UNLOCKING
FINANCE FORGREATER KRUGERTOWARDS A SUSTAINABLE FINANCE STRATEGYFOR THE GREATER KRUGER STRATEGICDEVELOPMENT PROGRAMMEEXECUTIVE SUMMARY

1

Enhancing
the integrityof natural
ecosystems
to bring
prosperity
and improve
the health of
all who live in
the Greater
Krugerlandscape.
2

UNLOCKING GREATER KRUGERABOUT THE GREATER KRUGERSTRATEGIC DEVELOPMENT
PROGRAMME (GKSDP)
Greater Kruger is a vast wildlife conservation area that includes the Kruger National
Park (KNP) and private game reserves that share unfenced borders. The area is known
for its diverse wildlife and is a popular destination for wildlife safaris and eco-tourism.
It is vital that we commit to protecting this valuable resource. There is a growing need for multiple
compatible land uses to balance the demands of people and nature as the human population andsettlements grow and the need for land and resources increases.

CONSERVATION MEETS DEVELOPMENTThe Greater Kruger Strategic Development Programme (GKSDP) promotes sustainable developmentin the region while preserving its natural and cultural heritage. It recognises the interconnectedness ofsocial, economic, and environmental factors in achieving sustainable development in the Greater Kruger
area.
The GKSDP was launched in 2020 as a partnership between the South African government, the private
sector and local communities and has implemented a range of projects and initiatives to achieve its
goals. These include:• Sustainable tourism development: Responsible tourism practices support local communities throughjob creation and economic opportunities.
• Natural resource management to preserve the region’s biodiversity through measures like habitat
restoration and wildlife conservation.
• Community development that focuses on improving quality of life through education and healthcare
initiatives and sustainable livelihoods.

EXECUTIVE SUMMARYiUNLOCKING FINANCE FOR GREATER KRUGERTOWARDS A SUSTAINABLE FINANCE STRATEGY FOR THE GREATERKRUGER STRATEGIC DEVELOPMENT PROGRAMMEAUGUST 2023

Development Programme

Research was funded by the International Finance Corporation (IFC), theprivate sector arm of the World Bank, as part of its Global Knowledge
Development Project to determine innovative mechanisms to financelandscapes, and co-funded by United Nations Development Program (UNDP),
given the alignment of Greater Kruger with the global UNDP agenda.
The consortium assembled as part of an engagement commissioned by
the IFC, UNDP and South African National Parks (SANParks) comprises:
Conservation South Africa, Endangered Wildlife Trust, ENS Africa and Rand
Merchant Bank.

UNDP
DITORIAL STYLEMANUAL

Acknowledgements: This strategy has benefited from data and strategic
inputs from local stakeholders, notably, SANParks and the Joint Management
Committee of the Greater Kruger Strategic Development Program. It has also
benefited from feedback from IFC including Irina Likhachova and Conrad
Savy, with insights received on certain mechanisms from IFC Manufacturing,
Agribusiness and Services (MAS).

UNLOCKINGFINANCE FORGREATER KRUGERTOWARDS A SUSTAINABLE
FINANCE STRATEGY FOR
THE GREATER KRUGERSTRATEGIC DEVELOPMENT
PROGRAMME

1ii

UNLOCKING GREATER KRUGEREXECUTIVE SUMMARYiii

TABLE OF CONTENTSABOUT THE GREATER KRUGERSTRATEGIC DEVELOPMENT PROGRAMME (GKSDP) I
ACRONYMS AND ABBREVIATIONSVIGLOSSARY VIIEXECUTIVE SUMMARY

1PART 1 SITUATIONAL ANALYSIS OF THE GREATER KRUGER LANDSCAPE
1.1 GREATER KRUGER’S STAKEHOLDERS

48PART 2 ABOUT THE GKSDP FINANCING STRATEGY 11
2.1 WHY GKSDP NEEDS A FINANCING STRATEGY
2.2 OBJECTIVE 1: FINANCIAL MANAGEMENT 12
2.3 OBJECTIVE 2: IMPLEMENTATION 13
2.4 OBJECTIVE 3: REFINEMENT
14
2.5 LANDSCAPE BUDGET
15

PART 3 FUNDABLE OPPORTUNITIESTO NATURE

1117

3.1 FINANCING THEMES
17
1. PROTECTED AREAS 22
2. BIODIVERSITY
28
3. CARBON FINANCING
38
4.. CATCHMENT INVESTMENT PROGRAMMES 46
5. GREEN ECONOMIES 54
6. GREEN ENERGY
64
7. JOBS		

72

PART 4 FEASIBILITY TESTING

76

PART 5 IMPLEMENTATION PLAN 78

5.1 DECISION-MAKING MATRIX 78
5.2 GANTT CHART
80
5.3 WHAT IS NEEDED FOR EFFECTIVE IMPLEMENTATION OF THE FINANCING STRATEGY? 80

PART 6 CONCLUSION

82

PART 7 APPENDIX 83

7.1 GKSDP META ANALYSIS		
84
7.2 MONITORING AND EVALUATION (M&E)
85
7.3 PROJECT SCOPING AND SCREENING
86
7.4 SHORTLIST OF 22 SAMPLE PROJECTS
89
7.5 POTENTIAL BIODIVERSITY FINANCING INSTRUMENTS
7.6 MARKET SOUNDING
92
7.7 REFERENCES
102

iv

UNLOCKING GREATER KRUGER

90

EXECUTIVE SUMMARYv

ACRONYMS AND ABBREVIATIONS
ACCT
ACF
AFOLU
ALM
BRID
CapEx
CCBS
CI
CIP
CIPC
CPLUS
CSA
CSI
DFFE
DSS
ED
ESG
EWT
FSC
GCTWF
GEF
GKPA
GKSDP
GLTFCA
GS4GG
GTAC
H4H
IBRD
IFC
IGM
IPP
IUCMA
IUCN
K2C
KNP
LEDET
LNW
M&E

vi

Africa Conservation & Communities
Tourism
African Conservancies Fund
agriculture, forestry and other landuse
Agricultural Land Management
Blyde River Irrigation District
capital expenditureclimate, community and biodiversity
standards
Conservation International
Catchment Investment ProgrammeCompanies and Intellectual Property
Commission
climate-positive land-use strategy
Conservation South Africa
corporate social investment
Department of Forestry, Fisheries andthe Environment
decision support systementerprise development
environmental, social, andgovernanceEndangered Wildlife Trust
Forest Stewardship Council
Greater Cape Town Water Fund
Global Environment Facility
Greater Kruger Protected Area
Greater Kruger Strategic
Development ProgrammeGreat Limpopo Transfrontier Park andConservation Area
Gold Standard for the Global Goals
Government Technical Advisory
CentreHerding for HealthInternational Bank for Reconstruction
and Development
International Finance Corporation
Improved Grassland Management
independent power producer
Inkomati-Usuthu Catchment
Management Agency
International Union for Conservationof Nature
Kruger to Canyons
Kruger National Park
Limpopo Economic Development,
Environment and Tourism
Lepelle Northern Water
monitoring and evaluation

UNLOCKING GREATER KRUGER

MCL
MEC
METT
MRV
MTPA
MTSF
N+
NbS
NDP
NEF
NFT
NGO
OpEx
PA
PES
PFMA
PPA
PPP
PV
PYEI
REIPPPPRFP
RSASANParks
SBTN
SDG
SEZ
SMME
SOFR
SPA
SPV
SWSA
TASC
TNFD
TTF
UNFCCC
USD
VBC
VCS
WDA
WUA
YES
ZAR

Mapungubwe Cultural LandscapeMember of the Executive Council
Management Effectiveness Tracking
Toolmeasuring, reporting and verification
Mpumalanga Tourism and Parks
AgencyMedium-Term Strategic Framework
nature positive
nature-based solution
National Development Plan
National Empowerment Fundnon-fungible token
non-governmental organisation
operating expenditure
Protected area
payment for ecosystem services
Public Finance Management Act
Power Purchase Agreement
public-private partnershipphotovoltaic
Presidential Youth Employment
Initiative
renewable energy independent
power producer procurement
programmerequest for proposals
Republic of South Africa
South African National Parks
Science Based Targets Network
Sustainable Development Goals
special economic zone
small, micro, and medium enterprisesecured overnight financing rate
Soutpansberg Protected Area
special purpose vehicle
strategic water-source areas
The African Stove Company
Taskforce on Nature-related Financial
Disclosures
Tourism Transformation Fund
United Nations Framework
Convention on Climate Change
US dollar
voluntary biodiversity credit
Verified Carbon Standard
wildlife dispersal areas
Water Users Association
Youth Employment Service
South African rand

GLOSSARY
ACTIVITIESGround-level actions to maintain or enhance the natural capital of the landscape that require financing
to be sustainable (including implementing Anchor Programmes under the GKSDP). Activities include, but
are not limited to, rangeland restoration, alien vegetation clearing, water resource management, andhub development.

ANCHOR
PROGRAMME

Anchor programmes underpin the strategic objectives of the GKSDP. They support restoration of
ecological infrastructure, secure strategic water source areas, grow the biodiversity economy, inform
conservation compatible land-use management, and conserve species of interest.

FINANCING
STRATEGY

A recommended long-term pathway to unlocking potential financing from different forms of funders
mapped to each activity, including shortlisted financing mechanisms that are eligible for market-testingwith funders.

FUNDABLE

Activities that are investment-ready and attractive to funders (based on a set of bespoke criteria).

FUNDERSA diverse spectrum of financing providers ranging from philanthropic (donor-based) funders through tomore commercial-based return-seeking funders (such as institutional funders and banks). (See Figure 4.1
for a detailed list).

IMPACTS

Changes in the state of nature that may alter the capacity of nature to provide social and economic
functions. Impacts can be positive or negative. They may result from the actions of an organisation or
another party and may be direct, indirect or cumulative. [TNFD (SBTN)]LANDSCAPE

A spatially heterogeneous geographic area characterised by diverse interacting patches or ecosystems,
ranging from relatively natural terrestrial and aquatic systems such as forests, grasslands, and lakes tohuman-dominated environments including agricultural and urban settings. (Libre Texts Biology)

MARKET-TESTING

Presenting a select list of funders with a refined concept paper on each financing mechanism that
includes a structural overview, sources and uses of funding, stakeholders and participants involved,
projected returns and targeted outcomes.

NATURAL CAPITAL

The stock of renewable and non-renewable natural resources (e.g., plants, animals, air, water, soils,
minerals) that combine to yield a flow of benefits to people. (TNFD)

NATUREBASED SOLUTIONS

Actions to protect, sustainably manage and restore natural or modified ecosystems that address societal
challenges effectively and adaptively, simultaneously providing human well-being and biodiversity
benefits. [TNFD (IUCN)]

NATURE POSITIVE

Activities that, in general, advance the natural capital (over time) of the whole landscape and respect thecarrying capacity of the ecosystem and habitats within it. These activities should aim to generate jobs
and livelihoods while securing the natural capital of the landscape.

PROJECT

Ground-level activities grouped and managed by an individual project owner.

EXECUTIVE SUMMARYvii

FOREWORDSSHAUN MANNFLORA MOKGOHLOASENIOR TOURISM SPECIALIST, WORLD BANK GROUPDEPUTY-DIRECTOR GENERAL, BIODIVERSITY & CONSERVATIONThis strategy document – and the proposed mechanisms for attracting landscapefinancing – is relevant and important for every conservation area globally. It presents adiagnostic methodology for valuing and realising returns from natural capital through abottom-up process of land-use assessment and realistic appraisal of market potentials
and market needs for providing financing. It reinforces the idea that conservation areas, as they wereconceived 100 years ago, cannot no longer exist as islands of nature, conservation and tourism but must
integrate with the communities on their borders and the broader political landscape answering to thosecommunities.
A paradigm shift is needed to unlock these mechanisms, disentangle the complex mosaic of land use
and landowners and get everybody thinking in a nature- and climate-positive direction that positions
nature not as a public good to be taken for granted but as a viable economic driver

MAXIM VERGEICHIKSENIOR NATURE ECONOMIST, NATURE HUB, UNDP
This is one of the first examples of granular participatory landscape business planning
for an area of high conservation value. The inclusivity of the process was remarkable; itbuilt on consultations with communities, park management, international organisations,and scientists, and many other relevant stakeholders. While it is fully grounded in local
reality, the strategy builds on the latest financing instruments in conservation, tailored for the scale andcomplexity of issues faced by the Greater Kruger landscape.
The landscape approach and systematic conservation planning employed in this exercise serve as thefoundation for the choice of financial instruments, and this in itself is a model: a better alternative tocherry-picking investment, which often fails to account for the full complexity of ecological processes.
It is hoped that the high level of quality and integrity of the plan attracts investors and paves the way toachieving the outlined financial goals, conservation and social impacts.

OSCAR MTHIMKHULU
MANAGING EXECUTIVE, KRUGER NATIONAL PARKSANParks welcomes and supports this ground-breaking Greater Kruger Financing
Strategy – an enabler of the Greater Kruger Strategic Development Programme (GKSDP)
that focuses on innovative pathways and solutions to mobilise resources and optimise
catalytic investment opportunities across the landscape. The GKSDP, launched in 2020
as a partnership between the South African Government, the private sector and local communities,
promotes sustainable development that enhances the integrity of our natural ecosystems and cultural
heritage to bring prosperity and improve the well-being of all who live in the Greater Kruger landscape.
The channeling of diverse financing mechanisms and viable solutions mapped against the inherent
potential of landscape projects, and their multiplier effects and linkages, provides the impetus forunlocking the Greater Kruger value proposition: responsibly balancing our conservation, economic andsocial pillars. There is an urgent call to action to achieve the desired unified and amplified landscapescale impacts over time. Successful implementation will also demonstrate co-benefits derived throughcollaboration and a transformative approach to inclusive rural economic development. We must continue
working towards the reduction of threats to our biodiversity whilst meeting people’s needs and thebetterment of their lives – in harmony with nature. SANParks is on board!

viii

UNLOCKING GREATER KRUGER

We have come a long way, especially in respect of the Greater Kruger Strategic
Development Programme (GKSDP). We know that this is a multi-stakeholder collaborative
programme that has matured over the years. We also acknowledge that some elementsof it are already being implemented, and others that require urgent implementation
are lagging. What we have not done, and are going to do now, is ensure that the strategy itself gets
supported by all spheres of government. This would require that the strategy goes through theIntergovernmental consultative processes.
The roles of the non-governmental and private sectors are key. Partners are welcome to identify areas
where they see their role and where they can intervene while government processes are underway.
We need to prioritise the low-hanging fruits that can unlock the opportunities identified in the Strategy
Action Plan of the paper. Operationalisation of strategy may require funders to provide seed funding; theinvolvement of the private sector and non-governmental organisations will also be critical in this regard.

KHOROMMBI MATIBECHIEF DIRECTOR, BIODIVERSITY ECONOMY & SUSTAINABLE USE
The strategy document is an enormous body of work that has been undertaken,
especially when one considers the scale of the landscape target budget. In terms of
the approach taken, the strategy delineates the various financing mechanism options
identified and the institutional arrangements to be utilised to unlock such mechanisms.

RICHARD NAPIER
VICE CHAIR, GLTFCA COOPERATIVE AGREEMENT, JOINT MANAGEMENT COMMITTEE
The timing for rolling out a financing strategy to showcase Greater Kruger’s potential forcontributing to collaborative management and protection of conservation areas could not
be more appropriate. Last year, the Great Limpopo Transfrontier Park (GLTP), based on
a 2002 treaty between the governments of South Africa, Zimbabwe and Mozambique,marked its 20th anniversary. It was to further the objectives and interests of the GLTP that the Great
Limpopo Transfrontier Conservation Area (GLTFCA) Cooperative Agreement between the Kruger
National Park (KNP) and various Protected and Conservation Areas open to the KNP was establishedand signed in 2018.
Given what this carefully researched financing strategy lays out in terms of scalability and replicability,
it could have a significant impact on the landscape from a social, ecological and economic perspective.
Some of the mechanisms may also have relevance in neighbouring countries within the aforementioned
transfrontier conservation areas.
The GLTFCA Cooperative Agreement Joint Management Committee (JMC) looks forward to and supports
successful implementation of the financing strategy.

EXECUTIVE SUMMARY

ix

EXECUTIVE
SUMMARYI

n December 2022 the International Finance Corporation (IFC), United
Nations Development Program (UNDP) and South African National Parks(SANParks) commissioned the development of a financing strategy for theGreater Kruger Strategic Development Programme (GKSDP). This publication– Unlocking finance for Greater Kruger – tables the results, findings andrecommendations of this assignment, which was carried out over a periodof six months by a consortium of partners: Conservation South Africa,
Endangered Wildlife Trust, ENS Africa and Rand Merchant Bank.

The United Nations Convention on Biological Diversity recognises that there is a significant
gap in funding for biodiversity conservation across land uses – from formal protected areas
to area-based conservation measures implemented to secure ecological connectivity andhabitat integrity in rapidly changing landscapes. As the world aims for the ambitious target
known as ‘30 x 30’ adopted in 2022 – to protect or conserve 30% of land and oceans by
2030 – the funding gap continues to widen.
It is up to the conservation sector to address this chasm, which demands new ways ofmobilising investment in the absence of effective traditional conservation financing
mechanisms. The Greater Kruger Finance Strategy responds to this challenge with a holistic
approach to landscape-level finance that incorporates core conservation areas as well as
the interconnected ecological areas that surround and support them. The strategy makes
a bold attempt not only to address existing financing needs but also to address humandevelopment needs in a nature-positive way that will attract finance to the landscape as awhole.
The strategy is a first attempt to work at this scale from a financing perspective; although it
will require ongoing refinement and realignment as practical lessons are learnt, it constitutes
a strong foundation upon which to shift to more ambitious financing goals to support
even greater protection. The approach puts people and protected areas at the heart oflandscape-level conservation financing efforts to ensure long-term integrity of the National
Park as well as the communities and species that depend on its sustainability as a whollyfunctional, nature-positive landscape. The strategy recognises the importance of inclusivity.
It follows, therefore, that this report is intended for a broad audience – from potential
interested funders, through to project participants, decision-makers and beneficiaries.
The report includes high-level due diligence of Greater Kruger and its investment landscape(via a top-down–bottom-up approach), identification and application of eight mechanisms (invarious stages of development),1 and a suggested prioritisation and phased implementation
plan, with recommendations of tools and resources to drive and sustain this plan. The
research conducted for this strategy strongly supports the use of nature-positive landscapeinvestment to finance diverse activities that enhance natural capital and in so doing
underlines the ways in which nature improves lives. This aligns very cleanly with the twocore strategic objectives of the GKSDP: securing the natural capital base of the Greater
Kruger landscape and, increasing employment and sustaining livelihoods – objectives thatare not only nature-positive but also pursue a positive socioeconomic outlook.

1x

UNLOCKING GREATER KRUGER

Tax incentives is a cross-cutting eighth mechanism under each of seven financing themes.

EXECUTIVE SUMMARY

1

THE STRUCTURE OF THE STRATEGY DOCUMENT
The strategy consists of the following sections:PART 1: SITUATIONAL ANALYSIS OF THE GREATER KRUGER LANDSCAPE
Research for the finance strategy required an in-depth analysis of Greater Kruger to reveal its
physical, political, social, economic and ecological structure and dynamics and determine the mostappropriate methodology for a financing strategy to serve all stakeholders. The stakeholder map
on page 8 shows the different levels of government and governance and their various functions asdrivers of decision-making and landscape management behaviour.
PART 2: ABOUT THE GKSDP FINANCING STRATEGYThis section explains the aims of the strategy and how it links with the GKSDP and its objectives andgoes on to define the three financial strategy objectives – Financial Management, Implementation
and Refinement – and the outcomes and outputs of each. A landscape budget (2.5) is also
proposed here. Collation of project- and ecosystem-level spatial data indicates a landscapebudget of between ZAR 870 million (USD 46 million) and ZAR 5.2 billion (USD 276 million) a year,
depending on whether core protected area costs are included or excluded, and on the extent of
ecosystem restoration desired. A realistic budget for the landscape (including core protected areas)is between ZAR 1.5 billion (USD 80 million) and ZAR 2.1 billion (USD 110 million) per year – or ZAR 21
billion (USD 1.1 billion) over ten years. This estimated figure has been adopted for the purposes ofthis report and includes the cost of protecting 2 million hectares of core conservation areas at about
ZAR 1.1 billion (USD 58 million) per annum, and the cost of restoring off reserve ecological corridors(non-core) at about ZAR 1 million (USD 53K) per annum.
Coordinated and effective implementation of the proposed financing strategy and its mechanisms
will channel diverse and sustainable sources of finance and achieve landscape-scale impact overtime. Successful implementation of these mechanisms has the potential to raise ZAR 2.84 billion(USD 151 million) in investment for the Greater Kruger landscape over a period of ten years. This
constitutes just under 14% of the total finance required to sustainably manage this landscape.
PART 3: FUNDABLE OPPORTUNITIESRecommendations of financing mechanisms that can be applied to channel financing for projects
are organised into the following financing themes: Protected Areas, Biodiversity, Carbon Financing,
Catchment Investment Programmes, Green Economies, Green Energy, and Jobs. Each theme
includes case studies that serve as examples of how the mechanisms work.
The fundable opportunities are central to the strategy and its implementation. Many of them hingeon real-world examples of projects that are already active in the landscape and come packaged
with existing skills, experience, methodology and M&E data.

Potential sources of cashflow linked to the activities of projects in the landscape are unbundled foreach scenario. These include eco-tourism, carbon and biodiversity credits, payment for ecosystemservices and water, tax savings, and savings on costs of electricity and diesel.
The different financing mechanisms for each theme are listed and defined (with examples whereavailable) and then linked to funder types. Information about aspects like due diligence anddevelopment, legal matters, impact indicators, investment choices, pricing and returns, etc., isuseful to projects seeking investment and to potential funders, and is included under structuralconsiderations. Recommendations are based on the expert knowledge of consultants who work in
the field of conservation finance.
Case studies for each theme provide real-world examples of how the mechanisms can be applied.
PART 4: FEASIBILITY TESTING
Market testing with a sample of funders was conducted to gather feedback to sense check thefeasibility of the landscape-level mechanisms proposed. Details of the market sounding interviews
are provided in section 7.6 of the appendix.
PART 5: IMPLEMENTATION PLAN
The proposed implementation plan (used for illustrative purposes at the time of writing)acknowledges that mechanisms are not mutually exclusive and can be offered as part of a stacked
or layered investment approach. The plan includes:• A decision-making matrix to rank mechanisms according to priority and phase out
implementation of mechanisms.
• A Gantt chart with suggested timelines and phasing of mechanisms as well as broader strategy
implementation considerations.
• Suggested requirements to facilitate implementation.
PART 6: CONCLUSION
The conclusion reiterates the findings of the situational analysis to assess stakeholders and theirrespective functions and influence regarding management of the landscape. As illustrated by thisstudy of Greater Kruger, no two landscapes are the same; all landscapes have their own uniquecharacteristics and there is no one-size-fits-all solution to financing. There is, however, potential for
scalability and replicability in other landscapes of the mechanisms explored. The report concludes
with a call to collaborate to bridge the gap between finance and on-the-ground implementation.
PART 7: APPENDIX
The appendix contains useful information and tools to aid landscape managers with target setting,details of the project scoping exercise conducted for the strategy, the list of 22 projects shortlisted
for the strategy, in-depth information on potential biodiversity financing instruments, the results ofthe market sounding interviews, a summary of the feasibility testing and a list of references.

The different financing themes first unpack the threats, challenges and opportunities in Greater
Kruger that can be linked to each theme. Challenges and threats include security risks, climatechange, human–wildlife contact, unemployment and loss of biodiversity; opportunities include
enterprise development, financial incentives, monetisation of ecosystem services and job creation.
The eligibility criteria that determine whether a project is considered for inclusion in the financing
strategy are aligned with the strategic objectives of the GKSDP and the objectives of the financing
strategy. Suitable projects are characterised as – among other things – nature positive, measurable
and managed, located in areas of high biodiversity or in critical water source areas, involved in
activities that mitigate climate change, and include those that address water shortages, focus on
green economy sectors and their value chains and offer material social and livelihood benefits. The
strategy lists specific projects in the landscape that fulfill these criteria and where relevant highlights
potential projects that will benefit from investment.

