PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB6157 Sustainable management of Nyika Transfrontier Conservation Project Name Area project Public Disclosure Authorized Region AFRICA Sector General agriculture, fishing and forestry sector (100%) Project ID P108879 GEF Focal Area Biodiversity Borrower(s) GOVERNMENTS OF MALAWI AND ZAMBIA M. Jack Chulu, Acting DG ZAWA PRIVATE BAG 1 Zambia Tel: +260 211 278 555 Fax: +260 211 278 555 [email protected] Leonard Sefu, DNPW PO BOX 30131 Public Disclosure Authorized Malawi Tel: +265 1 771 111 Fax: +265 1 773 379 [email protected] Implementing Agency Humphrey Nzima, Peace Park Foundation PO BOX 30131 Malawi Tel: +265 1 755 528 Fax: +265 1 759 832 [email protected] Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared November 25, 2010 Public Disclosure Authorized Date of Appraisal December 13, 2010 Authorization Date of Board Approval April 15, 2011 A. Country and Sector Background 1. The Nyika Transfrontier Conservation Area (TFCA) saddles over Malawi and Zambia territories. It harbors natural ecosystems and biodiversity that are unique to the world but also to the two countries. It also plays a major watershed function as uplands of large sections of Lake Malawi and of the Luangwa River. The Nyika pictures rolling hills covered with grassland in a misty ambiance that provides tourists with a peaceful or sporting visit that is significantly different from the usual wildlife African experience. The Nyika is however affected by various forces which threaten its biological diversity and natural resources as well as curtails the Public Disclosure Authorized sustainable and equitable development of its stakeholder communities. The next paragraphs identify some of the issues and the context through which they currently impact the Nyika. Subsequent chapters describe the Governments proposal to address some of these issues and how the World Bank, through a GEF grant, intends to assist. Rural Development, in spite of abundant resources, does not successfully dent rural poverty 2. In 2009, Malawi’s Human Poverty Index (HPI-1) scored 28% (90th rank among 135 countries while Zambia scored 35% (110th rank among 135 countries)1). In both countries rural poverty is significantly higher than urban poverty. Such high poverty, and its underlying human development indicator, creates a context whereby communities have little alternative but transform natural ecosystems for energy, farm land and food. This is worsened in Malawi by high rural population densities and little economic alternative at the country level. The Nyika Districts, Rumphi in Malawi and Chama in Zambia, are among the poorest areas in their respective countries. In 2006, 79% of the population in Zambia’s Eastern Province lived under the poverty level, classifying this region as the second poorest in Zambia (after Western Province).2 3. Malawi’s agriculture, the foundation of the country’s economy, contributes to about 90 % of national employment, 83 % of foreign exchange and 35 % of the GDP3. The sector is highly dependent on a few cash and export crops such as tobacco, tea, sugar and coffee. The sector is divided into two production systems, commercial estates and large smallholder mixed subsistence farmers characterized by a low input and low output system. Zambia is endowed with natural resources that are required to stimulate agricultural and rural development (good climate, abundant arable land, labor, and abundant water resources). 85 % of the population’s employment is related to the agricultural sector. 4. The percentage of population living under the poverty line in Zambia is 68 and in Malawi 65. In both countries, rural areas continue to be affected by high poverty. Both governments have recognized that a cross-sectoral and integrated rural development approach including biodiversity conservation and promotion of eco-tourism through their protected area network is an opportunity to enhance rural livelihood strategies and options. Natural resources based tourism 5. The biodiversity rich and spectacularly scenic 3,000 km2 large Nyika National Park is Malawi’s largest National Park and has the potential to attract significant revenues from nature- based tourism (enriching existing eco-tourism circuits in the country and neighboring Zambia). Importantly, the area is a significant catchment area (Nyika meaning “where the water comes from”). Zambia’s tourism sector is regarded as one of the three main pillars for economic growth of the country and focuses on the development and expansion of the Northern Tourism Circuit which includes the Nyika National Park in the Eastern Province. 