J.09 Final_Southern Africa REGO Mobilizing Investment Activity IEE_020322.pdf

INITIAL ENVIRONMENTAL EXAMINATION

PURPOSE

This IEE covers a new $30M activity through 2027. The Mobilizing Investment activity primarily concerns 1) establishing sustainable investment flows; 2) build capacity of fund managers; and

3) work with banks/other intermediaries to perform due diligence for investment opportunities.

PROJECT/ACTIVITY DATA

Project/Activity Name: USAID Southern Africa Mobilizing Investment Activity

Geographic Location(s) (Country/Region): Southern Africa (Angola, Botswana, Eswatini, Lesotho, Madagascar, Malawi, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe)

Amendment (Yes/No), if Yes indicate # (1, 2...): No Implementation Start/End Date (FY or M/D/Y): 11/01/2022-12/31/2027 If Amended, specify New End Date: N/A Solicitation/Contract/Award Number(s): TBD Implementing Partner(s): TBD Bureau Tracking ID: Southern Africa Mobilizing Investment Activity IEE https://ecd.usaid.gov/document.php?doc_id=54573 Tracking ID of Related RCE/IEE (if any):

Tracking ID of Other, Related Analyses:

ORGANIZATIONAL/ADMINISTRATIVE DATA

Implementing Operating Unit(s):

(e.g. Mission or Bureau or Office)

USAID Southern Africa Regional Economic Growth Office (REGO)

Other Affected Operating Unit(s): N/A Lead BEO Bureau: Africa Bureau Funding Account(s) (if available): Not Available Original Funding Amount: Total Estimated Costs: $32 million If Amended, specify funding amount: N/A If Amended, specify new funding total: N/A Prepared by: Jacques Swanepoel Date Prepared: November 22, 2021

ENVIRONMENTAL COMPLIANCE REVIEW DATA

Analysis Type: X Environmental Examination ☐Deferral Environmental Determination(s): X Categorical Exclusion(s)

X Negative ☐Positive ☐Deferred (per 22 CFR 216.3(a)(7)(iv)

IEE Expiration Date (if applicable): 31 January 2028 https://ecd.usaid.gov/document.php?doc_id=54573 about:blank

Additional Analyses/Reporting Required: EMMP; EMMR; ESF & ERR Climate Risks Identified (#): CRM approved during the design of the REGO Inclusive

Economic Development Project Appraisal Document (not available for public release)

Climate Risks Addressed (#): CRM contained in the REGO PAD

THRESHOLD DETERMINATION AND SUMMARY OF FINDINGS

PROJECT/ACTIVITY SUMMARY

There is currently a high demand for investment capital and corporate partnerships in Southern Africa and there are U.S. investors looking for higher returns on their capital investments but there is a gap between these groups. USAID Southern Africa Mobilizing Investment will work to close that gap by building an ecosystem that can identify and support a pipeline of viable investments, building familiarity between U.S.

and Southern Africa capital providers, and identifying and using USAID financial resources to reduce the risk for investors to test new investment options in new geographic areas and new sectors.

USAID Southern Africa Mobilizing Investment will be implemented for five years from approximately December 2022 to December 2027 with a proposed total estimated cost of $30 million. The Mobilizing Investment activity will be responsible for achieving results under Intermediate Result 1.2 (Investment Increased) of Regional Development Objective 1 (Inclusive Economic Growth Catalyzed) within the Mission’s Regional Development Cooperation Strategy. This activity was specifically named, described, and approved in the five-year Inclusive Economic Growth PAD that was approved in December 2020.

USAID Southern Africa Mobilizing Investment will:

1. Mobilize catalytic capital to establish sustainable investment flows into sectors that were previously underserved by investors.

2. Develop the capacity of fund managers that would traditionally have difficulty accessing capital.

3. Work with financial intermediaries (banks, and non-bank financial intermediaries) and non-financial intermediaries to identify and perform the due diligence necessary for bankable investment opportunities.

ENVIRONMENTAL DETERMINATIONS

Upon approval of this document, the determinations become affirmed, per Agency regulations (22 CFR 216).

TABLE 1: ENVIRONMENTAL DETERMINATIONS

Projects/Activities Categorical Exclusion Citation (if applicable)

Negative Determination

Positive Determination

Deferral2

Activity 1: Mobilize catalytic capital to establish sustainable investment flows into sectors that were previously underserved by investors

X ☐ ☐

Sub-activity 1.1: Catalytic Capital Grants Under Contract Facility

X ☐ ☐

Sub-activity 1.2: Technical Assistance for Blended Finance Structures

X

1 Positive Determinations require preparation of a Scoping Statement and Environmental Assessment.

2 Deferrals must be cleared through an Amendment to this IEE prior to implementation of any deferred activities.

Activity 2: Develop the capacity of fund managers that would traditionally have difficulty accessing capital

X ☐ ☐ ☐

Sub-activity 2.1: Incubation Support

216.2(c)(2) (i) Education, technical assistance, or training programs except to the extent such programs include activities directly affecting the environment (such as construction of facilities, etc.)

216.2(c)(2)(iii) Analyses, studies, academic or research workshops and meetings.

Sub-activity 2.2: Mentorship and coaching support

Sub-activity 2.3: Facilitate investments into emerging fund managers

Activity 3: Work with financial and non-financial intermediaries to identify and perform the due diligence necessary for bankable investment opportunities

216.2(c)(2) (i) Education, technical assistance, or training programs except to the extent such programs include activities directly affecting the environment (such as construction of facilities, etc.)