2

UNLOCKING GREATER KRUGEREXECUTIVE SUMMARY

3

PART 1
SOUTH AFRICASITUATIONALANALYSIS:
THE GREATERKRUGER
LANDSCAPE

S av eZIMBABWE

MusinaNational capital

Provincial capital
Major airport

LIMPOPOpo

Polokwanep

Provincial boundary
Main road

Ol

i

fa

L im

BOTSWANAMOZAMBIQUE

n ts

o

International boundary

popo
Lim

Town, village

Railroad

25°

Xai-Xai

The Greater Kruger landscape is part of the Great
Nelspruit
TswaneMafikeng
Limpopo Transfrontier Park and Conservation Area oJohannesburg
Maputoop
NORTH(GLTFCA), a transborder landscape conservation
MPUMALANGA
WEST
Mbabane
GAUTENG
corridor established in 2002 by a treaty between
South Africa, Zimbabwe
and Mozambique (Fig.
Lüderitz
Keetmanshoopr1.1). The South African portion of the GLTFCASWAZILAND
Ha
comprises the Greater Kruger Protected Area
FIGURE 1.1 Location of the Great Limpopo Transfrontier Park and Conservation Area (GLTFCA) ■.
(GKPA), which includes the Kruger National
20°
25°
30°
Park
and an open network of 16 protected area
S av ereserves (private,
state
and
community-protected
Upington
Karasburg
areas) on the western and southern boundaries of
FREE STATE
the park (Fig. 1.2).
Oranjemund
Kimberley
MusinaAlesanderOeNational capitalgrna
BOTSWANABayThe GKPA expands the protected wildlife
habitatKenhardt
MaseruBloemfontein
Port Nollothngbeyond the boundaries of Kruger National Park by
MOZAMBIQUE
Provincial capitale
LESOTHO
Springbok
includingprivategamereserves
andconcessions
NababeepTown, village
on the park’s western and southern borders.
N O R TbyHaErange
R N ofC A P E
E.C.
Amanzimtoti
Greater Kruger is also characterised
30°
30°
Major airport
LIMPOPO
Polokwaneg
De Aargn
agricultural land uses from large commercial farmsarOrCarnarvon
International boundarybep
to communal grazing areas and informal cropping
Aliwal North
Port ShepstonesopenWilliston
Bitterfontein
lands.
kmaProvincial boundary
L iMiddelburg
Dr
Victoria West
Umtata li
O
The area also has many high density
Calviniarural
Main road
Queenstown
Port St Johns
Klawerand small towns, andpopulations
in villages
N
G
Railroadreseveral mines. About 2.9 million people live withinatGraaﬀ- EASTERN CA PE
KeSaint Hofi
50 kilometres
GKPA’swesternboundary
elentheXai-Xai
ReinetBeaufortaB
ayunemployment rate for theBishodNelspruitaveragefence.2 TheaWest
G r e a t Fish Tswane
VredenburgyMaﬁkeng
SOUTH
seven municipalities
weighted by
Saldanha in this area,
East London
Johannesburg
Grahamstown
o
W
E
S
T
E
R
N
C
A
P
E
AFRICAp
Saldanha
Bay (as compared
Maputopopulation,is 40.8%
to the national
Marion I. (S.A.)oCapital:Oudtshoorn
MPUMALANGA
3
Pretoria, administrative;
rate of 32.7%).
Uitenhage
Port Alfred
Worcester N ORTH WEST
MbabanePaarl
GAUTENGts

Mol

N A M I B I Aoff a lSOUTBu

SOUTH AFRICA
H

an

e

R

Ca

NT

O

fa

n ts

o

IC

popo
Lim

LA

l edo
n

a

ge

Or

AT

C

E

A

Sun

Oranjemund

Bay

ls e

KnysnaCape St. Francis

SWAZILANDFIGURE 1.2 The Greater Kruger Protected Area (GKPA) includes the
Kruger National Park ■ and an open networkof 16 protected area reserves ■ (private, state and community-protected areas) on its western and southern.
boundaries.
35°
30°
25°
35°

Upington

Kimberley

FREE STATEo
ff a lUNLOCKING GREATER KRUGER

Sishen 20°

ay

Algoa BayPort Elizabeth

Bu

4

lb

ar

lH
Ba
y

e

Map No. 3768 Rev. 6 UNITED NATIONS
February
2007
Karasburg

Hotazel

se

0
35°

100

Cape of200
300 km Good Hope
2 SANParks, KNP Socio-Economic Impact Preliminary Report, March
2022.
Cape Agulhas
Fa
200 mi
100 3 Ibid.

ss0

Stellenbosch
Heidelberg
StrandM os

Keetmanshoop

GeorgeMo

eritz

Table BayCape Town

ts

Bloemfontein, judicial

Mo
l

s

N A M I B CapeI Town,A legislative andDepartment of Peacekeeping Operations
Cartographic Section

THE GREATER KRUGER LANDSCAPE

5

2.6 million

The boundaries of the Greater Kruger landscape, as presented in
the Greater Kruger Strategic Development Programme (GKSDP),
comprise Zones 1 to 6 (see Fig. 1.3)
• 16 protected area network reserves that form the GKPA.
• Kruger land-use and expansion area.
• Socioeconomic priority areas.
• Institutional integration areas.
• Water priority areas.
Greater Kruger also includes two major biospheres – Vhembe andKruger to Canyons (K2C) (Figure 1.4) – with various sub-boundaries
that facilitate local government administration (demarcation of
district and local municipalities, and traditional authorities). The
area has a rich diversity of conservation types with a wide range of
biomes, land cover and vegetation types, conservation-compatible
land uses, and global significance areas.

FIGURE 1.3 Spatial desired state
as presented in the Greater Kruger
Strategic Development Programme

hectares

1,078 kmboundary

7 community forums
39 traditional authorities
3 district municipalities
9 local municipalities
2 biospheres

FIGURE 1.4 Map of Greater Kruger
showing the Kruger to Canyons (K2C)
and Vhembe biospheres.

LEGENDGKSDP Integration zone outline
Greater Kruger conservation areas■ Zone 1
Kruger land-use and expansion area
■ Zone 2
Socioeconomic priority areas■ Zone 3■ Zones 4 and 5 Institutional integration areas■ Zone 6
Water priority areas (strategic water
source areas)

6

UNLOCKING GREATER KRUGERLEGEND■ Vhembe Biosphere■ K2C Biosphere■ Protected areas

EXECUTIVE SUMMARY

7

GREATER KRUGERTECHNICAL STEERING COMMITTEEPOLITICALOVERSIGHT• Minister of Forestry,
Fisheries and theEnvironment.
• Office of the Presidency.
• MECs of Mpumalanga
and Limpopo.
• Mayors of Vhembe,
Mopani and Ehlanzeni
District Municipalities.

Department of Forestry, Fisheries and the Environment (DFFE),
South African National Parks (SANParks), executives of Mpumalanga
Tourism and Parks Agency (MTPA) and Limpopo Economic Development,
Environment and Tourism (LEDET), managers of district municipalities

DA L A R E ASO
NBiodiversity
economynodes

FUNCTIONS OF THE GREATER KRUGERTECHNICAL STEERING COMMITTEE• Strategic oversight and coordination.
• Project Management Unit and Greater Kruger
Development Fund.
• Monitoring and evaluation.
• Guide resource priorities.
• Deliver on the District Development Model.
• Engage with provincial structures.

FUNCTIONS OF NODAL AREAS

Catchmentnodes• Enable partnership networks and support projects inclusters.

FUNCTIONS OF DISTRICT MUNICIPALITIESDISTRICT MUNICIPAL STRUCTURES

S

IT

DI

IE

S

• Integrated Development Plan
• Local Economic Development• Spatial Development Framework
structures

FIGURE 1.5 Stakeholder
mapping and spheresof influence of theGreater Kruger Strategic
Development Programme.

Land tenure
structures
Land rights
holders
and users

IC

T MUN I CL
I PA

Traditional
authorities

Projectlevel
organisations

Mandatedand enabling
partners
at projectlevel

CLUSTERS

1.1 GREATER KRUGER’S STAKEHOLDERS
Greater Kruger is a complex of interdependent ecosystems and biomes interspersed with humansettlements like farms, villages and towns. Greater Kruger’s many and varied stakeholders (national, local
and district municipalities, civil society, the private sector and community members) are vital to decisionmaking and overall governance of the landscape.
Different stakeholders link and partner across zones. Privately owned reserves, community property
associations and public stakeholders co-exist within the Greater Kruger Protected Areas and traditional
authorities, civil society organisations and public sector bodies cooperate across adjacent areas.
The GKSDP recognises that Greater Kruger is an interconnected landscape. The ‘state of natural capital(especially in terms of functionality of ecosystems and their ability to deliver services such as water) andsocio-economic well-being (particularly for marginalised communities)’ are inextricably linked.

• Deliver on the District Development Model.
• Coordinate service delivery and resourcing.
• Monitoring and evaluation, and reporting on
Medium-Term Strategic Framework (MTSF) andNational Development Plan (NDP) priorities.
• Enable programmes in the broader nodal areas.

UNLOCKING GREATER KRUGER

Secure the natural capital base of
the Greater Kruger landscapeSocioeconomic transformationand job creation

STRATEGIC OBJECTIVE 3:
Integrate economic and land-use
planning and management

STRATEGIC OBJECTIVE 4:
Strengthen partnerships andgovernance structures

STRATEGIC OBJECTIVE 5:
Mobilise resources andoptimise investments

FUNCTIONS OF CLUSTERSSTRATEGIC OBJECTIVE 6:
Partner in the same geographical implementation space(cluster) and work on joint or complementary initiatives

Strengthen data andknowledge management

Decision-making does not rest in any one body. The GKSDP categorises the various stakeholders ofGreater Kruger in terms of their interests, mandates, land tenure and user rights and their respective
contributions to decision-making and implementation of the plan (see Figure 1.5). The GKSDP aims
to improve environmental, socioeconomic and safety and security outcomes by strengthening thepartnerships between state, community, and private entities. Its primary goal is to bridge the gap
between local communities and conservation areas to secure the natural capital base and facilitate socioeconomic transformation.
The core Strategic Objectives of the GKSDP are to 1) Secure the natural capital base of the Greater
Kruger landscape and 2) Increase employment and sustain livelihoods. Indicators of these are thequantity of natural resources in healthy ecosystems expanding through innovative partnerships, thenumber of people working in nature-related sectors and their satisfaction with the natural resource
sector, and inclusion of communities and community land in the biodiversity economy.1

1

8

STRATEGIC OBJECTIVE 1:

STRATEGIC OBJECTIVE 2:

Biospheres:
K2C and
VhembeTR

STRATEGIC OBJECTIVESOF THE GKSDPStrategic objectives 3 and 4 are integrative; Strategic objectives 5 and 6 are enabling (see above)

THE GREATER KRUGER LANDSCAPE

9PART 2

ABOUT THE GKSDPFINANCING STRATEGY
A financing strategy combines financial and strategic planning into a functional
roadmap that assesses current resources, costs and budget and aligns them withthe mission and goals of an organisation. A comprehensive, well-structured financial
strategy is a useful tool to support calls for investment.

2.1 WHY GKSDP NEEDS A FINANCING STRATEGYGreater Kruger needs sustainable financing flows that align with and satisfy its budgeted needs tofacilitate ground-level activities for management of the landscape. This strategy explores the drivers ofdecision-making and landscape management behaviour and potential sustainable sources of funding
based on ecosystem composition and land-use compatibility. The core approach of this strategy is both
top-down–bottom-up, and nature-positive.

The top-down–bottom-up component comprises analysis of high-level due diligence ofactivities at ground level and assessments of best-fit funder flows (including potential feasible financing
mechanisms) to map and recommend pathways for nature-positive projects to unlock potential financing
on a sustainable basis.
The nature-positive landscape investment approach uses different forms of capital to financediverse activities that improve the integrity of large-scale ecosystems, enhance biodiversity and reducegreenhouse gases. If it scaled up, this approach can help us realise ‘30 x 30’: protecting or conserving
30% of land and oceans by 2030 – the minimum requirement to curb biodiversity loss and reach climate
goals. To determine their degree of nature-positivity, projects, and the respective financial mechanisms
recommended to finance them, are assessed against a set of parameters to determine how naturepositive they are. The nature-positive investment lens has two critical elements: social and economic
upliftment enabled by ecologically sustainable use and equitable benefit of natural capital (a focus areaof the financing strategy), and, enhancement and maintenance of the integrity of natural ecosystems. It
is for this reason that projects shortlisted for the financing strategy align with the core objectives of the
GKSDP: Strategic Objective 1 (SO1) – Secure the natural capital base – and Strategic Objective 2 (SO2) –Socioeconomic transformation and job creation.

THE FINANCING STRATEGY:• Applies a nature-positive lens to activities and links them with financing mechanisms
and funders.
• Suggests ways in which ground-level activities can be transformed into fundable
activities (the criteria they require, and including aggregation or grouping whereappropriate).
• Determines financing needs and budget for large-scale sustainable management of
the landscape and proposes the most efficient mechanisms to secure finance.
• Determines funders’ needs and requirements before they provide financing flows toactivities and/or financing mechanisms.
• Leverages private capital to finance projects where possible.
• Demonstrates scalability and replicability.

10

UNLOCKING GREATER KRUGERABOUT THE GKSDP FINANCING STRATEGY11

OBJECTIVES OF THE GKSDP FINANCING STRATEGY

2.2
ENVIRONMENTSOCIETY
FINANCIALMANAGEMENTSTRATEGYOBJECTIVE 1:
FINANCIAL MANAGEMENT

Facilitate long-term, sustainable financial
management of the Greater Kruger
landscape using a holistic approach that
acknowledges its ecological, economic
and social resources.

2.3

OBJECTIVE 2: IMPLEMENTATION

Support implementation of the GKSDP, particularly where it relates tomobilising sustainable financing to effect nature-positive initiatives, andensure alignment of the financing strategy with landscape management
plans and targets.
LANDSCAPE
MANAGEMENT
PLANS ANDTARGETSECONOMY
IMPLEMENTATION
OF THE GKSDPNATUREPOSITIVEINITIATIVESSUSTAINABLE
FINANCING

FIGURE 2.1 Financial management encompasses Greater
Kruger’s ecological, economic and social resources.
FINANCING

FINANCING
STRATEGYSTRATEGY

12OUTCOME 1

OUTCOME 2

Assess current
ground-level projects
in the landscape forprioritisation andeligibility criteria to
unlock sustainablesources of financing.

Identify, design and test the feasibilityof a broad and diverse range offundable financing mechanisms (fromimpact- to market-based) to enable
funders such as the IFC to deploy
capital to fill funding gaps in thelandscape.

Output 1: A projectmapping tool templatefor data collection andanalysis.
Output 2: A shortlist of
projects with funding
potential.

Output 1: Recommend at least five
diverse financing mechanisms tofinance the Greater Kruger landscape
Output 2: Conduct a feasibility
test on between 3 and 5 financing
mechanisms using market soundings
held with a pre-determined anddiverse group of funders
Output 3: Quantify potential
contribution of proposed financing
mechanisms to addressing thefinancing needs of the landscape.

UNLOCKING GREATER KRUGER

FIGURE 2.2 Sustainable financing will ensure that implementation of
the strategy results in nature-positive initiatives aligned with landscapemanagement plans and targets.

OUTCOME 1

OUTCOME 2

OUTCOME 3

Conservation is leveraged
as a catalyst for inclusive
rural economic developmentby prioritising projectsaligned with the core pillarsof the GKSDP (i.e., Strategic
Objectives 1 and 2).

Suggest financing
mechanisms that
promote integrated
partnerships within thelandscape.

Suggest an
implementation
plan for rollingout feasible
mechanisms andpilot projects.

Output 1 : The mapping tool
is expanded with criteria forprioritising projects (including
nature-positive assessment
parameters).

Output 1:
Strategy signed
off by landscapestakeholders.

Output 1:
Prioritisation matrixof factors andGantt chart for
implementation.

Output 2: A shortlist offundable projects that are
eligible for piloting.

ABOUT THE GKSDP FINANCING STRATEGY13

OBJECTIVES OF THE GKSDP FINANCING STRATEGY
2.4

OBJECTIVE 3: REFINEMENTLANDSCAPE BUDGET
2.5

Suggest improvements or enhancements to project management
plans to unlock fundable opportunities and attract appropriate
investment into the landscape.

LANDSCAPE BUDGET

Although there is no complete or fully accurate means of determining a budget at landscapelevel at this stage, the following methodologies present different scenarios from which to derive
an estimated budget for this landscape (based on a combination of point-in-time data available,
assumptions made and projections).

2.5.1 GKSDP database
OPPORTUNITIESREFINEMENTDATACOLLECTION
AND M&E

CATALYTICMECHANISMSDEVELOP AND
IMPLEMENT MORESUSTAINABLE
AND SCALABLE
FINANCINGMECHANISMS

FUNDERSAn initial estimate of ZAR 1,520,083,777 (USD 80,900,574.79) was calculated after review andassessment of data in the GKSDP database (with no timeframe for this estimate provided in thedata). Although this calculation does not qualify as a budget projection because of duplication of
entries across implementing partner organisations, and incomplete data entries in the database, it
is a useful starting point for a bare minimum landscape budget.
The budget includes public, private and non-profit funding requests from more than 20 landscapepartners. The fact that many entries were duplicated across the ‘unfunded’ and ‘funded’ categories,
indicates a high degree of inaccuracy in the data. There are also significant data gaps for stateowned protected area management authorities and private reserves. See additional information on
data integrity in Project Scoping and Screening.
Due to the fragmented and outdated nature of projects in the database, budget needs of projects
could not be determined accurately from the data provided. Likewise, the funding gap could not
be accurately determined from existing data sources because of ongoing roll-offs of committed
financing sources.

FIGURE 2.3 As the GKSDP Financing Strategy is rolled out andrefined an increasing number of fundable opportunities will be
unlocked and matched with investors.

2.5.2 Sample-based

OUTCOME 1

OUTCOME 2

OUTCOME 3

Unlock dedicatedcapacity to improveand manage datacollection and M&E
processes on an
ongoing basis.

Periodic facilitation by
an advisor to match
fundable opportunities
with interested funders.

Mobilise short- to
medium-term catalytic
mechanisms (e.g.
grants) to further
develop financing
mechanisms.

Output 1: A list of recommendations of what is required to mobilise resources and support foreffective and ongoing strategy implementation.

To mitigate data integrity issues, a sample-based approach for budget determination using the
GKSDP database was used. Using the sample data as a guideline, it is estimated that the budget
needs of the landscape are a minimum of ZAR 2.6 billion (USD 137 million) based on the list of
projects provided and extrapolation of this to the broader GK landscape. This is split into investable
opportunities and grants needed to leverage the investment as a multiplier of about 1:18:• Grant-based funding required: ZAR 135 million (USD 7.1 million)• Sustainable Investment required: ZAR 2.465 billion (USD 131 million)
The estimate for a minimum investment requirement of ZAR 2.465 billion (USD 131 million), withsupportive grant finance of ZAR 135 million (USD 7.1 million) is a baseline or starting point for a totallandscape budget of ZAR 2.6 billion (USD 138 million) over a 2- to 3-year period (based on project
timeframes), that is, a minimum budget amount of ZAR 870 million (USD 46 million) a year.
However, this baseline is derived from a limited approach – one which assumes that a landscapebudget should be the sum of all individual stakeholder needs and existing projects. This baseline
can be no more than a sum of the parts; it is neither a holistic picture of what is needed from anecosystem perspective, nor what is possible from an investment perspective.

2.5.3 An ecosystem perspective
An ecosystem perspective uses biodiversity, water and climate spatial data to assess the conditionof the ecosystem and the actions required to improve the ecosystem or maintain its condition
to quantify the possible investment requirements for the landscape. A draft set of ecosystem
restoration and management actions appropriate to the local ecological profile have been createdto assess the potential for improved landscape management and the associated costs.

14

UNLOCKING GREATER KRUGERFUNDABLE OPPORTUNITIES

15

LANDSCAPE BUDGETThe entire area of the Greater Kruger landscape (including the core protected areas) was assessed
for applicability of landscape interventions such as agroforestry, alien plant removal, assisted naturalregeneration, avoided deforestation, degradation and wetland impacts, bioproducts, livestock-basedsavanna and natural woodland management, and sustainable crop farming.4 A cost per hectare perintervention was estimated based on existing landscape pilot data, and a projection of ZAR 5.2 billion(USD 276 million) per annum was calculated as the cost of a comprehensive programme of protectedarea management and labour intensive ecosystem management across the landscape. Although thislandscape budget projection is inadequate, as it is based solely on stakeholder data input, it shows the
spectrum of costs that could be incurred to secure landscape-level social and ecological sustainability.
The collation of project level data and ecosystem level spatial data indicates a landscape budget
between a wide range of ZAR 870 million (USD 46 million) and ZAR 5.2 billion (USD 276 million) per
year, depending on whether core protected area costs are included or excluded, and on the extent of
ecosystem restoration desired. The cost of protecting 2 million hectares of core conservation areas
effectively is about ZAR 1.1 billion (USD 58 million) per annum. It is projected that it will cost at least ZAR
1 billion (USD 53 million) per annum to restore and manage 1 million hectares of off-reserve ecologicalcorridors.

2.5.4 Target budget
The real question, however, is what sort of finance can be leveraged in the short term through thefinancial mechanisms described in this report, and what contribution they will make towards the overall
cost of a highly managed landscape.
The total peak value of the financial mechanisms described in this report is ZAR 2.84 billion (USD
151 million) over an average of 10 years,5 or ZAR 385 million (USD 20.4 million) per year (‘Target
Budget’), assuming they have all been fully activated. This constitutes an estimated 14% of theestimated ZAR 21 billion (USD 1.1 billion) budget needed to manage the Greater Kruger landscape.
Currently, SANParks is responsible for securing approximately 50% of this total budget. They are
required to secure ZAR 1.1 billion (USD 57 million) of the ZAR 2.1 billion (USD 110 million) annually tocover the core protected area management needs. It is estimated that they have an ongoing shortfall
on average of ZAR 247 million (USD 13 million) each year (meaning that they manage to secure around
40% of the total). The broader, non-core landscape secured budget is difficult to calculate with current
data. It is known however, that the majority of existing funding for these activities is philanthropic andrelatively short term in nature. Whilst the funding gap cannot be adequately estimated, it is believed tobe significant, and the additional 14% contribution potentially raised from this strategy is therefore ofimportance.
The Implementation Plan presented in this report recommends a prioritisation and phasing of
mechanisms to contribute towards this targeted funding over a 5-year period to begin with (cognisantof the expectation that at least the first 2 of the 5 years will involve a gradual start-up phase that will
delay full activation).

4 CPLUS – Climate-Positive Land Use Strategy)
5 The value contribution of the mechanisms are staggered over a 5 to 30 year period depending on development and underlying
project durations.

16

UNLOCKING GREATER KRUGERPART 3FUNDABLEOPPORTUNITIES
Details of the various stages and processes required to achieve the outcomes andoutputs of the three objectives of the GKSDP Financing Strategy are outlined in thefollowing sections. Fundable opportunities, identified by assessing current ground-levelprojects in the landscape, have been assigned to the seven financing themes listed in thetable below and categorised according to scope and description, applicable landscapeprojects and pilots identified, cashflows, financing mechanisms within which to package
the cashflows (including those existing in the market), potential funders and funder types
and key structural considerations.
To establish a strategy for financing the landscape in its entirety, mechanisms should:• Monetise nature and/or generate value of some kind (generate revenue via sales of credits or
products).
• Unlock benefit-sharing opportunities for local communities.
• Be scalable and replicable across all geographical zones of the Greater Kruger.
Thematic structures can also be categorised according to the level of development required for viablefinancing mechanisms to be deployed. Shortlisted structures in this strategy include:• Structures already in the landscape: K2C Catchment Investment Programme and carbon projects.
• Structures based on global research and undergoing testing: Biodiversity financing, green energy,
and green economies.
• Structures in other landscapes that can be applied to Greater Kruger: Funding for conservancies (PAexpansion and management) and tax incentives (linked to several themes).

3.1

FINANCING THEMES

Financing structures for projects and activities included in this strategy are classified according to thefollowing themes:6
TABLE 3.1: Financing themes and corresponding mechanisms

FINANCING THEMEINVESTMENT MECHANISM

Theme 1: Protected areas

African Conservancies Fund

Theme 2: Biodiversity financing

Wild Dogs Bond

Theme 3: Carbon financing

No specific mechanism is proposed in the strategy, apathway to a landscape-level approach is proposed.

Theme 4: Catchment investment programmes

Kruger to Canyons (K2C) Catchment Investment
Programme

Theme 5: Green economies• Enterprise Catalyst• CI Ventures• Greater Kruger N+ Growth Fund

Theme 6: Green energy

Green Energy Strategy of KNP

Theme 7: Jobs

Jobs Creation Programme

6 Although tourism assets of KNP as a financing mechanism are not defined in this strategy, this sector has potential that needs further
research, and engagement with KNP management.

FUNDABLE OPPORTUNITIES17

FUNDABLEOPPORTUNITIESKEY CONCEPTS

FUNDERSTHE FUNDER
Provides the financing needed tosupport project activities (based on
pre-agreed terms and criteria).

Cash proceeds from funder(s)FINANCING THEMESFINANCING MECHANISM
Channels investment to qualifying
end recipients in a streamlined way tobridge the financing gap.

Cash disbursed to recipients
to finance project activities.

FINANCINGMECHANISMS
THE PROJECT
Ground-level activities deemed
to be fundable, grouped andmanaged by an individual
project owner.

PROJECTSFIGURE 3.1: The flow chart above shows
how funding is channelled from funders
via financing mechanisms to selected
landscape-level projects.
Section 7.3 in the Appendix provides adetailed, step-by-step analysis of how
sample projects in the landscape were
scoped and screened as the basis for an
appropriate financing strategy.

18

UNLOCKING GREATER KRUGERFUNDABLE OPPORTUNITIES19TABLE 3.2: Summary of financing mechanisms
FINANCING MECHANISMS
FINANCING THEMESAFRICANCONSERVANCIESFUND

WILD DOG
SPECIES BOND

N/AK2C CIPENTERPRISE
CATALYSTCI VENTURES

GREATER KRUGER
N+ FUNDKNP GREEN
ENERGYSTRATEGYJOB CREATIONPROGRAMME

Protected Area
Financing

Biodiversity Financing

CarbonFinancing

Catchment Investment
Programme

Green Economies

Green Economies

Green Economies

Financing Green
Energy Initiatives

Jobs Financing

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

NATURAL CAPITAL CATEGORY:
Water
Atmosphere (incl. Air)✔

Land (incl. Soil)✔

Biodiversity✔

✔

Carbon✔
✔

Climate✔

✔
✔

Mineral Resources
Cultural Heritage

✔

✔

✔

✔

Concessions/ tourism fees✔

✔

Cost savings (e.g. tax incentives, reduced OpEx)✔

POTENTIAL REVENUE/ INCOME GENERATED (PROJECT LEVEL):PES (Carbon credit sales)
PES (other)

✔

✔

✔

✔

Sale of product(s)

✔

✔

✔

No revenue✔

✔

TYPE OF REVENUE/ INCOME GENERATED (FOR FUNDER):
Revenue-sharing✔

Dividends✔

Interest payments

✔

✔

✔

✔

✔

No revenue

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

TYPE OF FUNDING THAT MECHANISM CAN ATTRACT:
Grant/donor (incl. corporate sponsor)

✔

✔

✔

Public sector

✔

✔

✔

✔

✔

✔

✔

Concessionary

✔

✔

✔

Blended

✔

✔

✔

Debt

✔

✔

✔

✔

✔

Hybrid✔

Equity✔

✔

STAGE OF DEVELOPMENT:
Initiation (Idea only)
Definition (What)✔

Design (How)Development

✔

✔

✔

✔

✔

✔

✔

Implementation✔

INDICATIVE RELEVANT QUANTUMS (ZAR):*
Catalytic (one-off) financing needed for this mechanism

36,800,000

32,00015,000,000

125,000,000

3,000,000

55,200,000

9,200,000

5,000,000

2,000,000

Total potential financing that can be unlocked by this mechanism

331,200,000

32,000,000

50,000,000

254,000,000

155,000,000

496,800,000

920,000,000

331,500,000

270,000,000

Timeframe (in years) over which financing is unlocked

5

5

10

30

5

5

10

15

5

Per annum financing contribution from this mechanism

66,240,000

6,400,000

5,000,000

8,466,667

31,000,000

99,360,000

92,000,000

22,100,000

54,000,000

17%

2%

1%

2%

8%

26%

24%

6%

14%

% contribution to total per annum Target Budget*NOTE: Figures are based on assumption; readers should not place undue reliance on them.
For USD–ZAR excahnge rate please refer to current figures.

20

UNLOCKING GREATER KRUGERFUNDABLE OPPORTUNITIES

21

better, more sustainable
protected areas

FINANCING THEME 1

PROTECTED AREAS
Protected areas are areas ‘of land and/or sea especially dedicated tothe protection and maintenance of biological diversity, and of naturaland associated cultural resources, and managed through legal or othereffective means.’ (IUCN, 1994). The protected areas referred to in thisfinancing strategy include those within Greater Kruger that fall outside
the borders of the Kruger National Park.

