1. Equalisation Fund
 Introduction
The Equalisation Fund comprises of 0.5 per cent of all the 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 .
The fund is only to provide basic services including water, roads, health facilities and
electricity to marginalized areas to the extent necessary to bring the quality of services
in those areas to the level generally enjoyed by the rest of the nation, so far as possible
(Art.2014(2).
Equalisation fund was meant to bridge the inequalities and inequities characterized by
marginalization.
The Equalisation fund became operational in the financial year 2011/12.
The Commission on Revenue Allocation(CRA) is tasked to publish and review a policy
that will set down the criteria for determining the marginalized areas for the purposes of
the fund.
The Equalisation Fund is implemented through policies established by the Commission
on Revenue Allocation

2. History of the Equalisation Fund
 The Bomas Draft Constitution,2004-Art.239- stated that, ‘“The Government shall promote financial equalization
among all levels of government” and that “Each devolved government… may receive equalization grants or other
allocations from Government revenue, either conditionally or unconditionally.
 The 2005 Referendum Draft Constitution(Wako Draft)-established the Revenue Allocation Commission and
mandated it to distribute national revenue in accordance with various principles including the recognition
“economic disparities within and among the districts and the need for financial equalization and the need
for affirmative action
 Task Force on Devolved Government(est.22/10/2010)-worked on the implementation of the devolution
process and advising the government on policy and legal frameworks for devolving power, resources and
responsibilities to the people of Kenya for effective local development and did recommended that
marginalised areas to be places that exist as clarified by Art.204(3)(b).
 Constitution of Kenya,2010,Art.204-Committee of Experts improved and refined the idea of equalization
contained in the previous drafts, without altering the original intent of the proposal by first, creating an
immediate rather than a permissive obligation on the National government to create an Equalisation
 The Constitution of Kenya,2010-Article 204(1-8) provision on equalization fund
 The Policy on the Criteria of identification of Marginalized counties for the purpose of the Equalisation
Fund for years 2016/2017-Developed by the Commission on Revenue Allocation
 The Second policy and Criteria for Sharing Revenue among Marginalised Areas for years 2017/208

3.  Why the Equalisation Fund
 Equitable Provision of Basic Services(Art.204(2)-the provision of basic services including water, roads,
health facilities and electricity to marginalized areas to the extent necessary to bring the quality of those
services to the level generally enjoyed by the rest of the nation.
 Participatory Development and Participation by communities-The marginalised groups are involved in
decision-making and implementation of laws and policies, they are able to influence the governance of a
state in a manner that will promote the attainment of equity through engagement of citizens in local
level planning processes
 The Affirmative Action Principle-denotes a positive step taken, as well as more specifically to connote, an
attempt to reverse or mitigate past discrimination and historical injustices. Its intended to address;
 Remedy past discrimination- Occasioned by the past and pre-colonial administration sin
employment/appointment opportunities and also enable such communities to have access to
benefits under Art.56 CoK being as development of cultural values, languages and practices,
access to health services, infrastructure, water, and electricity among others.
 Enhancing diversity-by building a diverse and inclusive society.
 Increasing the political power of the marginalised-Through increased representation

4.  Legal Framework for the Equalisation Fund
 Legal Framework
 The Constitution of Kenya-Art 204(1-9)-,Art 216,Art.201,Art.260,Art.56
 The Commission on Revenue Allocation Act No.16 of
 The Division of Revenue Act 2018-Equitable revenue raised by national assembly as per Art.203(2) CoK,2010.
 The Public Finance Management(Equalisation Fund) Regulations,2015
 Equalisation Fund Appropriation Act,2017 and 2018-Authorises the payment of a sum of money for the public
services listed under Art.204(2)
 Institutional Framework
• Commission of Revenue Allocation-Art 215,216,217 CoK
• The Senate-Art.205
• Officer of Controller of Budget-Art.228 CoK,Art.204,206 and 207 Constituion of Kenya.
• Office of the Auditor General-Art.248 CoK
• Equalisation Fund Advisory Board-Sct.4.1Public Finance Management(Equalisation Fund)
Regulations,2015

