total forNarok County | 1,254,952,708 | | |

| SN | CONSTITUENCY | AMOUNT(Ksh) | Constituency % benefit | County overall Benefit | |------|-----------------------------|---------------|--------------------------|--------------------------| | 1 | Samburu East | 308,536,075 | 29.2% | 6.5% | | 2 | Samburu North | 498,423,984 | 47.2% | 6.5% | | 3 | Samburu West | 249,612,875 | 23.6% | 6.5% | | | Total for Samburu County | 1,056,572,934 | | 6.5% | | | Bondo | 20,563,966 | 39.5% | 0.3% | | | Gem | 19,889,310 | 38.3% | 0.3% | | | Rarieda | 11,544,111 | 22.2% | 0.3% | | | Total forSiaya County | 51,997,387 | | 0.3% | | | Taveta | 10,305,612 | 47.5% | 0.1% | | 2 | Voi | 11,381,150 | 52.5% | 0.1% | | | Total for Taita Taveta | 21,686,762 | | 0.1% | | 1 | Bura | 259,489,901 | 36.1% | 4.4% | | 2 | Galole | 196,502,469 | 27.3% | 4.4% | | 3 | Garsen | 263,022,881 | 36.6% | 4.4% | | | Total for Tana River County | 719,015,251 | | 4.4% | | 一 | Maara | 18,450,370 | 25.8% | 0.4% | | 2 | Tharaka | 53,115,294 | 74.2% | 0.4% | | | Total for Tharaka Nithi | 71,565,664 | | 0.4% | | | Endebess | 12,161,730 | 100% | 0.1% | | | Totalfor Trans Nzoia County | 12,161,730 | | 0.1% | | 1 | Loima | 340,702,817 | 18.3% | 11.4% | | 2 | Turkana Central | 210,644,168 | 11.3% | 11.4% | | 3 | Turkana East | 190,727,155 | 10.3% | 11.4% | | 4 | Turkana North | 516,114,959 | 27.7% | 11.4% | | 5 | Turkana South | 185,266,354 | 10.0% | 11.4% | | 6 | Turkana West | 417,158,921 | 22.4% | 11.4% | | | Total for Turkana County | 1,860,614,374 | | 11.4% | | 1 | Eldas | 158,053,606 | 13.3% | 7.3% | | 2 | Tarbaj | 197,481,861 | 16.6% | 7.3% | | 3 | Wajir East | 88,428,800 | 7.4% | 7.3% | | 4 | Wajir North | 242,687,060 | 20.4% | 7.3% | | 5 | WajirSouth | 335,743,934 | 28.3% | 7.3% | | 6 | Wajir West | 165,062,531 | 13.9% | 7.3% | | | Total for Wajir County | 1,187,457,792 | | |

| SN | CONSTITUENCY | AMOUNT(Ksh) | Constituency %benefit | County overall Benefit | |------|---------------------------------------------|----------------|--------------------------|--------------------------| | | Kacheliba | 570,382,383 | 34.3% | 10.2% | | 2 | Kapenguria | 436,047,654 | 26.2% | 10.2% | | 3 | Pokot South | 236,170,276 | 14.2% | 10.2% | | 4 | Sigor | 418,956,373 | 25.2% | 10.2% | | | Total for WestPokot County | 1,661,556,686 | | 10.2% | | | Total allocation for developmentexpenditure | 16,296,000,000 | | 100% | | | Secretariatexpense | 504,000,000 | 3 % of total allocation | the | | | TotalEqualizationFund | 16,800,000,000 | | |

REPUBLICOFKENYA

NATIONALASSEMBLY

THIRTEENTHPARLIAMENT-FOURTHSESSSION

BUDGETANDAPPROPRIATIONSCOMMITTEE ADOPTIONSCHEDULE

We, the undersigned Members of the Budget and Appropriations Committee, today...S..9..?5....do hereby affix our signatures to this REPORT OF BUDGET AND APPROPRIATIONS COMMITTEE ON THE EQUALISATION FUNDAPPROPRIATIONBILL(SENATEBILL NO.7 OF 2025) to affirm our approval and confirm accuracy, validity and authenticity: - MINUTESOFTHE33RDSITTINGOFTHESELECTCOMMITTEEONBUDGET ATMAINCONFERENCEROOMENGLISHPOINTMARINAHOTEL,MOMBASA COUNTY.