CHALLENGES✘✘ Security risks, climate
impacts, increasing
operating costs, humanwildlife conflict and threats
to tourism.

PROTECTED AREA FINANCING
enables better protection
and management and increases
access to economic opportunities
for local communities.

Which projects
in the sample listof 22 projects
meet thecriteria?

EXAMPLES OF PROJECTS THAT FIT THE BILL
Limpopo Economic Development,
Environment and Tourism (LEDET)• Makuya Nature Reserve• Letaba Ranch• Mthimkhulu

ELIGIBILITY CRITERIASCOPE FORGREATER KRUGER• Signatories to the GLTFCA
Cooperative Agreement(GLTFCA): All protectedareas in Zone 1 of the
GKSDP with the exceptionof KNP.
• Zones 2 and 6 have notsigned the GLTFCA.

•
•
•
•
•

FINANCING MECHANISMS

Sabi Sand
Timbavati
UmbabatKlaserie
MjejaneWhich financing
mechanisms
could apply tothis structure?

FINANCIALSUSTAINABILITY✔✔ Measurable progressusing the Management
Effectiveness Tracking
Tool (METT)✔✔ Self-fund management
and operating costs✔✔ Generates returns forlandowners

Most financing for PA is sourced from patient capital, which can be managed in a variety
of ways. For funds domiciled in South Africa, a close or open-ended en commandite
partnership is the preferred structure; it also provides tax transparency for funders.
A special purpose company imposes tax at company level (assuming South Africanincorporation), requires solvency and liquidity to be met prior to any distributions and is subject toregulation by Companies and Intellectual Property Commission (CIPC).

✔✔ Management authority orprospective community
public–private partnershiphas the capacity to
improve the METT score.

✔✔ Short-term cashflow fromattracting a viable tourism
operator

CLOSED-END FUND✔✔ Offers a total returnwith all investments
repaid.
✔✔ Known andaccepted by target
funders.
✔✔ Suitable forinnovative
underlying
investments.

TAX INCENTIVESECO-TOURISM

BENEFITS FOR LANDOWNERS✔✔ Deductions for otherwise
non-deductible OPEX forenvironmental conservation✔✔ Deductions for acquisitions
and capital improvements
to areas in designatednational parks or nature
reserves✔✔ Discounted municipal
tariffs

Conservancy fees
such as gate receipts,
bed night fees, andwildlife observationfees.

✔✔ Sustainable agriculture, forestry
and aquaculture.
✔✔ Ecosystem services: water
purification, flood mitigation,
carbon sequestration, etc.
✔✔ Animal husbandry: livestock
revenue and improved soil
health.
✔✔ Generation of renewable energy.

BIODIVERSITY
CREDITS
Potential once themarket is established.

UNLOCKING GREATER KRUGERPRIVATE

AN EFFECTIVE
MANAGEMENT PLAN

POTENTIAL CASHFLOWS

22

Mpumalanga Tourism andParks Agency (MTPA)• Manyeleti• Methomusha• Andover• BlydeOPEN-ENDED FUND
OR OPEN-ENDED
COMPANY:
Unlimited duration
with fixed durationloans.
✔✔ Fund manager
allows for entry andexit of funders.
✘✘ Valuation risk forfunders enteringand exiting thefund/company inwhich a funder
may purchaseor sell shares at
a premium or
discount.

SPECIAL PURPOSE
VEHICLE (SPV):• Subsidiarycompany formed
for a specificbusiness purposeor activity.
• Used instructured financeapplications, (asset
securitisation, joint
ventures, property
deals, or to isolate
parent company
assets, operations,or risks).
✔✔ Preferred structure
for closed-end
funds.

TRUST FUND:
Legal entity that
holds property orassets for a person ororganisation. A trust
can hold a variety ofassets: money, real
property, stocks,
bonds, a business,or a combination ofproperties and assets.
✔✔ A preferredmechanism insome domiciles.

LOCAL COMMUNITIES✔✔ Increases access to economic
opportunities.

PROTECTED AREAS

23

better, more sustainable
protected areas

FINANCING THEME 1

PROTECTED AREAS

EXAMPLES OF MECHANISMS IN THE MARKETSTRUCTURAL CONSIDERATIONSWhat to consider when proposing this type of financing

GRANTS
Fund conservancy
operator, e.g.,Conserve Global

PAY-FOR-SUCCESS
Wildlife Conservation
Bond (Rhino Bond)(Rhino Bond), a 5-year,$150m developmentbond into which
the World Bank
makes conservation
investment payments
to finance conservation
activities.

GUARANTEEMECHANISMS
e.g., African
Guarantee Fund

DEBT INVESTMENTS:
LOANS OR REVENUE-BASEDFINANCING• African Conservancies Fund(ACF) to fund the OpEx/CapEx
of conservancies and ecotourism operators.
• Africa Conservation &Communities Tourism(ACCT) Fund provides
flexible debt to wildlife camps
and safaris.
• International FinanceCorporation (IFC) providing
direct debt financing suchas 3B Group of Hotels to
support Rwanda’s tourism
sector by upgrading andexpanding existing lodges.
• eco.business Fund (subSaharan Africa sub-fund) as
an open-ended debt fundinvesting through financial
intermediaries to fightdeforestation.

PRIVATE EQUITY AND
VENTURE CAPITAL• Okavango Fund provides
equity to small, micro, andmedium enterprises (SMMEs),
including lodges in Ethiopia,
conservancies in Kenya, andSMMEs in Zambia.
• Moringa Fund provides equity
and quasi-equity investments
into SMMEs, targeting
agroforestry.

Due diligence and development: Project investments (reserves, land parcels and ancillary SMMEs likeeco-tourism and agriculture) must undergo due diligence for financial and impact suitability and be
developed further for fundability. Remediation may be necessary.
Legal matters: Investment would be considered within the broader landscape. In-depth reviews of legal
structures of conservancies, and general land tenure and titling considerations are required.
Impact indicators (to determine contribution to nature-positive investments):• Hectares of land under conservation agreements and/or regenerative production.
• Tons of CO2e sequestered annually, or emissions avoided.
• Number of community members benefiting.
• Populations of indicator species increasing.

GENERAL RECOMMENDATIONS FOR DEVELOPING THIS THEMENATIONAL INITIATIVES

Immediate recommendations:

Tourism Transformation Fund(TTF) established by the South
African Department of Tourism
and the National Empowerment
Fund (NEF), to invest in majority
black-owned tourism entities
through grants, debt and equity
contributions

The pilot should focus on strengthening existing PA land parcels and reserves before looking at
expansion. Parcels that already exist are good candidates for due diligence and cooperative work withmanagement. Attention should be given to selecting the most appropriate site from the sample projects
list.
Create a scoring matrix to decide which land parcel to prioritise.
Select an appropriate financing mechanism from those specified above to finance pilot project sites,
and conduct feasibility testing with funders selected.

Medium- to long-term recommendations:
Assess suitability of KNP and concession or land claim areas for inclusion in scope.

POTENTIAL FUNDER TYPESSEED FUNDING
Philanthropic capital

GRANTS/ FIRST LOSS/GUARANTEES
Development financeinstitutions, non-profits,
government aid,
observation fees.

CONCESSIONALTO COMMERCIALCAPITAL
Development financeinstitutions, nonprofits, impact funders,
corporates, foundations,endowments, family
offices, high-net-worth
individuals, banks
and asset managers,
sovereign wealth funds.

New protected areas (concessions/land claim areas): Although existing cooperative agreement landparcels are prioritised, new protected areas (such as Soutpansberg) should be planned for (including
how cashflows are to be unlocked).

TAX INCENTIVES
Tax savings canbe used to fundconservation efforts.

24

UNLOCKING GREATER KRUGERPROTECTED AREAS

25

better, more sustainable
protected areas

FINANCING THEME 1

PROTECTED AREAS
CASE STUDY 1: AFRICAN CONSERVANCIES FUND
The aim of the African Conservancies Fund (ACF) is to strengthen, restore, and expand
conservation areas to safeguard biodiversity, deliver revenues to communities, andcombat climate change through adaptation and mitigation. Using a unique place-based
investment approach, ACF focuses on landscapes and seascapes in key migratory
corridors in sub-Saharan Africa. The fund seeks to provide flexible debt calibrated
to match the financing needs of the underlying investees and work closely with
communities and companies to increase and diversify sources of income.

WHAT IS THE FINANCING OPPORTUNITY?
Conservancies and reserves are created to manage large tracts of land in a sustainable way. In subSaharan Africa they account for 66% of the region’s total protected area – about 1.7 million km2. Research
led by Conservation International7 found that many conservancies are key biodiversity hotspots thatpeople depend on for clean air, water, food, and other resources. Supporting and expanding these
conservancies, and the small- and medium-sized businesses within them and on their periphery, is vitalto protecting wildlife corridors and wildlife dispersal areas (WDAs), supporting biodiversity, sequestering
carbon, and generating income for communities.
The overall aims of ACF are to:• Establish a network of interconnected protected areas to give nature room to thrive.
• Invest in multiple revenue-generating activities for the communities that live in and around theseareas.
ACF is raising conservation-focused senior and subordinated debt for a USD 30 million, ten-year fund asa blended finance initiative. The structure is familiar to market participants; preliminary market feedback
shows that it satisfies most minimum requirements for return and risk (level of subordination), This
innovative approach to conservation and biodiversity financing will leverage philanthropic capital tounlock private capital from impact funders, which will support continued growth of this sector. It is likelythat CI will be the manager of the fund, with potential for an investment advisor partner.

STRUCTURAL CONSIDERATIONSInvestment parameters specified:• Minimum size (demand and need): USD 500,000 to USD 3M (up to 9M in any one group)• Tenor profile: Up to 7 years• Pricing/return factors: Approximately 7% in USD with amortising loans or revenue based
financing

Impact indicators (to determine contribution to nature-positive investments):• Hectares of land under conservation agreements and/or regenerative production• Tons of CO2e sequestered annually or emissions avoided• Community members benefiting• Populations of indicator species increasing

SUCCESSFUL PILOT PROGRAMMESACF builds on the success of Conservation International’s pilot programme during the Covid-19
pandemic. Developed and initiated in 2020-21, Conservation International, in partnership with
the Maasai Mara Wildlife Conservancies Association, created the Maasai Mara Rescue Fund, aloan programme that helped cover lease payments owed by conservancies to landowners dueto the loss of tourism revenues in Kenya. The initiative received the Impact Initiative of the Year
– Africa award from Environmental Finance in 2021.

INDICATIVE RELEVANT QUANTUMSThe fund is expected to initially raise USD 30 million (Pan Africa/sub-Saharan Africa), with
USD 2–5 million allocated to the Greater Kruger area. When successfully deployed, additional
funding may be sought.
Investments will be chosen due to their ability to unlock increased revenues, development, andgrowth within conservancies and similar areas. For examples, infrastructure investments may
unlock eco-tourism opportunities or increased gate fees.

FEASIBILITY TESTING
Private impact funders,
corporates, foundations,
DFIs, non-profits

CLASS A

Senior funding: 70% of fund
Expected return: SOFR + 2%
Protected by subordination ofjunior sharesThis opportunity underwent preliminary market testing with a broad range of ACF’s target
funders at the beginning of the fund development (2020-21). This biodiversity/impact-first model
focused on the nascent conservancies industry in high-risk geographies.
Please refer to the Feasibility Testing section for more detail.

SCALABILITY AND REPLICABILITY
Donors, governments,
some DFIs

CLASS B

FIGURE 3.2: Classification of investors and corresponding returns

Junior funding: 30% of fund
Expected return: 0 -2%

This mechanism demonstrates a starting point to making protected areas that are not nationalparks more commercially fundable in the long-term; historically, financing has not been
deployed in this early or catalytic phase of protected area financing.
The ACF hopes to secure critical biodiversity land parcels and develop the revenue streams
related to them, and in so doing demonstrate their commercial viability. Scale can be created bycrowding other funders into this space.
ACF envisages securing a USD 2–5 million funding window dedicated to Greater Kruger, fordeployment over 5 years. If it is successful, the long-term outcome has potential for 8 to 10
times this amount.

7 https://www.cepf.net/our-work/biodiversity-hotspots

26

UNLOCKING GREATER KRUGERPROTECTED AREAS

27

FINANCING THEME 2

BIODIVERSITY FINANCING

protect and restore areas ofhigh biodiversity
Which projects
in the sample list

Biodiversity is all the different kinds of life that work together inecosystems to maintain balance and support life. An area of highbiodiversity value has many different types of organisms and species.

of 22 projects

meet thecriteria?

EXAMPLES OF PROJECTS THAT FIT THE BILL

CHALLENGES:✘✘ Lack or shortage of financing for conservation
activities and conservation management inareas of high biodiversity.

OPPORTUNITIES:✔✔ Monetise the biodiversity benefits ofconservation activities (protection andrestoration) and conservation management
activities in areas of high biodiversity.

BIODIVERSITY FINANCINGSHORTLISTED PROJECTSOTHER POTENTIAL PROJECTS

monetises biodiversity benefits
to provide long-term financing
for conservation management
and activities in areas with highbiodiversity value.

• Soutpansberg Protected Areas (SPA)and SPA expansion areas• Wolkberg/Blyde protected area K2C• Species of concern• Soutpansberg-Mutale Wildlife Corridor• Underfunded reserves Limpopo Economic
Development, Environment and Tourism (LEDET)
managed by Mpumalanga Tourism and Parks
Agency (MTPA) such as Letaba Ranch, Studholme,
Happy Rest, Nzhelele, Mukuya, etc.
• Other underfunded protected areas

ELIGIBILITY CRITERIASCOPE FORGREATER KRUGERThis form of financing isapplicable to the Greater
Kruger landscape given its
protected areas, protectedarea expansion zones andwildlife corridors located within
the landscape.

Applicable projects are those that:✔✔ Perform conservation activities (protection andrestoration) and conservation management activities
in areas of high biodiversity value with measurable
biodiversity benefits – positive biodiversity outcomesor impacts or positive contributions to biodiversity
goals and targets.

POTENTIAL CASHFLOWS

Conservation
activities are paid forby landowners, or
performed on their behalf
by environmental firms
funded by grants, donors
or state-funded natural
resource management(NRM) programmes.

Monetising biodiversity
benefits throughfundraising, payments
for ecosystem services
and selling certificates/
credits. Long-term
funding – to existing andnew projects – should,
at a minimum, covera project’s ongoing
operating expenditure(OpEx).

If there are enoughfunds they can be used
for capital expenditure(CapEx) requirements,
and to compensate
landowners for theopportunity costof conserving thebiodiversity value of theirproperties instead of
converting the land tohigher yielding uses.

NOTE: Data is not readily available. A financial needs assessment will determine the needs of projects and sites identified.

Which financing
mechanisms
could apply tothis structure?

FINANCING MECHANISMSWATER FUND
MODEL8CAPITAL
RECOMMENDATIONS:✔✔ Use the Water
Fund model to set
up a biodiversity
financingmechanismthat replaces
water metrics
with biodiversity
benefits.

The following mechanisms could
be used to capitalise the fund:✔✔ Leverage grants fromexisting funders to generatebiodiversity benefits.
✔✔ Grants from wholesale funders
seeking to invest in sustainablefinance mechanisms.
✔✔ Biodiversity offsets (with due
consideration to restrictions
such as like for like, or better,etc.).
✔✔ Target-based ecologicalcompensation.
✔✔ Debt-for-nature swaps.

OTHER:✔✔ Donations andgrants✔✔ Payment forecosystem services✔✔ Voluntary biodiversity
credits (VBCs)• Tokens/NFTs• Biodiversity certificates• VBC units
See Potential Biodiversity
Financing Instruments in the
Appendix for a breakdown ofpotential biodiversity financing
mechanisms.

8 The Water Fund model is used globally in diverse geographies. The Nature Conservancy & Partners have standardised theWater Fund development process around a five-phase cycle: Feasibility, Design, Creation, Operation, and Maturity.

28

UNLOCKING GREATER KRUGER

BIODIVERSITY FINANCING

29

FINANCING THEME 2

BIODIVERSITY FINANCING

EXAMPLES OF MECHANISMS IN THE MARKET
GRANTS

NFTs

Rainforest Trust for landpurchased for protectedareas expansion
Franklinia Foundation forprotecting natural habitats ofendangered trees

WildEarth Djuma
Game Reserve NFTs($15k raised)
Peace Parks Leopard
Relocation NFT ($30k
raised).

MECHANISMS THATCAN BE ADAPTED FOR
BIODIVERSITY FINANCING
Water Funds:
K2C Catchment Investment
Programme and Cape Town
Water Fund

Carbon Credits:
DONATIONS
Philanthropists and highnet-worth individuals donate
money for land purchases
and funding of conservation
activities, e.g., the Robertsfamily purchased land(Medike) used for protectedareas expansion and funding
management activities.

WILDLIFECONSERVATION
BOND (Rhino Bond):
A 5-year, $150m
developmentbond into which
the World Bank
makes conservation
investment
payments to financeconservation activities.

BIODIVERSITY OFFSETS
Vele Colliery – Mapungubwe Cultural Landscape (MCL)
world heritage site – based on the ecosystem approach tobiodiversity management.
Partnership between Barberton Mines and Barberton
Nature Reserve

CSA Herding for Health (Landrestoration)
EWT WeAct (Avoided loss)
TASC Cookstoves (Mitigation)
AgriCarbon (Regenerative
agriculture)

BIODIVERSITY PAYMENTS
FOR ECOSYSTEMSERVICES (PES)
Biodiversity & Wine
Forest Stewardship Council(FSC) PES claims.

protect and restore areas ofhigh biodiversity
STRUCTURAL CONSIDERATIONSWhat to consider when proposing this type of financing
Separate special purpose vehicle (SPV) or ringfenced portfolio?
The choice of creating a separate SPV, or a ringfenced portfolio in an existing environmental firm or NGO,
needs careful consideration.

Requirements for monetising biodiversity benefits:• Robust measurement, monitoring and evaluation tools and methodologies. Issues such asadditionality, robust measuring, reporting and verification (MRV) and solutions to address double
counting, permanence and unintended outcomes leaked to nearby geographies must all beconsidered to ensure success.
• Establish the right balance between trust (e.g. audit and verification) and cost.

Development approaches to explore
The agile project development approach is flexible with small iterative steps that adapt to changing
scope. Projects can start small and grow with no minimum starting size.
• Pilot projects are selected to launch with additions to existing M&E frameworks and measurement
tools.
• Growth can happen once there is traction.
• Start with a ring-fenced portfolio in an NGO and spin-off into a separate SPV if it proves successful.
The waterfall project development approach is a linear sequence of defined steps (e.g., Water Funddevelopment methodology).
• Find a wholesale funder to finance establishment of an SPV.
• Build a robust M&E framework.
• Invest in new measurement tools.
• Register with standard setting and verification agencies, etc.
• Perform a cost/benefit analysis to determine set-up costs and minimum viable product to justify
costs.
The agile approach may be preferable since market readiness for biodiversity credits is unproven.

POTENTIAL FUNDER TYPESDONOR/GRANT FUNDERSWHOLESALE FUNDERS

Environmental organisations,philanthropists, corporate social
investment (CSI).

Multilateral environmental agencies (e.g., GEF),
bilateral agencies (e.g., USAID) , other large
environmental funding organisations.

TAX INCENTIVES
Taxpayers can deduct the full value of land declared as anature reserve or national park from their taxable income
which could be a significant incentive for landowners toconserve biodiversity.
SEE: Sections 37C and 37D of the Income Tax Act 58 of 196230

UNLOCKING GREATER KRUGER

BIODIVERSITY FINANCING

31

protect and restore areas ofhigh biodiversity

FINANCING THEME 2

BIODIVERSITY FINANCING
CASE STUDY 2: THE WILD DOG SPECIES BOND
The Wild Dog Project has been selected as an appropriate test case because there is
a comprehensive monitoring programme in place (with associated measurement tools
and systems) and data are available. As a sub-project of the EWT species of concern
programme it is categorised under the GKSDP as follows:9

STRATEGICOBJECTIVE
1: SECURING
THE NATURAL
CAPITAL BASE

APPROVEDPROJECT 5:
Ecosystem services
and species ofinterest secured/
managedIntegrated
wildlife
management
and monitoringof species ofconcern/interest

EWTSpecies ofConcern

The outcomes payer (“donor”) makes an upfront contribution to the programme which is paid either as adeposit to the issuer, or as a donation to the implementing partner, which then makes a deposit with theissuer.
The donor only pays for success: A contingent outcomes failure payment is made to the donor if the
programme fails to meet outcomes targets.
Depending on whether the note is collateralised or not, the issuer will use the proceeds of the issuanceto either purchase the underlying collateral assets or for its own general funding requirements. (This,
therefore, does not meet the ‘Green Bond’ definition for use of proceeds).
Under the proposed structure the implementing partner signs a conservation activities performance
agreement (“activities agreement”) specifying which activities will be performed under the programme.
The implementing party receives periodic payments from the issuer to fund the conservation activities as
set out in the activities agreement. In the event of non-performance under the agreement, the issuer has
the right to transfer the programme to an alternative implementing partner.

WILD DOG
PROJECTS

African wild dogs are classified as endangered on the International Union for the Conservation of
Nature (IUCN) Red List of Threatened Species. Two wild dog projects – the Greater Kruger Wild Dog
Project and the African Wild Dog Range Expansion Project – fall under EWT’s Carnivore Programme,
which aims to reduce threats to carnivores. A key component of EWT’s approach is engagement with
communities: providing education on carnivores, and raising awareness of their importance, the threats
they face, and ways to reduce conflict between carnivores and people.
Using near-real-time monitoring systems EWT identifies wild dog packs in danger from snares andhuman-wildlife conflict and works to recover lost range across the continent. Offspring are relocated toreserves with unrelated individuals to maintain the genetic diversity of recovered populations that areprevented from dispersing naturally by barriers like fences and densely populated human landscapes.
EWT’s holistic approach addresses all threats to the dogs so that the work is effective and sustainable.

The outcomes performance of the reference programme (Wild Dogs) will be verified by an independent
third party; verified baseline and final measurement reports will be issued and used to calculate thelevel of achievement of the programme. Biannual performance reports should also be issued by the
implementing party to track performance of the programme; this will allow for better estimation of likely
success, and would help with valuation of the instrument and pricing in the secondary market.

ISSUER(BANK OR SPV)
MATURITY:
Contingent outcomes
Failure payment

OUTCOMESPAYERS (DONORS)START:
Donation
deposit

Conservation
activities
performance
agreement

9 The Wildlife Conservation Bond (Rhino Bond) is regarded as an appropriate structure to finance conservation activities in the
Greater Kruger landscape. The EWT species of concern programmes are on the shortlist of 22 fundable opportunities identified
in the GKSDP financing strategy. Given the relatively small funding requirements of each sub-project (and the fact that the metrics
are highly specific to each project) it was determined that an international dollar-based issuance would not be appropriate. This
rand-based species bond has been adapted specifically for testing in the South African financial markets.

32

UNLOCKING GREATER KRUGER

MATURITY:
Principal +guaranteed return;Contingent outcomes
success payment

SEMI-ANNUAL:
Payments
to fundconservation
activities

INVESTOR

MATURITY:
Potential bonus
for achieving
outcomes

ABOUT THE WILD DOG SPECIES BOND
The Wild Dog Species Bond is an outcomes-based financial instrument that channels investments
into conservation activities to achieve conservation outcomes measured by metrics and targets set
specifically for the wild dog projects. In place of coupons on their investment, investors in the species
bond receive their capital plus a minimum guaranteed return on maturity and a contingent outcomes
success payment based on a schedule of achievement for the underlying reference conservation
programme (in this case, wild dogs). Unlike the Rhino Bond, this structure allows the investor to givea portion of the success payment as a bonus to the implementing partner as a reward for achieving
success.

START:
Principal

START:
Donates provisional
value of maximum
contingent payment

Verifiedbaseline andoutcomes
reports

IMPLEMENTINGPARTNER(NGO)CONSERVATIONACTIVITIESBiannual
performance
reports

VERIFICATIONAGENCY(AUDITORS)FIGURE 3.3: How the Wild Dog Species Bond works

BIODIVERSITY FINANCING

33

protect and restore areas ofhigh biodiversity

FINANCING THEME 2

BIODIVERSITY FINANCING
STRUCTURAL CONSIDERATIONSSUCCESSFUL CASE STUDIESThe following considerations are based on initial investor feedback:

The Wildlife Conservation Bond (Rhino Bond)

Bond vs structured note: Structured notes offer greater flexibility and allow for components such as
capital guarantees and pay-out profiles linked to a wide variety of factors. They are well understoodby the investor market in South Africa and are considered the best fit for this product.
Bank issued vs special purpose vehicle (SPV): An SPV is considered the most appropriate issuer
as it allows for the underlying collateral assets to be ring-fenced and pledged as collateral thusachieving a high credit rating on the note.

The first-of-its-kind Wildlife Conservation Bond (Rhino Bond) is an outcome-based, financial instrumentthat channels investments to achieve conservation outcomes – measured in this case by an increase inblack rhino populations. The pay-for-success financial structure can be replicated and scaled to channel
more private capital across the world into other conservation and climate actions.

Collateralised – RSA government bonds: Although there is a high country risk premium priced into
RSA sovereign bonds, they are still considered a risk-free asset in the South African investor market
and are thus considered to be appropriate collateral assets.

Investors in the Rhino Bond do not receive coupon payments on the bond. Instead, the issuer makes
conservation investment payments to finance rhino conservation activities at two parks in South Africa. If
successful, as measured by the rhino population growth rate, independently calculated by Conservation
Alpha and verified by the Zoological Society of London, investors receive a success payment at maturity,
paid by the International Bank for Reconstruction and Development (IBRD) with funds provided by aperformance-based grant from the Global Environment Facility (GEF), in addition to principal redemptionof the bond.10

Metrics and targets are negotiated with the implementing partner. The following metrics could be
used for the Wild Dog Programme:

INDICATIVE RELEVANT QUANTUMS

Listed vs unlisted: An unlisted issuance is preferable as it reduces the cost of issuance. The
proposed size of issuance of this note does not warrant a listing.

