Battle over billions as CRA reviews Equalisation Fund beneficiaries

CRA Chairperson Mary Chebukati says the review of the policy seeks to improve the framework for sharing the Equalisation Fund. [File, Standard]

Controversy is brewing over the sharing of billions of shillings under the Equalisation Fund as the Commission on Revenue Allocation (CRA) commences a review of the policy that determines the counties and regions that qualify to be classified as marginalised.

Leaders from arid and semi-arid counties want the list of beneficiaries reduced, while those from the other counties insist they also have needs deserving government support with the policy review set to determine the areas eligible to benefit from the Equalisation Fund.

The Equalisation Fund is a constitutional allocation equivalent to 0.5 per cent of all nationally collected revenue, which finances basic services such as water, roads, health facilities and electricity in marginalised areas with an intention of making them at par with other areas.

Political Leaders from the 14 counties originally classified as marginalised have urged the commission to return to the initial model used in 2013, arguing that expanding the list of beneficiaries has diluted the impact of the fund.

Kakamega Senator Boni Khalwale said the Equalisation Fund was created to address historical marginalisation rather than general poverty, arguing that if it was about fighting poverty then all the 47 counties should benefit since they all have needy residents.

"Let me state clearly that the Equalisation Fund was not meant to fight poverty but to fight marginalisation since independence in some of the counties if it is about fighting poverty, then all counties should benefit and they should be allowed to be part of this,” said Dr Khalwale.

The Kakamega Senator argued that the widening number of beneficiaries had significantly reduced the amount allocated to each area, undermining the objective of transforming historically neglected regions.

Khalwale said that there was a region that was allocated Sh3 million, wondering what the amount can do when it comes to healthcare provision or the provision of water services to the area stating that the focus should be in ending marginalization and not poverty.

While leaders from the original 14 counties are lobbying for a return to the earlier framework, governors and lawmakers from other parts of the country argue that marginalisation is not confined to entire counties but also exists within subcounties, wards and locations.

The second policy, adopted in 2018, expanded eligibility from 14 counties to 1,424 marginalised areas spread across 34 counties after changing the unit of analysis from counties to subcounties with the proponents of the new formula arguing that using that basis will reach the needy areas.

Supporters of the current approach argue it allows the fund to reach neglected communities in counties that may appear relatively developed overall but still contain isolated areas lacking basic public services.

The Commission on Revenue Allocation has already held consultations with governors from the original 14 beneficiary counties, who pressed for a return to the first policy and also met the Senate Finance and Budget Committee chaired by Mandera Senator Ali Roba.

The Commission is set to hold more consultative meetings with Members of the National Assembly, Civil Society Organisations and a public participation initiative with members of the public before the revised policy is finalised and adopted.

CRA Chairperson, Mary Chebukati, said the review offers an opportunity to improve the framework using lessons learnt from the implementation of the previous policies and ensure that the framework remains responsive to the needs of marginalised communities.

“The stakeholder views collected during the consultations would help shape a policy that remains responsive to changing development needs while advancing the constitutional principle of equitable development,” said Chebukati.

The CRA Chairperson highlighted that the insights gathered during the stakeholders’ engagement will play a critical role in shaping a robust and responsive policy framework capable of addressing the evolving needs of marginalised communities.

According to the commission, discussions focused on the criteria used for identifying marginalised areas, lessons learnt from implementing previous policies, challenges encountered and proposals for strengthening the framework.

Chebukati said that the consultations also provided valuable grassroots perspectives on how the Equalisation Fund has affected beneficiary communities and where improvements are needed and that the commission will factor in all gathered in making the crucial decision.

“The Equalisation Fund is established under Article 204 of the Constitution and receives 0.5 per cent of nationally collected revenue. Based on recent audited accounts, its primary objective is to improve access to essential services in historically marginalised areas,” said Chebukati.

She said the equalization fund was aimed at bringing affected counties closer to other counties considered to be more developed with the constitution allowing the funds to be spent through appropriations approved by Parliament or conditional grants to county governments.