| No | NAME | SIGNATURE | |------|-------------------------------------------------------|-------------| | I. | Hon. Atandi, Samuel Onunga, M.P. -Chairperson | | | 2. | Hon. (Dr.) Pukose Robert, CBS, M.P.- Vice Chairperson | | | 3. | Hon. Chumel, Samwel Moroto, M.P. | | | 4. | Hon. (Dr.) Adan Wehliye Keynan, CBS, M.P. | | | 5. | Hon.Mulu,Makali,PhD.CBS,M.P. | | | 6. | Hon. Lekuton, Joseph, M.P. | | | 7. | Hon. Lesuuda, Josephine Naisula, OGW, M.P. | | | 8. | Hon. Robi, Mathias Nyamabe, M.P. | | | 9. | Hon. Ochieng, David Ouma, M.P. | | | 10. | Hon. Muchira, Michael Mwangi, M.P. | | | I1. | Hon. Mwakuwona, Danson Mwashako, M.P. | | | 12. | Hon. Mwirigi, John Paul, M.P. | | | 13. | Hon. Wangaya, Christopher Aseka, M.P. | | | 14. | Hon. (Dr.) Masara, Peter Francis, M.P. | | | 15. | Hon. (Dr.) Ongili, Babu Owino Paul, M.P. | | | 16. | Hon. Wanjiku, John Njuguna, M.P. | Bmm | | 17. | Hon. Sergon, Flowrence Jematiah, M.P. | | | 18. | Hon. Guyo, Ali Wario, M.P. | | | '61 | Hon. (Dr.) Gogo, Lilian Achieng, M.P. | |

| 20. | Hon. Murumba, John Chikati, PhD., M.P. | |-------|------------------------------------------| | 21. | Hon. Busia, Ruth Adhiambo Odinga, M.P. | | 22. | Hon. Kitilai, Ole Ntutu, M.P. | | 23. | Hon. Mokaya, Nyakundi Japheth, M.P. | | 24. | Hon. Abdirahman Mohamed Abdi, M.P. | | 25. | Hon. Mutuse, Eckomas Mwengi, OGW, M.P. | | 26. | Hon. Kagiri, Jane Wangechi, OGW, M.P. | | 27. | Hon. (Dr.) Mugo, Edwin Gichuki, M.P. |

PRESENT:

• I. Hon. Atandi, Samuel Onunga, M.P. -Chairperson

2. 3.Hon.Chumel, Samwel Moroto, CBS, M.P. 2. Hon. (Dr.) Pukose Robert, CBS, M.P.- Vice Chairperson 4. Hon. (Dr.) Adan Wehliye Keynan, CBS, M.P. 5. Hon. Lekuton, Joseph, M.P. 6. Hon. Muchira,Michael Mwangi, M.P. 7. Hon. Mwakuwona, Danson Mwashako, M.P. 8. Hon. Mwirigi, John Paul, M.P. 9. 10.Hon.(Dr.) Masara, Peter Francis, M.P. 9. Hon. (Dr.) Gogo, Lilian Achieng, M.P 11. I I1. Hon. Wanjiku, John Njuguna, M.P. 12. 12.Hon.Sergon,Flowrence Jematiah,M.P. 13. 13.Hon.Kitilai,Ole Ntutu,M.P. 14. Hon. Guyo, Ali Wario, M.P. 15. 15.Hon.Murumba, John Chikati, PhD, M.P. 16. 16.Hon.Abdirahman Mohamed Abdi, M.P. 17. Hon.Mutuse,Eckomas Mwengi, OGW, M.P.

APOLOGIES:

• I.Hon. Mulu, Makali, PhD, CBS, M.P.

2. Hon.Lesuuda,Josephine Naisula,OGW, M.P. 3. Hon. Robi, Mathias Nyamabe, M.P. 4. Hon. Ochieng, David Ouma, M.P. 5. Hon. Busia, Ruth Adhiambo Odinga, M.P. 6. Hon. Wangaya, Christopher Aseka, M.P. 7. Hon. (Dr.) Ongili, Babu Owino Paul, M.P 8. Hon. Mokaya, Nyakundi Japheth, M.P. 10. Hon. (Dr.) Edwin Mugo, M.P. 9. Hon. Kagiri, Jane Wangechi, OGW, M.P.

