A Needs-Based Model for Cash Transfer Value Determination: Towards Equitable Cash Assistance in Drought-Prone Regions

2.1 Data sources and assumptions

Household level data were collected from 476 households from March to April 2023 using survey questionnaire covering demographic characteristics and expenditure patterns. Before questionnaire administration, an informed verbal consent was obtained from each participant where by a full explanation of the study purpose, procedures, potential risks and benefits, and their rights to withdraw at any time were provided. An informed verbal consent was chosen due to cultural sensitivity, high illiteracy and language barrier in the study area, factors that could discourage participation. Also, due to the aforementioned factors, to recording of interviews was not possible and suitable. However, dates of interviews for each household that participated were documented. Local prices for a standardized set of priority basic needs were collected from relevant markets within the study area. These data provide the basis for computing household specific consumption requirements and transfer values. Based on collected data, the proposed model accepts the following assumptions and facts:-

2.2 Determination of MEB and transfer values

The MEB for each household is calculated by combining the adjusted household consumption needs with local prices of essential goods and services. The transfer values are derived to cover the calculated MEB while accounting for prices changes through inflation adjustments and the adequacy ratio, which ensures that transfers meet intended welfare objectives. This step wise process allows for a flexible and context specific determination of cash transfers that can be updated dynamically as new data becomes available.

Mathematically, and based on assumptions and facts stated above, the cash transfer value is determined based on the following formula;

Whereby ${\mathrm{T}}_v$ is the transfer value, ${\mathrm{MEB}}_{\mathrm{per}\text{capita}\_\mathrm{f}}$ is the per capita minimum expenditure basket per month for food items, ${\mathrm{MEB}}_{\text{nfood}}$ is minimum expenditure basket for non-food items, ${\mathrm{I}}_{\mathrm{f}}$ is the inflation factor and ${\mathrm{A}}_{\mathrm{r}}$ is the adequacy ratio.

The minimum expenditure basket for non-food items is the total cost per month for education (food and uniforms for children), health services, clothing, communication (air time) and transport needs for the household.

Where ${\mathrm{C}}_{\mathrm{i}\_\mathrm{nf}\_\mathrm{hh}}$ is the average cost of non-food item i incurred by a household per month.

Since households have different compositions of children and adults and large households share some of the household’s resources (economies of scale), the household size is expressed in terms of adjusted equivalence scales as follows;

Where as ${\mathrm{AE}}_{\mathrm{hh}\_\mathrm{adj}}$ is the total adult equivalent size of a household adjusted based on economies of scale. It is given by the following formula:-

Where as ${\mathrm{w}}_{\mathrm{i}}$ is the weight (adult equivalent weight/units) of household member i based on age/sex or consumption needs and ${\mathrm{C}}_{\text{hsize}}$ is the average cost given a household size.

Finally, the transfer value formula for is given by;

Conceptual description of the needs-based model is presented in Figure 1.

Figure 1. Conceptual description of the household’s needs-based cash transfer value determination model.

3.1 Determination of priority basic needs for households

A nuanced understanding of households’ basic needs within the study area is essential for the formulation of interventions that effectively address both acute vulnerabilities and long-term developmental challenges. These needs represent the minimum standards required to ensure dignity, health, and socio-economic stability. Results of the assessment of household’s priority basic needs indicates that, most frequently reported needs include food (92%), education for children (36.8%), access to health services (32.1%), clothing (31.3%), and water for livestock (24.4%). Other needs include energy for cooking (9.2%), transport (4.8%), communication (4.6%) and energy for lighting (3.4%). The prominence of these priorities highlights persistent deficiencies in access to essential goods and services, the redress of which is imperative for strengthening household resilience, promoting adaptive capacity, and fostering sustainable well-being.

Although less reported, needs such as communication (airtime), energy for lighting (kerosene) and transport are considered in this analysis because they also formed part of expenses that cash transfer beneficiaries incurred using cash transfers. Shelter and water for livestock are also excluded from the MEB and transfer value analysis for methodological and conceptual reasons. The MEB is designed to capture the minimum cost of meeting essential human needs necessary for survival and maintaining dignity, while livestock water and shelter are important for livelihood sustainability and extend beyond the scope of immediate household consumption, thus they are excluded to maintain analytical consistency with the MEB’s human-centric framework (WFP, 2020; Baizan and Klein, 2021).

3.2 Determination of household’s MEB

Based on identified priority basic needs for households in the study area, although less reported, needs such as communication (airtime), energy for lighting (kerosene) and transport are considered in this analysis because they also formed part of expenses that cash transfer beneficiaries incurred using cash transfers. Shelter and water for livestock are also excluded from the MEB and transfer value analysis for methodological and conceptual reasons. The MEB is designed to capture the minimum cost of meeting essential human needs necessary for survival and maintaining dignity, while livestock water and shelter are important for livelihood sustainability and extend beyond the scope of immediate household consumption, thus they are excluded to maintain analytical consistency with the MEB’s human-centric framework (WFP, 2020; Baizan and Klein, 2021). Thus, in this analysis, the minimum expenditure basket for households comprises of food and nonfood basic items.

