State of Conservancy book 2005

Namibia's communal conservancies: a review of progress and challenges in 2005

Chapter 4: Benefits

Sources and uses of financial and economic gains

One of the central aims of the CBNRM programme is to improve the livelihoods of rural people through the sustainable use of natural resources. The sums of money now being earned in this way are considerable (almost N$20 million in 2005; see Figure 15). Most importantly, these are new or additional activities which give many households access to cash and other benefits that they never had before, and that would not have been possible prior to the passage of innovative conservancy legislation in 1996. This chapter concentrates on these tangible incomes, while a variety of less tangible gains are described in Chapter 3.

Most benefits have been generated through conservancies, with the 'earning power' of conservancy-based activities being greater than those of all other CBNRM activities. In 2005, conservancies earned more than N$13.7 million, which represents approximately 69% of the total CBNRM income of N$19,943,767. This represents an increase of 61% from 2003 and demonstrates the prominent role that conservancies now play in generating benefits through CBNRM activities. These incomes were generated from many different activities, and the money has been used in a variety of ways.

Figure 15. Incomes from CBNRM have risen from nothing in 1994 to almost N$20 million in 2005. The graph divides income into three categories: cash payments to conservancies, non-cash or in-kind incomes to conservancies, and incomes to CBNRM activities outside conservancies. Information prior to 1998 did not allow for income to be divided into these three categories. The actual values are shown in Namibian $ in the table below, and cover incomes to both registered and non-registered conservancies.

Following the registration of the first four conservancies in 1998, income and benefits have grown steadily, from less than N$600,000 in 1998 to the current N$13.7 million in 2005. Much of this growth has coincided with the parallel growth of the tourism industry. Indeed, conservancies have earned much more from tourism than any other activity. It has also been opportune that growth in tourism has coincided with the development of conservancies and legislation that provide rights for registered conservancies to benefit from tourism. The spectacular scenery, rich cultures and burgeoning wildlife populations in many conservancies have attracted increased private sector investment, particularly in the form of partnerships or joint ventures with conservancies to develop tourism lodges. In turn, this has brought larger numbers of tourists to these conservancies. From a conservancy perspective, the Kunene and Erongo regions continue to attract the majority of tourists. However, there has also been a resurgence of tourism development in Caprivi and modest growth in both the Kavango and the North Central Regions.

Types and sources of benefits

Table 5. The total value of income each year to conservancies and other CBNRM activities unrelated to conservancies.

Conservancies obtain benefits from a variety of different sources (see below and Figure 16). Income in the form of direct payments to conservancies and wages comes mainly from joint venture lodges, trophy hunting, small enterprises (e.g. campsites), craft sales and sale of game. In addition, some benefits are non-financial or 'in-kind' such as meat from hunting or other contributions (computers, education materials, equipment, etc.) to local social or economic development activities primarily made by joint venture partners. In 2005 non-financial benefits accounted for 17% of the total. Table 5 also shows additional income of more than N$6 million from other CBNRM activities. This income is generated from activities that are either outside conservancies or, in the case of those inside conservancies, where there is no formal relationship between the particular enterprise and the conservancy. This can occur where the enterprise pre-dates the formation of the conservancy. The majority of this N$6 million is generated by small tourism enterprises (campsites, traditional villages and tour guiding), thatching grass and crafts.

Table 6. The value of income from different sources in 2005, and the percentages that each source contributed to all income.

By far the most lucrative source of income is from joint venture tourism lodges and camps in which conservancies negotiate a levy or income sharing agreement. A total of N$7,643,943 was earned from these ventures during 2005, representing 56% of all conservancy income. This is a clear indication of the successful approach of bringing registered conservancies with tourism potential together with private sector investors who recognise a viable tourism opportunity and help conservancies 'unlock' this potential. In these joint ventures, both partners are bringing something of value to the table. The conservancy brings the tourism development rights, a commitment to actively manage the natural resources (especially wildlife), and a desire and willingness to learn and become involved in the tourism industry. The investor brings capital, expertise in tourism and access to the market. The partnerships are structured in ways to maximise benefits to both parties.