X *grants only

Activity 4: Facilitate connections between U.S.

and Southern Africa capital providers

☐ X ☐ ☐

CLIMATE RISK MANAGEMENT

A Climate Risk Screening was conducted and approved during the design of the Regional Economic Growth Office’s (REGO) Inclusive Economic Development Project Appraisal Document. Climate risks for Investment activities were given a low-risk rating and therefore additional climate risk screening was not conducted for this activity-level IEE.

Climate Risk Management (CRM) is a priority for USAID. CRM is an iterative and adaptive process, where risks and risk ratings should be reconsidered as new information becomes available. As the mobilizing investment activity is being implemented the Implementing Partner along with USAID/Southern Africa (USAID/SA) will ensure that potential climate risks are assessed and addressed on a case-by-case basis for each distinct investment deal identified, facilitated, and supported. The Implementing Partner and USAID/SA will monitor how climate change might impact the activity since circumstances can change. The Implementing Partner will provide the Contracting Officer's Representative quarterly updates on climate related issues and the REGO team will also potentially monitor the climate resilience of USAID Southern Africa Mobilizing Investment through portfolio reviews and other internal reviews.

BEO SPECIFIED CONDITIONS OF APPROVAL

Reporting Conditions: The AFR BEO requests that the activity managers/AORs/CORs provide access to the Regional Environmental Advisor (REA) and to the AFR BEO Team to review (not approve) the Environmental Mitigation and Monitoring Plans/Reports (EMMPs/EMMRs) that will be written to implement the findings of this IEE. These should be uploaded into the appropriate sub-folder(s) of this Google Drive folder: https://drive.google.com/drive/folders/1q7HGMzgopJ-MuKxkQEJ4GSPp9R7Qzv- 5?usp=sharing

This will facilitate access by all parties who need these documents, including the Mission Environmental Officer and the AOR/COR. This will allow the REA and the BEO Team to spot-check and review these documents to confirm that the mitigations seem appropriate and are cognizant of the specific design of the activities.

COVID-19 Conditions: In order to reduce COVID-19 transmission during the implementation of these activities, USAID managers are encouraged to:

• Ensure all activities addressed by this IEE adhere to current, applicable COVID-19 guidelines.

Refer to the AFR COVID-19 PIEE (attached and linked here --https://ecd.usaid.gov/document.php?doc_id=52754) for links to U.S. and international guidance on appropriate measures to reduce COVID-19 transmission. Such measures may include, but are not limited to social distancing, use of personal protective equipment, limiting the size of gatherings and travel, and effective disinfection.

• Share with the partner:

o Applicable COVID-19 guidance from the USAID Mission or U.S. Embassy;

o Applicable COVID-19 guidance from local authorities;

o The following Agency-wide “COVID-19 GUIDANCE FOR IMPLEMENTING PARTNERS” page on the USAID website: https://www.usaid.gov/work-usaid/resources-for-partners/covid-19-guidance-implementing-partners.

• Ensure that partners have appropriate training, authorization, and resources to meet the expectations of the applicable guidance while implementing these activities.

IMPLEMENTATION

In accordance with 22 CFR 216 and Agency policy, the conditions and requirements of this document become mandatory upon approval. This includes the relevant limitations, conditions and requirements in this document as stated in Sections 3, 4, and 5 of the IEE and any BEO Specified Conditions of Approval.

https://drive.google.com/drive/folders/1q7HGMzgopJ-MuKxkQEJ4GSPp9R7Qzv-5?usp=sharing https://drive.google.com/drive/folders/1q7HGMzgopJ-MuKxkQEJ4GSPp9R7Qzv-5?usp=sharing

USAID APPROVAL OF INITIAL ENVIRONMENTAL EXAMINATION

PROJECT/ACTIVITY NAME: USAID Southern Africa Mobilizing Investment Activity

Bureau Tracking ID: https://ecd.usaid.gov/document.php?doc_id=54573

Approval: Cleared 12/14/2021 Andrew Karas, Mission Director Date

Clearance: Cleared 12/13/2021 Ralph Koehring, Deputy Mission Director Date

Clearance: Cleared 11/22/2021 Jacques Swanepoel, A/COR Date

Clearance: Cleared 11/22/2021 Todd Flower, Office Director Date

Clearance: Cleared 11/23/2021 Nonkululeko Khathi, Mission Environmental Officer Date

Clearance: Cleared 11/30/2021 Michael T. Weaver, Regional Environmental Advisor Date

Clearance: Cleared 11/30/2021 Richard Burns, Regional Legal Officer Date

Concurrence: 02/01/2022 Brain Hirsch, Africa Bureau Environmental Officer Date

DISTRIBUTION: ROAA

https://ecd.usaid.gov/document.php?doc_id=54573

INITIAL ENVIRONMENTAL

EXAMINATION

CONTENTS

INITIAL ENVIRONMENTAL EXAMINATION 1

Project/Activity Data 1 Organizational/Administrative Data 1

ENVIRONMENTAL COMPLIANCE REVIEW DATA 1

THRESHOLD DETERMINATION AND SUMMARY OF FINDINGS 2

PROJECT/ACTIVITY SUMMARY 2

ENVIRONMENTAL DETERMINATIONS 2

TABLE 1: ENVIRONMENTAL DETERMINATIONS 2

CLIMATE RISK MANAGEMENT 3

A Climate Risk Screening was conducted and approved during the design of the Regional Economic Growth Office’s (REGO) Inclusive Economic Development Project Appraisal Document. Climate risks for Investment activities were given a low-risk rating and therefore Climate Risk screening was not conducted for this IEE. 3

