Botswana's Diamond Dilemma: Economic Strain Amid Stockpile Surge

Botswana faces economic challenges as diamond stockpiles nearly double target levels, amid falling prices and weak demand. The nation struggles to boost production, with the diamond sector critical to state revenues. Increased tariffs threaten further financial strain, prompting concerns over fiscal revenues.

Botswana is grappling with an economic challenge as its diamond stockpile has reached nearly twice the intended inventory level due to persistently low prices. This situation hampers the country's ability to enhance gem production in the short term to bolster its economy.

The finance ministry predicts that Botswana's economy will shrink by almost 1% in 2025, following a 3% contraction the previous year, largely driven by the collapse of diamond prices pressured by lab-grown alternatives and weak global demand. As a result, Debswana, the country's joint venture with De Beers, has temporarily suspended production at several mines.

Botswana's diamond production was 18 million carats in 2024, second only to Russia, according to the Kimberley Process Certification Scheme. By the end of December 2025, the stockpile had swelled to 12 million carats, nearly double the set inventory cap of 6.5 million carats. The finance ministry warns of limited production growth unless non-mining sectors perform robustly.

(With inputs from agencies.)