Botswana and its southern African peers – nations that built much of their prosperity on diamonds – are scrambling to secure new sources of growth as cheaper, lab-grown alternatives disrupt the global market.
Diamond-dependent Botswana has taken the lead, launching a sovereign wealth fund this week to lay the “foundation for a more resilient, sustainable and diversified future beyond diamonds.”
The country is also exploring other avenues: expanding luxury wildlife tourism, developing a medicinal cannabis industry, and harnessing abundant sunshine for solar power.
President Duma Boko has even suggested taking a majority stake in De Beers and selling Botswana’s diamonds independently.
“Countries such as Angola, Namibia and South Africa are all exposed but not to the same degree as Botswana,” economist Brendon Verster of Oxford Economics Africa told AFP.
Diamonds still the backbone
Diamonds remain Botswana’s main economic pillar, making up around 30% of GDP and 80% of exports, according to the International Monetary Fund.
But the global market is shifting. As consumers increasingly turn to synthetic stones from China and India, the average price of a one-carat natural diamond has slumped – from $6,819 in May 2022 to $4,997 by December 2024, World Diamond Council figures show.
Botswana, 70% of which is desert, was lifted from poverty by its diamond discovery in the 1960s. Now, it is already feeling the impact of lab-grown competition.
Risks of economic collapse
Falling revenues are straining public finances. With foreign reserves dwindling, the government has turned to debt to fund essential services. In August, the health system nearly collapsed, prompting President Boko to declare a state of emergency.
“If left unaddressed, there is a real risk of the situation becoming not just an economic challenge but a social time bomb,” he warned in July.
Ratings agency S&P echoed those fears on Friday, downgrading Botswana’s long-term rating to “BBB” with a negative outlook. The agency cited the rapid expansion of synthetic diamonds, which by 2025 had captured about 20% of the global market by value and up to 50% by volume in the U.S. engagement ring segment.
“Diversification is essentially now or never,” Verster said. “We don’t see anything that would shift consumer demand back toward natural diamonds.”
Lesotho feels the strain
Neighboring Lesotho, where diamonds account for up to 10% of its $2 billion GDP, is also suffering. Its vital textile industry has been hit by U.S. tariffs, and this month its largest diamond mine, Letseng, announced plans to cut 20% of its workforce.
The closures “could heighten risks of economic collapse,” independent analyst Thabo Qhesi told AFP, urging a pivot toward other resources such as rare earth minerals.
In June, Angola, Botswana, Namibia, South Africa and the Democratic Republic of Congo pledged to allocate 1% of annual diamond revenues to marketing natural stones. The aim: reposition them as coveted luxury products.
“We see a significant opportunity to engage consumers in the story of responsibly sourced diamonds from Botswana,” De Beers told AFP.
The company, meanwhile, is diversifying itself – exploring uses for synthetic diamonds in high-tech sectors such as quantum networks and semiconductors, where prices have dropped below $100 per carat.
For Botswana’s minerals ministry, both natural and lab-grown diamonds have a place. “They offer different value propositions to different consumers and therefore can and will coexist,” said official Jacob Thamage.
That divide was stark in a Johannesburg luxury mall: behind steel gates, a natural yellow diamond priced at more than $50,000 glittered under heavy security, while just steps away a $115 lab-grown stone sat unguarded.
“We each have our target,” one jeweller said. “So long as everyone is happy.”
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