BEO SPECIFIED CONDITIONS OF APPROVAL 4

IMPLEMENTATION 4

USAID APPROVAL OF INITIAL ENVIRONMENTAL EXAMINATION 5

1.0 PROJECT/ACTIVITY DESCRIPTION 8

1.1 PURPOSE OF THE IEE 8

1.2 PROJECT/ACTIVITY OVERVIEW 8

1.3 PROJECT/ACTIVITY DESCRIPTION 9

TABLE 2: DEFINED OR ILLUSTRATIVE PROJECTS/ACTIVITIES AND SUB-ACTIVITIES 11

2.0 BASELINE ENVIRONMENTAL INFORMATION 11

2.1 LOCATIONS AFFECTED AND ENVIRONMENTAL CONTEXT (ENVIRONMENT, PHYSICAL,

CLIMATE, SOCIAL, THREATENED AND ENDANGERED SPECIES) 11

2.1.1 COUNTRY SPECIFIC INFORMATION 14

2.2 APPLICABLE AND APPROPRIATE PARTNER COUNTRY AND OTHER INTERNATIONAL

STANDARDS (E.G. WHO), ENVIRONMENTAL AND SOCIAL LAWS, POLICIES, AND

REGULATIONS 27

3.0 ANALYSIS OF POTENTIAL ENVIRONMENTAL RISK 29

PROJECT/ACTIVITY: USAID SOUTHERN AFRICA MOBILIZING INVESTMENT 29

4.0 ENVIRONMENTAL DETERMINATIONS 31

4.1 RECOMMENDED ENVIRONMENTAL DETERMINATIONS 31

TABLE 4: ENVIRONMENTAL DETERMINATIONS 32

4.2 CLIMATE RISK MANAGEMENT 33

5.0 CONDITIONS AND MITIGATION MEASURES 33

5.1 CONDITIONS 33

5.2 AGENCY CONDITIONS 34

5.3 ACTIVITY SPECIFIC CONDITIONS 34

5.4 MITIGATION MEASURES 34

TABLE 5A. SUMMARY OF MITIGATION MEASURES FOR PROJECT/ACTIVITY 1 35

6.0 LIMITATIONS OF THIS INITIAL ENVIRONMENTAL EXAMINATION 37

7.0 REVISIONS 38

1.0 PROJECT/ACTIVITY DESCRIPTION

1.1 PURPOSE OF THE IEE

The purpose of this document, in accordance with Title 22, Code of Federal Regulations, Part 216 (22 CFR 216), is to provide a preliminary review of the reasonably foreseeable effects on the environment of the USAID Southern Africa (USAID/SA) Mobilizing Investment activity that is currently being designed and recommend determinations and, as appropriate, conditions, for this Activity. Upon approval, these determinations become affirmed, and specified conditions become mandatory obligations of implementation. This IEE also documents the results of the Climate Risk Management process in accordance with USAID policy (specifically, ADS 201mal).

USAID/SA Mobilizing Investment is anticipated to be awarded in FY 2022, will be managed out of the USAID/SA Regional Economic Growth Office, and will cover eleven countries in Southern Africa including Angola, Botswana, Eswatini, Lesotho, Madagascar, Malawi, Mozambique, Namibia, South Africa, Zambia and Zimbabwe.

This IEE is a critical element of USAID’s mandatory environmental review and compliance process meant to achieve environmentally sound design and implementation. Potential environmental impacts should be addressed through formal environmental mitigation and monitoring plans (EMMPs) and/or Environmental Assessments (EAs), if needed.

1.2 PROJECT/ACTIVITY OVERVIEW

There is a funding gap for critical sectors including but not limited to, agriculture, financial services, infrastructure, information and communication technology (ICT), energy, clean water, health, and education that have the most potential to drive sustainable development in Southern Africa3. The Southern Africa region suffers from critically high unemployment, poverty, and social inequality that stems in part from a lack of investment capital. In addition, critical sectors for regional economic integration, such as agriculture, are becoming even more challenging due to the effects of climate change and the dramatic economic setback caused by COVID-19. Mobilizing private capital from the United States and within Southern Africa into the sectors that can address these challenges is critical for building a system that is self-sustaining and growth oriented. The connection between U.S. capital investors and Southern Africa is expanding but still nascent. In addition, domestic investment capital from Southern Africa is often invested outside of the African continent, and venture capital required to launch new businesses is extremely limited.

There is currently a high demand for investment capital and corporate partnerships in Southern Africa and there are U.S. investors looking for higher returns on their capital investments but there is a gap between these groups. USAID Southern Africa Mobilizing Investment will work to close that gap by building an ecosystem that can identify and support a pipeline of viable investments, building familiarity between U.S.

and Southern Africa capital providers, and identifying and using USAID financial resources to reduce the risk for investors to test new investment options in new geographic areas and new sectors.

USAID Southern Africa Mobilizing Investment will be implemented for five years from approximately December 2022 to December 2027 with a proposed total estimated cost of $30 million. The Mobilizing Investment activity will be responsible for achieving results under Intermediate Result 1.2 (Investment Increased) of Regional Development Objective 1 (Inclusive Economic Growth Catalyzed) within the Mission’s Regional Development Cooperation Strategy. This activity was specifically named, described, and approved in the five-year Inclusive Economic Growth PAD that was approved in December 2020.

3 1 For the purposes of this document, “Southern Africa” includes countries within the Southern African Development Community (SADC) that fall under the mandate of the USAID/Southern Africa Regional Mission.