PARLIAMENTARYBUDGETOFFICE

1. FA. (Dr.) Martin Masinde, OGW

Director,PBO

• 2.[ Dr. Abel Nyagwachi

Senior Fiscal Analyst

3. Ms. Julie Mwithiga

Senior Fiscal Analyst

• 4.Mr. Benard Adera

Fiscal Analyst Il

• 5.Mr.Michael Kiminza

Fiscal Analyst II

COMMITTEESECRETARIAT

• 1.Mr. Danson Kachumbo

SeniorFiscal Analyst

• 2.Ms. Sylvia Ocharo

Senior Research and Policy Analyst

• 3.Mr. Mosses Mwariri

Legal Counsel

4. Ms. Loice Olesia

Fiscal Analyst II

• 5.Ms.Fridah Ngari

Media Relations Officer Ill

• 6.Mr. Simon Ouko

Sergeant at Arms

7. Mr. Jared Amara

OfficeAssistant

AGENDA

1. Preliminaries. 2. AdoptionofCommitteeReportson:-

• i. TheCountyGovernments'Additional Allocations(No.2) Bill(SenateBill No.8of2025);and
• ii. TheEqualizationFundBill (SenateBillNo.7of2025)

5. 3.Any Other Business (A.O.B).

MIN.NO.NA/BAC/2025/131: PRELIMINARIES

The Chairperson welcomed the committee members to the meeting and called the meeting to order at 3.00 p.m. A prayer was said by Hon. Sergon, Flowrence Jematiah, M.P.

MIN.NO.NA/BAC/2025/132:

ADOPTIONOFCOMMITTEEREPORTSONTHE COUNTYGOVERNMENTS' ADDITIONAL ALLOCATIONS (NO.2) BILL (SENATE BILL NO. 8 OF 2025)

The Parliamentary Budget office took members through the draft report. The report was proposed by Hon.(Dr.)Pukose Robert,CBS, M.P.and seconded by Hon.Kitilai, Ole Ntutu,M.P. After deliberation the report was ADOPTED with the following observations and recommendationsasfollows:

CommitteeObservations

1. The Bill allocates Ksh. 2.93 billion to ten specific counties, equivalent to the 20% share of mineralroyaltiesaccumulatedsince20l6.Previously,thesefundscouldnotbedisbursed dueto thelackoftransferframeworksandwereheldin theConsolidatedFund.To

• facilitatethewithdrawal fromtheConsolidatedFund,anddisbursementofthesefundsto the beneficiary counties, the allocation has been included in the budget.

2. WVhile the Bill allocates Ksh 454 million for County Headquarters construction, the FY 2025/26budgetdesignatesKsh.449millionasadirectconditionaltransferforthe construction works and Ksh. 5 million for operational expenses of the state department. 3. The allocation of Ksh. 4.5 billion to eighteen counties under the CAlPs Programme demonstrates a possible misalignment with implementation progress. WWhile certain s of implementation are being considered for funding.

• 4.TheBillprovidesforanallocationofKsh.23.64billionfrom theRoad MaintenanceLevy Appeal isued stay orders on the implementation of the High Court judgement, which had previously invalidated the legislation regarding the establishment and distribution of the RMLF. The Court of Appeal granted Parliament a I2-month period to align road funding and classification laws with the devolved system of governance, thereby preserving the onbsnzeas

5. The Bill provides for allocations from the proceeds of loans and grants from development partners totalling Ksh. 56.91 billion. Nonetheless, donor-funded projects have historically facedimplementationdelaysattributedtolateorinsufficientdisbursements.These setbacks arise from missed implementation deadlines, unmet conditions, and the impact ofcurrencyfluctuations.

Recommendation

Having deliberated on theprovisions of the Bill, the Committee recommends that the House approvetheCountyGovernmentsAdditionalAllocationsBill,2025(SenateBillNo.8of2025) andtheSchedulescontainedintheBill,withthefollowingamendments:

• I. Construction of county Headquarters - Amending the second schedule to reflect the actual transfers to counties of Ksh. 449,000,000, netting out the Ksh. 5,000,000 for operationexpenses;

