Rangelands in southern Africa continue to be degraded by the thickening of bush at the expense of grasses. This is a great concern for rangeland managers, especially because there is still no consensus about the main mechanisms that drive shrub encroachment in southern African savannas, making it difficult to make recommendations regarding management. Much work has been done on the effects of fire, grazing, water and nutrient availability on rangeland productivity but the role of climate change, namely changes in CO2 concentrations and rainfall, and their potential interaction with manageable factors, such as grazing and fire, is not understood. This study therefore focuses on investigating the combined role of elevated CO2, drought and land use on the balance between shrubs and grasses in southern African savannas. The study used a climate gradient in Namibia, which spans from approximately 600 mm average annual rainfall in the North to 250 mm in the South to set up experiments at a nested scale of realism and detail. I conducted semi-controlled to more controlled experiments in Germany, in the greenhouse and climate chambers, respectively. Here, the intention was to investigate how tree grass interactions at a seedling stage are mediated by drought and land use, and CO2 as an additional independent variable. In Namibia, I performed a field experiment in a common garden, where tree-grass interactions were monitored under the following treatments: grazing, drought and nutrient addition. Unfortunately, the drought treatment was unsuccessful, so the experiment ended up with only grazing and nutrient addition. The general finding for this PhD is that the grass species are not less negatively affected by drought but appear to be more affected by competition than shrubs. In addition, in the field experiment, surrounding herbaceous vegetation facilitated the emergence of one of the shrub's seedlings but did not affect the other species. Elevated CO2 did not ameliorate the negative effects of drought on shoot biomass of any of the focal species. Overall, all my experiments have one common finding, and that is that drought was the most important factor in determining plant performance during the early life stages studied during this PhD. I therefore conclude that according to the early life stages and focal species studied here, climate change will not be decreasing shrub encroachment but that actually enhanced encroachment is possible in response to drought and elevated CO2. This is however not necessarily due to a larger positive response of shrubs to CO2 as predicted, but rather to a less negative response to drought and competition.