Based on the RCDS, this includes Angola, Botswana, Eswatini, Lesotho, Madagascar, Malawi, Mozambique, Namibia, South Africa, Zambia and Zimbabwe.

https://www.usaid.gov/our_work/environment/compliance/22cfr216 https://www.usaid.gov/our_work/environment/compliance/22cfr216 https://www.usaid.gov/ads/policy/200/201mal

1.3 PROJECT/ACTIVITY DESCRIPTION

This activity will unlock the potential of private capital to drive inclusive growth in Southern Africa. In many growing economies, there is a lack of accessible capital for SMEs, companies, and infrastructure projects because the risk-return profiles associated with these types of emerging market investments often prevent investors from deploying capital. REGO will help to mitigate constraints by supporting catalytic investments that combine development capital and/or support with return-seeking capital from private investors.

The activity will unlock the potential of the private sector to drive inclusive growth in high-impact sectors such as, but not limited to, agriculture, financial services, infrastructure, information and communication technology (ICT), energy, clean water, health, and education. Approximately 50% of the funding for USAID Southern Africa Mobilizing Investment will come from agriculture funding so agriculture will be a critical sector for the activity.

USAID Southern Africa Mobilizing Investment will:

1. Mobilize catalytic capital to establish sustainable investment flows into sectors that were previously underserved by investors

The reasons for the lack of deployment of capital in different sectors and geographies varies depending on the type of capital provider. Banks, DFIs, institutional investors, and private equity funds are present and capitalized in South Africa but face structural barriers and risks to providing capital in new sectors or geographies. Venture capital is existent but nascent in South Africa.

The Activity will establish a grants under contract facility of $8 million (including $4 million in agriculture funding) to support blended finance funds and Fund of Funds that combine USAID catalytic funding4 with private capital from any capital provider to invest in projects that support the targeted sectors identified. In addition, the Contractor Offeror will use at least $1.6 million of the catalytic funding to focus specifically on the issue of the lack of venture capital in South Africa and the region.

In addition to the grant fund for catalytic capital, the Activity will provide technical assistance as required in support of grants made under the catalytic fund grant facility. Technical assistance will be provided in circumstances where the grantee needs additional support in establishing the blended finance structure.

2. Develop the capacity of fund managers that would traditionally have difficulty accessing capital

The private equity industry in South Africa, in particular fund ownership and management, has not been inclusive in terms of gender and race, with the majority of funds being male-owned and not representative of the ethnic diversity of the country. In South Africa, about 14% of fund managers are women5. Not only are there few female portfolio managers, but women also have a smaller allocation of funds entrusted to them to manage.

The Activity will consist of two separate capacity development activities:

(1) Building the capacity of private equity fund managers that are black and/or women who are a chronically underrepresented group in the South Africa private equity space.

4 Catalytic Funding is financing from USAID that accepts lower returns, more flexible terms, longer timeframes, and/or higher risk than conventional investing in order to attract private capital and mobilize that capital into new sectors.

5www.bloomberg.com/news/articles/2021-05-04/about-14-of-fund-managers-are-women-same-as-it-was-two-decades-ago https://www.bloomberg.com/news/articles/2021-05-04/about-14-of-fund-managers-are-women-same-as-it-was-two-decades-ago https://www.bloomberg.com/news/articles/2021-05-04/about-14-of-fund-managers-are-women-same-as-it-was-two-decades-ago

(2) Building the capacity of venture capital fund managers from any ethnic background or gender but representing the ethnic and racial diversity of South Africa.

The Activity will customize the program to target relevant areas of development and support for the selected fund managers to cater to the different stages of development or growth for the participants. The following support services will be provided for both private equity and venture capital participants:

Incubation support to first time fund managers to cultivate the “next generation” of talent into the industry to unlock the strategic and operational constraints faced by first time fund managers, and help them navigate the fund raising, fund management, and regulatory process involved in building a successful fund.

Mentorship and coaching support to partner emerging fund managers with larger and more experienced fund managers to ultimately enable the inclusion of emerging and diverse managers into the asset class and promote greater access for disadvantaged firms.

Facilitate investments into emerging fund managers to provide networking access through matchmaking that leads to access to investment capital.

3. Work with financial and non-financial intermediaries to identify and perform the due diligence necessary for bankable investment opportunities

Transaction advisory services are a vital part of the ecosystem for matching capital providers with appropriate investments. In Southern Africa it is often difficult for businesses to find investors and for capital providers to find opportunities to invest in. Some of the reasons include a lack of a track record for capital providers in these markets, the time it takes to close transactions may be too long, high transaction costs, information asymmetry, and many more.

USAID Southern Africa Mobilizing Investment will facilitate increased capital flows to projects and/or transactions, improve their chances of success and/or achieve their strategic investment objectives by providing a solution/s that will effectively link capital seekers with capital providers and that will effectively mobilize private capital and result in the closing of financial transactions and investment deals.

USAID has previously paid directly for transaction advisory services and the identification of bankable deals. USAID Mobilizing Investment will transition the approach to cost sharing with financial and non-financial intermediaries to reduce the risk for businesses to seek out transaction advisory services, for transaction advisory services to market services in new sectors and markets, and for capital providers to invest their capital in new projects.

The Activity will establish a $5 million cost-sharing grant fund ($2.5 million from agriculture funding) to move towards the cost-sharing structure noted above as part of the grants under contract facility. An annual program statement to solicit ideas from the private sector that will stimulate long-term change and overcome the barriers for willing investors and businesses to close investment deals in Southern Africa. Cost sharing must meet a minimum threshold of a 1:1 match from the private sector.

4. Facilitate connections between U.S. and Southern African capital providers There is an insufficient amount of public or private capital in Southern Africa for all of the development needs in all of the sectors in Section 3.2. above. National governments were the primary investors in these sectors, but they do not have sufficient capital for all of the needs in these sectors. There are opportunities in many of these sectors for investment returns that should entice international capital providers6 into the market. USAID has worked extensively to connect institutional investors from the United States into infrastructure investment opportunities in Southern Africa7.