METRICS FOR THE WILD DOG PROGRAMMEELEMENTCOMPONENTPOSSIBLE
INDICATORECOSYSTEMSAND HABITATSSPECIESPOPULATIONSSPECIESGENETICSHUMAN–WILDLIFE
CONFLICT✔✔ Area✔✔ Connectivity✔✔ Integrity✔✔ Extinction rate✔✔ Extinction risk✔✔ Population
abundance(size)✔✔ Population
distribution✔✔ Genetic
diversity✔✔ Minimise
human–
wildlife
conflict✔✔ Range
expansion:monitoreddogs✔✔ Numberof dogs
relocated✔✔ Population
growth:monitoreddogs✔✔ Range
expansion✔✔ Number ofdogs relocated✔✔ Number of dogs relocated

The Wild Dog Projects currently have a funding requirement of approximately ZAR 6 million (USD 320K)
per annum. A large portion of this is for salary and wages; because there is a strong inflation-linked
element in the costs the current requirement is likely to increase annually with inflation. The projects
are financed primarily by donations and grants which are soon to run out; projects continually seek new
funding.
The aim of the financing mechanism is to provide the project with ZAR 7 million (USD 372K) per annum,
escalating by inflation each year. This slightly increased budget should enable the project to expand thescope of work being done and cover the additional costs pertaining to the measurement, reporting andverification required under the agreement.
Based on current market conditions, the present value of the expected funding raised for the Wild Dogs
programme over the next five years using this mechanism is between ZAR 30 – 34 million (USD 1.5 – 1.8
million). Although there is significant scope use this mechanism to raise funding for other projects in thelandscape, the amount is difficult to quantify at this stage without knowledge of the other projects in thelandscape that could meet the relevant criteria.

FEASIBILITY TESTING
Initial market sounding in South Africa has highlighted that although interest in this space is growing,
many investor mandates still focus on profit maximisation and have not yet been updated to allow forinvestment into this type of products. This note is a concrete example of a potential fundable productthat can be taken to investor boards to motivate them to update their investor mandates.
Please refer to the Feasibility Testing section for more detail.

Scoring and payout schedule: The contingent outcomes success payment to the investor is basedon achievement of programme targets. The following method has been proposed:• Three different metrics selected.
• Three levels of targets set for each metric (underperformance, expected performance andoutperformance) to be achieved during the term of the deal.
• At maturity a score of 0-3 is assigned to each metric based on the relative achievement of the
programme over the term (where 0 = failure and 3 = overperformance).
• Total score is calculated by adding the scores achieved for each metric.
• The success payment is determined based on the total score achieved according to a predefined schedule of payouts.
• Payout schedule is negotiated between donor and investor.

34

UNLOCKING GREATER KRUGERTARGET INVESTORS
Potential outcomes payers (donors)
Finding the right outcomes payer (donor) may be the most challenging part of realising this mechanism.
In essence, the mechanism assures the donor that if the desired outcomes are not achieved, they get
their money back but if targets are achieved, they end up paying more.
The mechanism could present an opportunity to existing donors to collaborate on the deal and be
involved in innovative structuring, which could help raise their market profile following marketing and
10 Extracted from a press release issued by GEF and World Bank on March 23, 2022: “Wildlife Conservation Bond boosts South
Africa’s efforts to protect black rhinos and support local communities”.

BIODIVERSITY FINANCING

35

FINANCING THEME 2

BIODIVERSITY FINANCING

protect and restore areas ofhigh biodiversity

advertising of the structure.
Other potential donors include the typical grant payers such as corporate social investment (CSI), local
environmental agencies and other impact only investors.
International environmental organisations seeking a guarantee on outcomes, such as the GEF, can also
be considered but are vulnerable to a currency risk on the donation deposit, which is paid in rands.
If the deposit is refunded it will be paid back in rands. As this is a contingent payment based on theperformance of the reference conservation programme (Wild Dog Projects) it will not be easy to hedge.
It is expected that interest in verifiable outcomes-based biodiversity finance instruments will grow as
corporate boards seek ways to back up their public commitment to biodiversity protection as part oftheir corporate strategies and become more aware of their impact on nature. An instrument such as thisprovides a corporate donor committing corporate social investment funds, or an impact only investor, an
opportunity to ensure the real-world impact of their capital.

Potential note or bond investors
The investment opportunity is aimed at South African investors – institutional investors that want to add
nature-positive investments to their portfolios, family offices looking for worthy investments, and charitable
trusts or endowment funds seeking to protect their capital base while contributing to worthy causes. The
focus in the institutional market will be on fixed income funds, balanced funds, other funds with inflation
benchmarks and funds with ESG mandates.
International investors (such as the IFC) who are prepared to take on the South African sovereign risk aswell as the rand exchange-rate risk can also be considered. Although hedging the guaranteed capital
portion may be possible (using cross currency swaps) this can give rise to significant counter-party risk
and should only be applicable to very highly rated counter parties.
As the contingent outcomes success payment is uncertain and difficult to hedge, the investor would stillneed to take on the currency risk of this portion.

OTHER NOTEWORTHY CONSIDERATIONSOther factors that have been considered in putting together this structure include:• Fair market valuation of note• Accounting treatment• Tax considerations• Legal requirements

SCALABILITY AND REPLICABILITY
While the concept of a conservation bond is new to the South African market, the intention is to create a
new asset class (instead of doing an isolated issuance). This will enable more investors to obtain board
approval to include these types of investments in their investment mandates.
Features and conditions of a project that are likely to enable access to funding through this mechanism atscale:• The implementer has a strong reputation and a good delivery track record.
• Outcomes or success metrics are measurable, attributable to the underlying project activity and canbe independently verified.
• Outcomes funding can be supplemented through carbon or biodiversity credits.
• Clear programme budget to implement the programme.

36

UNLOCKING GREATER KRUGER

BIODIVERSITY FINANCING

37

reduce greenhouse gases andsequester carbon

FINANCING THEME 3

CARBON FINANCING
A carbon benefit is a reduction in greenhouse gas (GHG) emissions or an
increase in carbon storage as a result of nature-positive activities.

Which projects
in the sample listof 22 projects

EXAMPLES OF PROJECTS THAT FIT THE BILL
THREATS AND CHALLENGES:CARBON FINANCING
finances projects that are able tomonetise and measure greenhousegas emissions to generate sustainableclimate solutions.

✘✘ Extreme weather and disruptive weather
events threaten nature and livelihoods.

OPPORTUNITIES:✔✔ Funding for nature-based climate activities andsustainable climate solutions.

SCOPE FORGREATER KRUGERAt least four known carbon
opportunities are under developmentin the landscape, with the potential
for more being identified and/or
developed. Most carbon financing
for Greater Kruger applies to natural
climate solutions (i.e., agriculture,
forestry and other land use).

ELIGIBILITY CRITERIA✔✔ GHG crediting standards: Any project that
implements mitigation activities compliant with
GHG crediting standards may qualify.
✔✔ Suitable project developers: Project developers
may be for-profit or not-for-profit private entities,
private or community landowners, communitybased organisations, or public entities.

POTENTIAL CASHFLOWS

e.g. project activity
that generates
credits.

MEASUREMENTOR VERIFICATIONPROCESS:
specifically, upfront or
annual costs that need to becovered.

••Herding for Health
Blyde Restoration and Catchment
Management Project

Exemplifies the complexity of a successfulcarbon project and can underpin bestpractice to attract interest in developing
further landscape-based carbon projects.
Verified under Verified Carbon Standard(VCS), Agricultural Land Management (ALM)
and Improved Grassland Management (IGM).

EWT SOUTPANSBERG• Contracts are being signed with landowners
and new opportunities have been identified,covering up to 50,000 ha in total (onceexpanded) across multiple sites and typesof land use (including wetlands, forests,
rehabilitation and agriculture).
• The Verra process is underway. Based on
information gathered during the baseline
survey (in the second half of 2023) Verra will
decide on the methodology to be applied to theagriculture, forestry and other land use (AFOLU)
sector.

Potential new projects that could apply
TASC Cookstove with K2C Biosphere – A nature-based avoided emissions
project using the dissemination of cookstoves to reduce larger fire wood
harvesting and thus avoided emissions credits that have recently been validated.

FINANCING MECHANISMS

Unlocking cashflows depends on:

SUPPLY:K2C RANGELANDS RESTORATIONCARBON PROJECTCONNECTION TO A
DEMAND-BASE:
market access to sell thecredits to and determine
price.

Sale of carbon credits can unlock cashflows from provision of ecosystem services such as biodiversity
and water provision. The profiles of these cashflows depend on whether or not the project and funderagree on payment structures based exclusively on a results-based approach. Although it is expected thateligible projects might prefer flexible arrangements that make carbon revenues available to cover upfront
project costs, this payment structure is not always affordable because of the risk associated with carbon
project development. Upfront carbon investments also result in reduced gains from fluctuations in carbon
pricing over time, which favours carbon speculators over local implementers.

meet thecriteria?

Which financing
mechanisms
could apply tothis structure?

✔✔ Grants for project development activities✔✔ Development fund vehicle (SPV)✔✔ Trust (ownership split between community and carbon project developer)✔✔ Bond instrument✔✔ Equity participation✔✔ (Syndicated) Debt facility✔✔ Carbon credits purchase agreement (spot, forward, option)

TAX INCENTIVES
Carbon credits derived from carbon generating
projects can be sold to greenhouse gas
emitters to reduce their carbon tax liabilities
SEE: Carbon Offset Regulations in terms of section
19(c) of the Carbon Tax Act 15 of 201938

UNLOCKING GREATER KRUGERCARBON FINANCING

39

FINANCING THEME 3

CARBON FINANCING
EXAMPLES OF MECHANISMS IN THE MARKET

reduce greenhouse gases andsequester carbon
STRUCTURAL CONSIDERATIONSWhat to consider when proposing this type of financing

INTERNATIONAL VOLUNTARY CARBON
MARKET• Primary mechanism and source of demandfor project-based carbon crediting,• Funders in carbon assets seek to promote
voluntary climate action by corporations.
• Dedicated carbon funds facilitate project
development for the benefit of final users ofcarbon assets.
• For example, Broadleaf carbon fund(managed by CI) as funder and developer
for carbon crediting and sales related torestoration of community rangelands.

CONSERVATION AGREEMENTS ANDCOMMUNITY GRAZING ASSOCIATIONS
Conservation agreements and community
grazing associations incorporate community
beneficiaries.

PRIVATE SECTOR FINANCING MECHANISM
Forests Bond USD 152 million, five-year bond(executed in 2016 by CI, IFC and BHP Billiton)
with returns in the form of cash or verified carbon
units coupons.

CARBON TAX (SOUTH AFRICA)
Companies have the option of using carbon
credits (from projects located in South Africa) topartially fulfil their tax liability, This is a mandatory
market.

POTENTIAL FUNDER TYPESCORPORATE FUNDERSTHAT BUY CREDITSTO:✔✔ Offset greenhouse gas
emissions, e.g., mines
and large agricultural
producers.
✔✔ Improve their ESG
scores (not offset
related).

BANKS

SOVEREIGNS AND MULTILATERALS

with aninterest in the
renewableenergy spaceor coverrenewableenergy clientsand projects.

that want to meet UNFCCC climate pledges

CARBON PROJECT DEVELOPERS
and other intermediaries speculating oncarbon opportunities

Minimum size (demand and need):
To ensure that commercial viability thresholds are attained:• Project costs must be covered by returns from the sale of carbon credits.
• The project must generate enough credits to warrant the high registration and verification costs.
Tenor profile: Carbon financing projects are typically longer than ten years. For example, the VCS
minimum requirement for agriculture, forestry and other land use (AFOLU) projects is 20 years.
Pricing and return factors:
The price of carbon credits must:• Factor in costs of generating credits. These include ongoing operational costs, legal costs, insurance
costs, taxes.
• Generate revenue-share for local community beneficiaries, which assists in delivering sustainable
development.
Impact indicators in addition to climate change mitigation outcomes measured in tCO2e avoided or
sequestered:• Improved soil quality and yield• Livelihoods improved• Improved adaptation and resilience• Biodiversity benefits• Diversity, equity and inclusion (DEI) benefits• Hectares under improved management
Projects will typically align with recognised frameworks (e.g., Sustainable Development Goals [SDG]
goals) and/or embed non-carbon outcomes certification, e.g., Climate, community and biodiversity
standards (CCBS) and Gold Standard for the Global Goals (GS4GG).
Governance and legal: Legal ownership of rights, including carbon rights and land rights/tenure
considerations are very important, particularly when dealing with a range of different land ownershiparrangements.
Payment plan: Funders may insist on ex-post, results-based payment structures or impose expensive
price adjustments and/or penalties for under performance

RECOMMENDATIONS FOR CARBON FINANCING
1.

Address barriers to entry by lowering average costs and improving exposure with dedicated carbon
vehicles that have local knowledge and the capacity to generate high-integrity or high-quality
carbon credits at landscape level. Barriers to entry include high capital intensity for development,
weak or complex governance and carbon rights regulations, long lead times to asset issuance,
quantification uncertainty, demand based on voluntary compensation that can be cyclical and a lackof appetite for small projects among institutional capital.

2. Consider a landscape-level approach: One potential outcome is a dedicated landscape carbon
fund. A landscape-level approach to carbon finance would reduce the individual costs of projectregistration and verification allowing individual actors to focus on the activities that result in carbon
gains, such as avoided deforestation or degradation of carbon rich ecosystems. This approach would
require central coordination, but could greatly improve returns for implementers.

40

UNLOCKING GREATER KRUGERCARBON FINANCING

41

reduce greenhouse gases andsequester carbon

FINANCING THEME 3

CARBON FINANCING
CASE STUDY 3: SUGGESTED PATHWAY TO UNLOCKINGA LANDSCAPE-LEVEL CARBON APPROACH
Within this strategy it can be broadly acknowledged that carbon financing has value bothin terms of impact and revenue generation within the landscape. However, the degree of
disaggregation across the landscape with respect to various carbon projects undertaken(from project origination through to development and implementation), presents many
challenges to designing a single, one-size-fits-all landscape-scale mechanism (Figure 3.4).
There is an opportunity to aggregate and promote synergies (leveraging experience, learnings and market
knowledge) across various project efforts to unlock carbon financing at landscape-level. Such aggregation
will require application of a number of considerations, from landscape level through to end-market level.
The intention of the pathway suggested here is that in time the value of and need for a singular dedicatedvehicle to finance carbon project opportunities across the landscape will become apparent.

FIGURE 3.4 Although carbon finance is a proven tool to support conservation and landscaperestoration, there is no one-size-fits-all approach for different projects. The structure andscope of a carbon vehicle to support the Greater Kruger landscape will vary, depending ondesired outcomes, and for funders and beneficiaries. Cost and time considerations must be
weighed up against the benefits of a consolidated vehicle approach. Much validation anddesign work is required before a vehicle can be brought to market.

PIPELINE OPPORTUNITYVALIDATIONPOLICYENVIRONMENT✔✔ Is there enough of a viablecarbon project opportunity set
to justify a dedicated vehicle(rather than a piecemeal
approach as presently exists)?

✔✔ Is there an
enabling
environment
to support alandscapeapproach?
✔✔ How would thisvehicle fit into a
local, regional,
or national
strategy?

OR✔✔ Is there enough appetite fornon-carbon funding to design ablended vehicle that still seeks
returns through carbon alone?

42

UNLOCKING GREATER KRUGER

MARKETTESTING

FUND DESIGN,STAKEHOLDERROLES,FINANCIAL
AND NONFINANCIAL
OUTCOMESSUGGESTED PATHWAY
Factoring in various considerations it is suggested that the following steps are pursued under thefinancing strategy.

1

2

3

4

Draw inrequiredcatalytic capitalin the formof technicalassistancegrants.

Establish anadvisory panel
or sounding
board comprisedof experts
well-versed inbest-practicestandards forcarbon.

Establish
stakeholder
engagement or
co-ordination
unit to ensure
various stakeholderinterests acrossthe landscape arecaptured.

Draft andsocialise
best-practicestandards orrules for carbon
projects as wellas community
engagements.

PATHWAYYEAR 1YEARS 2 AND 3

Set up support
and facilitation
factors

Socialise the idea
and finalise remaining
steps

5
Identify carbon
potential acrossthe landscape.
Map hotspots forcarbon acrossvarious forms(soil carbon,
wetlands etc.)

RECOMMENDED
FINAL OBJECTIVE
YEAR 4
Assess the landscapeapproach to be
adopted and steps for
implementation

Landscape-level approach
determined and signed
off by various landscapeparticipants (with potential
for a landscape fundconsidered).

FIGURE 3.5 The steps and timeline of the suggested pathway to a landscape-level carbon approach

WHAT WILL SUPPORT AND FACILITATE PATHWAY WORK?
•

Catalytic finance to assist with technical support.

•

Advisory panel/sounding board to advise on start-up procedure through to full
implementation support.

•

A strong landscape brand to drive the story, price and motivate ethics.

•

Stakeholder engagement and co-ordination unit to facilitate discussions across project
owners, implementers, and communities.

•

Streamlined monitoring & evaluation.

•

Appropriate model(s) for equitable distribution of benefits.

CARBON FINANCING

43

reduce greenhouse gases andsequester carbon

FINANCING THEME 3

CARBON FINANCINGLANDSCAPE-LEVEL CONSIDERATIONS

Enabling
conditions

Greater Kruger
brand
Telling the story(and linking it to
the price story)Bestpractice
Standards,
e.g., CCBS

Projects

EthicsVisibility

The approach adopted should unite the various landscape stakeholders under the common goal of improving
respect for nature and people as opposed to focusing exclusively on generating revenue from projects. Thisrequires sensitivity to the overall impact on the landscape beyond the individual projects being undertaken.
Overarching, landscape-level best practice standards and ethics will encourage appropriate behaviour at projectlevel.

PROJECT-LEVEL CONSIDERATIONS

Scale

Means ofverification

Deal
structure

Costs

Ethics

MARKET CONSIDERATIONS
Buyer’s rationale✔✔ Good story,
underpinned byscience✔✔ Right price✔✔ Strong
implementation✔✔ Good ethics✔✔ Time and money
spent

Voluntary✔✔ Price linked toopportunity✔✔ Opportunity
for boutiquepricing

Compliance✔✔ Price floor

Price✔✔ Nature-basedcarbon attracts
higher price vscookstoves✔✔ Reforestation =highest price/ton

CARBON OPPORTUNITIESSoil Organic
CarbonRangelands
Agriculture/
crops

*

44

ForestPrimary/
secondaryPAs
Landscapemanagement

EnergyCookstoves*
Reducedcombustion

Wetlands
usually includedin Soil Organic
Carbon or
ForestWoodlands
Can exist
across thelandscape(e.g.,
reforestation)

Peat
Few
examplesof this exist[Cookstoves under energy credits, credit comes from reduced emissions – so accounted for differently and can do both as not additionality.
Became less popular with natural climate solutions and forest protection; higher price to market carbon]

UNLOCKING GREATER KRUGERCARBON FINANCING

45

FINANCING THEME 4

CATCHMENT INVESTMENT PROGRAMMES

improve water security, protect
biodiversity, support livelihoods
Which projects
in the sample listof 22 projects
meet thecriteria?

A catchment is an area in which the natural landscape collects water. Natural andhuman systems such as rivers, bushland, farms, dams, homes, plants, animals andpeople often co-exist in a catchment.

THREATS AND CHALLENGES:EXAMPLES OF PROJECTS THAT FIT THE BILL

CATCHMENTINVESTMENT PROGRAMMES (CIPs)

Economic and biodiversity loss, floods anderosion, land degradation

enable coordination of efforts and poolfinancial resources from a range of water
users. CIPs act collectively to improvewater security, protect biodiversity andsupport resilience of livelihoods in criticalcatchments by modeling, mapping andproposing nature-based solutions (NbS).

OPPORTUNITIES:
Monetise ecosystem services (e.g. waterprovision, flood attenuation, erosion control, andhabitat for wildlife) generated by catchments andsell them to end-users (mostly downstream).

K2C CATCHMENT INVESTMENTPROGRAMME(under the Blyde Restoration andCatchment Management Project in the
shortlisted projects): The K2C businesscase was developed and presented
to funders in April 2023; testing was
conducted independently of the GKSDP
financing strategy formulation.

ELIGIBILITY CRITERIASCOPE FOR GREATER KRUGER
Strategic water-source areas (SWSAs) inGreater Kruger

Mpumalanga Drakensberg (Inkomati-PongolaUsuthu)
Mpumalanga Drakensberg (CrocodileOlifants)
Wolkberg (Letaba-Olifants),
Soutpansberg (Luvuvhu-Mutale rivers).
Geographical scope: Zone 6 – water priority
areas – as defined in the GKSDP.

Kruger toCatchmen

Business✔✔ Addresses water security challenges withnature-based solutions by supporting existing
initiatives to catalyse systemic change incatchment management.
✔✔ Is a critical water source area where potential
threats to water security may cause economic
and biodiversity loss.
✔✔ Uses NbS to generate ecosystem services inand around the catchment.
✔✔ Stakeholders (public, private, civil society
and local communities) in the catchment are
willing to coordinate efforts and work towards
collective action.

t Investm

Case April
202

3

Canyons

ent Progra

mme

1

Potential new projects that could apply• Polokwane (Sand River) Alien plant clearing – Coca Cola – Concept phase with
The Nature Conservancy (TNC) and CI.
• Olifants – AWARD – Historical work that can be re-energised for a CIP,
• Inkomati-Usuthu Catchment Management Agency (IUCMA) is a potential future
investment or catalyst for a CIP in the southern Greater Kruger.

Which financing
mechanisms
could apply tothis structure?

FINANCING MECHANISMS
POTENTIAL CASHFLOWS✔✔ Special purpose vehicle (SPV) to manage PES.

PAYMENT FOR ECOSYSTEM SERVICES (PES)

Carboncredit sales

46

Tariffs for water consumption
by downstream users: Payment
for water from downstream
users – such as agriculture (e.g.,
citrus and mango farms in thelandscape) and domestic users.

UNLOCKING GREATER KRUGER

Biodiversity credits(contingent on market
development andavoidance of doubledipping with carbon credits)✔✔ Direct increase in water tariffs (cents/litre) to end-users by municipalities.

•✔✔ Corporate donations: Offsets for water usage by corporates operating in and around thecatchment (mines and industry).
✔✔ Carbon credits generated and sold: for upper catchment grazing best practice (in areas where land
is used for cattle farming).
✔✔ Debt instrument linked to sustainable water management, e.g., Cape Town Green Bond.
✔✔ Government job stimulus programmes for alien plant clearing and its value chains.
✔✔ Poverty alleviation/job creation programmes in the upper catchment linked to land claim benefits(lease of land for eco-tourism).

CATCHMENT INVESTMENT PROGRAMMES

47

FINANCING THEME 4

CATCHMENT INVESTMENT PROGRAMMES

improve water security, protect
biodiversity, support livelihoods
POTENTIAL FUNDER TYPES

EXAMPLES OF MECHANISMS IN THE MARKET
Catchment investment programmes are used globally as conservation financing mechanisms, and havebeen particularly successful in Latin American countries like Guatemala, Costa Rica and Ecuador. In
Africa the Greater Cape Town Water Fund (GCTWF) and the Upper Tana-Nairobi Water Fund helped
inspire the development of the Kruger to Canyons (K2C) CIP business case.

DOWNSTREAM WATER USERSCORPORATES✔✔ Tourism land lease e.g., Singita, Londolozi✔✔ Agricultural land users e.g., citrus andmango farmers✔✔ Mining and industrial land use✔✔ Municipalities e.g., Maruleng Ba-Phalaborwa✔✔ Offsets for large corporates (water/
upstream users) e.g. Coca Cola, Anglo, or
other mining companies✔✔ Forestry offsets e.g., SAFCOL/ KomatieLand Forests, SAPPI, York Timbers and a
few smaller private entities

WATER FUNDS IN SOUTH AFRICAK2C CIP business case

STRUCTURAL CONSIDERATIONS

Described in detail later on in this chapter.

Key structural parameters:

Greater Cape Town Water Fund (GCTWF)

Minimum size required: Catchment-wide for planning and buy-in.

The aims of the GCTWF (from Business Case 2019):• Unite private and public sectors stakeholders and local communities around the common goal ofrestoring the surface water and aquifer catchments that supply Greater Cape Town’s water.
• Support and align with existing government initiatives and act as a catalyst for systemic change incatchment management through cost effective use of on-the-ground resources.
• Strengthen capacity, and monitoring and evaluation• Stimulate funding and implement catchment restoration efforts and in so doing create jobs andmomentum to protect globally important biodiversity and build the climate-resilience of communities.

Legal considerations: Land ownership and tenure.

Business case results showed that investing ZAR 372 million (USD 20 million) would generate expectedannual water gains of 100 billion litres (100 Mm3) within thirty years compared to the business as
usual scenario. Invasive alien plant removal – additional 55 billion litres (55 Mm3) within six years, andapproximately 350 job opportunities created in the first five years of implementation.

Cost: High set-up costs.
Impact indicators:• Water yield – quantity and quality• Hectares of land restored• Jobs created• Livelihoods improved
Monitoring, reporting and verification (MRV) of impact: Reporting and verifying the impact of thenature-based solutions implemented in and around a catchment (e.g., hydrological, biological andfinancial information) ensures coherent governance of the interventions to improve water security andprotect biodiversity.

GENERAL RECOMMENDATIONS FOR DEVELOPING THIS THEME
Leverage the design, development, feasibility testing and execution learnings from other successful
CIPs to assess the potential for other CIPs to be developed within the landscape at scale.
Water user governance/regulation bodies and key water users within the Greater Kruger: Further
engagement is needed to establish appetite and appropriateness of additional CIPs and scalability ofexisting CIPs.
• The lower catchment (area below the Blyderivierspoort dam) is governed by the Lower Blyde
Water Users Association (WUA) and serves the Blyde River Irrigation District (BRID). Towns such as
Hoedspruit and Phalaborwa towards the north-east of the KNP Reserve are almost totally dependent
on water from the Blyde River. The Blyde River provides water for large-scale irrigation in the
Hoedspruit area.

TAX INCENTIVESCatchment Investment Programmes
may qualify for tax exempt
government grant funding
programmes.
See: Section 12P and Schedule 11 of the
Income Tax Act

48

UNLOCKING GREATER KRUGER• Lepelle Northern Water (LNW) is responsible for water supply to 64% of Limpopo’s surface area11 (20bulk water schemes) and supplies three regions: Capricorn, Mopani and Sekhukhune. LNW supplies
water abstracted from the Olifants River, to Phalaborwa in BaPhalaborwa Local Municipality.
• Kruger National Park: The total licensed volume for potable abstract is almost insignificant whencompared to the Managed Aquifer Recharge (MAR).12 The total volume for Olifants camp and theBalule pipeline (to Satara) is 200,750 m3 (76,650 m3 + 124,100 m3).
11 https://lepellewater.com
12 The purposeful recharge of water to aquifers for subsequent recovery or for environmental benefit.

CATCHMENT INVESTMENT PROGRAMMES

49

The Kruger to Canyons (K2C) Biosphere Region is a UNESCO site with high levelsof biodiversity. It encompasses the Kruger National Park and the Blyde, Klaserie,
Selati, Letaba, Sabie and Sand catchments, which form part of the greater Olifantsand Inkomati-Usuthu water management areas. The upper reaches of thesecatchments make up the majority of two major strategic water source areas (SWSAs)
for both surface and groundwater because of high rainfall (1,000-2,000 mm/year).
The upper catchment is also a source of ecosystem services like water provision,flood attenuation, erosion control, and habitat for wildlife which make it suitable for a
Catchment Investment Programme (CIP) approach.

