Botswana's Diamond Glut: Impact on Economic Recovery

BOTSWANA’S diamond inventory has swelled to nearly twice its target level, preventing production increases that might otherwise support the struggling economy, said Reuters citing a paper by the country’s finance ministry. The southern African nation held 12 million carats at end-December 2025, almost double the government’s maximum allowable stockpile of 6.5 million carats, according to the ministry’s 2026/27 Budget Strategy Paper. “This suggests that, over the short term, production is expected to remain broadly unchanged, until the level of inventories is drawn down closer to minimum allowable levels, creating room for additional production,” the ministry said. The glut follows persistent weak pricing driven by competition from laboratory-grown stones and subdued global demand. Botswana’s economy is forecast to contract nearly one percent in 2025 after shrinking three percent the previous year, said Reuters. Price pressures forced Debswana – the joint venture between Botswana and De Beers that generates 90% of national diamond sales – to temporarily halt production at certain operations last year. Botswana produced 18 million carats in 2024, ranking second globally after Russia. The ministry warned that new US tariffs of 15% on Botswana exports, combined with potential Indian duties, could extend the downturn. Diamonds typically account for one-third of government revenues and three-quarters of foreign exchange earnings. Mineral revenues are projected at 10.3 billion pula for 2025/26, down from a historical average of 25.3 billion pula.