The Activity will expand on USAID’s previous work in developing peer-to-peer connections between U.S. and domestic capital providers and investors. U.S. capital providers have demonstrated an interest in working with capital providers in Southern Africa to become familiar with the investment opportunities in the region, develop a portfolio of investments, and support the mobilization of domestic capital through co-investments.

The Activity will facilitate relationships between U.S. and Southern African capital providers to identify investment opportunities for U.S. capital providers to invest in Southern African sectors, with returns necessary to sustain those investments and create and deepen win-win relationships.

In addition, the Contractor Offeror will provide a pool of technical assistance as needed to research potential structures or other ideas the U.S. and Southern African capital providers can use to overcome challenges identified through the peer-to-peer connections that are inhibiting potential investments.

TABLE 2: DEFINED OR ILLUSTRATIVE PROJECTS/ACTIVITIES AND SUB-ACTIVITIES

Activity 1: Mobilize catalytic capital to establish sustainable investment flows into sectors that were previously underserved by investors Sub-activity 1.1: Catalytic Capital Grants Under Contract Facility Sub-activity 1.2: Technical Assistance for Blended Finance Structures Activity 2: Develop the capacity of fund managers that would traditionally have difficulty accessing capital Sub-activity 2.1: Incubation Support Sub-activity 2.2: Mentorship and coaching support Sub-activity 2.3: Facilitate investments into emerging fund managers Activity 3: Work with financial and non-financial intermediaries to identify and perform the due diligence necessary for bankable investment opportunities Activity 4: Facilitate connections between U.S. and Southern Africa capital providers

Will this project/activity involve construction8 as defined by ADS 201 and 303? Yes ☐ No X

USAID funding will not be used for any construction activities. USAID funding is being used to create connections between U.S.-based capital providers, Southern Africa-based capital providers, and bankable investment transactions. Construction may be an outcome in the future with private sector funding based on USAID’s support for creating connections. USAID will ensure that all participants included in the activity abide by ESG standards9 for investment.

6www.prosperafrica.gov/blog/institutional-investor-highlights-opportunities-in-africa-an-interview-with-aymeric-saha/ 7 nasphq.org/africa-initiative/ 8 Construction, as defined by ADS 201 and 303, includes: construction, alteration, or repair (including dredging and excavation) of buildings, structures, or other real property and includes, without limitation, improvements, renovation, alteration and refurbishment. The term includes, without limitation, roads, power plants, buildings, bridges, water treatment facilities, and vertical structures. In the box below, describe any construction planned for this project/activity. Refer to ADS 201maw for required Construction Risk Management procedures.

9 https://www.oecd.org/daf/fin/financial-markets/esg-investing.htm https://www.usaid.gov/sites/default/files/documents/1865/201maw.pdf

2.0 BASELINE ENVIRONMENTAL INFORMATION

2.1 LOCATIONS AFFECTED AND ENVIRONMENTAL CONTEXT (ENVIRONMENT, PHYSICAL,

CLIMATE, SOCIAL, THREATENED AND ENDANGERED SPECIES)

There are eight terrestrial biomes in southern Africa: forests, which include tropical rainforest and coastal forests that host a high number of endemic plant, bird, and reptile species; savanna, comprising a mosaic of grassland and deciduous woodland, which is the primary habitat for most large mammal species; high-altitude grassland; arid shrubland; true desert; the fynbos biome; wetlands, which are scattered throughout the subregion and range in type from endorheic pans to major floodplains and mangrove swamps; and the lake biome comprising the major Rift Valley lakes. Six of the 36 internationally recognized biodiversity hotspots occur in Southern Africa. These are areas of high plant and animal diversity, which warrant strong conservation management to sustain the bulk of species diversity and species populations.

FIGURE 1. The main terrestrial biomes in southern Africa (Scholes and Biggs 2004) (l) and the major ocean currents and marine ecozones (r) (SADC 1994).

COASTAL AND MARINE

The Southern African coastline is more than 15,000 kilometers (km) long, spanning a latitudinal range of more than 40º, changing from tropical conditions near the equator to sub-Antarctic conditions at the Prince Edward Islands (SADC 2008). Four quasi-distinct marine ecological areas can be distinguished, namely, the Benguela System, Agulhas Bank, and the Angola and Mozambique Currents (ibid.). While distinct, these marine regions are interlinked with each other. For example, several fish species migrate regularly within the Benguela System between the Agulhas Bank and the Benguela Current, whereas some whales move even further, feeding in the Southern Ocean but migrating to the west and east coasts of Africa to calve (ibid.). As elsewhere in the world, Southern Africa’s coastal and marine systems are also interlinked with terrestrial biomes, especially rivers and wetlands.

The west coast is characterized largely by desert conditions and sparse human populations, but with rain forest established toward the mouth of the Congo River. Its seas are influenced by the cold, northward flowing Benguela Current, with highly productive upwellings supporting industrial-scale fisheries. The east coast, under the influence of the East African Coast Current, which flows northward along the coast of Tanzania, and the warm, southward-flowing Mozambique and Agulhas Currents, is subtropical in South Africa, becoming tropical and wetter northwards. Marine diversity increases towards the warmer zones

(SADC 2008).

TERRESTRIAL SPECIES DIVERSITY

Africa south of the equator has a disproportionately high fraction of global biodiversity (Scholes and Biggs 2004). Overall, this biodiversity is well preserved, both inside and outside protected areas. It is estimated that 84 percent of the pre-colonial biodiversity is intact in the region (Scholes and Biggs 2005).