WHAT IS THE FINANCING/FUNDING OPPORTUNITY?
The K2C Catchment Investment Programme being rolled out in the Greater Kruger landscape forms
part of the financing solution for the Blyde Restoration and Catchment Management Project. It is apartnership between Kruger to Canyons Biosphere Region NPC, Conservation South Africa and The
Nature Conservancy, with technical assistance provided by the Nature for Water Facility.
The business case for the K2C CIP was launched on 19 April 2023. Given its success and direct link to
the Greater Kruger landscape, it is an appropriate opportunity to serve as a pilot under the financing
strategy and demonstrates the willingness for participation and co-ordination by key catchment
stakeholders (public, private, civil society and local communities).

DETAILS OF THE FINANCING MECHANISM CHOSEN
The K2C CIP is an innovative mechanism for coordinating implementation of nature-based activities andpooling financial resources from the public and private sector and other downstream beneficiaries todeliver long-term sustainable impacts.

Elements of the K2C Catchment Investment Programme• A collective action platform, with a common vision, to address water security challenges in the
Kruger to Canyons Biosphere Region.
• Sourcing and maintaining long-term financing solutions to implement and scale up key naturebased solutions like clearing of invasive alien plants and grazing best management practices.
• Supporting existing government initiatives and catalysing systemic change in catchment
management.
The K2C CIP is designing a long-term financing plan to follow on from the launch of the business case.
The financing mechanisms being considered as sources of finance for this plan:• An increase in water tariffs from existing downstream users – Agriculture (citrus and mango)
through Lower Blyde Water Users Association (WUA) and serves the Blyde River Irrigation District(BRID).
• Carbon credits for upper catchment grazing best practice.
• Grants and donations from large corporates (in particular as water offsets).
• Water bonds.

Although no specific financing mechanisms can be showcased and tested in this strategy, the strategy
can use design and development experience and feasibility testing learnings from the K2C CIP to assess
the potential for development at scale of other CIPs in the landscape because there is overlap in termsof likely nature-positive and NbS activities, implementing partners and similarities in beneficiary profiles
within the landscape.
Benefits generated: The K2C CIP business case has shown that investing ZAR 254 million (USD 13.5
million) in nature-based solutions will realise benefits worth ZAR 657 million (USD 34.5 million) throughthe delivery of 8.9 million cubic metres of water, ZAR 11.5 million (USD 605k) in additional householdincome to upstream communities, the restoration of over 20,000 ha of biodiverse ecosystems, and overZAR 40 million (USD 2 million) in carbon offset value. The interventions also create and protect almost
16,000 jobs. The CIP creates a return 2.5 times larger than the investment into the CIP.
Monitoring, reporting and verification of impact: A decision support system (DSS), a computer program
to support determinations, judgments, and courses of action, developed for the K2C CIP, combineshydrological, biological and financial information to monitor, report and verify the impact of the naturebased solutions implemented in and around the K2C Biosphere Region to ensure coherent governanceof the interventions to improve water security and protect biodiversity.
The DSS communicates key results and tracks progress related to CIP activities to ensure a holistic andintegrated approach to catchment management using maps and graphical representations for eachnature-positive solution implemented in the areas identified. The DSS allows CIP partners to visualisemanagement progress against targets for hectares under better management, alien plants cleared andquantity of water released and to spatially monitor progress and impact landscape-wide interventions
that link into broader GKSDP targets.
• Clearing of alien plants• Restoration and revegetation• Fire management• Land protection

Water andfood security• Education and awareness• Water, sanitation andhygiene (WASH)

Sustainable
rangeland
management

Economic
resilienceand poverty
alleviation

Climatechangemitigation
Biodiversity

Floodregulation
and reduced
sedimentation

R
BENEFICIARIESCASE STUDY 4: KRUGER TO CANYONS (K2C)
CATCHMENT INVESTMENT PROGRAMMEOUTCOMESCATCHMENT INVESTMENT PROGRAMMES

improve water security, protect
biodiversity, support livelihoods

INTERVENTIONSFINANCING THEME 4

Communities

Agriculture andIndustry

Municipalities

Greater
Kruger

FIGURE 3.6 Interventions, outcomes and beneficiaries of the K2C CIP

5050

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

CATCHMENTINVESTMENTPROGRAMMESFINANCING
STRATEGY
GKSDP

51 51

FINANCING THEME 4

CATCHMENT INVESTMENT PROGRAMMES

improve water security, protect
biodiversity, support livelihoods

STRUCTURAL CONSIDERATIONSMinimum size: Variable; it is worth noting that start-up costs are high.
Tenor profile: 5-year high-impact phase, and 30-year overall lifespan projected.
Legal considerations: Land ownership/tenure profile, four community property associations, land claims
partially settled, although the settlement agreement has not yet been concluded.
Impact indicators: Quantity and quality of water yielded.

CASE STUDIES OF OTHER PROGRAMMESNature for Water Facility: Case studies of other programmes include a case study of the Greater Cape
Town Water Fund.

INDICATIVE RELEVANT QUANTUMS
Amount of financing needed
ZAR 125 million (USD 6.5 million) to cover the costs of the initial 5-year high impact phase. During thistime, the CIP will initiate and scale up implementation to achieve full delivery of benefit from interventions
by Year 5. Over this period the CIP will also establish governance arrangements and long-termsustainable financing mechanisms.
Potential amount of financing (towards investment in underlying projects) – Business case results revealthat over a 30-year period, a lifetime investment of ZAR 254 million (USD 13.5 million) in NbS unlocks
benefits worth ZAR 657 million (USD 35 million).

FEASIBILITY TESTING
No market testing will be conducted until a long-term financing strategy has been developed for K2C CIP
and an individual mechanism can be identified and designed.
Please refer to the Feasibility Testing section for more detail.

FUNDERSTARGET FUNDERS

5252

LARGE CORPORATES:OUTCOMES-BASED FUNDERS:

Mines, forestry, industrial users of water

Can also be large corporates of water

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

CATCHMENTINVESTMENTPROGRAMMESFINANCING
STRATEGY
GKSDP

5353

nature-positive value chainsthat restore nature

FINANCING THEME 5

GREEN ECONOMIES
Green economies are defined by infrastructure and production activities that
foster social and environmental sustainability created with the support ofpublic and private investment. In short, economic activity that is nature positiveor, at a minimum, non net-consumptive.

POTENTIAL SOURCES OF CASHFLOW
1. EARLY STAGE

None: pre-revenue

2. PRE-GROWTH
STAGE• Earnings before interest and taxes (EBIT) generated through businessactivities.
• Sale of products and services, tariffs and levies, or tax savings income(where an opportunity in a special economic zone could be unlocked).
• Avoided costs.

3. GROWTH
STAGE• Profits are generated by underlying investee companies.
• Biodiversity and carbon benefits (credit) related to some enterprises
invested in. Cashflows are nascent and much smaller and not factored into
the evaluation and selection process at the outset.

THREATS AND CHALLENGES✘✘ Unsustainable land-use practices: overstocking, invasives, soil
erosion from soil mining and firewood harvesting, unplanned
informal housing and poor management of water catchment areas.
✘✘ Socio-economic challenges: poverty and unemployment, poor
health and well-being, safety and security risks, and human-wildlife
conflict.
✘✘ Entrepreneurs lack access to financing to reach financial
sustainability and attract later-stage funders because of businessstage risk, novel/unproven business models, and an underdeveloped financing ecosystem in the landscape for early-stage
enterprises.
✘✘ Lack of access to conservation science

SCOPE FORGREATER KRUGERSupport for businesses thattransform value chains andeconomies can help protect,manage and restore criticalecosystems and create
nature-based, green jobs.

GREEN ECONOMIES
address the drivers of
ecosystem degradation
and use naturepositive sectors andvalue chains to restore
nature.

EXAMPLES OF PROJECTS THAT FIT THE BILL

ELIGIBILITY CRITERIABusinesses that:✔✔ Focus on green economy sectors and value chains – i.e.,
biodiversity (wildlife economy, eco-tourism, sustainable
resource harvesting), waste and alien invasives economies, andclimate-smart agriculture.
✔✔ Are nature positive (rather than net consumptive).
✔✔ Offer material social and livelihood
benefits in the landscape.

NATURE-POSITIVEENTERPRISE
DEVELOPMENT

1
EARLY STAGE
A fundable conceptthat can generate
sustainable revenue
flows and advance tothe next stage of thelifecycle.

Waste management
and circular
economies (10)Recycling, awareness,enterprisedevelopment

Agri-hubs and agriculturecompatible socioeconomic
opportunities and community
beneficiation (12)Eco-tourism; sustainableagriculture

Hub developments (11)Phalaborwa, Shangoni,
Punda Maria as
pipeline13

Climate smart agriculture(sustainable agriculture
economy) (5)AP 7: Green recovery

All sustainable resource
harvesting projects (6, 7,
8, 9)• Traditional Healers
programme• Baobab project – areas
north of Makuya• Ndindane, Mutale,
Gidjana, Bevhula, etc.
Informed by assessments
and feasibility• Traditional authority areas– nurseries

13

FINANCING MECHANISMS

2
PRE-GROWTH
Revenue-generating
projects with potential
for self-sustaining,
viable businessmodels.

Which projects inthe sample list of 22
projects meet thecriteria?

Which financing
mechanisms
could apply tothis structure?

3

1. EARLY STAGE• Pre-investment SMME CapEx and OpEx grant finance• Technical assistance grant finance

GROWTH

2. PRE-GROWTH
STAGE• Dedicated impact investing fund vehicle or new funding window created in
an existing fund, where underlying financial instruments (debt/equity) are
deployed.
• Processes adopted are appropriate for the stage and needs of thebusinesses being supported.

3. GROWTH
STAGE• A dedicated GK investment fund vehicle, investing in growth enterprises thatare financially viable, nature positive (rather than net consumptive), and havematerial social and livelihood benefits in the landscape.

Financially viable andprofit-generating forself-sustaining, viablebusiness models.

f
Each stage o
ve
ti
si
o
nature-pserienterptdevelopmen
rent
e
iff
d
s
ct
attra
ital.
p
forms of ca

13 Phalaborwa Wildlife Activity Hub, Shangoni Entertainment Hub, Punda Maria tent upgrades (https://www.timeslive.co.za/news/southafrica/2022-05-11-kruger-national-park-to-get-r320m-makeover/).

54

UNLOCKING GREATER KRUGER

GREEN ECONOMIES

55

FINANCING THEME 5

GREEN ECONOMIES

nature-positive value chainsthat restore nature
EARLY STAGE

EXISTING MECHANISMS
1. EARLY STAGE

2. PRE-GROWTH
STAGE

3. GROWTH
STAGE• Enterprise development (ED) funds from the Industrial Development Corporation(IDC) can be used to assess how best to cluster ED funds towards a common
goal.
• Match the Special Economic Zones (SEZ) concept with the Biodiversity Economy
Framework and GEF 7 investment outline to develop a terms of reference for
Nature-Positive Kruger Enterprises with a clear framework and scorecard.
• From the Region for the Region• Pfunanani Enterprise Development Project and ProNature Projects canprovide lessons.
•
•
•
•
•
•

CI Ventures
AcumenLGT Venture Philanthropy
Ceniarth
Bestseller Foundation
MCE Social Capital• Investment institutions like Phatisa and AgDevCo have invested in Greater
Kruger on an ad hoc basis.
• We are not aware of any mechanisms focused specifically on GK or collaboratingwith land stewards in this landscape.

POTENTIAL FUNDER TYPES
1. EARLY STAGE

2. PRE-GROWTH
STAGE

3. GROWTH
STAGE• ED funders that provide blended finance (grant and loan)• ED funders that provide loan tickets below ZAR 2 million (USD 106k)• Provincial and national agencies with a mandate to provide technical andfinancial support to SMMEs• Corporates that are under pressure to transform their supply chains (e.g., Bidvest
and Tourvest)• Grants and recoverable grants: Attractive to multilateral development
programmes (GEF, GCF, World Bank) and risk-tolerant funders such as donoradvised funds, foundations, impact funders and family offices.
• Concessional debt
• Impact funders, philanthropic ultra-high-net-worth individuals, foundations,development finance institutions, private (retail) funders through financial
institutions as distribution partners.
• Factors to consider: The risk profile of the investment fund vehicle and the placeof specific funder in a broader blended finance capital structure.

CASE STUDY 5: ENTERPRISE CATALYST
Concept-level entrepreneurs need catalytic financing fordevelopment and technical support to advance to the next stage ofthe lifecycle. An enterprise catalyst channels existing grant finance(enterprise development [ED] funds) and acts as a mechanism tobuild a pipeline for next-stage impact investing to convert earlystage enterprises into opportunities for post-revenue financing.

HOW IT WORKS

1EARLY STAGE
A fundable conceptthat can generate
sustainable revenue
flows and advance tothe next stage of thelife cycle.

The Greater Kruger Enterprise Development Catalyst draws together existingED agencies and funds under a common set of guidelines and best practice standards to prioritise andfinance nature-positive enterprises in the landscape to:• Develop a landscape-level pipeline of fundable local SMMEs in tourism, logistics, natural resource
management, green energy and nature-positive agriculture supply chains. Participating enterprises
receive Nature Positive Enterprise certification.
• Work with SANParks and private-sector supply chain aggregators, such as Tourvest and Bidvest, tomainstream pre-approved nature-positive enterprises in their supply chains.
• Draw on examples from existing ED funds to create nature-positive Kruger enterprises financing
windows in existing programmes. These include pre-investment SMME CapEx and OpEx grant
finance, technical assistance grant finance and fundable loan finance.
• Collaborate with Limpopo and Mpumalanga provinces and national government entities such as SA
Tourism, the Industrial Development Corporation and the SANParks Board to ensure that the Greater
Kruger Landscape is an investment priority for ED funds to unlock the biodiversity economy andassociated value chains.
• Draw up a clear, easy-to-implement nature-positive investment framework for ED funds.
• Request that ED funds advertise calls for applications for their ED windows on the Greater Kruger
forum. Each fund will apply their own criteria for the investment readiness of an enterprise.
• Establish a nature-positive Kruger enterprises technical assistance (TA) committee to review andapprove applications from a nature-positive perspective.

Youth4Tourism
Youth4Tourism (Y4T) is an example of an existing ED fund. It is a youth employment initiative of Youth
Employment Services (YES) and financial services group, Sanlam, that seeks to leverage the catalytic
potential of South Africa’s tourism sector to grow the SMME sector and create jobs for young people.
Businesses from a range of sectors are invited to join the Y4T movement and create diverse work
opportunities for youth in the tourism sector. Businesses can contribute by:• Funding youth jobs through YES implementation partners as part of their B-BBEE or social impact
initiatives.
• Identifying events, conferences, and content creation opportunities for young South Africans to
showcase South Africa as a tourism destination via the Youth Climate Champions ‘gig’ work platform.
• Contribute hardware including photography and videography equipment for a Section 18 A tax
break.

56

UNLOCKING GREATER KRUGER

GREEN ECONOMIES

57

nature-positive value chainsthat restore nature

FINANCING THEME 5

GREEN ECONOMIESENTERPRISE
DEVELOPMENT
FUNDS

NATURE-POSITIVEOUTCOMES

SMMEs

DIrect or
redirect funding

Technical
assistance

FIGURE 3.7: Commercial and grant funding flows directly to SMMEs from existing ED funds. The ED
catalyst provides technical assistance to ensure nature-positive outcomes in pre-identified supply chains.

STRUCTURAL CONSIDERATIONSWhat to consider when proposing this type of financing
Minimum size of grant finance to enterprises – ZAR 50K – ZAR 500K (USD 2.6K – USD 26K) of grant
and/or technical assistance funding and up to ZAR 2 million (USD 106k) of loan financePricing/return factors – determined by each ED fund.
Impact indicators:• Increase in turnover for local nature-positive enterprises• Number of supply contracts awarded to nature-positive enterprises

INDICATIVE RELEVANT QUANTUMS
Amount of financing needed: ZAR 3 million (USD 159.5K). Funds to be raised to support developmentof the Nature-Positive Enterprise certification standard and the technical review committee.
Potential amount of financing this can unlock (towards investment in underlying projects):
ZAR 155 million (USD 8.2 million)

FEASIBILITY TESTING
Is this opportunity eligible for market testing and why?
The concept can be sounded out with a number of aggregators already operating in, and familiar with,the landscape.
Please refer to the Feasibility Testing section for more detail.

FUNDERS TO TARGET
Industrial Development Corporation, Mpumalanga Green Cluster Agency and the Limpopo Economic
Development Agency have made similar investments in landscapes; further work is needed toaggregate and direct their investments to support the GK landscape strategy. TourVEST, BidVEST and
SANParks procurement will have to agree to sign purchase agreements with Nature Positive Kruger
Enterprises to unlock funding.

Points to test with funders
Please refer to the Feasibility Testing section for more detail.

PRE-GROWTH STAGE

CASE STUDY 6: CI VENTURES

2

There is a significant funding gap for post-revenue, pre-growthenterprises. In the Greater Kruger landscape, this is particularly
acute when an enterprise is scaling up from micro-business tosmall business. Very few microfinance institutions in South Africa
are equipped or incentivised to support rural, nature-positive
businesses.

PRE-GROWTH
Revenue-generating
projects with potential
for self-sustaining,
viable businessmodels.

Since 2018, CI Ventures has invested in early-stage SMEs in sub-Saharan Africa(Kenya and South Africa), supporting them through to bankability in the wider
market. In this way, overlooked businesses and value chains involved in restoration of landscapes
or working to mitigate landscape degradation caused by soil erosion, drought, overgrazing, etc., canaccess private investment.

CI Ventures has an existing team, infrastructure and a strong track record of nature-positive investing(35+ investments, USD 12.5 million invested, USD 86 million follow-on investment mobilised).

FUNDINGPARTNERHOW IT WORKS
A dedicated financing window in
the CI Ventures programme will use
standardised financing documents,
streamlined application and due
diligence processes, and light-touchreporting requirements to accommodate
the limited capacity of many of theseenterprises.
Underlying investment is likely to beconcessional debt with a grace period,
and a term of up to five years.
Current CI Ventures processes will betailored for the region with dedicatedstaff in the landscape to identify andlead investments in the Kruger. As
far as possible, processes will bestandardised, and investments madeon a cohort basis to ensure speedy
execution, quick disbursement of capitaland cost control.

RISK-TOLERANT
CAPITAL grants andrecoverable grants

RETURNED
CAPITAL + IMPACT(net of costs andlosses)CI VENTURESINVESTMENTS
debt, equity, quasi
structures

RETURNED CAPITAL +IMPACT(net of costs and losses)

NATUREPOSITIVE
BUSINESSFIGURE 3.8: The CI Ventures financing window

58

UNLOCKING GREATER KRUGER

GREEN ECONOMIES

59

FINANCING THEME 5

GREEN ECONOMIESSTRUCTURAL CONSIDERATIONS
Size: USD 2-5 million financing window for Greater Kruger – to be validated after value-chain scoping in
the 6 months before deployment.
Tenor profile: 5+1+1 years
Pricing/return factors: Recoverable grant (return of capital plus interest less default and costs)
Impact indicators (where relevant):• Number of jobs created• Increase in revenues (USD)• Follow-on investment raised (USD)• Area under sustainable production (hectares)• Sustainable production (kilograms)• Commercial – Total value of sales by green economies to the organisation during the reporting
period.

GROWTH STAGE

CASE STUDY 7: GREATER KRUGER
NATURE-POSITIVE FUND (GKN+F)
The Greater Kruger Nature-Positive Fund is a funding concept
intended for enterprises that have reached the growth stageof their lifecycle and need access to larger pools of financing
beyond grant or impact capital to sustain the financial viability of
their business models.

3
GROWTHFinancially viable andprofit-generating.for
self-sustaining, viablebusiness models.

Underlying investments:

Opportunities include:• Expansion of businesses established by a related venture facility.
• Greenfield projects in partnership with major operators.
• Expansion of mature businesses.

Size: USD 25–250,000 per investment

HOW IT WORKS

Tenor profile: Up to 5 years

A blended financing approach: To raise capital, the Greater Kruger N+ Fund may require a blended
financing approach that blends capital from funders seeking commercial returns with capital from funders
with lower or no return requirements. The proportion of each will be determined during a detailed designphase and will take into consideration the quality of pipeline opportunities identified.

Interest rate: Referencing local bank rates
Grace period: One year

INDICATIVE RELEVANT QUANTUMS• Amount of financing needed: ZAR 55.2 million (USD 3 million)• Potential amount of financing that this can unlock (towards investment in underlying projects):
ZAR 496.8 million (USD 26.4 million)

FEASIBILITY TESTING
This mechanism is an existing financing vehicle that can be market tested, and has had successful
capital-raising rounds in the past.
Please refer to the Feasibility Testing section for more detail.

FUNDERS TO TARGET
To approach during market sounding

Points to test with funders
Please refer to the Feasibility Testing section for more detail.

SCALABILITY AND REPLICABILITY
Although CIV (in a similar way to the ACF) has a potential multiplier effect to achieve financing at scale,
CIV also demonstrates that nature-positive enterprises are fundable and addresses the gap in financing
being deployed between start-up and post-revenue enterprise stage. CIV aims to create a USD 2-5
million funding window to:• Create impact through the deployment of capital• Recycle capital and obtain leveraged impact on that funding• Crowd in 8 to 10 times the amount of co-financing for portfolio companies (as demonstrated by thefund’s historical track-record)• Crowd other funders into this enterprise life stage and green economies sector.

60

nature-positive value chainsthat restore nature

UNLOCKING GREATER KRUGER

A dedicated grant-based technical assistance facility: The Greater Kruger N+ Fund may require a
dedicated grant-based technical assistance facility, e.g., to cover operating costs of the platform if theyexceed projections, as well as for studies to demonstrate the nature-positive impact of investments.
Management: A team of investment professionals from Natural Heritage Capital, in partnership with CI
Ventures.
Geographical focus of the fund:• Greater Kruger landscape, i.e., within a radius of 100km of Kruger NP boundaries. It is expected that
80 percent of funds will be invested in South Africa, and 20 percent in Mozambique and Zimbabwe.
• Inclusion of the northern and eastern periphery of Kruger NP will help address challenges (e.g., rhino
poaching incursions from the Massingir area).
• Businesses with a footprint outside the Greater Kruger landscape may be eligible for investment if anature-positive impact on the landscape can be demonstrated; including such businesses will help
support the commercial viability of the Greater Kruger N+ Fund.

STRUCTURE DIAGRAMGreater Kruger N+ Fund is a concept-level mechanism; its structure will thus be determined during thedevelopment-grant stage.

GREEN ECONOMIES

61

FINANCING THEME 5

GREEN ECONOMIES

nature-positive value chainsthat restore nature

STRUCTURAL CONSIDERATIONS
Platform size: USD 100 million with a first close of USD 50 million(approximately ZAR 2 billion with a first close of ZAR 1 billion) to ensure
minimum viable scale; subsequent scale-up will likely be necessary toaddress the challenges faced by KNP.
Deal size: USD 1 – 10 million (± ZAR 20 – 200 million)
with follow-on investments.
Tenor profile: The proposed Greater Kruger N+ Fund investment
strategy would benefit from a long-term investment approach beyond
the 10 years of a typical private equity fund; a permanent capital vehicle
is ideal.
Investment instruments: Typically mezzanine and other self-liquidating,convertible quasi equity structures; some equity.
Impact indicators:• Number of jobs created• Increase in revenues (USD)• Follow-on investment raised (USD)• Area under sustainable production (hectares)• Sustainable production (kilograms)• Commercial – Total value of sales by green economies to theorganisation during the reporting period.

INDICATIVE RELEVANT QUANTUMS
Amount of financing needed – ZAR 9.2 million (USD 490K)
Potential amount of financing that this can unlock (towards investment
in underlying projects) – ZAR 920 million (USD 49 million)

FEASIBILITY TESTING
This concept will be market tested.
Please refer to the Feasibility Testing section for more detail.

FUNDERS TO TARGET
To approach during market sounding

Points to test with funders
Please refer to the Feasibility Testing section for more detail.

SCALABILITY AND REPLICABILITY
There is currently no TFCA-focused fund; financing at scale can be
unlocked through a USD 500,000 development grant (to design andmarket-test this vehicle) with the potential to secure USD 50 million –growing to an eventual USD 100 million – across Greater Kruger andother African landscapes.

62

UNLOCKING GREATER KRUGER

GREEN ECONOMIES

63

transition to
renewable energy

FINANCING THEME 6

GREEN ENERGY INITIATIVESReducing dependence on fossil-fuel-based energy (coal anddiesel) can significantly decrease operating costs and increase
the value of tourism activities that are not affected by load
shedding. Funds can be redirected towards core biodiversity
conservation activities.

FINANCING MECHANISMS
The solution and financing mechanism depend on the size and energy
needs of a project. Funding sources are increasing as the market develops.
Although project complexity and specific technology are also criteria to beconsidered, funding solutions in this analysis are classified by project size
because solar PV is the most likely technology.

GREEN ENERGY FINANCINGOPPORTUNITIESThe South African government has introduced
policy and tax incentives to accelerate thetransition to renewables, to solar in particular.
Eskom tariff increases and loadshedding areprompting the transition to renewable energy.

facilitates the transition to renewableenergy and, over time, potentiallystable, cheaper energy.

ELIGIBILITY CRITERIASCOPE FORGREATER KRUGER
Projects in the landscape that relyon electricity from Eskom with
ambitions to transition to renewableenergy to decrease their emissions
should consider the different
financing options available for solar
photovoltaic (PV).

Which financing
mechanisms
could apply tothis structure?

<10KW RESIDENTIAL

Projects that want to:✔✔ Take advantage of policy changes, tax incentives
and the decreasing cost of renewable energy,✔✔ Reduce their electricity bills✔✔ Reduce the impact of loadshedding.
✔✔ Transition to a clean energy source.

Debt structure: Home loan
Funding: ZAR 50 – 500k
(USD 2.6k – 26k)
Term: Matched to home loan

>5MW UTILITY
Debt structure: Various
Funding: ZAR 100m+(USD 5.2m+)
Term: Project dependent

100KW – 5MW
COMMERCIAL AND
INDUSTRIAL
Debt structure: term loan,
independent supply agreement(ISA), lease
Funding: ZAR 150k – ZAR 50m(USD 7.8k – 2.6m)
Term: Up to 10 years

POTENTIAL CASHFLOWS✔✔ Savings on the cost of electricity: Access to power is vital to some projects; self-generated
power may serve to preserve the current cashflows and viability of a project or business.
✔✔ Commercial funding for commercial projects.
✔✔ Grants for non-profit projects.
✔✔ Policy changes, tax incentives, the decreasing cost of renewable energy. Eskom tariffincreases and loadshedding will help prompt a transition to renewable energy.
✔✔ Carbon credits

EXAMPLES OF MECHANISMS IN THE MARKET

Which projects
in the sample listof 22 projects

EXAMPLES OF PROJECTS THAT FIT THE BILL

meet thecriteria?

