Botswana has long been synonymous with diamonds: a land where the sparkle of mined stones has fueled schools, roads, state stability, and investor confidence. Over the last two decades, the country has been one of Africa’s quiet success stories, posting steady growth and remaining largely debt-free. Between 2000 and 2019, annual GDP growth averaged around 4-5%, while public debt stayed below 20% of GDP, a rarity on the continent. This prudent management of diamond wealth meant Botswana avoided the pitfalls of resource mismanagement seen elsewhere. Yet today, revenues are weakening, fiscal buffers are thinning, and the economy is more exposed to shocks than at any point in recent history.
The rise of lab-grown diamonds has sharpened these pressures. In 2024, Debswana Diamond Company, a diamond mining company owned by the government of Botswana and De Beers Group , saw rough diamond sales plunge nearly 48.3% in the first quarter, from about US$1.085 billion to US$560.9 million. (Reuters) Natural stones are losing ground to synthetic ones marketed as cheaper and more sustainable. This shift has reduced diamond export earnings, which once provided roughly 75% of foreign exchange and over 30% of government revenue, feeding directly into widening budget deficits and credit downgrades.
In February 2025, Botswana and De Beers signed a new sales deal that gradually increases the state’s share of Debswana rough output from 25% to 50% over the next decade, while extending mining rights until 2054. (Reuters) The deal underscores Gaborone’s determination to capture more value at home, even as natural diamonds face long-term structural headwinds.
Credit Ratings Sound the Alarm
The strain is evident in credit ratings. On April 4, 2025, Moody’s Ratings revised Botswana’s outlook from “stable” to negative, citing the prolonged diamond downturn, falling revenues, and rising debt. (Bank of Botswana) The budget deficit widened to 9% of GDP, nearly double the year before. S&P Global followed in September, lowering Botswana’s rating to BBB with a negative outlook. IMF forecasts point to a mild contraction in 2025, around -0.4%.(Reuters)
The Sovereign Wealth Fund: A Strategic Pivot
In response, the government launched the Botswana Sovereign Wealth Fund Limited (BSWFL) in September 2025, separate from the older Pula Fund that has been depleted. (Reuters) Its mandate is to diversify income, preserve capital, and manage state-owned assets, with powers to invest domestically and globally. Withdrawals are limited to investment returns, not the corpus. Governance rests with a board chaired by Farouk Gumel , blending local and international expertise. Crucially, the fund is designed to support diversification into renewable energy, infrastructure, SMEs, tourism, and digital industries, sectors better aligned with Africa’s demographic surge. By complementing the De Beers deal and ODC’s expanded marketing role, it marks a pivot from short-term crisis management to building long-term resilience. Like Norway’s oil fund (Norges Bank Investment Management) or the UAE’s Mubadala , its success will depend on strict governance and job-creating investments that prepare the economy for a post-diamond future.
On the ground, Debswana has already cut production by 27%, to 17.93 million carats in 2024. Okavango Diamond Company , whose share of output is rising under the new framework, is scaling up auctions and building marketing capacity. These shifts illustrate how industry players are adapting while government reform lays the foundation for resilience.
Looking Ahead
Botswana’s institutions remain strong, yet the economy faces structural gaps: limited downstream processing, shortages of skilled labor, and restricted financing. Without diversification, growth risks slowing to stagnation. This is not only Botswana’s challenge. Across Africa, where the median age is under 20, millions of young people join the labor force each year. Resource dependence alone cannot provide the jobs, healthcare, and education required to sustain stability.
The risks are significant. Synthetic diamonds are eroding natural markets, global demand remains fragile, and debt pressures are mounting. But Botswana is acting.
The sovereign wealth fund, the expanded role of the Okavango Diamond Company, and revised agreements with De Beers all reflect a determination to shape its own future. That determination gained fresh momentum with a Bloomberg report published today (September 23, 2025), in which President Duma Boko outlined Botswana’s intention to acquire a controlling stake in De Beers.
The greater challenge, however, is not simply securing diamonds but turning mineral wealth into a platform for broader prosperity. Success will depend on whether today’s reforms drive diversification into industries that can employ the next generation and sustain social stability. For citizens, this means new jobs, reliable healthcare, and quality education supported by growth in tourism, renewable energy, and digital services. For Africa, Botswana’s path sends a wider message: resource-rich nations can move beyond extraction, capture greater value, and set their own terms in the global economy. If Botswana delivers on this vision, it will not only secure its own future but also offer a blueprint for other African nations seeking to turn resource wealth into long-term prosperity.
Sources:
- Reuters: Botswana’s Debswana diamond sales fall 48% in first quarter 2024
- Reuters: Botswana signs long-delayed diamonds deal with De Beers
- Bank of Botswana : Moody’s Rating Action on Botswana, April 2025
- S&P Global: Botswana Sovereign Credit Rating, September 2025
- Reuters: Botswana slashes growth forecast amid prolonged diamond downturn
- Reuters: Botswana launches new wealth fund to drive diversification, create jobs
- Reuters: Botswana’s Debswana curbs diamond production as weak demand persists
- Bank of Botswana: The Pula Fund overview