Number of species is a commonly reported statistic that provides a measure of the status of a country’s biodiversity (SADC et al. 2008). Numbers are meaningless for poorly known groups such as invertebrates, since diversity in all cases is much higher than the number of recorded species. Similarly, data for fish, reptiles, and amphibians can be misleading due to differences in the depth of research conducted on these groups. However, plant diversity is a fairly reliable indicator, and diversity of mammals and birds can be usefully compared, as these taxa are mostly conspicuous and relatively well studied. Summarized data on the diversity of plants, mammals, and birds are presented in Table 3 below, together with the number of species that are threatened. The high plant diversity in South Africa results from three biodiversity hotspots: Cape Floristic, Succulent Karoo, and the Maputoland-Pondoland Albany area.

MARINE AND COASTAL SPECIES DIVERSITY

The Angola Current is relatively unproductive, but nevertheless supports large concentrations of fish.

These include Cunene horse mackerel; Benguela hake; yellowfin, skipjack, Atlantic little, and frigate tunas; and two species of pilchard (SADC 2008). By contrast, the nutrient rich Benguela Current has low diversity but high biomass and is dominated by a suite of planktivorous fish. These include pilchard, anchovy, round herring, pelagic goby, several mesopelagic mid-water species, Cape horse mackerel, chub mackerel, and two species of hake (ibid.). The mackerels and hakes grow larger than the other species and often prey on smaller fish. Other abundant predators of small fish include squid, piscivorous fish including some tunas, seabirds, and the Cape fur seal. Several of the seabirds breed only in the Benguela System. In the inshore region, beds of kelp support substantial populations of Cape rock lobster and abalone (ibid.).

The coastal wetlands of Namibia and western South Africa provide nursery areas for some fish species and are important feeding grounds for large flocks of palaeractic and resident shorebirds. These areas include Sandwich Harbour, Walvis Bay lagoon, and the Orange River mouth in Namibia, which are all Ramsar sites, as well as the Berg River estuary and Langebaan lagoon in South Africa (ibid.).

The Agulhas Current flows in a southwesterly direction along the east shelf of the Agulhas Bank and is generally less turbulent than the Benguela, providing a more stable environment for spawning fish. As a result, many fish migrate to this region to spawn. Their eggs and larvae are swept westward and then northwards into the Benguela System, where the intense upwelling provides rich feeding grounds for the young fish (ibid.).

The warmer east coast supports extensive deltas, estuaries, mudflats, mangrove forests (especially around river estuaries), seagrass beds, and coral reefs. In contrast to Benguela, it is relatively unproductive but has a much greater diversity of plant and animal life. Extensive mudflats support vast flocks of waders, while mangrove forests are feeding grounds for many species of fish, crab, and shrimp (ibid.). The seagrass beds provide habitat for a wide range of organisms, from invertebrates such as prawns and starfish through to fish and dugongs. Coral reefs cover an estimated 1,500 km of coastline in the eastern African region (Somalia to eastern South Africa) and also support a wide diversity of fish and invertebrates.

The open waters of the east coast are important for large pelagic fish such as tuna and billfish. They also provide habitat for the coelacanth and calving grounds for the migratory humpback whale.

ECOSYSTEM SERVICES

Humans are directly dependent on ecosystems for air, water, food, and other basic needs, and these ecosystems are, by their nature, not confined to man-made boundaries (Scholes and Biggs 2004).

Ecosystems also provide recreational opportunities and aesthetic, cultural, and spiritual values. The dependence of people on ecosystems is often more apparent in rural communities, which are directly affected by the availability of food, water, medicinal plants, and firewood.

Living organisms are critical to creating the environmental conditions that make the planet habitable. For example, pollination by bees, and nitrogen fixation by symbiotic bacteria in the roots of legumes, are examples of services provided by animals and plants. Complex ecosystems are responsible for processes such as regulating the climate and atmospheric composition (Millennium Ecosystem Assessment 2006).

Importantly, the natural features of the region form the basis of a major nature-based tourism sector that makes up a significant part of the regional economy and is growing three times faster than agriculture or forestry (Scholes and Biggs 2004). Biodiversity also has a large direct economic and human well-being value through the provision of medicines, as well as a significant, but poorly quantified indirect value, through many other services that ultimately depend on biological variety.

The mangrove forests along the east coast protect the coastline from storm surges, spring tides, and wave action (SADC 2008). The distribution of mangroves correlates closely with productive fishing areas for shallow-water prawns, shrimp, and other commercially important marine organisms (e.g., the Sofala Bank), while the internationally renowned reefs of the western Indian Ocean islands, including Mauritius, support a booming tourism industry and subsistence and commercial fisheries (ibid.). The nutrient rich Benguela System is highly productive and supports an important industrial fishing sector, which contributes substantially to the economy and employment along the west coast.

2.1.1 COUNTRY SPECIFIC INFORMATION

Angola Angola contains extraordinary resources in both its biodiversity and its forests. However, there is a lack of data that can provide a thorough understanding of its biota (USAID 2013a). There is no reliable data on the vegetation cover in Angola, as no post-war vegetation assessment exists. The vegetation zones and their percent of Angola’s land cover are estimated as follows, but anthropogenic disturbances mean these estimates may be inaccurate:

● Miombo woodlands (open tropical forests) (45 percent);

● Savannas (24 percent);

● Miombo-savanna mosaic (20 percent);

● Grasslands (five percent);

● Steppe (three percent);

● Tropical rainforests (two percent); and

● Desert (0.3 percent).