TAX INCENTIVES
Commercial businesses, lodges, SMMEs, community-based projects and households.
Solutions depend on how much power is required (megawatts).

KNP INFRASTRUCTURE
UPGRADE/ GREEN ENERGY
PROJECT✔✔ Protection: Natural capital/
resource management✔✔ Behaviour change: Sustainable
livelihoods

6464

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

For installation of solar
for individuals andbusinesses.

DEBT
INSTRUMENTS
Tailored to installing
renewable energy e.g.,commercial banks.

CONCESSIONARY FINANCE
Enables the transition to renewableenergy e.g., Finance with extended
tenors or concessionary terms toenable the transition.

GREEN RECOVERYGREEN ENERGY PROGRAMMESTOURISM

GREEN ENERGYINITIATIVESFINANCING
STRATEGY
GKSDP

6565

transition to
renewable energy

FINANCING THEME 6

GREEN ENERGY INITIATIVESCASE STUDY 8: GREEN ENERGY STRATEGYFOR KRUGER NATIONAL PARKPOTENTIAL FUNDER TYPESSANPARKS’ GREEN ENERGY STRATEGYApproved by the Board in March 2022

DEVELOPMENT FINANCE
INSTITUTIONSPHILANTHROPICORGANISATIONSBANKS• Corporate and investment• Retail and commercial

Objectives of the strategy• Transition SANParks to renewable energy.
• Enable the journey to net-zero.
• Provide reliable green energy.
Although the Kruger National Park (KNP) is included in SANParks’ Green Energy Strategy no budget is
specified for the capital expenditure to acquire a renewable energy solution for KNP.

STRUCTURAL CONSIDERATIONSWhat to consider when proposing this type of financing

Proposed solution: Small-scale embedded generation (SSEG)14

For state-owned entities: Financing a transition to green energy is governed by the requirements of the
Public Finance Management Act (PFMA). For example, state-owned entities cannot take on long-term
liabilities without approval from National Treasury.

Mini-grids based at each camp will provide renewable energy for total annual electricity demand of
between 14.5 MW and 21.4 MW across KNP.

GENERAL RECOMMENDATIONS FOR DEVELOPING THIS THEME• Prioritise projects with the greatest urgency to transition• Provide technical assistance to advise on which finance and incentives a project qualifies for.

Mini-grids are the preferred and optimal solution because:• KNP is very likely to have good solar irradiation (quality of irradiation to be determined in thetechnical scoping of the project).
• Rooftops are not viable because of structures at the camps.
• Distances are too vast for a single plant to supply the entire park.
• Wheeling will not reduce the effects of loadshedding as power availability will remain dependent on
Eskom.
• Reduced costs because diesel-run generators will not be required.

Further considerations:• Availability of land.
• Battery storage: Adding battery storage should be considered in planning and budgeting for the
programme either upfront or at a later stage.

TAX INCENTIVES
Accelerated depreciation
allowances can promote
the adoption of renewableenergy by making it morefinancially attractive forbusinesses to invest inthese projects.
See: Section 12B of the
Income Tax Act, No. 58 of
1962

NET-ZERO: Cutting greenhouse gas emissions to as close to zero as possible, with any remaining
emissions re-absorbed from the atmosphere, by oceans and forests for instance.
MINI-GRID: A set of small-scale electricity generators connected to a distribution network that supplies
electricity to a localised group of customers independently of the national transmission grid.
SMALL-SCALE EMBEDDED GENERATOR (SSEG): Electrical generators that can connect and operate inparallel with the grid or network (by synchronising with the grid)
WHEELING: Delivery of energy from a generator to an end-user in another area through existing
distribution or transmission networks.

Section 12BA available
for a period of 2 years(Effective from 1 March2023 to 1 March 2025)
14 Subject to detailed technical and socio-economic feasibility study. Recommended at this stage but may be altered after fulltechnical evaluation of the scope required to meet KNP’s energy needs.

66
66

UNLOCKINGGREATER KRUGERFINANCING STRATEGYGKSDP

GREEN ENERGYINITIATIVESFINANCING
STRATEGY
GKSDP

6767

transition to
renewable energy

FINANCING THEME 6

GREEN ENERGY INITIATIVESDETAILS OF THE PROPOSED FINANCING MECHANISM 15

It is anticipated that a request for proposals (RFP) will attract best-of-breed private operators (in thatsegment of the market) to build, operate and maintain the system for the duration of a contract.

Power Purchase Agreement (PPA)
INDEPENDENT POWER
PRODUCER (IPP)80%

STRUCTURAL CONSIDERATIONSSANPARKS/KNP
10%Investment parameters specified:

COMMUNITIES
10%

Debt:
70-80%• Minimum project size: Estimate is ZAR 250 million (USD 13 million) – ZAR 413 million (USD 22 million)(including battery storage).
LENDERS• Tenor profile: 10 – 20 years• Pricing/return factors: Based on the specifics of the project size.

SANPARKS/KNP

PROJECT IPP

PPAENGINEERING,PROCUREMENT,AND
CONSTRUCTION(EPC)

OPERATION
AND
MAINTENANCE(O&M)• Appropriate socioeconomic indicators will be developed based on the final structure of thetransaction.
• Constraints: The key constraint identified by SANParks to execute on this opportunity is capacity andtechnical expertise.

PROCUREMENT CONSIDERATIONS:FIGURE 3.9: How a PPA will work in Greater Kruger

Given the growth in the number and scale of South African renewable energy market participants, KNP’s
annual demand of between 14.5 MW and 21.4 MW is large enough to be fulfilled by an Independent
Power Producer (IPP).
Power Purchase Agreement (PPA): KNP will purchase electricity from the IPP for an agreed term andat an agreed tariff (and escalation mechanism) in terms of a PPA with the IPP. The IPP will build, own
and operate the solar plants for the duration of the PPA. The PPA will effectively replace a portion of
KNP’s current electricity cost without placing additional financial pressure on KNP. The hope is that in
the long-term KNP’s overall energy costs (Eskom electricity plus diesel for generators) will be reduced oreliminated.

Advantages• No upfront capital outlay required by SANParks.
• Cost savings are anticipated due to:ȿȿ Lower rate for electricity (especially given forecast Eskom tariff hikes).
ȿȿ Predictable escalations in the price of electricity linked to CPI over an extended period (10+years).
ȿȿ Lower diesel costs (SANParks’ diesel bill has doubled in the last year because of dependence on
generators during loadshedding).
ȿȿ Potential for further reduction in tariffs and financing costs from the sale of carbon credits.
• Increased operational cashflow for KNP due to reduction in the cost of electricity.
• Integrity of security systems which currently rely on unpredictable Eskom supply.

PUBLIC-PRIVATE PARTNERSHIPS (PPPs)
AND THE PUBLIC FINANCE MANAGEMENT ACT (PFMA)

PPA contracts are typically long term (15-20 years) to ensure viability of the project; a longer
term increases the term of the debt to the project company and thus provides greater scope tonegotiate the tariff.
SANParks will require approval from National Treasury as part of the Public FinanceManagement Act (PFMA) process to enter into a long-term agreement with an IPP, which canbe a lengthy approval process. Lenders to the IPP (and the IPP themselves) may insist that the
obligations of SANParks under the PPA are guaranteed by National Treasury.
SANParks and KNP have limited capacity to manage a PFMA process and technical assistancewill be required to fund the appointment of additional capacity to support the process. Funding
providers for this technical assistance have started being explored.
National Treasury must approve the accounting treatment of the long-term contract, which may
be considered a long-term liability on SANParks’ balance sheet.
Private-sector participants are not permitted to own assets on national park land, which
impacts on the ability of lenders to perfect security. A structural solution is needed to address this– likely a structure whereby, if SANParks/KNP is not able to meet its payment obligations, the IPP
can effectively put the plant to SANParks/KNP at a price equal to the outstanding debt plus equity
plus equity return. This amount may be considered as a contingent liability on National Treasury’sbalance sheet.

• Can be structured as a BOOT (Build, own, operate, transfer), whereby plants are transferred to
KNP/SANParks when the PPA ends.
• Risk: Construction, delay and operational and performance risks is carried by the IPP.

15 Subject to detailed technical and socio-economic feasibility study.

68

UNLOCKING GREATER KRUGER

GREEN ENERGYINITIATIVESFINANCING
STRATEGY
GKSDP

6969

FINANCING THEME 6

GREEN ENERGY INITIATIVESSUCCESSFUL CASE STUDIES
Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in South Africa(2012 to 2023), Bid Windows 1 – 5.

INDICATIVE RELEVANT QUANTUMS• Estimated project cost: ZAR 250 million to ZAR 413 million (USD 13 – 22 million) depending on thescope of the project.
• KNP’s spend on energy (electricity and diesel) was ZAR 85.5 million (USD 4.5 million) in 2022.
• Potential revenue of ZAR 50 million (USD 2.6 million) through sale of carbon credits (subject todetailed specifications of the final solution). Ownership of the potential carbon credits will need to benegotiated with the IPP. The potential income from carbon credits is not guaranteed.
• A comprehensive cost/benefit analysis is not possible because irradiation and energy yields at thevarious sites is not yet known and the power to be generated at each site needs to be determined. A
technical adviser will be needed to support KNP with this analysis.

transition to
renewable energy
There is also an opportunity to test the possibility of securing concessionary funding for community
ownership or KNP shareholding which will improve the overall viability and potential socioeconomic
benefits of the project.
Please refer to the Feasibility Testing section for more detail.

SCALABILITY AND REPLICABILITY
Each project will have its own specific energy needs, which will determine the type of solution and theappropriate financing mechanism for the transition to green energy.
The ability to scale lies in the ability to unlock numerous project opportunities for transitioning to green
energy within the landscape. As the market is developing there are increased sources and structures offunding for renewable energy, and increasing successful case studies being implemented.

TARGET FUNDERSDevelopment financeinstitutions

Concessional
funders

IPPs in the specific market segment
and their commercial banking
partners

OTHER NOTEWORTHY CONSIDERATIONSThe key constraint identified by SANParks to execute on this opportunity is capacity and technicalexpertise to scope the project for the RFP and to evaluate the strength of the bids.

NEXT STEPS
Secure funding to appoint a transaction advisor and technical advisors to develop the investment caseto obtain the relevant approvals from the Board of SANParks and National Treasury. In addition, funding
will be required for technical experts and legal advice to input into the investment case. It is estimatedthat the total amount for technical and legal expertise will be between ZAR 3 and 5 million (USD 160K –266K). A more detailed budget would need to be built out if there is a possibility to secure grant funding
for the technical assistance.
Assist SANParks with design and execution of the project. Test the market with potential Independent
Power Producers who would consider bidding for this type of contract to understand the market appetiteand the types of factors required to ensure the success of the project in the market.
Support SANParks to draft a RFP document that leverages lessons learned from previous PPPs (e.g.
Skukuza Airport) and ensures the community and socio-economic benefits from the transaction areappropriately considered and responded to by bidders. The scope of the RFP document would be basedon a detailed technical scope of the project and the requirements of KNP.

FEASIBILITY TESTING
Market testing took place with a high-level overview of the potential opportunity presented to a rangeof IPPs to test the viability of the project. The RFP could be supported by a term sheet for concessionary
funding to the extent this is available (as has been seen in other transactions that are subject to the
PFMA e.g., the early REIPPPP Bid Windows).
70

UNLOCKING GREATER KRUGER

GREEN ENERGYINITIATIVESFINANCING
STRATEGY
GKSDP

71 71

JOBS

working to preserveand restore nature

Although the concept of ‘jobs’ is widely understoodand requires no specific definition, in applying
a nature-positive lens and in the context of thisstrategy, jobs are ‘green jobs’ – jobs that contribute topreserving and restoring the natural environment.

POTENTIAL CASHFLOWSFINANCING THEME 7

Threats and challenges:✘✘ Average unemployment rate of 40.8% across theGreater Kruger landscape.
Opportunities:✔✔ Job creation at scale is crucial to socioeconomic
upliftment of the landscape and unlocking muchneeded resources and capacity to undertake
nature-positive activities on the ground.

Jobs and jobs-related programmes do not generate cashflows; jobs-based financing
mechanisms do not appeal directly to the return-seeking end of the funder spectrum.

JOBS:
A cross-cutting
financing theme
that can support
other financing
initiatives.

FINANCING MECHANISMS
Grant/donor
financingTechnical assistanceand supervisory
financing – grant andimpact financing

ELIGIBILITY CRITERIASCOPE FORGREATER KRUGER
Local NGOs and businesses
can create work experiencesthat deliver ecosystem
restoration and park
infrastructure upgrades.
Financing will increase thecapacity for nature-positiveenterprise development
support.

Projects that qualify for this type of financing are thosethat support or create green jobs directly through:✔✔ Enterprise development (ED)✔✔ Establishing enterprises or value-chain support
infrastructure that creates trading opportunities,
increases access to markets, or establishes a conducive
business environment for enterprises.
✔✔ Providing support for work seekers (access toWhich projects
employment and work-related training).
in the sample✔✔ Capacity building to improve operational
list of 22
efficiencies and remove barriers to entry.
projects meetthe criteria?

EXAMPLES OF PROJECTS THAT FIT THE BILL
CLIMATE-SMART
AGRICULTURE:
Climate change
mitigation andadaptation
programme.

7272

Corporate sponsorships – to coversalaries, protective clothing and training
costs for short term jobs (6 months – 3
years) are available through a range ofCorporate and State mechanisms.

EXAMPLES OF MECHANISMS IN THE MARKET
These funders are all active in the landscape, but not in a co-ordinated manner.
• ProNature Enterprises – an enterprise development and value chain support vehicle (ledby French Development Agency and Conservation International AFD and CI led)
• Youth Employment Service (YES) – a business-led collaboration providing 12-month quality
work experience• Social Employment Fund – part of the Presidential Employment Stimulus• Presidential Youth Employment Initiative (PYEI) – Jobs Fund/Government TechnicalAdvisory Centre (GTAC) as fund manager, supported by Harambee accelerator and DBSA
(alongside government departments).
• Groen Sebenza – SANBI-led; aimed at developing priority skills in the biodiversity sector tocreate sustainable job opportunities

GREATER KRUGER MEDICINAL PLANT
CULTIVATION AND DISTRIBUTION
PROGRAMMES:

TRADITIONAL
AUTHORITY
AREAS:

Ndindane, Mutale, Gidjana, Bevhula, etc.
Informed by assessments and feasibility.

Nurseries

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

Which financing
mechanisms
could apply tothis structure?

POTENTIAL FUNDER TYPESPRIVATE SECTORPUBLIC SECTOR• Large corporates that allocate 3,000+ jobs
per year such as Absa and Nedbank.
• Contribute mostly as partners to Jobs Fund(PYEI) or via NGO aggregators such as YES.

State funds/agencies including
environmental agencies such as SANBI.

JOBSFINANCING STRATEGY GKSDP

7373

working to preserveand restore nature

FINANCING THEME 7

JOBS
CASE STUDY 9: JOBS CREATION PROGRAMME
Although there is no consolidated programme or large-scale collaboration at alandscape level to provide job-based financing, with the abundance of jobs funding
available, a coordinated programme such as the one proposed here has the potential todraw in significant catalytic capital to support other landscape initiatives.
The Jobs Creation Programme proposes a landscape-level jobs alliance across the Greater Kruger thatwill direct and focus existing jobs funding to the Greater Kruger Landscape via various state and non-state
actors. Existing jobs funders identified will allocate a set number of jobs per year to SANParks, MTPA,
LEDET and a range of local NGOs and businesses to create work experiences that deliver ecosystem
restoration, park infrastructure upgrades and nature-positive enterprise development support. The
Presidency and large corporations and banks across South Africa make annual allocations for the numberof jobs they plan to finance for that year. This mechanism will work through:• The Presidency and the Youth Employment Services (YES): Some jobs (at least 1,000) can befocused on the Greater Kruger Landscape through the Just Transition and Biodiversity Economy focal
areas.
• Political support from the SANParks Board, the Presidency and YES to ring-fence at least 5,000
jobs over five years for the Greater Kruger Landscape.
• Support from a central project management unit to co-ordinate distribution of jobs among partners
and prioritise areas for labour-intensive investment through Green Halo and other grant finance.

STRUCTURE DIAGRAM

JOB-BASEDFINANCING
using
aggregatorssuch as YES,
SEF, PYEIJOBSCREATIONPROGRAMME
co-ordinates
aggregators
to collectfinancingfocused onjobs in the GK
landscapeProceeds
disbursed to
implementerson the groundto support job
creation, basedon annualquotas.

GK
IMPLEMENTERS
THAT SUPPORTGREEN JOBS
placements into
NGOs, SANParks,
MTPA, LEDET etc,

FIGURE 3.10: The Jobs Creation Programme channels jobs funding via job aggregators to support job
creation in the Greater Kruger landscape.

STRUCTURAL CONSIDERATIONSMinimum size: Minimum allocation of 100 jobs per funder per year (ZAR 5.4 million [USD287K])
Impact indicators: 5,000 nature-positive jobs

INDICATIVE RELEVANT QUANTUMS
Amount of financing needed – ZAR 2.5 million (USD 130k) per annum (office rental, staff time, phone
and photocopy costs).
Potential amount of financing this can unlock (towards investment in underlying projects): Up toZAR 270 million (USD 14 million) over five years. 5,000 jobs (1,000 p.a.) in total over the five years, each
person receives ZAR 4.5k (USD 240) per month (which covers salaries and PPE and TA (work experience)– i.e. 1,000 jobs p.a. x 12 months (12 month cycle) x ZAR 4.5k = R270 million in total raised towards
financing jobs.

TAX INCENTIVESFEASIBILITY TESTING

Additional tax deductions arisingfrom learnership agreements
help to offset the costs of training
employees and improve theskills of the workforce. Skills
Development Act 97 of 1998

This mechanism can be tested with existing jobs funders that are familiar with the landscape.

See: Section 12H of the Income Tax
Act 58 of 1962 (Effective from 1
October 2016)

Points to be tested with funders

Please refer to the Feasibility Testing section for more detail.

TARGET FUNDERS
To approach during market sounding.

Please refer to the Feasibility Testing section for more detail.

The employment tax incentive isdesigned to promote job growthby making it more affordable for
employers to hire young people.
See: Employment Tax Incentive
Act 26 of 2013 (Effective from 1
January 2014 to 28 February 2029)

74

UNLOCKING GREATER KRUGER

JOBS

75

Market testing was carried out on the following financing mechanisms. Theme 3, Carbon finance andTheme 4, Catchment investment, were excluded from testing.

FINANCING THEMEFINANCING MECHANISM

Theme 1: Protected areas

African Conservancies Fund

Theme 2: Biodiversity

Wild Dogs Species Bond

Theme 5: Green economies• Enterprise Catalyst• CI Ventures• Greater Kruger N+ Growth Fund

Theme 6: Green energy

Green Energy Strategy of KNP

Theme 7: Jobs

Jobs Creation Programme

FINANCIAL
ONLY

GRANTS

IMPACT
ONLY

Tr a

FINANCING MECHANISMS TESTED

Donor,
philanthropic,
government,
impact-only
funder (e.g.,
environmental
agencies)

Nonrecourse
funding:
donations
and/or grant
contracts

R

di

IS

K

tio

nal finan

AN D

CONCESSIONARY

Development
finance loans
with belowmarket-related
finance rates
Impactfunders,
government,
DFIs,
multilaterals,
banks

o

• Potential level of interest to engage in further discussion about financing mechanisms.

• Expected execution timeframe for such financial mechanisms.

HYBRID(PUBLIC ANDPRIVATE)

c

RETU

E

• Risk perception of funders.

Commercial/corporate,banks, impact
fundersMS

Convertible
instruments
Redeemablepreference shares
Mezzanine finance

Listed, unlisted
and non-redeemablepreference shares
Structured
products
EQUITY• Level of experience in and/or perceptions of nature-positive investing.

• Types of refinements or considerations to be applied to make mechanisms more attractive tothe market.

ECHANIS

EAS

FIN

ING M
AN C

pact pr• Degree of strategic focus funders might apply to the nature-positive themes (i.e., water,
biodiversity, carbon, protected areas, green economies, green energy, jobs).

Privateequity,venturecapital,banks, family
offices/ im• Targets, objectives and mandates of funders with regard to nature and the different
mechanism types.

G
FUNDIN TYPESCR• Types of funders with a potential interest in:ȿȿ Nature-positive investments within a landscape such as the Greater Kruger
ȿȿ The various financing themes presented in the strategy.

e

MARKET SOUNDING INDICATORSFor detailed market feedback on each financial mechanism and a debrief of the interviews conducted,
please refer to Market Soundings (see Appendix).

DEBT(PUBLICANDPRIVATE)

Loans
Listed andunlisted bonds
Commercial
paper

Asset managers
and institutional
funders (nonbank FI), banks,
impact funders

I

N

Preliminary, high-level market testing with a select sample of funders is key todeveloping an implementation plan to roll out the various financing mechanisms
presented in this strategy. The aim of market sounding via a series of interview
sessions is to gather valuable and insightful feedback to sense-check the feasibility of
the landscape-level mechanisms proposed.

Interviewees included local and international participants from across the funder spectrum. The rangeof perspectives and insights captured will be used to inform implementation of the strategy. Most
interviewees were enthusiastic about the mechanisms.
• Nature-positive investing is regarded as innovative and forward-thinking.
• Suggestions: Some interviewees suggested how mechanisms might be adapted and improved
to address perceived risks and shortcomings and make them more attractive to the market. Thesesuggestions should be considered when mechanisms are being refined and finalised for execution.
• Timing, level of effort and resources: The interviews revealed factors to consider with regard totiming of mechanisms, level of effort and resources required to further develop the mechanisms andunderlying projects (to make them more fundable), and the level of sophistication and experience ofthe market in absorbing nature-positive as an investment concept.

e

FEASIBILITYTESTINGKEY FINDINGS FROM THE INTERVIEWS

filPART 4RN

BLENDED

Social Impact
Bonds/Outcomesbased funding
Guarantees
Risk-sharing
products
Impact funders,commercial,corporate,
government, DFIs,
multilaterals, banks

FIGURE 4.1: Funder spectrum

EXPECTATIONS FROM THE TESTING
Quantified market appetite is difficult to determine at this stage; further due diligence processes are
required.

76

UNLOCKING GREATER KRUGERFEASIBILITY TESTING

77

PART 5IMPLEMENTATION
PLAN
The implementation plan proposed in this strategy is based on information available at the time ofwriting. It is expected that the plan will change over time due to the dynamic nature of the various
parameters driving decision-making and prioritisation, as explained below.
The implementation plan reflects a five-year horizon, not only for purposes of illustration but also
because visibility is limited beyond this. The various dynamic factors will be more predictable once key
kick-off implementation work commences in Year 1 and the plan can be adjusted accordingly.
This chapter includes:• A decision-making matrix that can be used by strategy decision-makers to priority rank and phaseout implementation of mechanisms.
• A Gantt chart indicating suggested timelines and phasing of both mechanisms as well as broader
strategy implementation considerations.
• Suggestions of requirements to facilitate implementation.

5.1 DECISION-MAKING MATRIX
Figure 5.1 provides a snapshot of a matrix that can be used to assess and score the various mechanisms
based upon a set of parameters (‘assessment factors’) that reflect key decision-making considerations.
These include:• Nature-positive impact potential: Natural capital impact and socioeconomic impact.
• Capacity to attract funders: Degree of complexity, costs involved and market feedback. This
includes capacity to attract funders with a more commercial-base, e.g., financial risk/return andpotential for revenue-generation.
• Level of effort required for development: Degree of complexity, costs involved and estimated timing
for execution.
• Ability to crowd in potential further funding: Scalability and replicability.
• Likelihood of successful execution: Market feedback and estimated timing for execution.
Because some factors are arguably more important than others in terms of level of priority for the roll-outof the strategy, the matrix can also be used to assign a relative ‘weighting’ to the various factors (i.e., themore important a factor is deemed to be, the higher the weighting).
The example in Figure 5.1 assigns weights to factors based on two priority criteria: application of anature-positive lens, and ability to reach landscape-level coverage. Financial risk and financial return are
assigned lower weightings because they are more applicable to commercial-based mechanisms (which
initially will exclude the majority of mechanisms). The remaining factors are equally weighted. Weightings
can be re-assigned as the plan is rolled out and as the relative importance of factors becomes clearer.
The final components of the matrix are presented in ‘Guidelines for Scoring’ (Figure 5.2), which assists
with assigning a score out of 5 to each factor to a mechanism and computing a ‘Total Score’. This can beused for comparison and when considering rankings for the priority phasing out of mechanisms under
the implementation plan.