5. Policy on the criteria for the identification of marginalised counties for the purpose of
Equalisation fund-1st Policy
• The policy was prepared by the CRA in 2013 and
was to apply for the first three years and was also to
set out the criteria for identifying marginalized
areas/counties in Kenya for consideration of the
Equality Fund
• The Policy identified 14 counties and Counties were
allocated Ksh.11.8 Billion from the Equalisation Fund
kitty.
• The primary criterion chosen for identifying
marginalized counties in this policy was the County
Development Index (CDI), which is a composite
index, constructed from indicators measuring the state
of health, education, infrastructure and poverty in a
county. The CDI is complemented by two other
approaches, namely: expert analysis on historical and
legislative discrimination and results of the
Commissions county marginalization survey.
• Objectives of the policy
• Set out the criteria for identifying marginalized areas in
Kenya
• To recommend procedures for utilization of the
fund
Factors Considered by the commission in Identifying the
marginalized Counties
a) Historical and Legislated discrimination- the District Ordinance
Act of 1902 The Vagrancy Act, Northern Frontier Province Poll Tax
and Special Districts (Administration Act),the Sessional Paper
No.10 of 1965. Closed District Policy 1902,Majimbo
Governments,(1963),Sessional Paper No.10 of 1965,Harambee
Philosopy,1960,Special Rural Development
b) Land administration and legislation-Land Titles Ordinance 1908
and Crowns Lands Ordinance of 1905(later the Government Land
Act
c) Geographical factors-Internal Migration, Minorities recognition
and inequitable development policies.
d) Past Policy initiatives and Limitations- Sessional Paper No.4 of
1975 and 1965, Programme,1971 and the Kenya Uganda Railway-
e) Culture and lifestyle analysis
f) Domination by non-indigenous persons and Non-recognition of
minority groups
g) Ineffective political participation and Inequitable government
policies

6. Guiding Principles for identification of Marginalized Counties
 The guiding principles for making the policy are ;
 the Constitution of Kenya,Art.201-Opennes and accountability,fairness,equity
 The Public Finance Management Act Principles-Openness and
Accountability,equity,Efficiency,Effectiveness,Economy,,subsidiarity,transparency,materiality and Public Participation Principles
Methodology Employed Under the Policy
 County Development Index
 Historical Justice Approach
 County Survey Approach
1. County Development Index-It’s a qualitative measure of the access levels of basic services provided in the 47 counties.
 The indicators used were Health (gauging the percentage of deliveries, percentage of children aged 12-23 months and populations
with improved sanitations, Education(by gauging the percentage of students in secondary schools and the literacy levels,
infrastructure indicators(percentage of tarmacked roads, population with electricity and clean water).
 Twenty counties were selected using this criteria being-Turkana, Mandera, Wajir, Marsabit, Samburu, West Pokot,Tana
River,Narok,Baringo,Kwale,Kitui,Garissa,Homa Bay,Tharaka Nithi,Trans Nzoia,Kilifi,Busia,Taita Taveta,Bomet ,Migori.
2. Historical Justice Approach-Its a qualitative Approach and majored on the historical injustices during the pre and post colonial times and
the legislations that perpetuated exclusion. Some of the legislations that were considered were; The special Districts(Administration)
Ordinance(1934),the Constitution of Kenya( Amendment Act) No.16 of 1966),Crown Land Ordinance(Bow Government Land Act, Cap 280.)
and Sessional Paper Policy No.10 of 1965.
The commission factoring the legislated discrimination, land dispossession issue and the low potential areas identified 15 Counties that were to be considered
marginalized.
3. County Survey Approach-A national survey was conducted in the 47 counties from which different stakeholders and groups gave their
views in the form of quesstionnaires.The commission after the consideration selected 10 counties that were to be marginalized.

7. List of Counties Selected per CDI,Historical Justice and County
Survey Approach of the 1st Policy.
HISTORICAL COUNTY SURVEY APPROACH CDI APPROACH
INJUSTICES
APPROACH
RANK COUNTY RANK COUNTY COUNTY RANK COUNTY CDI
SURVEY
(%)
1. TURKANA 1. TURKANA 27.72 1. TURKANA 0.27
2. MANDERA 2. MARSABIT 10.71 2. MANDERA 0.31
3. WAJIR 3. WAJIR 9.45 3. WAJIR 0.33
4. MARSABIT 4. LAMU 9.13 4. MARSABIT 0.37
5. SAMBURU 5. MANDERA 8.35 5. SAMBURU 0.38
6. WEST POKOT 6. TANA RIVER 5.51 6. WEST POKOT 0.38
7. TANA RIVER 7. WEST POKOT 5.20 7. TANA RIVER 0.39
8. NAROK 8. SAMBURU 3.94 8. NAROK 0.44
9. KWALE 9. KILIFI 2.52 9. BARINGO 0.44
10. GARISSA 10. ISIOLO 2.20 10. KWALE 0.45
11. KILIFI 11. KITUI 0.46
12. TAITA TAVETA 12. GARISSA 0.47
13 ISIOLO 13. HOMA BAY 0.47
14 KAJIADO 14. THARAKA NITHI 0.48
15 LAMU 15. TRANS NZOIA 0.49
16. KILIFI 0.50
17. BUSIA 0.51
18. TAITA TAVETA 0.51
19. BOMET 0.51
20. MIGORI 0.52