At the end of 2005 there were 10 formal joint venture agreements that were operational and generating income for conservancies. A further six conservancies were receiving income from operators for traversing or resource utilisation. In addition, there are currently 13 potential joint venture agreements under negotiation. This further demonstrates recognition by the private sector that conservancies offer value and are the legitimate rural partners for tourism development and the management of the natural resources upon which the future of the tourism sector depends. Since 1999, more than N$21 million has been generated for conservancy members from joint venture lodge agreements.

Figure 17. Incomes earned by conservancies from joint venture tourism and trophy hunting, respectively, increased about nineteen and seven-fold between 1999 and 2005. Incomes from other uses of own game increased more than ten-fold between 2001 and 2005.

Although there are several joint venture agreements in operation and others being negotiated, the structure of these agreements is under constant review. Conservancies have placed high priority on negotiating the best terms from joint venture lodges and camps for both partners. Existing options for financial benefits include direct revenue as a percentage of net turnover, a flat concession fee paid annually, a monthly lease fee, or a levy for every bed night sold by the lodge. Many agreements include a combination of these options. The development of 'non-financial' social infrastructure, such as schools and clinics, has been included in several contracts. All agreements include clauses for minimum performance to protect conservancies and operators against non-performing partners. Strict clauses regarding environmental impacts are included and, most importantly, conservancies have ensured that contracts provide jobs and build skills of local conservancy members. However, future agreements may explore other opportunities, such as community shareholding, with conservancies accessing and bringing capital to the partnership. This could strengthen both the business relationship and enhance the community share of benefits. It is clear that with so many opportunities for joint venture partnerships, different options are available to secure a sound business-oriented agreement that satisfies the needs of both parties.

In terms of its contribution to conservancy income, trophy hunting increased in real terms but declined as a percentage of total income from 36% in 2003 to 27% in 2005. Trophy hunting concessions currently provide the second highest source of income for conservancies, in 2005 generating N$3.6 million, of which 78% was from concession fees and 22% from meat distribution. By the end of 2005, 12 concessions extending over 16 conservancies had been allocated to professional hunters. A further five conservancies have approved trophy quotas and will be entering into agreements with private sector hunters in 2006. Although meat distributed from trophy hunting is an 'in-kind' income, it is a very direct benefit for communities. Its value amounted to some N$774,567 in 2005. Apart from the nutritional value of meat, its distribution also strengthens local support for wildlife and conservancies because people see the link between wildlife and conservation in the form of a tangible, immediate benefit.

In 2005, the total income generated from direct wildlife utilisation was N$4.93million or 36% of all conservancy income. Most importantly, whilst the total income from wildlife utilisation has increased, it is the diversification of different types of wildlife utilisation that has been significant. For example, there was an impressive increase during 2005 in income generated by other direct wildlife utilisation activities including 'premium' hunting, 'own-use' hunting, 'shoot and sell' and live game sales. Income generated from these activities totalled N$1.34 million. Over the years between 1999 and 2005, conservancies have cumulatively earned a total of N$16.7 million from direct wildlife utilisation.

All other sources of conservancy income were considerably smaller than those provided by joint venture lodges and camps and trophy hunting/wildlife utilisation. Thus, fees charged at camping sites and other community-based tourism enterprises (CBTEs) provided 4% of total income (N$518,355) to conservancies in 2005. Another 3% (N$423,223) was generated by the sale of craft, while the sale of veld products (in the form of melon seed) generated 0.5% (N$48,500) of income for a newly registered conservancy in Oshikoto. Interest earned on accumulated funds and miscellaneous items comprised the remaining 1.3% (N$176,598). While these other income categories are relatively small in overall terms, they do provide substantial benefits to some conservancies and to individual members, for example women in the case of crafts.

Although this gives a general overview of income sources across all conservancies, there is considerable variation between individual conservancies. This variation is both in terms of total income earned and sources of income (Figure 18). There is however, a steady increase in the number of conservancies now earning income and in the variety of sources of income. In 2005, 27 of the 44 registered conservancies received some form of benefit, compared to 19 conservancies in 2004. Of these, 12 conservancies generated N$140,000 or more that could be used to cover the operational costs of conservation, resource management activities and begin to provide benefits to members. Eight conservancies made incomes in excess of N$250,000 per year and were either already covering all their own operating costs or were well on the way to achieving financial independence.