2. County Aggregation of Industrial Parks (CAIPs)-Amending the second schedule to

• the balance among counties that have made significant progress in terms of implementation of the projects.
• 3.Road Maintenance Levy Fund- Deletion of the third schedule that contains allocation tocountiesfrom theRoadMaintenanceLevyFund.
• 4.Kenya Informal SettlementImprovementProject-Amending the allocationin the fourthschedulebyreducing thefunds tobe sentto the countiesunder theWorld Bank (IDA) from KSh.800,000,000 to Ksh. 167,500,000 while increasing the allocation of AFD Funds fromKsh.1,000,000,000 to Ksh.2,500,000,000.
• 5.Kenya Devolution Support Programme ll (KDSP Il)-Amending the fourth schedule to increase the allocation for level one grants toKsh.3,426,746,500 and reduce level twograntstoKsh.11,378,253,500.
• 6.Schedules to the Bill-that the First,Second,and Third Schedules to this report be theSchedulestotheBill.

MIN.NO.NA/BAC/2025/I33:ADOPTIONOF COMMITTEEREPORTSON THE EQUALIZATION FUNDBILL(SENATE BILLNO.7 OF2025)

The Parliamentary Budget office took members through the draft report. The report was proposed by Hon.(Dr.)Masara,Peter Francis,M.P.and seconded by Hon.Guyo,Ali Wario, M.P. After deliberation the report was ADOPTED with the following observations and recommendationsasfollows:

CommitteeObservations

• 1.The Committee observed that while the Senate Bill mirrors the National Assembly Bill in the enactment of the Division of RevenueAct,2025,by Parliament has since revised the actualallocationforFY2025/26toKsh.9.59billion.
• 2.The Committeeobserved inconsistenciesin the commencement dates underClausesl and 3, creating ambiguity as to whether the Act was intended to operate retrospectively. It further noted that the Bill lacked clear definitions of key terms, including "Board" and "Equalisation Fund," and erroneously assigned the role of fund management to the

Management (Equalisation Fund Administration) Regulations, 202l. The Committee cautioned that such gaps and inconsistencies could undermine the proper interpretation andeffectiveimplementationoftheAct.

• 3.The Committee observed that although Clause 4 excluded the Equalisation Fund from being paid into the County Revenue Fund, it failed to establish a clear framework for managing the funds at the county level. In particular, the absence of a legal requirement for counties to open dedicated special-purpose accounts at the Central Bank of Kenya poses risks of diversion or absorption of allocations into general county accounts. This gap undermines the objective of financing basic services in marginalised areas and runs contrary to the principles of accountability and prudent use of public resources under Article20loftheConstitution.

CommitteeRecommendations

The Committee, having reviewed, scrutinized, and examined the Equalization Fund Appropriation Bill, 2025, recommends that the House approve the Bill with the following amendments:-

• i. THAT, Clause I of the Bill be amended by deleting the words "the date of publication in the Gazette" and substituting therefor the words "Ist July, 2025",since the commencementdateinClauseIconflictswithClause3,whichdeems theamount appropriated as of Ist July,2025,the amendment harmonises the commencement provisions and aligns them with the standard practice for Appropriation Acts, which ordinarilytakeeffect onIstJulyof therelevantfinancialyear.
• ii. THAT, the Bill be amended by inserting the following new clause immediately after means the Equalisation Fund Advisory Board established under regulation 4 of the Public Fund" means the Equalisation Fund established under Article 204(l) of the Constitution to provide clear definitions of key terms, ensure consistency with existing legal and regulatory frameworks, and enhance the effective interpretation and implementation of theAct.

• ili. THAT, Clause 3 of the Bill be amended by deleting the words "is deemed to have been appropriated on Ist July 2025 for" and substituting therefor the words"shall be applied towards". The Clause provides for the appropriation of the money granted. The proposed deletion is a consequential amendment arising from the change to Clause I.
• iv. THAT,Clause 4 of the Bill be amended by inserting the following new subsection immediately after the existing provision"(2) A county to which funds are to be transferred shall open a special purpose account at the Central Bank of Kenya into which shall be paid ensures compliance with Article 20l of the Constitution on transparency and accountabilityinpublicfinancial matters.Excluding the Fund frombeingpaid intothe CountyRevenueFundwithoutspecifyinganalternativeaccountwoulddefeattheFund's purpose.

There being no other business, the meeting was adjourned at 4.00 p.m. The next meeting wil becommunicatedonnotice.

SIGNED

HON.ATANDISAMUELONUNGA,M.P.

CHAIRPERSON,BUDGETANDAPPROPRIATIONSCOMMITTEE

O5. 09. 2c25

DATE