Dozens of marginalised counties may fail to benefit from the transformation envisioned under the Equalisation Fund.
A fresh report has highlighted the government’s failure to remit Sh51.9 billion owed to the fund as the deadline for its expiry approaches.
Only six years remain before the fund lapses, in the 2031-32 financial year, which marks 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 levels in marginalised counties to match those available in other parts of the country.
The fund was intended to support water, roads, health facilities and electricity projects in marginalised regions.
However, Auditor General Nancy Gathungu has 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 bleak 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 allocated to the fund every year.
However, the audit shows that although the fund should have received Sh67.8 billion between 2011-12 and 2024-25, only Sh15.93 billion has been transferred.
This means nearly 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 has cautioned that, because of the low disbursements, the goal of improving services in disadvantaged areas may not be achieved 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 issue is especially significant because the programme was expanded well beyond its original 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.
Despite the expansion, implementation has fallen far behind, a concern Tiaty MP William Kamket raised in Parliament on Thursday.
The lawmaker has sought answers from Treasury on when Baringo would receive its full share from the fund.
The Equalisation Fund Appropriation Act, 2023 set aside Sh10.02 billion for projects under the second policy.
However, auditors found that six counties, namely Bomet, Bungoma, Kericho, Kitui, Lamu and Narok, had 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, representing 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, greatly slowing projects meant to improve living conditions in underserved regions.
Gathungu says that even if Treasury released the outstanding billions immediately, administrative barriers could still stop counties from fully using the resources before the fund’s deadline.
Regulatory weaknesses are also hindering implementation.
The audit found conflicting provisions in the Public Finance Management (Equalisation Fund Administration) Regulations, 2021.
These include uncertainty over who is responsible for conducting public participation, approving projects and preparing financial reports.
The National Treasury and fund managers have yet to amend the regulations to close the gaps.
As a result, the fund is trapped between persistent underfunding and weak implementation systems, with potentially serious consequences.
The Equalisation Fund was designed as a once-in-a-generation intervention to address historical development disparities.
Yet with only 23 per cent of its entitled resources received and six years remaining before expiry, that promise appears increasingly threatened.
As a result, many of the marginalised areas identified for support may never receive the full benefits unless Parliament extends the life of the fund.
Another way to avert this would be for the government to sharply accelerate both funding and project implementation.
Even so, questions remain over whether resources already disbursed have been properly used.