Figure 18. Incomes vary greatly between conservancies, both in terms of how much they earn and the sources of revenue. Some conservancies depend largely on one kind of income while others have a range of different sources. The histograms show how incomes have changed over the years in each area, while the pie diagrams show the different sources of income for each conservancy during 2005. Information is shown for 14 conservancies. Of the remaining conservancies, 15 had income ranging up to N$770,000 and 15 others had no income in 2005. Note that the y-axis scales differ between some of the conservancies.

The pie charts and graphs in Figure 18 show how conservancies differ in the activities from which they earn benefits. Perhaps the most significant variation lies in the amounts of money that different conservancies have earned. Those that now have the highest incomes are the conservancies with attractive resources for tourists and trophy hunting. They have also been able to exploit these opportunities commercially, primarily through joint ventures.

Private sector partnerships

• There are currently 22 formal joint venture agreements between conservancies and private sector partners.

Benefits

• In 2005, joint venture agreements for tourism and wildlife utilisation were responsible for N$11.24 million or 82% of all conservancy income.
• The 10 joint venture lodges and 12 hunting concessions generated N$7.64 million and N$3.6 million of benefits respectively for conservancies in 2005.

Capacity

• Joint venture lodges provide 307 full-time and 58 part time jobs in remote rural areas of the country where unemployment is highest and livelihood opportunities extremely limited. In addition, agreements with trophy hunters provide a further 67 jobs.
• Apart from wages earned through employment, all agreements have a strong focus on training and skills development. For example, as part of the agreement with hunters, 49 conservancy members have received training. This includes a few members who have been trained as Professional Hunting Guides and are now qualified to coordinate hunting activities within their own conservancy as well as hunt elsewhere.

Unlocking potential

• Engaging in partnerships with the private sector has allowed conservancies to access resources they currently lack. In particular, private sector has brought capital, tourism and hunting expertise and access to the market (tourists).
• In addition, agreements are structured in a way that recognises that the conservancy members want to develop tourism skills and business awareness. This will ensure that they are in a position to share more of the business risk in the future if they choose to be more actively involved in the development and management of tourism businesses in their conservancy.

The uses of financial benefits

What happens to the substantial amounts of money earned by conservancies? More specifically, how is this income used, who benefits, how much reaches members of the conservancies, and what proportions are spent on management? Answers to these questions can be provided from an analysis of disbursements in 2005. It is important to note that the analysis does not account for all income in 2005 because funds are carried over from year to year. This means that a portion of funds spent in 2005 accrued from earnings in previous years, while some 2005 income will only be used in 2006 or thereafter.

In 2005 a total of N$11,111,809 was disbursed, the money broadly going to either the management of conservancies or as wages and benefits to member households. These were the total payments in 29 of the 44 registered conservancies; the remaining 15 newly established conservancies had no income or expenditure. Note that the N$11,111,809 had been earned in and by conservancies, and excludes any spending by donors or other support agencies.

By 2005 a total of 17 conservancies were contributing to their own operational costs. Several conservancies still receive support from external donors and a few conservancies have avoided the need to cover operational costs by keeping management to a minimum (as in Oskop). In 2005 conservancies spent approximately N$3,370,780 of their own income on conservancy management to cover running costs, capital developments and the employment of staff (Figure 20). This amounted to approximately 30% of all conservancy funds disbursed in 2005. The number of self funding (financially independent of donor or external support) conservancies has risen from four in 2003 to eleven in 2005. Uibasen became self-funding in 1999, Torra in 2000, and Salambala and Nyae Nyae in 2002, ?Khoadi-//Hôas, Doro !nawas, Kwandu, Mayuni and Wuparo in 2004 and Mashi and Tsiseb in 2005. Annual operational costs - ranging from N$90,000 to N$450,000 in different conservancies during 2005 - cover the running of conservancy vehicles (two in some conservancies), salaries and benefits for Community Game Guards, Community Resource Monitors, Field Officers, Managers and administrative staff, allowances for committee members, money for travel, meetings, insurance, office administration and training activities

