Dozens of marginalised counties face the possibility of missing the transformation envisioned under the Equalisation Fund.
A fresh report has highlighted the government’s failure to remit the Sh51.9 billion owed to the fund, with little time left before it expires.
Only six years remain before the fund lapses in the 2031-32 financial year, the 20th year provided for in the Constitution.
The Constitution established the fund more than a decade ago to narrow the country’s development gap.
It was meant to raise service delivery in marginalised counties to levels available in the rest of the country.
The fund was intended to support water, roads, health facilities and electricity projects in marginalised regions.
However, Auditor General Nancy Gathungu warned in her review that Kenya is unlikely to meet the goals for which the fund was created.
The June 30, 2025 audit presents a troubling picture of the fund’s struggle to deliver basic services to some of the country’s poorest communities.
The Constitution requires 0.5 per cent of national revenue to be directed to the fund every year.
However, the audit shows that although the fund should have accumulated Sh67.8 billion between 2011-12 and 2024-25, only Sh15.93 billion was transferred.
This means almost three-quarters of the money meant to uplift neglected communities has not reached the fund.
“The National Treasury had not remitted the remaining balance of Sh51.8 billion to the Fund as at 30 June, 2025 and was, therefore, in breach of the Constitution,” the audit states.
Gathungu warned that the low disbursements could prevent the improvement of services in disadvantaged areas within the timelines set by the Constitution.
“Given the low level of disbursements as indicated above, the country is not likely to achieve the objectives of the Equalisation Fund,” the report says.
The concern is especially important because the programme was expanded well beyond its initial scope.
The first marginalisation policy, developed by the Commission on Revenue Allocation in 2013, identified 14 beneficiary counties, including Turkana, Mandera, Wajir, Marsabit, Samburu, West Pokot and Garissa.
A second policy, adopted in 2018, expanded the fund’s reach to 1,424 marginalised areas across 34 counties.
But despite the expansion, implementation has fallen far behind, a point Tiaty MP William Kamket raised in Parliament on Thursday.
The lawmaker demanded answers from Treasury on when Baringo would receive its full share from the fund.
The Equalisation Fund Appropriation Act, 2023 allocated Sh10.02 billion to projects under the second policy.
However, auditors found that six countiesBomet, Bungoma, Kericho, Kitui, Lamu and Narokhad not received approval for any projects despite a combined allocation of Sh1.37 billion because they had not submitted project proposals.
At the same time, only Sh2.9 billion, or 48 per cent of approved project funding, had been requisitioned and transferred.
Thirteen counties with approved projects worth more than Sh2 billion recorded no absorption of allocated funds.
Overall, only 29 per cent of appropriated funds had been transferred by June 2025, sharply slowing implementation of projects intended to improve living conditions in underserved regions.
Gathungu says that even if Treasury released the outstanding billions immediately, administrative obstacles could still stop counties from fully using the resources before the fund’s deadline.
Regulatory weaknesses are also slowing implementation.
The audit found conflicting provisions in the Public Finance Management (Equalisation Fund Administration) Regulations, 2021.
These include uncertainty over who is responsible for public participation, project approval and financial reporting.
The National Treasury and fund managers have yet to amend the regulations to close the gaps.
As a result, the fund is caught between persistent underfunding and weak implementation systems, with potentially serious consequences.
The Equalisation Fund was created as a once-in-a-generation intervention to close historical development gaps.
Yet with only 23 per cent of its entitled resources received and six years remaining before expiry, the promise now looks increasingly endangered.
As a result, many of the marginalised areas identified for support may never receive the full benefits unless Parliament extends the fund’s life.
Another possible remedy would be for the government to greatly speed up both funding and project implementation.
Even so, concerns remain over whether the resources already disbursed have been used appropriately.