The major threats against biodiversity in Angola are poverty and population growth, habitat conversion and overexploitation of natural resources, and institutional management challenges. Subsistence agriculture provides 85 percent of the people with their main livelihood. Degradation in the environment arises from unsustainable agricultural practices, deforestation, grazing, and pollution. Poverty, population growth, and other anthropogenic factors add to the strain on the environment, as do desertification and climate change. Most natural resources are not yet fully protected, or the protection they hold is inadequate. Both legal and regulatory provisions that are intended for protection of forests are largely ignored and are themselves insufficient. Angola has a weak history of enforcing conservation efforts and practices, owing largely to past political instability and a lack of protective technical and operational means. The country has a history of uncontrolled use of forest and biodiversity resources. Awareness of the high biodiversity value is needed, in order to promote not only conservation, but also so that natural resources can be used to improve and strengthen the livelihoods of Angola’s population. Angola used to hold the most extensive tree plantations in Africa, consisting predominantly of eucalyptus, pine, and cypress. However large parts of these have disappeared due to uncontrolled cutting for fuelwood and charcoal. Charcoal itself is a major income source for many rural people, who make up roughly 60 percent of Angola’s population.

Threats to forests include clearing for charcoal production and agricultural use; high-intensity selective harvesting of valuable tree species (valuable for construction, furniture, and medicine), causing extremely low recruitment rates for some species. Those most at threat are Pterocarpus angolensis (Girassonde or Múkua), Guibourtia coleosperma (Mussivi), and Afzelia cuanzensis. Anthropogenic fire is also a threat to forests, as is diamond mining in central and eastern Angola.

Enormous aquatic diversity can be found in Angola’s marine, coastal, and inland freshwater ecosystems.

The fisheries along its coastline are considered to be one of the most productive globally. Mangrove forests along the coast are critical ecosystem service providers, as they regulate storm buffering and sediment loading, and provide habitat for invertebrate and vertebrate organisms, of which many are used for sustaining livelihoods.

Mangroves, estuaries, and coastal zones face growing pressures due to their proximity to population centers and irregular settlements that were established during the war. An absence of effective environmental governance combined with rapid economic growth compromise the future of such areas.

Wood extraction and intense poaching of dugongs place even more pressure on estuaries and mangrove ecosystems. Semi-industrial and industrial fishing (including overfishing), disturbance, and pollution threaten marine habitats, all of which are related to energy and mineral exploration and extraction. Other anthropogenic threats to coastal habitats include uncontrolled recreation and development. International interest is focused on the development of shrimp farms and hydroelectric facilities, which would dramatically impact ecosystems.

Botswana Botswana contains seven of the 238 global WWF-defined ecoregion types. Much of the country is covered by Kalahari Xeric Savanna or Kalahari Acacia-Baikiaea Savanna. The areas of greatest biodiversity are those to the north of the country, which are characterized by the Zambezian Flooded Grasslands, the Zambezian and Mopane Woodlands, and the Zambezian Baikiaea Woodlands. It is also to the north that most of the threats to biodiversity occur. All of the ecoregions, with the exception of the Southern African Bushveld, are reasonably well protected (DEA 2016).

Botswana’s varied ecosystems support an abundance of plants (2,800 species), fish (99 species), reptiles (131 species), amphibians (44 species), birds (587 species) and mammals (157 species), including many that are globally threatened. The country hosts one of the largest remaining populations of the African wild dog (Lycaon pictus) and African elephant (Loxodonta africana). Of the plant species in Botswana, 13 are endemic, 10 potentially endemic, seven near endemic, and 43 threatened (DEA 2016).

Some wildlife numbers are in decline, including eland, gemsbok, giraffe, hartebeest, lechwe, sable, springbok, wildebeest, and crocodile. The status of avifauna in the country appears to be relatively good and includes the largest number of breeding lesser flamingos in the region. However, all vulture species are in decline, mostly because of the widespread use of poison on wildlife carcasses (ibid.).

There are several causes of biodiversity loss in Botswana:

● Habitat destruction.

● Habitat conversion and disturbance.

● Barriers to wildlife movement (notably fences, roads, and spreading human settlements).

● High populations of elephant concentrated in ecologically sensitive areas.

● Increase in poaching.

● Disruption of natural fire regime.

● Unsustainable use of wild plant species.

● Presence and spread of IAS.

● Climate change and changes to hydrology and water quality of inflowing rivers.

In addition, an important indirect threat is policy and institutional arrangements that may undermine sound biodiversity management (ibid.).

In Botswana, as in most of Southern Africa, drought and desertification are major threats. Taking into account the possible long-term impact of persistent drought and desertification, it is clear that the problem exceeds the limits of practical management techniques or approaches. What is necessary is adaptability.

The threats of land degradation, population pressure, and water resource damage make Botswana less adaptable to the long-term impact of climate change.

Botswana has experienced 12 drought years in the past 22, on a regular, cyclical basis. Water management is critical, as groundwater and river basin watersheds are threatened. Even without climate change, Botswana and other Southern African countries face a growing water crisis. The situation is expected to worsen significantly by 2025. Water resources in Botswana are equally important for people, wildlife, and the ecosystem as a whole.

Lesotho For its size (30,300 km2), Lesotho has a rich variety of plants and animals, a number of which are endemic (National Environmental Secretariat 2000). There is some debate over what constitutes the “natural” vegetation of Lesotho (due to a long history of human activity and livestock habitation), but the main biome in the country is natural grasslands, although there are also some patches of indigenous forests, wetlands, and plantations (DoE 2009). Lesotho contains three vegetation zones (Highveld Grassland, Afromontane Grassland, and Afro-alpine Grassland), which in turn can be delineated into 12 vegetation types (ibid.). The condition of the grasslands and the species composition has been substantially transformed by human activities, and despite interventions, it has not been possible to restore the status quo (ibid.).

