The encroachment called shift of arid grasslands from grass dominated to shrub dominated communities is associated with serious implications for ecosystem functions and services that often resemble those of plant invasion by non‐native species. Especially its mostly negative consequences for forage grasses and pastoral production have been subject to intensive discussion and led to a common negative connotation of this process. However, encroachment is usually solely associated with woody species or shrubs. Within the last decade, a native, annual herbaceous legume, Crotalaria podocarpa, has exhibited an extensive spread in arid grasslands in Namibia’s great escarpment region and apparently repressed the formerly aspect building local grasses in large areas. To quantify the short and long term effects of the proliferation of C. podocarpa on the dominant perennial tussock forming forage grass Stipagrostis ciliata we studied Crotalaria and Stipagrostis abundance and biomass production on long‐term observation plots since 2009 and investigated possible facilitation of C. podocarpa by S. ciliata. We found competition with Crotalaria to reduce biomass production of Stipagrostis individuals by 30% and to weaken the ability of Stipagrostis tussocks to recover after drought. Crotalaria podocarpa was facilitated by Stipagrostis tussocks but led to a continuous decrease of grass tussocks in affected areas. Our study demonstrates, that the massive spread of a native annual plant, similar to woody encroachers and invasive species, can severely affect arid grassland productivity, reduce its carrying capacity and may also affect biodiversity.