3.2.1 Minimum expenditure basket for food items

Common main food items utilized by households in the study area were used in establishing the cost of food basket and achieve the standard and minimum calorie requirement of 2,100 kca/person per day. Food basket items included maize flour, beans, meat, milk, cooking oil, salt, vegetables, sugar and tea leaves. Required daily quantities to achieve a 2,100 kca/person from these food items are adopted from UNHCR/WFP (1997). Although WFP and WHO guidelines do not include milk in the general ration, this model has taken it into account for planning purposes and considering that it has been reported as priority food item for majority of study households. Standard quantities for each food item required by one adult person per month and their unit market costs was applied to obtain a minimum expenditure basket for food items per person in month as shown in Table 1.

3.2.2 Adult equivalent units and economies of scale

Energy requirements for each household is adjusted based on household size and composition whereby the adult equivalent units for households in the study area were calculated and adjusted to reflect real needs and economies of scales using conversion factors and economies of scale constants for East Africa ( Table 2) as presented by Massawe (2016) and Goto et al. (2024). Adult equivalent conversion factors for pregnant and breastfeeding women are adopted from Bowen et al. (2011). These factors account for the increased dietary energy requirements associated with pregnancy and lactation, incorporating an additional 300 kcal per day for pregnant women to support fetal development and 500 kcal per day for breastfeeding women to meet the nutritional demands of lactation. The specific conversion values used are detailed in Table 3. Adult equivalent units for all household members in each household are summed to obtain total adult equivalent units for a household. These totals are adjusted to take into account economies of scale of a household. According to Assenga and Kayunze (2016), households with lager household sizes requires few resources because some facilities are shared among household members. Therefore, in the second step, the total adult equivalent units for households are multiplied by an average cost corresponding to the household size of each household. These economies of scale constants (average costs) are adopted from Massawe (2016) as presented in Table 4. Adult equivalent units adjusted for economies of scale are used in place of household size to determine the MEB of food items for different households. Computed total adult equivalent scales for all study households ranges from 0.72 to 9.6 while the total adjusted (for economies of scale) equivalent units ranges from 0.67 to 6.9. Results of the computed adult equivalent scales for selected 13 households are presented in Table 5.

3.2.2.1 Computed monthly minimum expenditure baskets for selected households

The MEB for selected households is computed based on the adjusted adult equivalent units as presented in Table 5. Results of the computed MEB for food items vary among selected households due to differences in adult equivalent units among study households.

3.2.3 Minimum expenditure basket for non-food items

3.2.3.1 Monthly average costs for non-food items

Non-food expenditures comprised of education costs, health services, clothing, communication (air time), transport and kerosene. Descriptions of how relevant non-food expenses were computed are described as follows:-

Education costs for children were calculated by identifying and summing up all the necessary direct and indirectly expenses needed for supporting children’s learning and participation in primary schools. For households in the study area, key components of education needs include food contributions (20 kilograms of maize for a semester equivalent to TZS 26,000, 5 kilograms of beans which was sold at TZS 3,000 per kilogram, and one litre of cooking oil which was sold at TZS 6,000); standard uniforms which includes shirt (at TZS 8000), short/skirt (TZS 8,000), sweater (at a unit price of TZS 12,000), shoes (at an average cost of TZS 6,500) and socks (at a unit price of TZS 1,500); and learning materials such as pencils (2 pencils all at TZS 2,000), pens (2 pens all at TZS 2,000) and exercise books (10 exercise books all at TZS 10,000). Costs for each household were determined using such reported actual market prices of such items and adjusted based on the number of schooling children and number of times in year (semesters) that households make purchases. Number of schooling children in a household ranged from one to four children, and the average cost per month was computed considering 5 months of attending school per semester.

Transport costs incurred by each household in access of food items in a month using a motorcycle or public transport were recorded. Three distinct costs based on proximity (nearer, moderate far and farthest) to market centers (central places) were recorded. The resulting average transport costs per month for households are variable based on the location of households from central places (market centers). For instance, households located farthest away from market centers spent an average of TZS 10,600, those located at moderate distance spent an average of TZS 15 400, and those located nearer to market places spent an average of TZS 23,200 per month on transport. The above results indicates that, the further away the households are from central places, the lesser they incur transport costs and more time spent walking to and from market places because of unavailability of transport facilities (Anega & Alemu, 2023; Mosha et al., 2025). Therefore, in this approach, higher transport cost between the three categories of locations (TZS 23,200) was adopted across all households in the calculation of the total MEB for non-food items. With households preferring to make purchases once a week during market days, the TZS 23,200 was divided by four (the average number of trips in a month that’s heads of household visits market centers in accessing food items) to obtain a weekly average transport cost of TZS 5,800. For households that do not often use transport to access market places, this amount is considered as an incentive to compensate for long walking distances to and from market places. Households can use this amount to purchase extra food items.