78

UNLOCKING GREATER KRUGERAssessment Factors

PRIORITISATION MATRIX – ILLUSTRATIVE EXAMPLE

Weighting

Mechanism 1

Mechanism 2

Natural Capital impact

15.00%

4

4

Socio-economic impact

15.00%

3

4

Degree of Complexity

10.00%

2

4

Financial risk

2.50%

3

Financial return

2.50%

4

Potential for revenue-generation

10.00%

4

3

Costs involved

10.00%

2

4

Scalability/Replicability

15.00%

44Market feedback

10.00%

4

3

Estimated timing for execution

10.00%

3

TOTAL SCORE

100.00%3.3

3.8

TABLE 5.1 Matrix table in unpopulated form, with illustrative examples of how to approach scoring
N/A
Leave
blank

VERY POOR
1

POOR
2

SATISFACTORY
3

GOOD
4

VERY GOOD
5Natural Capital
impactEntirely
negative

Negative,but can be
improved

NeutralPositive, butneeds constant
M&E

Entirely
positive

Socio-economic
impactEntirely
negative

Negative,but can be
improved

NeutralPositive, butneeds constant
M&E

Entirely
positive

Degree ofComplexity

VerycomplicatedComplicated

Not complicated

Easy

Very easy

Financial risk

Very highHigh

MediumLow

Very low

Financial return

Deeplynegative
returnNegative
returnZero/de minimis
returnSome positive
returnVery HighreturnPotential forrevenue-generation

No ability togenerate

LimitedPotential with
time

Good

Very good

Costs involved

Very highhighModerate

Low

Very low

Scalability/
Replicability

Cannotbe scaled/
replicated

Limitedreplicability

Replicable

Easy toreplicate/scale

Very Easy toreplicate/scale

Market feedback

very negative
responses

Negative
response

NeutralPositive
responses

Very positive
responses

Estimated timing
for execution> 4 years

3-4 years

2-3years

1-2 years< 1 year

Score

TABLE 5.2 Guidelines for scoring

IMPLEMENTATION PLAN

79

Applying the matrix
Figure 5.3 illustrates how the mechanisms highlighted in this report can be scored and how these scorescan be used to derive priority rankings.16
GREATERKRUGER N+
FUND

KNP GREEN
ENERGYSTRATEGYJOB CREATIONPROGRAMME

Financing Green
Energy Initiatives

Jobs Financing

2

1

FINANCING MECHANISMAFRICANCONSERVANCIESFUNDSPECIESOUTCOMES BOND

N/AK2C CIP12

UMBRELLA FINANCING THEME

Protected Area
Financing

Biodiversity
Financing

CarbonFinancing

Catchment
Investment
Programme

1

3

5

2

4

4

4

4

4

4

4

3

3

4

3

4

4

4

4

4

4

5

PRIORITISATION RANKING(BASED ON DECISION-MATRIX SCORE)
Assessment factors

WeightingNatural capital impact
Socio-economic impact
Degree of complexity
Financial risk
Financial return
Potential for revenue-generation
Costs involved
Scalability and replicability
Market feedback
Estimated timing for execution
Total score15.00%
15.00%
10.00%
2.50%
2.50%
10.00%
10.00%
15.00%
10.00%
10.00%
100.00%

ENTERPRISE
CATALYSTCI VENTURES

Green Economies
2

3

4

3

3

1

3

2

5

1

2

4

2

3

–

3

–

2

1

3

–

4

3

–

3

–

4

4

4

3

4

2

4

3

2

4

4

2

1

4

4

1

2

4

4

3

4

4
5

3

2

–

3

4

4

3

4

4

4

–

–

–

4

–

5

4

4

–

2

4

3

3

2

–

–

3.7

3.1

2.9

3.3

3.4

4.0

3.1

3.5

3.8

FIGURE 5.3 Populated matrix (suggestion)17
Year 1

Year 2

Year 3African Conservancies Fund

Refinement and fundraising

LaunchJob Creation Programme

Pathways and IP onboarding

LaunchYear 4

Year 5RANK

A. PHASING OF FINANCING MECHANISMS

5.2 GANTT CHART
How the phased implementation could work
The following factors are considered for phased implementation:• Year 1: Set up appropriate institutional arrangements (e.g., steering committee/governing body,technical teams/project management unit), source catalytic capital, deal development and structuringof mechanisms.
• Launch of mechanisms is staggered across years (one at a time) and rolled out according to
the respective ranking assigned. Although it is possible to develop more than one mechanism
simultaneously this is very much contingent on the institutional arrangement agreed upon, allocation of
resource capacity and how the development of each mechanism progresses.
• Budget includes costs expected to be incurred by the strategy implementers.

5.3 WHAT IS NEEDED TO IMPLEMENT THE FINANCING STRATEGYEFFECTIVELY?			
• Endorsement for the strategy paper – DFFE, LEDET, MTPA, Joint Management Committee: GLTFCA.
• Public awareness and participation – broader dissemination of the paper.			
• Ongoing support and ownership of the strategy:						ȿȿ Technical: e.g., establish a project management unit (PMU) to drive the action plan.			
ȿȿ Supervisory/governance: e.g., establish a steering committee and assistance to mobilise resources.
• Catalytic capital to be raised.

16 CI Ventures is ranked 4th based on the assumption that it is contingent on pipeline feeding in from the launch of the Enterprise
Catalyst
17 In this illustrative example, the market feedback factor was left blank because within the scope of this strategy work market sounding
was not conducted. Decision-makers may wish to amend this to incorporate market feedback conducted outside of this paper (e.g.,
as part of Business Case launch).

80

UNLOCKING GREATER KRUGER

K2C CIPL/T financial planEnterprise Catalyst
KNP Green Energy Strategy

Technical advisory work

Species Outcomes Bond

Refinement

CI Ventures

Refinement
Further DD and fund design

Greater Kruger N+ Fund
Carbon pathway to landscape –approach1
1

Launch2

Launch2Deal structuring*

Launch2

Launch3

Fundraising

Launch3

Further market
testing

Fundraising

Carbon pathway steps refined and implemented

Launch4

Assess how best to proceedwith landscape-approach5

B. FURTHER DESIGN & DEVELOPMENT OF MECHANISMS **C. RESOURCE MOBILISATION
Data collection tool
M&E framework
PMU establishment
Steering committee establishment

Created and set-up in Yr 1
Set-up in Yr 1
Formalise within Yr 1
Formalise within Yr 1

D. BUDGET FOR IMPLEMENTATION (ZAR) ***Catalytic finance to be raised
PMU set-up (costs incurred bystrategy owner)
Running of PMU (costs incurredby strategy owner)

ZAR 251,000,000 (USD 13 million)
TBD
TBD* Including document negotiation and PFMA process** Includes new as well as scaling of the above*** For implementation of the strategy and excludes the target budget pertaining to the financing mechanisms and projects in thelandscape. It is assumed that catalytic/start-up capital is to be raised in Year 1 across all mechanisms. This amount is strictly catalytic, andis separate from the total budget number (no impact to budget if this is raised).

FIGURE 5.4 Phasing out implementation of the strategy (suggestion)			

IMPLEMENTATION PLAN

81

PART 6

CONCLUSION
The diverse ways in which land in the Greater Kruger landscape is used is part of what makes it
remarkable. Land use ranges from protected areas to densely populated small towns to mining activities
and farms. When this mix is combined with a complex spectrum of land owners – state-owned andprivate, tribal authorities, commercial farm owners, mine owners and an increasing number of high-end
housing estates – the challenges and opportunities that arise are just as unique. The bespoke solutions
presented in this strategy are specific to the needs of the landscape and its stakeholders.
Another dimension of the financial mechanisms presented in the strategy is that they can be replicated inother landscapes using ‘stacking’ options – combining financing mechanisms in a singular parcel of land(or project area) to achieve more effective outcomes and cost efficiencies. The lessons from the work
completed on the strategy for Greater Kruger can also be applied universally.

6.1 FOUR KEY LESSONS
There is no one-size-fits-all solution. Although an umbrella vehicle or singular landscape-widemechanism would be an ideal scenario, early-stage due diligence revealed challenges with thisapproach, such as the lack of a credible and experienced agent to manage such a large vehicle, and theneeds, players and complexities specific to each project.
Nature-positive investing is gaining popularity. The feasibility testing revealed that nature-positivity
is gaining popularity among the global investment community and is regarded as an innovative andforward-looking approach.

PART 7APPENDIX

There is potential for scalability and replicability in other landscapes. Although the projects that needfinance and the quantum of finance required to address the finance gap vary significantly from landscapeto landscape, the overall approach of the strategy is a useful starting point for any landscape seeking to
attract additional investment into nature-positive activities that can secure ecological integrity and humanwell-being at scale.
Collaboration is essential. Working together will go a long way towards bridging the gap between
finance and on-the-ground implementation. A collaborative approach:• Furthers a common understanding of key financial and impact concepts in private, public and civilsociety.
• Addresses challenges in developing fundable pipeline opportunities, such as data integrity,
constrained due diligence processes and biased risk perceptions.
• Improves access to resources, such as catalytic capital and technical advisors, for ground-level
implementation partners.

82

UNLOCKING GREATER KRUGEREXECUTIVE SUMMARY

83

7.1

GKSDP META ANALYSISThe GKSDP Meta Analysis is applied by landscape managers in target setting and ensures that national,
provincial, district and municipal policies are checked in relation to the GKSDP. The outcomes anddeliverables for the Strategic Objectives in the GKSDP can be summarised using the GKSDP dashboard
from GKSDP database.

7.2

MONITORING AND EVALUATION (M&E)

The outcomes of the GKSDP are critical to funder interest and need to be measured in relation to
implementation of the nature-positive activities highlighted in the financing strategy. Outcomes have thus
been expanded to include additional nature-positive parameters (see Nature-positive Assessment on
page 86 of the Appendix).
Although the data collected by GKSDP implementers and partners in 2019 and 2020 are a valuable
resource for developing the financing strategy, they have not been updated and are often incomplete.
Data collection (to keep the meta database current) and M&E are critical to maintenance of projects inthe landscape.
The M&E framework suggested here combines the GKSDP database structure with the Management
Effectiveness Tracking Tool (METT-4) scoring framework in MS Excel. METT-4 offers online support,
and is the most widely used protected area assessment system. With minor adjustments to the METT-4
framework, the GKSDP M&E framework can be used to score any project, implementation or naturepositive activity, both inside and beyond protected areas. The project overview page also forms partof the framework for ongoing live gathering of information for the GKSDP Meta Analysis, from GKSDP
project contributors.

FIGURE 7.1 GKSDP dashboard from meta-analysis data

8484

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

It is recommended that Greater Kruger Landscape implementation partners seeking to unlock financethrough the proposed financing strategy complete the project overview page which has user-friendly
guidelines and drop-down lists for clear and accurate information gathering that can be checked by thefinancing strategy implementer for the following attributes:• Identified Cooperative Zone of GKSDP• Nature-positive assessment• Alignment of implementation plan to GKSDP strategic objectives• Alignment of deliverables and outcomes with the GKSDP• Financial requirements• Financial structures and themes best suited to implementation• Risks

FINANCING STRATEGYAPPENDIX
GKSDP

8585

7.3

PROJECT SCOPING AND SCREENING

STEP 1: Synthesisation of projects
A list of 155 projects provided by SANParks was reviewed as part of the due diligence process to unpack
and assess ground-level activities. The list was sourced from key implementing partners (NGOs, public
sector, and private reserves) in Greater Kruger and based on a set of activities grouped by implementing
partner project (e.g., GEF-7), and further categorised according to Strategic Objective and Anchor
Programme under the GKSDP. Before the projects were analysed, the list was synthesised down to amore manageable list of 41 projects.

Synthesisation process applied (most projects fall into categories 1, 2 or 5):
1.

Duplication: After reviewing for overlap duplicate projects were deleted. Duplication was mostly
due to the same project being listed under several anchor programmes, often because many
implementing partners contributed to the list.

2. Aggregation: Many projects were part of a broader project run by a single implementer or leadpartner in the landscape. Because funding is usually raised at broader project level, projects thatwere part of the same broader project were combined.

STEP 2: Mapping
Data on underlying projects are collected and analysed using a basic database tool to map activities
to potential sources of funding and assess and develop the most feasible and fundable financing
mechanisms. The database tool assesses ground-level activities in the landscape and suggests how
they can be mapped to financing flows. Specific parameters (reflected by the various columns) are not
only used as guidelines for gathering inputs, but also reflect key criteria to be used when prioritising anddetermining eligibility of activities for fundability. The intention is to help project implementers gauge
which data inputs and criteria their projects need to satisfy to achieve fundable status and eligibility forunlocking sources of sustainable financing.
Parameters are broadly categorised according to:• Terms of financing needed (such as size, tenor, use of proceeds)• Geographical considerations (both administrative and conservation-based)• Nature-positive considerations (both natural capital impact and socio-economic impact)• Global impact indicators (such as UN SDGs)• Summary financials (for example for conducting high-level cash flow analysis)• Legal and risk considerations

3.

Insufficient details: Some projects were deleted because there was not enough information to justify
further analysis of the project.

The need for a more advanced and consistent database tool to be rolled out and managed within thelandscape was identified as part of this step.

4.

Outdated: Projects that had matured were deleted (based on confirmation by SANParks).

STEP 3: A nature-positive lens

5. Grant finance eligibility only: Projects that did not qualify for longer-term, sustainable sources offinancing given their nature (e.g., skills/education, and anchor programmes falling under supporting
Strategic Objectives 4, 5 and 6 of the GKSDP) were excluded. These are, however, eligible for donorand grant-based funding are mapped as such.

To derive a strategy that landscape managers can use to support and enhance their efforts in the longterm, projects (and the respective financial mechanism recommended to finance them) are assessed
according to a set of parameters that establishes how nature-positive they are.18 Specifically:•

Natural capital and socioeconomic considerations. Nature-positivity ‘advance(s) natural capital(over time) of the whole landscape and respect(s) the carrying capacity of the ecosystem andhabitats within it … (and) should also aim to generate jobs and livelihoods’.19 Project assessments
consider both natural capital impact and socioeconomic impact and assign an aggregated qualitative
categorisation.

•

The assessment uses a range of parameters to ensure that potential negative impacts of a projector effecting a financial mechanism are captured.

Observations on data integrity
The project list was last updated about three years ago. Some projects on the list were either
already completed or had since stopped due to limited funding.
Fragmented data. Data was provided at anchor programme level, auxiliary programme level orproject level. Little data on individual activities was available and mappings were adapted for
project level rather than activity level. Data at project or programme level were, however, still
not detailed enough in description or in terms of providing the necessary inputs to complete thepredetermined parameters of the mapping tool.

When mapped to the GKSDP strategic objectives, the projects most suitable for shortlisting were thosecategorised under Strategic Objective 1 (SO1) – Secure the natural capital base – and Strategic Objective
2 (SO2) – Socioeconomic transformation and job creation.

••

The list was narrowed down to 41 projects using the data available. There was not enough data to
fully populate the database tool. Most input parameters are left blank since data collection is outside
the scope of the strategy determination.
Existing funders and financing mechanisms. Due diligence of projects confirmed that mostlandscape funding is via short-term (< 3 years) grants, donations or government allocations andsubject to constant roll-offs, which validates the need for longer-term, sustainable financing.

GKSDP
Strategic
Objectives

Key takeaways from the process

Naturepositive
activities

Most project contributors were all from the public sector or civil society. Private-sector
opportunities may be insufficiently captured as a result.

PROTECTAND
CONSERVE(natural capital/
resources)

SO1 – Secure
Natural CapitalBase
SO1 – Protected
Areas
Expansion

SUSTAINABLE
USE(to avoid loss)

SO1 – Secure
Ecosystem
ServicesSO2 –Sustainable
Livelihoods

MITIGATIONANDPRESSURE
REDUCTION(against threats
and risks)

SO2 –Employment
CreationSO3 – Economic
and Land Use
Planning andManagement

RESTORE,REGENERATEAND
REHABILITATE

ADAPTATION

SO1 – Restore
Ecological
Infrastructure

SO4 – Partnerships & Governance SO5 – Resource Mobilisation SO6 – Data Management

FIGURE 7.2 How nature-positive activities map to the GKSDP
18 Only high-level qualitative assessments were conducted. There was not enough detail available on each project.
19 Definition of nature positive (see glossary)

86
86

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

FINANCING STRATEGYAPPENDIX
GKSDP

8787

TNFD and SBTN considerations
The Taskforce on Nature-related Financial Disclosures (TNFD) and Science Based Targets Network(SBTN) frameworks can aid in determining how best to incorporate them into the nature-positive
assessment (and more broadly, the M&E framework for the landscape). The causes of loss of nature andpositive activities (as presented both in Figure 7.3 are factored into the Database Tool.
The challenge, however, is that both the TNFD and SBTN are global frameworks designed for corporates/
businesses whereas this strategy looks at assessing the decision-making of a diverse range of players
across the landscape. Furthermore, the assessment tools presented in global frameworks requiredetailed data which are difficult to obtain for projects and activities in this landscape. SBTN (e.g., Sectoral
Materiality Tool) and TNFD materiality assessment concepts were used to develop the qualitative
assessment approach.
NATURALENVIRONMENT
natural capital resources,
ecosystems andecological infrastructure
Biodiversity (habitats andspecies), water, carbon
store, atmosphere andair, land and soil, mineral
resources, renewableenergy resources, cultural
heritage, weather andclimateHuman dependencies,
benefits and value ofnatural environment
Direct use of natural
resources, ecosystemservices, intrinsic value ofnatureDEPENDENCIESNATURAL THREATS
Alien invasive
species, indigenous
encroachment,diseaseSOCIO-ECONOMICPRESSURE
Environmental
crime, human wildlife
conflict, overgrazing,
harmful farming
practices, other socioeconomic pressure

PRESSURES ON
NATURE
Invasive species
and other,overexploitation,
land and water
use change,pollution, climatechangeCONSEQUENCES OFUNSUSTAINABLE PRACTICES
Loss of biodiversity, loss of habitats,degradation (desertification, deforestation,
erosion), depletion of natural
resources, contamination, increased
frequency and intensity of extreme
adverse weather (droughts, floods, highwinds, heat waves), long lasting shifts
in normal weather patterns, increased
frequency and extent of wildfires

EXTERNAL
THREATS
Climate change, longrange pollution (air,water)RISKS AND THREATSSHORTLISTED SAMPLE PROJECTSLANDSCAPE PROJECTRESTORE,REGENERATE,REHABILITATEREDUCE PRESSURE AND
MITIGATE THREATS

ADAPTPROTECT /CONSERVEUSE
SUSTAINABLYOPPORTUNITIES Nature-positive activities

POTENTIAL FINANCING
STRUCTURES/THEMESPOTENTIAL REVENUE SOURCES

1.

LEDET-managed reserves: Makuya
Nature Reserve, Letaba Ranch,
Mthimkhulu

Protected areas expansion and improved
management

Concessions and tourism fees

2.

MTPA-managed reserves: Blyde,
Andover, Manyeleti, Methomusha

Protected areas expansion and improved
management

Concessions and tourism fees3.

Blyde Restoration and Catchment
Management Project

Water catchment , carbon funding,biodiversity funding

Levies/tariffs

4.

Herding for Health (Rangeland
management )Carbon funding, biodiversity funding,green economy development

Carbon credits

5.

Climate smart agriculture

Green economy development

Product sales

6.

Traditional healers programme

Green economy development

Product sales

7.

Baobab project – areas north of
MakuyaGreen economy development

Product sales

8.

Ndindane, Mutale, Gidjana, Bevhula,etc. Informed by assessments andfeasibility

Green economy development

Product sales

9.

Traditional authority areas –nurseries

Green economy development

Product sales

10. Waste management and circular
economies: recycling, awareness,enterprise development

Green economy development

Levies/tariffs; product sales

11. Hub developments – Phalaborwa,
Shangoni, Punda Maria as pipeline

Green economy development

Tax savings income; product sales

12. Agri-hubs and agriculturalcompatible socio-economic
opportunities, and community
beneficiation

Green economy development

Tax savings income; product sales

13. Privately managed reserves

Tax incentive structures and special
economic zones , protected areas
expansion and improved management

Tax savings income; Concessions andtourism fees

14. GEF-6 PA management
effectivenessProtected areas expansion and improved
management, biodiversity fundingNA

15. Soutpansberg Protected Area
Expansion Project

Biodiversity funding, protected areas
expansion and improved management, tax
incentive structures and special economic
zones

Biodiversity credit sales

16. GEF-7 Stewardship (which includes
wildlife economy)

Biodiversity funding, protected areas
expansion and improved management,
green economy development

Biodiversity credit sales; tourism fees/
concessions

17. DFFE, NRMP, Limpopo

Biodiversity fundingNA

IMPACTSUPPORTING AND ENABLING ACTIVITIES

18. EWT species of concern

Biodiversity funding

Outcomes-based payment

Biodiversity funding

Outcomes-based payment

STEP 4: Shortlisted projects

19. WWF South Africa Kruger
Programme
20. KNP operations

Concessions/tourism fees; PA entry fees

From the 41 projects synthesised, a sample project list of 22 projects was short-listed after applying the
mapping exercise and nature-positive assessment and accounting for data availability on these projects.
Please refer to the list of 22 Sample Projects list on the following page.

Kruger Park socioeconomic opportunities,
protected areas expansion and improved
management

21. KNP infrastructure upgrade/green
energy project

Kruger Park socioeconomic opportunities,
carbon funding

Levies/tariffs; Concessions/tourism fees;
PA entry fees;

22. Green recovery/green energy
programmes, tourism

Kruger Park socioeconomic opportunities

NA

FIGURE 7.3 Loss of nature and nature-positive activities as framed by SBTN and TNFD

88
88

7.4

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

FINANCING STRATEGYAPPENDIX
GKSDP

8989

7.5

POTENTIAL BIODIVERSITY FINANCING INSTRUMENTS

7.5.1

Capital investments (once-off/short term)

Regulatory biodiversity offsets
Biodiversity offsets are used to comply with legislation to avoid loss of biodiversity when developing
new projects. Offset requirements are generated by environmental impact assessments (EIAs); a draft
Biodiversity Offset Guideline was published on 25 March 2022 in terms of Section 24J of the National
Environmental Management Act (NEMA). A mitigation hierarchy (avoid, reduce, restore/rehabilitate,offset) is applied for new developments whereby the developer only pays to offset unavoidable
biodiversity impacts that are not fatal flaws.
ADVANTAGESDISADVANTAGES

A source of funding for securingbiodiversity that may besignificant• Poor management or inappropriate implementation can result in a net lossof nature.
• Fragmentation of offset sites across the landscape• The like-for-like principle limits potential offset sites to those in the samelandscape /ecosystem type and hampers funding flows from outside thelandscape• Risk of being accused of greenwashing

Grants
A grant is a contribution for a specific purpose with specific terms and conditions. Usually paid upfront or
as a series of payments over time.
ADVANTAGES• Upfront payment• Low cost of verification

For strategic developments where no suitable offset has been identified, a target-based ecologicalcompensation may be appropriate. Funds are allocated towards achieving broad biodiversity targets toachieve desirable outcomes for stakeholders and biodiversity.
ADVANTAGESDISADVANTAGES• Aligns outcomes of actions with overarchingconservation objectives• Conservation outcome targets are clearly
defined• The type and amount of compensation
required is calculated according to a
standardised formula• Articulation of conservation targets may create an
incentive to ‘set the bar low’
• Requires an estimate of the difference between the target
state and current state of impacted biodiversity features• A relatively new concept

Biodiversity payment for ecosystem services (PES)
In a PES scheme the beneficiary or user of an ecosystem service pays for the service. For biodiversity
these can range from conservation levies being paid on entrance to a park to levies applied toagricultural produce coming out of a landscape.
ADVANTAGES• When beneficiaries pay for services they
are likely to value nature more

Debt-for-nature swaps are financial transactions in which a portion of a developing nation’s foreign
debt is forgiven in exchange for local investments in environmental conservation measures. In a threeparty debt-for-nature swap, a country’s foreign currency debt is bought in the secondary markets (bya third party) then cancelled by that country. In exchange, the country agrees to either enact certain
environmental policies or endow a government bond in the name of a conservation organisation.
Bilateral debt-for-nature (or multilateral) swaps take place between two (or more) governments.
The creditor country forgives a portion of the public bilateral debt of a debtor nation in exchange forenvironmental commitments from that country.
ADVANTAGES• Allocation of funding is politically loaded• Willingness of National Treasury to restructure debt

Donations
A donation is a free and unrestricted contribution towards a cause usually paid in cash upfront(sometimes made as a pledge or paid in kind).

90
90

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP• Difficulty in getting beneficiaries to pay for services• Complexity in collecting levies

Non-fungible tokens (NFTs) are assets tokenised via a blockchain. They can be bought and sold online
and used to raise funds for various causes. A wide range of NFTs are used to raise funds for nature suchas digital birds used to raise funds for endangered magpies in Seychelles to ValueNature’s biodiversity
credit tokens based on a metric to assess the status of biodiversity and its conservation value.
ADVANTAGES• Immutable records• Ease of money exchange• Attractive to offshore funders

DISADVANTAGES••••

Wide range - some lack credibility
Internet scams
Lack of trust in new technologies
Most NFTs settle using the digital currency Ethereum
which had a bad reputation for using significant amountsof energy to process these transactions (however it has
moved to a new settlement platform that has significantly
reduced its carbon footprint).

Biodiversity certificates
Certificates can be issued to verify, for example, the biodiversity value of a site and/or activites performed
and costs to secure a site but do not attempt to unitise biodiversity values.
ADVANTAGES• Confidence that money has been
appropriately spent or activities have been
performed or the site has high biodiversity
value

DISADVANTAGES• Cost of verification• Market uncertainty

DISADVANTAGES

7.5.2 Options to monetise biodiversity• Upfront payment• Low cost of verification

DISADVANTAGES

7.5.3 Voluntary Biodiversity Credits (VBC)

Debt-for-nature swaps

ADVANTAGES• Restrictions on where money can be spent.
• Hard to build up reserves• Short funding cycles

Tokens/NFTs: distributed ledger technology (DLT), and block chain

Target-based ecological compensation• May be a source of large scale funding
towards conservation goals in developing
countries

DISADVANTAGESDISADVANTAGES• Lack of trust may make fundraising difficult

Voluntary biodiversity credit units
Quantifiable, tradeable units representing a biodiversity conservation and/or enhancement claim used tomobilise financing flows towards biodiversity custodians and based on scientific methodology.
ADVANTAGESDISADVANTAGES• Standardised units may be easier to trade• They provide a level of confidence tobuyers that impact has been achieved• Quantifying biodiversity ‘units’ is complex.
• Poor understanding of impact of biodiversity on ESG
scores (but improving with TNFD) may limit the market• Complexity with measurement, and monitoring andevaluations• Long lead times before credits are ascertained andavailable to be sold to raise financing• High costs of establishing a scheme

FINANCING STRATEGYAPPENDIX
GKSDP

91 91

7.6

MARKET SOUNDING

The Africa Conservation and Communities Tourism Fund (ACCT) was interviewed on a broad basis, andthe following feedback was noted in respect of the Greater Kruger and ACF in particular.
• Interest in pipeline sharing and collaboration on ACCT/ ACF/ Greater Kruger• Alignment and complementarity acknowledged between ACF and ACCT, though ACF is more earlier
stage• South Africa is on the radar and expected to be pursued, with interest in conservancy models aroundthe park as in the case of Greater Kruger

7.6.2 WILD DOGS BOND
Funders sounded
Objectives, targets,and investment
mandate of funders• Variety of mandates

Funder’s strategy
regarding the relevant
field(s) that applies tothis mechanism (e.g.
water, biodiversity,
enterprises)• Believe investing in biodiversity is important and needs to be developed.

Funder’s experience
and/or perceptions ofinvesting in nature/
natural landscape• No experience in investing in Nature Bonds

7.6.1 AFRICAN CONSERVANCIES FUND
Funders sounded

Objectives, targets,and investment
mandate of funders

All funders have similar objectives, targets and mandates – investments that will bring deep
impact to biodiversity. Funders mentioned that many funds do not make an effort to track
biodiversity metrics. They believe that with CI involved funding will reach and benefit local
communities. Overall, funders believe in the future of biodiversity investment.