8. Final List of Selected Counties
Turkana Narok
Mandera Kwale
Wajir Garissa
Marsabit Kilifi
Samburu Taita Taveta
West Pokot Isiolo
Tana River Lamu

9. The Second Policy And Criteria For Sharing Revenue Among Marginalized Areas
 Prepared to be used for the sharing of revenue for the
years2011/12,2012/2013,2013/2014,2017/18,2018/19,2019/20 and
2020/21.
 Prepared by CRA to invoke equity where there are pockets of
extreme marginalization.
 It adopted an approach of finding the marginalised areas in
specific areas i.e. sub locations(smallest administrative unit and
used the indicators on access to education,water,sanitation
and electricity to construct an index of deprivation out of
which 7,131 areas were viewed to be most deprived.
 The policy considered the population of an area and level of
deprivation within a sub-location social economic parameters
being-primary education and secondary
education(attendance rates and literacy levels),water(access to
water) ,electricity access and sanitation out of which a
deprivation index was identified.
 In applying the index of deprivation,1,424 out of 7,131 sub-
locations were identified as marginalised for the purposes of
benefiting from the Equalisation fund.
Minority Groups Selected Under The Policy
 The legal Framework-Art.56,260CoK,
 Guiding Factors in the selection of Minorities-
• Small population .Cultural Identity
 Unique Culture -Provision of basic services
 Traditional lifestyle
 Representation
 Discrimination/Recognition
 Minorities that met the definition in Art.260 of the CoK
are-Endorois of Baringo, Ilchamus of Baringo,Sengwer of
Trans Nzoia,Waata of Isiolo and Mandera,Elmolo of
Marsabit,Boni of Lamu,Makonde of Kwale, and Yaaku of
Laikipia
 Four(4) marginalised minority communities were also
identified for service provision being-
Elmolo,Watta,Makonde and Dorobo Saleita because they
met the guiding factors discussed above.

10. Comparison between the 1st Policy and second
Policy on the Criteria for Revenue Sharing
1st pOLICY
• It used the counties as a unit of focus by using the information of historical
injustices and index of county development to choose the marginalized areas.
• Identification of projects in the first policy was done at a one-off meeting at
county level where representatives from constituencies were invited to
participate.
• The revenues from the Fund for three financial years appropriated under the
first policy were shared equitably using the criteria determined by the
Commission among the 14 marginalized .
• The first policy identified marginalised areas based on triangulated
information from a perception survey report, historical injustices reports and
county development index.. This approach widened the scope of
marginalization beyond
• Implementation of projects across the 14 counties under the first policy has
been slow. This is because the demand for public services in marginalised
areas is very high. Owing to the fact that there was a slow uptake of funds
allocated to the various counties under the first policy
2ND POLICY
• It uses the marginalised areas smallest administrative units-
sub locations of the marginalised counties to determine the
marginalised areas/groups.
• Calls for the use of Projects Implementations Units that
would see communities engage and get involved in their
development.
• Invoked equity by recognizing that there are pockets of
extreme marginalised areas that need consideration.
• Applied the index of deprivation using access to
water,education,improved sanitation and electricity
indicators.
• Factors in minority communities/groups that requires special
attention under the Equalisation fund.
• Identifies 1,424 areas for consideration and four(4) minority
groups- Elmol ,Makonde , Waata and Dorobo-Saleita for
consideration for Equalisation Fund.

11. Shortcomings and Recommendations of
the Equalisation Fund
Shortcomings of Equalization Fund
 Weak Financial Management
systems/Misappropriation-
 Supremacy Battles between the National
Assembly, the County Governments and the
Senate
 Lack of Public participation by the citizens from
the marginalized areas
 Weak Legal Framework for the Administration of
the Fund.
 Inequitable Distribution of the Fund
 Lack of better Project Implementation
levels/Units
Recommendations
 Need to come up with solid legislation e.g Equalization Bill/Act that
would operationalize Article 204 Constitution of Kenya
 Develop Project Implementation Units(PIU)
 Identification of Unique Projects and Programmes
 Priotization of Funding to the Priority Areas
 Strengthening Public Participation
 Preparation operational

12. END