Key Points:
• Steep Decline: Debswana’s diamond sales fell 46% in 2024, dropping from P45.3 billion to P24.6 billion, marking one of the steepest falls on record.
• Economic Impact: The sharp downturn is straining Botswana’s national budget and bank liquidity, with forecasts predicting a record P18.7 billion deficit for the 2024–2025 fiscal year.
• Banking Sector Adjustments: In response, the Bank of Botswana has reduced the prime reserve ratio and raised foreign exchange trading margins to ease liquidity pressures.
• Market Recovery Signs: Despite the challenging figures, De Beers CEO Al Cook reports an 8% increase in U.S. diamond jewellery demand, with long-term growth expected from Chinese and Indian markets.
• Government Initiatives: Minerals and Energy Minister Bogolo Kenewendo revealed that upcoming negotiations between the government and De Beers aim to restore confidence and address structural challenges in the diamond industry.
Article:
Preliminary figures from the Bank of Botswana (BoB) reveal a dramatic 46% decline in Debswana’s diamond sales for 2024. Revenues fell to P24.6 billion from P45.3 billion in the previous year, marking the steepest drop on record and the worst performance since the COVID-19 period, when sales dipped to P23.7 billion.
Debswana, which accounts for over 95% of Botswana’s diamond sales, is a critical pillar of the nation’s economy—its revenue directly supports both the national budget and bank liquidity. The sales slump is particularly concerning as it contributes to projections of an unprecedented P18.7 billion budget deficit for the 2024–2025 fiscal year. Monthly sales figures were volatile, plunging to as low as P24.4 million in January before rebounding to a peak of P4.5 billion in March.
Jointly owned by the government and De Beers, Debswana sells most of its production within the De Beers ecosystem, with 25% allocated to the state-owned Okavango Diamond Company. The downturn in natural diamond performance, driven in large part by disruptions in the retail market, is having a ripple effect throughout the financial sector. In response, the Bank of Botswana has taken significant steps to stabilize the economy, including reducing the prime reserve ratio to free up more cash for banks and increasing the trading margin for foreign exchange transactions. These measures are designed to encourage banks to source foreign currency among themselves, easing the pressure on the BoB.
Despite the sobering figures, there are promising signs for the diamond market. In a recent interview with Bloomberg in Cape Town, De Beers CEO Al Cook revealed that demand for diamond jewellery in the United States—currently the largest market for diamonds—rose by about 8% year-on-year. Cook expressed cautious optimism about the long-term recovery, noting, “We see growth, the regrowth of Chinese demand being a longer-term story. The good news is that India has taken over where China was.”
The government is placing its hopes on a turnaround in the diamond sector to support the new administration’s economic plans. Speaking at a media briefing in Cape Town, Minerals and Energy Minister Bogolo Kenewendo announced that finalizing talks with De Beers on a new sales deal would be a crucial step in restoring market confidence. “We are hoping that the announcement of the conclusion of negotiations brings us not only to the end but the beginning of a working relationship where we can start to focus on developmental areas needed in this diamond industry,” she said. “We must rebuild around the structural changes that this industry is currently facing, rather than simply replicating the past.”
As the government and industry stakeholders work to navigate these turbulent times, the next few months will be critical in determining whether the diamond market can rebound. With early signs of recovery in key markets and strategic government interventions underway, there is cautious optimism that the industry can overcome these challenges and once again become a cornerstone of Botswana’s economic prosperity.