Funder’s strategy
regarding the fieldthat apply to thismechanism (e.g.,water, biodiversity,
enterprises)

•
•
•
•
•
•
•
•
•
•

Funder’s experience
and/or perceptions ofinvesting in nature/
natural landscape9292

ACF looks at senior and subordinated debt, fixed term and revenue-based financing. A
range of funder types (guarantors, donors, non-profits, corporate and development financeinstitutions) were interviewed, namely: African Guarantee Fund; Ahueni AG; British International
Investment; Calvert Impact Capital; Global Environment Facility; Hempel Foundation; KfW
Development Bank; Netflix; Swedish International Development Corporation Agency; US
Agency for International Development, Africa Team; US DFC, Fund Team; and, US DFC,
Guarantor Team.

AGF – climate change adaptation
Ahueni – exploring different carbon projects
BII – targets unproven markets and strategies
CIC – conservancies and SMEs
GEF – deliver environmental benefits
Hempel foundation – African sustainable plantation funds
KfW – biodiversity-related projects
Netflix – exclusively in carbon
SIDA – products that make biodiversity contributions (conservancies)
USAID Africa – enterprise-driven solutions to increase trade and investment and contributeto job creation• US DFC Fund Team – water conservation• US DFC Guarantee Team – biodiversity and conservation
Some funders mentioned that they had more experience working with carbon when it comesto nature landscapes.
Perceptions of investing in a nature landscape include that there is a huge demand forinvesting but no suitable products and that funds claim to have climate impact with no scienceand data to prove it.

Asset managers (4)• Bonds would fit best with cash plus other mandates• One asset manager noted that although they have a sustainability overlay to theirfunds, they cannot receive lower than market returns even for a sustainable/impact
cause.

• Response was positive and funders were excited about the innovation and thepossibility of the structure.
• Funders are looking for innovative products and increasingly interested in structureswith a financial and impact return.
• Global asset manager has experience in investing in green bonds and sustainablebonds but only those with market returns. Not prepared to take risk of theintervention failing.
• Experience in Green and Sustainable Bonds

Perceived risks funderassociated with thismechanism

If implementation is not successful returns will be lower than market.

Ways to address or
mitigate risks

Mitigation: To address specific funder concerns, various features can potentially beincorporated and risk mitigation tools applied when structuring the bond.

If a “No” on appetite,what would it take forthe funder to make theinvestment

Mechanism could work if returns were increased using carbon or biodiversity credits.

General thoughts fromthe funder regarding
the mechanism, nototherwise captured in
the above?

Asset manager identified water as a key area of interest and one where there may be apartnership between the asset manager and their CSI team to enable the solutions, e.g.,
CSI funding is used as the outcomes-based funding in the model• Higher appetite for floating rate instruments• Typical deal size is ZAR 100 – 200 million (USD 5 – 10 million) as opposed to ZAR 20
million (USD 1 million); projects need to be of sufficient scale• Mandate for inflation-linked and nominal

Funders believe there is a need to protect and strengthen protected areas and with the rightfund and management it can be a success.

• Term: 5 years

Perceived risks funderassociated with thismechanism

Funders were concerned about the risk profile of conservancy loans being unknown,
execution risks, and how the fund would manage the currency risk.

• SPV vs Bank: SPV is fine. Bank does not make sense

Ways to address or
mitigate risks

Mitigation: Provide better descriptions of the risk profile through the due diligence process. CI,
its local partners and community ties will make sure a technical assistance facility is available
to mitigate the execution risk. When choosing a fund manager their ability to manage currency
risk will be the key focus.

What is their (orclient’s) appetite
for the mechanism(quantify range where
possible in USD), overtime?

Funders provided positive feedback and enthusiasm to invest.

Based on the funder
feedback, howlong would it taketo execute such amechanism?

The overall range is 6 months to 2 years

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP• Listing: not needed• Collateral: Like government bonds• Return: minimum of cash when asset swapped
Recommended
refinements/changes to make themechanism more
executable

Funders/asset managers would like to see the on-bill financing (OBF) taking a degree ofrisk on the project failing – as in the current structure the donors or initial funders take all
the risk if the project does not meet it intended targets

Based on the funder
feedback, howlong would it taketo execute such amechanism?

Credit committee and other internal approval would play a key role in determining thetime it would take to execute or invest in the mechanism

Supplement returns with carbon or biodiversity credits

FINANCING STRATEGYAPPENDIX
GKSDP

9393

7.6.3 ENTERPRISE DEVELOPMENT CATALYST

7.6.4 CI VENTURES GK WINDOW

Funders sounded

Funders sounded

Broad consultation about SMME Development sector players in the Greater Kruger,
including government, private sector and civil society actors active in this field.

Objectives, targets, and SMME development (granting, incubation, technical assistance) with a sector (tourism,
investment mandate of rural development and natural resource management) and spatial (Greater Kruger) focus.
funders
Funder’s strategy
regarding the relevant
field(s) that applies tothis mechanism (e.g.
water, biodiversity,
enterprises)

The ED catalyst aims to build a healthy pipeline of nature-positive enterprises for existing
ED funds by addressing incubation level, pre-investment CapEx and OpEx grant financeneeds for SMMEs in existing private sector supply chain aggregators. Examples ofaggregators are:• Multiple European and US-based foundations.
• GEF/GCF grant funding windows
Objectives, targets, and DFIs: Overwhelming interest in growth of SMMEs, job creation, and increased
investment mandate of incomes. Some DFIs (France, UK, Germany) are more forward thinking and interested
funders
in biodiversity and carbon impacts, but potential grant funding needs to fit within predefined development programmes – little opportunity for pro-active development of new
programmes, which are centrally led and developed
Mandate: a combination of grants, recoverable grants, first-loss guarantees andinvestment capital (from investment arm of DFIs). Note – DFIs have significant capacity
relative to other donors discussed here.

Tourvest: Tourvest Destination Management (TDM) provides financial, mentoring andskills development to SMMEs in the tourism sector.
Bidvest: Enterprise and Supplier Development (ESD) programme that supports small
businesses in various sectors, including tourism. Support is financial and non-financial
assistance to emerging enterprises, creating sustainable employment opportunities, andencouraging entrepreneurship.

Foundations: Impact mandate varies significantly by foundation – some are moreenvironmentally focused and flexible around location/intervention and thus interested inanything from regenerative agriculture, to NTFPs, ecotourism, traditional conservation,
carbon etc.; others are geography/biome/species focused. Some are more interested ineconomic development and growth in green jobs.

The Sanlam Enterprise and Supplier Development programme focuses on providing
grants, mentoring, and training to qualifying businesses and entrepreneurs that meetcertain criteria. The programme aims to build sustainable enterprises, promote job
creation and grow supplier diversity.
Funder’s experience
and/or perceptions ofinvesting in nature/
natural landscape• Tourvest Destination Management has a positive perception of investing in nature
for tourism purposes. The company recognises nature-based tourism as a key
product offering. Tourvest’s strategy for nature-based tourism is to provide authentic,
immersive experiences that showcase the natural beauty and unique features of adestination.
• Bidvest has a positive view of investing in nature and natural landscapes,
recognising the value they hold for tourism and the impact conservation efforts canhave on the environment and communities.
• Sanlam perceives investing in nature and natural landscapes as an opportunity topositively impact both the environment and the communities it operates in whilepursuing sustainable investments in ESG factors.

Perceived risks funderassociated with thismechanism• Normal risks such as financial risk (losses), regulatory non-compliance, lowparticipation by enterprises, product and market failures and weak enterprisemanagement by business owner and staff.

Ways to address or
mitigate risks• Proper due diligence of participating enterprises and selection of enterprises
responding to a market need.
• Suitable offtake agreements that are within the scope of the SMMEs to meet.

What is their (orclient’s) appetite for themechanism (quantify
range where possible
in USD), over time

SMME aggregators are implementing various programmes in the Greater Kruger.
Although Individual funds are not interested in aggregating their funds into a single
mechanism, all funds would benefit from improved co-ordination in developing a pipelineof SMMEs and a pipeline of offtake agreements.

General thoughts fromthe investor about
the mechanism, nototherwise captured in
the above

SMME investment is a hot topic in South Africa and there are significant funds available
to support business development. However, a shortage of qualified mentors in remotelocations, as well as high barriers to market entry created by state-owned procurement
systems and the high quality of products required by the private sector make it difficult tobe successful without dedicated local knowledge and local implementation support.

Access to reliable banking services, telecommunications and professional behaviour are
obstacles to SMME funds wishing to invest in rural areas.
Based on the funder
feedback, howlong would it taketo execute such amechanism?

9494

Mandate: Significantly more flexible; all are currently in traditional grant-making, withsome actively making impact investments or trying to explore the topic. A recoverable
grant window would land here, although capacity to give by any one foundation is limited
relative to DFIs
GEF/GCF grant: See feedback on DFIs. GEF and GCF generally take the same approachand have flexibility across both grant and non-grant instruments. It is worth noting that theprocess is onerous and takes ~2 years.
Funder’s strategy
regarding the relevant
field(s) that applies tothis mechanism (e.g.
water, biodiversity,
enterprises)

Since investors are already active in the Greater Kruger, proper planning lead times
would help to ensure investor can start to implement as soon as needed.

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP• CI Ventures will target green Enterprise Development• DFIs: Green ED is core to the goals of DFIs, alongside ambitions around biodiversity,
reducing deforestation, rangeland restoration.
• Foundations: For some, largely in line with DFI approach where green ED is
important in and of itself, and the ‘green’ angle is a nice impact upside. For other,more environmentally focused foundations, green ED is viewed as a pathway
for creating environmental impact – so equal weighting is likely given to both
environmental and economic outcomes.
• GEF/GCF: Largely in line with DFI approach where both environmental andeconomic/social outcomes are equally weighted.

Funder’s experience
and/or perceptions ofinvesting in nature/
natural landscape• DFIs: Have been granting many millions to nature for a number of years out of
their development programme arms, and are sophisticated and comfortable withthis space. Out of their investment arms they have made almost zero investment innature – some DFIs have experience in forestry or agriculture – but nature as aninvestment theme is new to them (but relatively old as a grant-making theme).
• Foundations: We undertook market testing with 2 main types of foundation: thoseinterested in nature/environment, and those interested in economic development.
There is an overlap between the two. Foundations interested in ED are increasinglyinterested in green growth/jobs, and those interested in nature are increasinglyinterested in SMMEs and green growth as a pathway for nature conservation. We
have spoken with corporate foundations, and they are generally focused on themesthat impact their business (Coca Cola – interested in water and plastics for example).

The primary opportunities for aggregation relate to improving the process of preselecting investment ready SMMEs and linking them to existing supply chain
opportunities.

A dedicated landscape Enterprise Development Unit able to pre-select and pre-approve
SMMEs in line with real time market opportunities would make it easier for SMME Funds
to invest.

• Multiple development arms of European development finance institutions (DFIs)• GEF/GCF: These bodies were created to invest and grant in this space and thus
very comfortable with supporting both nature and green ED
Perceived risks funderassociates with thismechanism

Risks perceived with this strategy are quite consistent across the different funder types,
and that is the ability to find sufficiently sophisticated, scalable, profitable businesses
capable of absorbing investment capital, and that are having a direct impact in and on the
Greater Kruger landscape.

Ways to address or
mitigate risks

Mitigation: proposing a series of different vehicles capable of supporting businesses
through the life cycle from incubation through to investment, as well as by identifying
potential investees that aren’t necessarily based in the landscape but have a direct orindirect impact on it.

FINANCING STRATEGYAPPENDIX
GKSDP

9595

7.6.4 CI VENTURES GK WINDOW

7.6.6 GREEN ENERGY STRATEGY OF KNP

DFIs: USD 1-10 million
What is their (orclient’s) appetite for the Foundations/HNWIs: USD 500k – USD 2M
mechanism (quantify
GEF/GCF: USD 2-25M
range where possible
in USD), over time

Funders sounded

If a “No” on appetite,what would it take forthe funder to make theinvestment

n/a

General thoughts fromthe funder regarding
the mechanism, nototherwise captured in
the above?

n/a• Track-record in private power agreements (PPAs)• Capability to install and manage multiple sites of embedded generation• Experience in projects with 15MW and above• Working knowledge of the Public Finance Management Act (PMFA) and theEskom Cost Estimate Letter/Budget Quote process

n/a
Recommended
refinements/changes tomake the mechanism
more executable
Based on the funder
feedback, howlong would it taketo execute such amechanism?

Three potential independent private power producers (IPPs) in this market segment
were approached to test viability of the project and to gain additional insight into the
proposed transaction. The companies selected had to have the following:

Up to 2 years given timelines for DFI and GEF/GCF approval of capital

7.6.5 GROWTH FUND

Objectives, targets, andinvestment mandate offunders

Due to the nature of the specific opportunity the funders are companies which havethe technical capability and track-record to deploy approximately 15MW Grid-Tied
Solar PV to multiple sites and manage the sites under a Private Power Agreement.

Funder’s strategy
regarding the relevant
field(s) that applies to thismechanism (e.g. water,
biodiversity, enterprises)

All the IPPs approached have the capability to develop the project and enter into a
PPA with the KNP. The mechanism is an established one in the market.

Funder’s experience
and/or perceptions ofinvesting in nature/naturallandscapeThe IPPs have experience in installing and managing medium- to large-scale rooftop
and ground-mounted solar photovoltaic (PV) projects for a variety of clients. The
experience is not specific to the natural landscape, but it is a capability that can be
executed in a natural landscape.

Perceived risks funderassociates with thismechanism and ways toSpecific to the opportunity: The greatest risk identified, for SANParks, is in thefeasibility and scoping phase of the project. If there are errors in the feasibility andscoping of the project, it will jeopardise the success of the entire project as the bids
and proposed solutions will be based on incorrect information. It was highlighted that
SANParks would need to invest in the relevant technical expertise to develop thescope for the RFP. One IPP recommended that KNP should invest in collecting dataon usage now, by installing meters that can collect data at 30-minute intervals at
each of the camps. The data would be critical in the development of the scope.

address or mitigate risksThis fund is still in the concept development stage and a full set of comprehensive interviewee responses wasthus not possible. Initial high-level inputs from potential funders such as BII, FMO, Norfund, IFU, and Finnfund werecollated and can be summarised as follows:• Biodiversity and nature are relatively new investment topics that compete with rival trends for ever bigger
commercial deals. However, the focus on climate is bringing these topics to the fore.

Selection of EPC is critical because companies who specialise in ground-mounted
systems (and at this scale) are different from those who specialise in roof-mounted
systems. Risk can be mitigated by ensuring the correct technical expertise isincluded in the scoping and evaluation of the RFP. It is a bespoke, complex systemthat will require specific expertise to executive successfully.

• There are DFIs with concessional windows where some of this mandate could be more applicable.
• Blending and risk mitigation would help.
• Few (if any) of the funders have dedicated fund allocations for this sub-sector as yet.

Contextual risks: In SA there is a shortage of skills in the renewable energy sector
to execute this specific type of project and a limited number of people with the rightexperience and expertise in the industry. General engineering skills exist but limited
skills related directly to renewable energy projects.

• Landscape approaches are still broadly viewed as possibly limiting deal flow for commercially viable deals.
• Overall, funders displayed an interest in the space.

Community benefit and buy-in was highlighted as critical especially because
KNP opts for a centralised solar plant outside the border of KNP. Providing lower
cost, reliable power to surrounding communities is a strong mitigant, and it wasrecommended that SANParks increase its knowledge of the potential opportunities
relating to this associated with SANPark’s distribution licence.
What is their (orclient’s) appetite for themechanism (quantify range
where possible in USD),
over time

All the IPPs interviewed expressed interest in the opportunity and if they were able tosecure the necessary finance would put in a bid if there was an open RFP issued by
SANParks.
The IPPs all believed that it would be valuable to participate in this type of opportunity
which has a broader positive impact for South Africa and would make a contribution
to the preservation of the Kruger National Park.
Different approaches were recommended in terms of the design of the system. The
majority of the IPPs recommended decentralised embedded generation at eachof the key camps while one IPP recommended a combination of a centralized anddecentralized model. The different approaches highlighted the need to invest in thecorrect independent technical capability to advise SANParks on the scope, design
and technical specifications of the RFP.

If a “No” on appetite, what Access to finance is one constraint that was identified that would prevent an IPP fromwould it take for the funder bidding on the RFP. The financing would need to be secured, by the IPP, before theto make the investment
bid as there is a need for substantial working capital to implement and manage a
Private Power Agreement (PPA)96
96

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

FINANCING STRATEGYAPPENDIX
GKSDP

9797

7.6.6 GREEN ENERGY STRATEGY OF KNP
General thoughts fromthe investor regarding themechanism, not otherwise
captured in the above?

High possibility of attracting concessional funding into the project due to theimportance and interest in nature conservation and the KNP as a national asset.

Funders sounded

An IPP highlighted the increased security risk that the KNP is facing due toloadshedding. The security system and technology is compromised duringloadshedding and the design of the final solution should take into account the remotesecurity technology and game warden lodges.
There are other solar projects which are taking place in the vicinity of the KNP likein Phalaborwa and at the private game lodges in the Greater Kruger region andthe possibility of a broader collaboration was raised. It would add complexity to theproject.

Corporate – Youth Employment Service (YES)
Although YES provided insightful feedback for the purposes of this initial sounding,
it is recommended that the Presidency (PYEI), IDC, SEF, and SANParks (existing NRM
programme) are sounded out at a later stage (as this mechanism develops) for othertypes of jobs.

Recommended employing renewable energy expertise to assist in evaluating thetenders submitted to ensure that a company with the right capability is selected
to deliver on the RFP. Due to the technical nature of the project, it is critical that acompany with the right skills, experience and access to finance is selected.
The fees for this type of expertise can be charged as a % of the total contract,which is the industry standard, or at an hourly rate on an activity-based costing. It isestimated that this can range from between 1% to 5% of the total project cost.

98
98

7.6.7 JOBS CREATION PROGRAMME

Objectives, targets, andinvestment mandate offunders• Incorporate Greater Kruger into the Tourism and green angle of their strategic
focus• Environmental Tourism (but still need to understand clear theories of change forthe youth)• Pathway to job absorption (not DTI definition) for the young people• Integrate ESG/SDG

Funder’s strategy regarding
the relevant field(s) thatapplies to this mechanism(e.g. water, biodiversity,
enterprises)• Green (broad – including renewables) jobs
• Creative industry jobs
• Tourism jobs (future focused sector and cross-cutting for all other corporate
sectors)• Digital jobs

Appointment of a project team with a mandate to work with SANParks to secure
Recommended
the budget for the technical assistance is required to enable the execution of therefinements/changes tomake the mechanism more opportunity.
executable

Funder’s experience and/or
perceptions of investing in
nature/natural landscape

YES facilitates 32,000 jobs a year (across sectors and regions in SA)

Based on the funder
feedback, how long would
it take to execute such amechanism?

Risks that funder associateswith this mechanism

Creating a specific place-based, sector-based commitment is challenging.

Ways to address or mitigate
risks

Mitigation: Starting with a manageable number of jobs would mitigate the risk.

What is their (or client’s)
appetite for the mechanism(quantify range where
possible in USD), over timeShows enthusiasm to invest (given a clear and attractive pathway).

Recommended refinements/changes to make themechanism more executable

Set up a working group for implementing partners – compile a list of IPs operatingin the GK landscape and facilitate via the working group when calling on partners tojoin the initiative (onboarding new implementing partners individually is otherwise
time consuming).

Based on the funder
feedback, how long would
it take to execute such amechanism?

Uncertain at this stage, subject to defining clear pathways and setting up IP working
group.

The time to execution is dependent on the ability of SANParks to secure funding
for technical assistance to develop the scope of the opportunity and to obtain theapproval of National Treasury for the transaction.

UNLOCKINGGREATER KRUGERFINANCING STRATEGYGKSDP

For Mpumalanga and Limpopo (tourism and green sectors) – 300 jobs a year
sounds manageable (i.e. about 30% contribution towards the estimated 1,000 jobs
per annum envisaged under this mechanism).

FINANCING STRATEGYAPPENDIX
GKSDP

9999

TABLE 7.1: Summary of feasibility results
FINANCINGMECHANISM

AFRICANCONSERVANCIES FUND

WILD DOGS BOND

Umbrella financing
theme

Protected Area Financing

Biodiversity Financing

ENTERPRISE CATALYSTCI VENTURES

GREATER KRUGER N+
FUND

Green Economies

KNP GREEN ENERGYSTRATEGYJOB CREATION PROGRAMME

Financing Green Energy
Initiatives

Jobs Financing

TYPES OF FUNDERSSOUNDED
DFI/multilateral✔

✔

Government

✔

✔

✔

Impact funder (e.g. NGO,
NPO or environmental
agency)✔

✔

✔

Corporate

✔

✔

✔

✔

✔
✔

✔

Bank
Non-bank FI✔

Donor/ philanthropic✔

TARGETS/ OBJECTIVES/ MANDATES
Impact and investment into
biodiversity tracked via metrics.

Varies, noting minimum market
return is needed for some.

SMME development in tourism,
rural development and natural
resource management within GK.

Varies in terms of impact andgeographical focus.

Impact and investment into
biodiversity tracked via metrics.

Technical capability managing
Integrate ESG/SDG; incorporate GK intogreen energy projects for a variety
environmental tourism.
of clients.

Green ED (across a numberof sectors) is a focus for most.
Varied focus across job creation,
biodiversity, carbon, restoration.

Varies, depending on availability ofconcessional windows.

Focus on green and renewableenergy initiatives.

Focus on jobs (youth) and touching on naturepositive sectors such as green (including
renewable), tourism, digital and creative.

General comfort with the space.

Biodiversity and nature are
emerging with increased climate
focus.

Track record in PPAs andmanaging large-scale projects.
Not applicable to nature, but canbe extended to include.

Very experienced in job creation among youth.
Nature-positive needs to be future focused to
attract youth.

Securing a specific place-based, sector-based
commitment is challenging.

DEGREE OF STRATEGIC FOCUS ON TOPICS
Address finance needs of SMMEs
Note the importance of investing inin private sector supply chain
Climate change adaptation, carbon,
biodiversity coupled with strategic
aggregators to build a pipeline ofconservancies, SMMEs, water,
relevance of both impact andnature-positive enterprises for ED
biodiversity, job creation.
financial return.
funds.
LEVEL OF EXPERIENCE IN AND/OR PERCEPTIONS
Mostly in carbon. Perceptions oflimited products for investing,science and data.

No experience in Nature bonds,
Investors active in GK.
only Green and Sustainable bonds.

RISK PERCEPTIONS
Unknown profile of conservancy
loans, execution risk, currency risk
management.

Implementation risk, lower thanmarket return is earned.

Financial risk (losses), regulatory
non-compliance, low participation
by enterprises, product and market
failures and poor management.

Ability to find sophisticated,scalable, profitable enterprises to
Minimal experience and allocations
absorb investment capital (within funds for this sub-sector.
direct impact within GK landscape).

Feasibility and scoping phase;engineer-procure-construct (EPC)
selection; execution risk due tocomplexity; lack of specialised
skills and experience; community
benefit and buy-in.

Largely dependent on return
profile of the bond, but generalenthusiasm expressed.

No interest in aggregating funds
into a single mechanism but funds
would benefit from co-ordinationof a pipeline of SMMEs and offtakeagreements.

“DFIs: $1-10M
Foundations/HNWIs: $500k-$2M
GEF/GCF: $2-25M”

Interest expressed by all to submit Demonstrated enthusiasm to invest (given a
bids.
clear and attractive pathway).

Return enhancement using carbon
or biodiversity credits; floating rate
structure; higher deal/project size;
degree if risk sharing taken by
OBFs.

A project team with a mandate
to secure off-take/purchaseagreements for SMMEs fromSANParks and private landowners
will facilitate greater investment
into ED through existing ED
funds not already active in thelandscapen/aOverall interest displayed

Appointment of a project teamwith a mandate to work withSANParks to secure a budget fortechnical assistance (TA).

Establish an IP Working Group to facilitate
onboarding and co-ordination. Organisations
registered with jobs aggregators such as YES
have delivery experience with the Presidential
Employment Stimulus or Jobs Fund and canunlock funds for collaborative implementation
more easily than newly established entities;
track record is crucial.

Varies depending on credit
approval processes.

With well-planned lead times
investors can implement whenneeded.

Up to 2 years

Too early to tell

Depends on timing of securing
TA and approval of National
Treasury.

Uncertain at this stage, subject to defining
clear pathways and IP onboarding.

POTENTIAL LEVEL OF INTEREST

General positive feedback.

Blending/risk mitigation would
benefit this mechanism.

TYPES OF REFINEMENTS OR CONSIDERATIONSn/a

EXPECTED EXECUTION TIMEFRAME
6 months to 2 years

100
100

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

FINANCING STRATEGYAPPENDIX
GKSDP

101101

7.8
1.

REFERENCES

Department of Environmental Affairs (DEA) and South African National Biodiversity Institute (SANBI)– (2016). Strategic Framework and Overarching Implementation Plan for Ecosystem-Based
Adaptation (EbA) in South Africa: 2016 – 2021. DEA, Pretoria, South Africa.

2. DEA (2017). Ecosystem-based Adaptation (EbA) guidelines.
3.

Department of Forestry, Fisheries and the Environment (DFFE) (2019) National Climate Change
Adaptation Strategy.

4.

GEF and World Bank, Press release, March 23, 2022. “Wildlife Conservation Bond boosts South
Africa’s efforts to protect black rhinos and support local communities”.

5. Greater Kruger Landscape (website) https://www.greaterkrugerlandscape.co.za/.
6. Greater Kruger Strategic Development Programme (GKSDP). Decision-makers summary. September
2020.
7.

GKSDP. Meta Analysis.

8. GKSDP. Stakeholder Engagement Strategy.
9.

GKSDP. 17.10 Project summary.

10. Great Limpopo Transfrontier Conservation Area Cooperative Agreement.
11. International Finance Corporation (IFC), (2022). Terms of Reference for the Landscape Financing
Strategy for Greater Kruger Area, South Africa.
12. IUCN (2021), Management Effectiveness Tracking Tool (METT).
13. RSA (2011). White Paper on the National Climate Change Response. Government Gazette No.
334695, Notice No. 757 of 19 October 2011. Pretoria: Government Printer.
14. RSA (2012). National Development Plan 2030: Our Future – make it work.

CONTACT DETAILSIFC and UNDP:
Hermione Nevill – hnevill@ifc.org
Nokutula Mhene – nokutula.mhene@undp.org
SANParks:
Noki Maier – nokimaier@outlook.com
Oscar Mthimkhulu – Oscar.Mthimkhulu@sanparks.org
On behalf of the consortium:
Justine Ganess (CSA) – jganess@conservation.org;
Julia Levin (CSA) – jlevin@conservation.org
Editorial design, graphics and layout:
Quba Design and Motion i info@quba.co.za

102
102

UNLOCKINGGREATER KRUGERFINANCING STRATEGY
GKSDP

FINANCING STRATEGYAPPENDIX
GKSDP

103103

104

UNLOCKING GREATER KRUGER