Alarm as marginalised counties starved of cash

A flagship constitutional fund designed to end decades of neglect in the country’s poorest regions has been starved and crippled, an explosive government report reveals.

The report by the Equalisation Fund Advisory Board, tabled in Parliament recently, reveals that the impact of the fund has yet to be felt.

It has emerged that the fund, mandated to uplift marginalised areas to national standards, is owed Sh64.16 billion by the National Treasury.

The situation has left thousands of water, road, health and electricity projects in limbo.

At the time of the review, Treasury had disbursed approximately 20 per cent of the constitutional entitlement of Sh80 billion.

“As of June 30, 2025, the National Treasury had paid a total of Sh15.93 billion into the fund, leaving an outstanding balance of Sh64.16 billion,” the report reads.

Despite a constitutional requirement that 0.5 per cent of all national revenue be paid into the fund yearly, Treasury has consistently withheld cash.

The board sounded alarm bells, saying the financial crisis has crippled the fund.

In the report, it notes that the Treasury drafted a payment plan in 2023 to clear the arrears by adding Sh9.98 billion extra each year, which it has already failed to do.

“As of June 30, 2025, the National Treasury has not been able to fully honour the payment plan, citing a tight fiscal space.”

The admission has cast doubt on any political commitment to remedy the delays, deemed an injustice to the beneficiaries.

The board feels that the Treasury is treating the fund as an afterthought and not a constitutional mandate.

“The operations of the fund have not been without challenges,” the board notes, citing non-funding of approved budgets and the consequent piling of pending bills.

Payments have been erratic and grossly insufficient. A year-by-year breakdown paints the picture of the delays.

While the fund received its due for 2015-16 and 2016-17 financial years, the deficit began to balloon thereafter.

The arrears for the 2017-18 financial year stand at Sh7.7 billion and grew to Sh5.7 billion in the 2019-20 spending period.

The deficit ballooned to Sh7.3 billion for 2023-24 and another Sh5.35 billion was added in 2024-25. Only Sh2.5 billion was paid for the referenced year.

The board said Sh9.6 billion is already marked as arrears for the current fiscal year, with budget projections showing no signs they’d be settled soon.

According to the draft BPS 2026, the problem appears protracted, with Treasury citing a tight fiscal space.

The Treasury dossier shows the fund would be allocated Sh15 billion, of which Sh5.5 billion would be for the outstanding arrears.

The delays have come with a direct cost to the intended beneficiaries, the report reveals.

Under the First Marginalisation Policy, which targeted 14 counties with 360 projects via national agencies, progress is choked by outstanding balances.

Though 82 per cent are reportedly complete, final touches and handovers are stalled because ministries, departments and agencies are owed over Sh1 billion in outstanding balances.

Turkana county, for instance, still awaits Sh246 million, while Narok has Sh142 million in pending disbursements for its final projects.

The crisis is more acute under the Second Marginalisation Policy, which expanded the scope to 1,424 sub-locations across 34 counties.

Parliament appropriated Sh10.02 billion in 2023. Yet, by the reporting deadline, only Sh2.85 billion had been disbursed.

Consequently, 1,138 approved projects, or 73 per cent of the total, are less than 50 per cent complete.

Counties like Narok, Kwale, Garissa (under the second policy), Bungoma and Kisumu have received not a single shilling for their second-phase projects.

Their approved plans for boreholes, dispensaries and rural access roads remain mere paper proposals.

In contrast, a few counties like Homa Bay and Mandera show high absorption rates.

“Being a constitutional Fund, EF should be made a separately voted entity outside the National Treasury,” the board argued.

It insists that equalisation fund allocations must be excluded from cuts during supplementary budgets, saying budget reviews have been used to claw back the already meagre resources.

The “lengthy legislation process…non-funding of enacted Appropriation Acts… and piling of pending bills” are cited as core challenges.