In addition to the 11 conservancies that cover all their own costs, a further six conservancies have begun to pay parts of their own costs, some contributing up to 85% of costs (Ehirovipuka, Marienfluss, Puros, Uukwaluudhi, Sorri-Sorris, King Nehale). Of these 17 conservancies, 14 employ and pay 141 full-time and 26 part-time positions, while donor support covers the salaries of another 68 full time staff. Conservancy funded jobs have increased more than threefold in value from N$480,906 in 2005 to N$1,660,758 in 2005. (Figure 20). In addition to the day-to-day running costs of conservancies, several conservancies have funded the establishment and maintenance of conservancy infrastructure. For example, Salambala and ?Khoadi-//Hôas provided funds for the upkeep of the conservancy campsites whilst Nyae Nyae continued to fund the maintenance of water points for villages and wildlife, as well as the upkeep of the conservancy boma. In Salambala, Marienfluss and Puros funds were used to purchase water pumps for boreholes within the conservancies. Twyfelfontein-Uibasen has been independent financially since its establishment, and has used some of its funds to build its own offices, purchase two conservancy vehicles and other equipment.

Figure 19. About N$11,111,809 of funds earned by conservancies was paid out in 2005. The histograms show disbursements in a select number of conservancies. Payments for private sector and conservancy jobs have been pooled, and note that scales of N$ values on the y axes differ between the conservancies.

All other funds went to members of the conservancy in one form or another. Spending on these categories - private sector jobs, cash payments, household meat, and social benefits - add up to about N$7,741,030 and represent 70% of all payments in 2005. As was the case in 2003, the greatest proportion (46%) went to private sector jobs, with 355 full-time and 1,029 part-time people employed by joint venture and community-based campsites and other tourism enterprises, and trophy-hunters.

The next highest category of spending was the provision of meat from trophy hunting and own use quotas to members. This rose steeply from 4% in 2003 to 12% of all spending in 2005, with the value of meat distributed totalling N$1,787,433. This meat came from the hunting of conservancy game and from trophy hunters. During 2005 a total of 21 conservancies distributed meat and skins to their members from animals that had been allocated as quotas for the conservancy's own use. This was a marked increase from 11 conservancies that benefited from this form of use in 2003. Conservancies in the Caprivi were included for the first time. In addition, the members of 16 conservancies received meat from trophy hunting conducted in their areas. Several conservancies supplied neighbouring conservancies and traditional leaders with meat for local festivities. Various conservancies used quotas to supply meat for local pensioners and school children, or for important occasions such as conservancy planning sessions and annual general meetings.

The last two categories, social benefits and cash payments made up the remaining 8% of conservancy spending. Cash disbursements to members totalled N$450,217 and were made in five conservancies. The payments were made directly to members, or to villages in areas where the number of members was too large to make individual payments viable. In 2005 Nyae Nyae Conservancy paid out N$300 to each of its 770 members, while Salambala made cash payments to 19 villages totalling N$28,500 from funds generated by its trophy hunting contract. Twyfelfontein Uibasen made its first cash payment to members, disbursing N$157,377 to the households of its approximately 60 members. Mayuni distributed a total of N$24,000 to the three main villages in the conservancy while the King Nehale Conservancy paid out a total of N$15,340 to members involved in the production of crafts and Kalahari Melon seed. The total amount of cash payouts was less than in 2003 although the number of conservancies making disbursements rose from three to five. A number of conservancies responded to members' requests to put funds towards projects or other social schemes rather than pay cash amounts out to members. Thus, while cash payments were only 60% of those made in 2003, the amount put towards social benefits for conservancy members more than doubled from 2003 to 2005 (Figure 20).

Figure 20. Spending by conservancies has almost doubled since 2003, rising from a total of N$6,352,886 to N$11,111,809 in 2005.

Eleven conservancies donated funds for social development, and in 2005 these amounted to over N$465,032 or 4% of all disbursements. For example, Marienfluss paid N$15,000 towards the local mobile school, ?Khoadi-Hôas donated a total of N$25,000 to two local schools, Mayuni gave N$5,000 to each of its two local schools and Torra gave money towards youth development projects and the maintenance of the school computers. Several conservancies donated money to local soccer teams and sports events. Tsiseb (N$22,550), Salambala (N$20,000) and Mashi (N$7,000) all made donations to their local traditional authority. Soup kitchens and pensioners received ongoing support in ?Khoadi-//Hôas and Torra. As per their benefit sharing plan, ?Khoadi-//Hôas continued to provide diesel for elephant water points as well as compensating members for costs incurred from elephant damage and losses from predators. Money was donated to the local farmers' association in Torra, and ?Khoadi-//Hôas continued to put money aside for its small-stock loan scheme. A new type of spending was noted in 2005 when money was put aside for formal conservancy savings and investments other than investment bank accounts. Salambala and Twyfelfontein Uibasen invested money in formal annuity schemes, whilst Tsiseb began a local micro-finance scheme. ?Khoadi-//Hôas again put money into the local trust fund.