The total forested area in Lesotho is approximately 140 km2 (0.5 percent of the country’s total land area), of which 12.5 percent (17.5 km2) is primary forest (USAID 2007a). Unfortunately, the forests in Lesotho continue to be under threat from land clearing for agriculture; grazing (even in protected areas); bushfires;

drought; and domestic, commercial, and industrial exploitation (ibid.).

The Maloti-Drakensberg Mountain range is considered a regional hotspot for plant diversity (containing 30 percent of the country’s endemic species). It covers approximately 35,000 km2 and straddles Lesotho and South Africa, with 60 percent located in Lesotho (USAID 2007a). Much of this area is protected under the Maloti-Drakensberg Transfrontier Conservation and Development Project, a collaborative conservation effort between South Africa and Lesotho.

Lesotho is home to an abundance of flora (2,000–3,092 species, depending on the source), some of which are endemic: 54–63 species of mammals (depending on the source), 40 reptiles, 20 species of frogs and toads, 18 species of fish, and 1,279 species of invertebrates (USAID 2007a and National Environmental Secretariat 2000). The IUCN Red List includes only one critically endangered species in Lesotho – the Maluti minnow (Pseudobarbus quathlambae), which is endemic to the country (ibid.).

Lesotho also provides habitat for two endangered species: the white-tailed mouse/rat (Mystromys albicaudatus) and the long-toed tree frog (Leptopelis xenodactylus), and 11 vulnerable species, seven of which are birds (ibid.).

Lesotho has 340 species of birds, seven of which are listed as vulnerable by IUCN (notably the yellow-breasted pipit (Anthus chloris), black harrier (Circus maurua), the lesser kestrel (Falco naumanni), southern bald ibis (Geronticus calvus), the wattled crane (Grus carunculata), blue crane (Grus paradisea), and the Cape griffon (Gyps coprotheres) (USAID 2007a).

The other four vulnerable species include the Natal banana frog (Afrixalus spinifrons), Lesueur's hairy bat (Cistugo lesueuri), the African lion (Panthera leo) and the red stinkwood (Prunus africana) (ibid.). All the endangered species in Lesotho are vulnerable to a variety of threats, which are present in protected areas as well as non-protected areas.

The threats to biodiversity in Lesotho are continuing to intensify and include:

● Drought and desertification.

● Loss of habitat (predominantly due to bushfires (frequently linked to honey collectors) and clearing of lands for fuelwood, timber, or grazing pastures).

● Illegal exploitation of resources.

● Overgrazing (leading to soil degradation).

● Population pressures and poverty.

As in most of Southern Africa, drought and desertification are major threats in Lesotho, leading to devastating effects on agricultural lands, biodiversity, income, and nutrition (USAID 2007a). Furthermore, desertification contributes to soil erosion, reduced soil moisture retention, increased runoff, and reduction in land productivity (ibid.).

Because subsistence and commercial agriculture are the principal livelihood strategies for the Basotho, they are actively engaged in natural resource utilization, and the population is dependent on a healthy environment to provide building materials, food, fuel, and medicine (USAID 2007a). However, population pressures, and problems associated with widespread poverty, HIV/AIDS, and limited educational opportunities exacerbate threats to natural resources and biodiversity (ibid.). The majority of people live in the lowland areas, and those living in poverty generally do not have the means to operate with long-term sustainability in mind, as they are forced to overgraze their livestock on small areas of land available for leasing or on already degraded communal grazing lands. Alternatively, their animals may graze illegally in protected areas (ibid.).

Water is an important and marketable natural resource in Lesotho, capitalized on by the multi-billion-dollar Lesotho Highlands Water Project, which commenced in 1986 (USAID 2007a); new phases are under implementation. The project provides income and hydroelectric power to Lesotho and benefits South Africa through the transportation of water from the Orange-Senqu River system in Lesotho to South Africa’s main industrial heartland in Gauteng (ibid.).

Overall, poor natural resource management strategies and policies undermine sound biodiversity management and pose a further threat to biodiversity (USAID 2007a). Land tenure insecurity is an issue of concern; most farmers do not have rights to their land for agriculture or grazing and therefore do not invest in sustainable practices (ibid.). This leads to overgrazing and planting of crops in areas with poor soil quality (ibid.). This issue is being addressed by the government with support from the Millennium Challenge Corporation (ibid.).

Madagascar Madagascar shelters approximately five percent of global biodiversity and encompasses a set of highly diverse habitats (MEEMF 2015). A variety of complex biogeographic, climatic, and ecological characteristics define the island’s four ecoregions (Eastern, Central Highlands, Western, and Southern regions) (ibid.). The terrestrial areas comprise forests, agricultural fields and grasslands, while the aquatic ecosystems are composed of wetlands, rivers, and floodplains, as well as coastal and marine areas (MEF 2014). Despite large-scale conservation efforts, biodiversity loss remains a serious concern. The marine and coastal, continental freshwater, semi-arid habitats, and inland tropical forest ecosystems are most vulnerable to biodiversity loss (MEEMF 2015), with the natural forest cover disappearing rapidly (MEF 2014). The most rapid deforestation is occurring in the needleleaf forest area, which suffers a loss of 1.1 percent per year). More recently, the impact of climate change on biodiversity has also become apparent, particularly in the marine and coastal environments (UNCBD no date (a)).

Madagascar is one of the most floristically diverse countries…