6. Malawi has a mainly rural population of 13 million people with high incidence of poverty, both factors resulting in significant human pressure on natural resources. The conservation of the country’s natural resource base is therefore an important factor that contributes to achieving sustainable national economic growth. The challenge is to achieve cost- effective conservation while enhancing livelihoods particularly of adjacent communities around protected areas. Malawi’s Growth and Development Strategy (MGDS) 2006-2011 aims to reduce poverty through sustained economic growth and infrastructure development. In the 1 UNDP Human Development Report 2009 2 Central Statistical Office, Living Conditions Monitoring Survey 2006 3 CIA World Factbook 2009 estimates strategy, the Government prioritized six areas to foster its economic growth base including agriculture and food security, integrated rural development, irrigation and water development, and transport infrastructure development. 7. Zambia is endowed with favorable climate, arable and plentiful land and rich natural resources conducive to a vibrant agriculture sector. About 85 % of the population’s employment is related to the agricultural sector. Most agricultural producers are asset-poor smallholders, who use simple technologies and cultivation practices to produce rain-fed maize, groundnuts, roots, and tubers, mostly for their own consumption. Reasons for the low productivity levels are: 1) poor access of most smallholders to markets; 2) lack of public infrastructure, especially roads, 3) misdirection of public resources into poorly targeted subsidies, and 4) weak capacity to manage risks, particularly those resulting from insecure land tenure and climate change. Low productivity and low return to labor and land lead to chronically low farm income for smallholders. Zambia’s Fifth National Development Plan (2005/2010) and its Vision 2030 focuses on broad-based wealth and job creation for its citizens. Tourism – An emerging growth sector largely based on nature products 8. In Malawi, tourism has been identified as one potential new economic growth sector. In 2009, tourism contributed directly and indirectly to about 7 % to Malawi’s GDP and 5 % of employment (WTTC, 2009). Tourism in Malawi thrives on natural resources and major resource attractions include water bodies, protected areas, mountains and cultural heritage. It is recognized that tourism growth is not necessarily benefitting the poorer population. 9. Malawi’s geographic position between established tourism destinations such as Tanzania, Zambia and Mozambique is a potential advantage to tap into existing tourism streams. Besides the attractive Lake Malawi, the country possesses other currently less developed areas of interest for tourism products such as in the north the highland Nyika National Park with the adjacent lowland marshland Vwaza Wildlife Reserve. The 2500 meter high Nyika Plateau contains leopard, roan, eland and elephant as well as Africa’s richest orchid communities and a number of endemic plant and bird species. 10. In Zambia, a Bank supported report on the Economic and Poverty Impact of Nature Based Tourism in 2007 demonstrated that the economic impact of nature based tourism is higher than previously perceived. According to the study results, nature-based tourism accounts to about 3.1 % of the GDP and 10 % of the formal employment. The challenge is to increase the opportunities for local communities to participate in the tourism economy (shared growth). 11. Zambia’s government also focuses on diversifying its economy in expanding its agriculture and tourism sectors (as additional pillars to the copper mining industry). The country’s environmental challenges are high deforestation rates (around 250,000 ha/ year), loss of biodiversity as well as air, water and soil pollution. The country has 19 National Parks and 34 Game Management Areas covering 33 % of the country of which 5 % has been developed for tourism. Medium and long term financial sustainability is a critical issue for national parks that needs to be addressed through delegation of management functions, better commercial management and externally generated financial support. Noteworthy, the protected area network in Zambia includes 432 Forest Reserves (national and local). Biodiversity and Watershed – Nyika ranks top in both countries for both functions 12. The Nyika TFCA is centred on the Nyika Plateau, a high undulating montane grassland plateau that rises over 2000 m above the bushveld and wetlands of the Vwaza Marsh. The Nyika Plateau has been classified as one of Africa’s Centers of Plant Diversity (WWF & IUCN 1994) as well as one of “Global 200” WWF Priority regions for conservation, namely the Rift Valley Lakes, Zambezi-Miombo. Both the Nyika national parks of Malawi and Zambia have been classified