Contributions to the Namibian economy

In terms of total benefits to communities, the CBNRM programme earned N$19,943,767 in 2005, most of which was generated through conservancies (Figure 15). This was the household or community income in cash or material benefits that could be measured. Several additional economic benefits of the CBNRM programme can be estimated, however. First, private sector lodges and camps earn other income which is not distributed in conservancies, for example as salaries for people outside the conservancy and government taxes. Second, tourists drawn to these tourism activities also spend in the wider national tourism sector, generating direct income for urban hotels, airlines and car rental companies, for example. Third, tourism and other enterprises use products, such as food and fuel, from other sectors in the economy, and this generates further income. Fourth, part of all this new income earned by households, firms and government gets re-spent in the economy during further rounds of spending, produce further income generation. In this way, the initial direct benefits generated by conservancies and other CBNRM activities, induce further impacts on the economy, through so-called 'linkage and multiplier' effects.

All the economic contributions described here may be termed contributions to net national income (NNI). The NNI can be defined as the value of the goods and services that economic activity - in this case CBNRM activities - make available to the nation. In 2005, the NNI contribution had reached an estimated N$144 million, and the total cumulative NNI over these years amounted to about N$530 million (Figure 21). These figures were adjusted for inflation to be equivalent to the value of Namibian dollars in 2005. The contribution made by CBNRM to NNI should include adjustments for stock appreciation, and Figure 21 shows an additional economic benefit of conservancies. This is the accumulated capital value of increasing wildlife numbers, which many people conclude to be a direct consequence of CBNRM activities. The incremental value of the animals produced is therefore seen as an extra economic benefit of conservancies. The animals' value is taken as their monetary value 'on the hoof ' i.e. the value they could fetch if they were to be sold or harvested commercially. The total cumulative value of increased wildlife populations between 1990 and 2005 adds up to an estimated N$210 million.

Figure 21. Estimates of economic benefits resulting from the CBNRM programme between 1990 and 2005, shown by the columns of annual values of net national income (NNI) and increasing wildlife stocks in north-west Namibia. The shaded area is the value of investment or development spending each year on CBNRM. All values were adjusted for inflation and changing foreign exchange rates to be equivalent to the value of Namibian dollars (N$) in 2005.

The capital stock values of wildlife shown in Figure 21 are those attributed to growing numbers of wildlife in northwestern Namibia. If other factors - such as good rainfall and other conservation activities - also contributed to the increase, the stock appreciation values would not be due to conservancies alone, and the capital values would exaggerate the economic contributions made by conservancies. However, the figures provide at least an indication of the relative values of wildlife that have benefited from protection in conservancies. Moreover, possible exaggerating effects may be offset by the fact that other values have been excluded from the estimates in Figure 21. These are values for which there are inadequate data or measures. Perhaps the most important of these are the additional value of growing wildlife stocks elsewhere in Namibia and the economic value of local management institutions and capacity, including the training provided to people associated with conservancies.

The total value of NNI and increased capital value of wildlife in north-western Namibia from 1990 to 2005 amounts to a cumulative sum of about N$745 million. This is an impressive figure, which is increasing rapidly. But what investments have been made to achieve these benefits? Figure 21 shows the value of spending on the CBNRM programme each year. The cumulative value of these investments between 1990 and 2005 adds up to just over N$680 million. Donors supplied most of the funds, while the MET and NGOs also provided inputs, mainly as 'inkind' contributions, such as staff, vehicles and other kinds of support. The most important donor assistance has come from USAID; World Wild Fund for Nature (UK, International, USA and Netherlands); the Swedish International Development Agency (Sida); Department for International Development (Dfid); DANIDA, European Union, GTZ; UNDP; World Bank; Namibia Nature Foundation; Global Environment Fund (GEF); HIVOS; Canada Fund; Comic Relief; UK Lottery Fund; British High Commission; NORAD; Austrian Government and Royal Norwegian Embassy.

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