Clothing needs for households were determined by considering two adults (spouses) and a maximum of four dependent children. Field experience has shown that traditional clothing is still predominant in the Maasai community where by between two to three pieces of traditional clothes (shukas) are worn among men, women and children. Clothing costs for households were determined using market prices for traditional garments whereby two pieces of traditional garments were considered for men (at an average of TZS 12,000 per piece = 24,000 for 2 pieces), one for children (at a price of TZS 8,000) and three for women (at an average price of 8,700 per garment = 26,000 for 3 pieces). Number of adults and children were variable among study households. These numbers, independently, are considered as units for computation of total clothing costs.

Based on responses from households, communication (air time) was another expenditure that cash transfers were spent on. Total estimate for communication expenses per month was obtained by multiplying the purchase price of units of airtimes with number of times in month that households purchase such airtimes. In practice, households purchase airtime once in a week, during market days with prices per unit ranging from TZS 500 to TZS 2000. The average cost per month for all households was obtained by multiplying the average unit price (TZS 1,250) to the number of times (four) households purchases unit airtime in a month. This cost is incurred by a household head, which means a household (one) is the unit of reference in computational of total communication costs per month.

Field experience revealed that, in times of sickness, Maasai households mostly resorts into traditional medicines for treatment. However, this study includes average health care services costs for pregnant and lactating women when attending clinics, which ranged from TZS 30,000 to 40,000 per month. Thus, for health services component, only households with pregnant and lactating women were considered in the computation of non-food expenses incurred.

Apart from firewood as a primary source of energy for lighting, kerosene is used by a significant number of households as secondary source of energy for lighting. An estimate for total cost incurred by a household in the purchase of kerosene per month was obtained by multiplying the price of half a litre of kerosene (sold at an average of TZS 1,750) with the number of times (four times according to field experience) such households purchases kerosene in a month. In determining the cost of kerosene per month, a household is considered as the unit of reference in computing total energy cost per month.

3.2.3.2 Computed monthly household’s MEB for non-food items

Results of the computed average costs per month and total household’s minimum expenditure basket for nonfood items are presented in Table 6. Results indicates that, the total MEB for non-food items varies among selected households due to differences in the number of adults and children in a household, number of schooling children and presence of pregnant or breast feeding women in a household.

3.2.4 Total MEBs and determined transfer values for selected households

Minimum expenditure baskets for both food and non-food items are presented in Table 7. The total MEB for households varies from one household to another due to differences in MEBs for food (accounts for number of household members) and non-food items (computed by taking into account number of schooling children, number of adults in a household and presence of pregnant or breast feeding women in a household). Also, results of the computed transfer values for different selected households at 30%, 55% and 60% adequacy ratios are presented in Table 7. The computed transfer values are adjusted (using the inflation multiplier) to take into account changes in the prices of goods and services experienced between 2021 and 2022 when the ICTP was implemented.

Based on the computed transfer values, a clear disparity is revealed between the flat-rate transfer of TZS 70,000 (which was 30% of the total MEB) provided by the Tanzania Red Cross Society (TRCS) through the 2021 Integrated Cash Transfer Programme and the transfer values (at 30% adequacy ratio) calculated through the application of the needs-based model as presented in this paper. Sensitivity analysis of the model using 55% and 60% adequacy ratios that are within the recommended range for arid and semi-arid regions was undertaken. The model yields different transfer amounts that are more reasonable for meeting household needs in these areas. Also, in comparison to the TRCS flat rate transfer values, it is evident that some of the beneficiary households of the ICTP were overcompensated while majority of them were under supported.

In comparison, regional programs such as Tanzania Social Action Fund (TASAF) offer considerably lower amounts. Conditional transfers provide up to TZS 26,000 per month for households with young children attending health clinics and school-going children, while unconditional transfers average TZS 12,000 per month (URT & World Bank Group, 2023). These figures fall well below both the Red Cross flat-rate transfers and the household’s needs-based transfer values derived in this study. However, the computed amounts are generally comparable to Kenya’s HSNP, where Group 2 beneficiaries receive a total of KSh. 5,400 during drought (Republic of Kenya, 2025).

Use of generative Artificial Intelligence (AI) tools

In preparation of this manuscript, the Generative AI tool (ChatGPT) was used for the purpose of obtaining appropriate reference materials for review as well as an in-depth understanding of different aspects in this study.