The National Government Constituency Development Fund (NG-CDF) is facing yet another major challenge, with the Kenya Revenue Authority (KRA) demanding Sh2.2 billion in tax arrears from the fund’s board, piling pressure on the already troubled kitty as its possible dissolution date approaches.
According to Mwingi Central lawmaker Gideon Mulyungi, fund managers across various constituencies have started receiving letters from KRA asking them to clear tax arrears accumulated since 2021.
He told Parliament that the situation has caused confusion in many constituencies, with some disputing the figures presented by the taxman.
“Despite numerous engagements between the NG-CDF board and the KRA, the matter has remained pending,” Mulyungi said.
As of May 31, 2025, KRA indicated that the constituencies, whose names were not disclosed, owe a total of Sh2.2 billion. Mulyungi, who chairs the Decentralised Funds Accounts Committee, urged Parliament to step in through the Finance and National Planning Committee to help address the issue.
He also asked the committee, led by Molo MP Kimani Kuria, to convene a session with KRA to provide a clear update on the status of each constituency’s arrears and give a detailed breakdown of the amounts owed.
In addition, he wants the committee to spell out the specific steps that both KRA and the NG-CDF board will take to settle the arrears and provide a clear timeline for resolving the matter.
This fresh demand from the tax authority adds to the growing list of problems facing NG-CDF, which is scheduled to be wound up by June 30, 2026, following a court ruling that declared the fund unconstitutional.
Just last week, lawmakers raised alarm that constituency fund managers are yet to receive the first tranche of Sh19 billion from the National Treasury.
They warned that if the situation remains unresolved, the fund could close with outstanding commitments exceeding Sh50 billion, jeopardising ongoing development projects already awarded to contractors.
The Treasury has since assured Parliament that it will release all funds to constituencies—amounting to Sh58 billion—before the June 2026 deadline.
Each constituency is expected to receive at least Sh7 billion per month starting this month to ensure pending obligations are cleared.
The fund’s troubles began last year when a three-judge bench ruled that it violated the principle of separation of powers.
In response, MPs moved to secure its future by passing the Constitution of Kenya (Amendment) Bill, 2025, which seeks to anchor three funds in the Constitution: the National Government Constituencies Fund (NG-CDF), the Senate Oversight Fund (SOF), and the National Government Affirmative Action Fund (NGAAF).
The Bill, sponsored by Rarieda MP Otiende Amollo and Ainabkoi MP Samuel Chepkonga, received overwhelming support during the August vote, with 304 legislators backing it and achieving the two-thirds constitutional threshold. It has since been forwarded to the Senate for consideration.
However, the High Court has stopped Parliament from presenting the Bill to the President for assent, halting the constitutional amendment process that lawmakers hoped would protect the fund from being scrapped.
Established in 2003 through a private member’s Bill sponsored by then Ol Kalou MP Engineer Muriuki Karue, the fund became law after receiving presidential assent in December of that year.
Now, 22 years later, it faces the real prospect of closure in just eight months.