Diamond sales from Debswana, the joint venture between De Beers and the Botswana government, dropped significantly in the first three quarters of 2024.
According to the Bank of Botswana, Debswana’s diamond revenue fell by 52%, dropping from $3.19 billion in the same period last year to $1.53 billion. This decline highlights challenges in the global diamond market, which have impacted Botswana’s economy, heavily reliant on diamond exports for a substantial portion of its revenue.
Impact on Botswana’s Economy
Botswana’s diamond industry is a central pillar of its economy, accounting for 30%-40% of government revenue, 75% of foreign exchange earnings, and about one-third of the country’s GDP. Debswana’s sales decline thus has broader implications, as Botswana is the world’s leading diamond producer by value. President Mokgweetsi Masisi addressed the downturn in the lead-up to Botswana’s recent general election, stating, “Our diamonds have not been selling since April, so yes, our revenues are down but the economic fundamentals still remain intact.”
This fall in revenue comes amid a period of political focus on economic performance and employment, with the election drawing attention to issues in Botswana’s largely diamond-dependent economy. High levels of unemployment and the reduced export earnings have been primary concerns as global demand for natural diamonds faces challenges from economic uncertainty and competition from lab-grown alternatives.
Structural Shifts in Debswana’s Output Distribution
Debswana’s diamond output is currently divided, with 75% going to De Beers and the remaining 25% handled by the state-owned Okavango Diamond Company (ODC). However, a new 10-year sales agreement established last year between Botswana and De Beers will gradually adjust this distribution. ODC’s share of Debswana’s production will increase to 30% initially, with a target of a 50-50 split by the end of the contract period. This shift provides Botswana with greater control over its diamond production, an effort to lessen reliance on De Beers as the industry continues to evolve.
This agreement is part of Botswana’s plan to strengthen its revenue sources within the diamond sector by expanding ODC’s role, offering a buffer against market volatility.
Global Market Factors Driving the Decline
Debswana’s drop in sales mirrors a global downturn in diamond demand. De Beers, Debswana’s principal buyer, reported a 75% decline in revenue for Q3, from $899 million in 2023 to $213 million in 2024, after cancelling two of three planned sights for the quarter. This decline reflects a combination of factors, including reduced demand, changing consumer preferences, and increased competition from lab-grown diamonds. Botswana’s industry is particularly impacted given its dependence on diamond exports.
In local terms, Debswana’s sales revenue dropped by 50.3%, totalling 20.9 billion pula (approximately $1.55 billion). The timing of this revenue shortfall, combined with Botswana’s high dependency on diamonds, underscores the nation’s economic vulnerabilities. The situation has renewed discussions around economic diversification, a long-term goal for Botswana to stabilise its economy amid market volatilities.
