‘But square-cut or pear-shaped; These rocks don’t lose their shape; Diamonds are a girl’s best friend.’ So sang Marilyn Monroe in 1953. Diamonds have also been Botswana’s best friend too. It’s been due mostly to the gem that the country has become, in the description of the World Bank, ‘an upper-middle-income country with an aspiration of becoming a high-income country’.

However, the country’s over-reliance on a single commodity (90% of exports) has come with drawbacks.

A prolonged downturn in the global diamond market has had a negative impact on Botswana’s economy. GDP contracted 3% in 2024 and the government was forced to revise its budget deficit forecast to 9% of gross domestic product for the year through to Q1:2025.

In April, the finance minister told Bloomberg that ‘something drastic’ had to be done. ‘The first thing we need to do, obviously, is to live within our means. That means cutting spending. Cutting expenditure means doing away with what we believe is some of the fat,’ said Ndaba Gaolathe in an interview in Washington DC.

The recent US trade tariffs have also put a recovery in doubt. ‘High tariffs on our diamonds will have a deleterious effect on us because we obviously are very diamond dependent,’ he said.

Government owns half of Debswana, the joint venture with global diamond giant De Beers, while it also has a 15% stake in the latter company, itself majority owned by miner Anglo American. Anglo wants to dispose of De Beers and is mooting either selling it or listing the company separately.

In July, the Financial Times reported that Botswana wanted a controlling interest in De Beers. That’s according to Botswana’s mines minister, Bogolo Kenewendo. She told the newspaper, ‘President Duma Boko “remains resolute in his quest” to increase Botswana’s stake in De Beers’. This was to ‘ensure Botswana’s full control over this strategic national asset and the entire value chain including marketing’.

Kenewendo warned that any disposal by Anglo of De Beers ‘without our support will be difficult to achieve’. According to the newspaper, she also criticised Anglo for failing to manage the process ‘transparently or in co-ordination with the government’.

Kenewendo told the Financial Times funding ‘is not an issue’. At the end of July, Anglo American CEO Duncan Wanblad said Botswana would not be offered a discount for a bigger stake in De Beers, but would pay in line with the value agreed with third-party buyers, currently under assessment.

‘It’s a strong business and it consists of some fantastic assets, and despite the current turmoil in diamond markets – which we believe to be a real bottom of cycle – I think it’s set up to do very well. We are also engaging with the government of Botswana on its interest in increasing their stake in the business. And so in the next little while, the next month or so, we’ll be moving into what is effectively the second round of a sales process,’ said Wanblad.

‘We obviously would be looking to do this on fully commercial terms with the government of Botswana,’ he said.

Earlier, in May, it was announced that Debswana would retrench 1 000 workers, nearly 20% of its staff.

Located at the centre of Southern Africa, positioned between South Africa, Namibia, Zambia and Zimbabwe, Botswana was one of the world’s poorest countries 60 years ago at the time of independence.

‘It rapidly became one of the fastest-growing economies,’ according to the World Bank. ‘But growth has slowed in recent decades. The economy is still reliant on mineral revenues, and productivity has declined. Poverty and inequality remain high, compared to other middle-income countries.’

It says Botswana’s macroeconomic framework, ‘historically anchored in prudent fiscal management and robust institutions for diamond revenue governance, sustained prolonged growth for nearly four decades since its independence in 1966. However, structural vulnerabilities persisted due to over-dependence on diamonds and a public sector-led model’, which has magnified its exposure to global impacts.

‘Fiscal pressures intensified, with the 2024 deficit reaching an estimated 9% of GDP due to elevated spending, pushing public debt to 27.4% of GDP in 2024. Employment remains skewed towards low-productivity sectors, with unemployment at 27.6% and extreme inequality (Gini index: 53.3),’ said the bank in a report earlier this year.

‘Climate shocks, especially droughts, threaten livelihoods, underscoring the urgency of adaptation investments. While diamond revenue may improve, challenges linger in implementing reforms to attract private investment and improve efficiency of public spending to drive inclusive, resilient growth,’ it said.

In July, Reuters reported that Botswana would allow its currency to depreciate by 2.76% over the next year, a faster rate than previously announced.

‘The recent decline in foreign exchange reserves, further worsened by the current macroeconomic environment, has the potential to compromise the stability of the exchange rate mechanism,’ it quoted finance ministry official Sayed Timuno as saying.

Timuno said the president had ‘approved the upwards revision in the pula’s annual rate of depreciation to 2.76% from 1.51%’, which was set in December.

‘This is meant to enhance the competitiveness of domestic goods and services. It will also help moderate demand for foreign exchange and support preservation of foreign exchange reserves.’ He said another review of the pula’s exchange rate would happen at the end of the year.

In October last year, the 13th set of elections held in Botswana resulted in a major transformation. The Umbrella for Democratic Change (UDC) secured a landmark victory, bringing an end to the Botswana Democratic Party’s uninterrupted 58-year hold on power.

‘This historic change marks a new chapter for Botswana’s economy and foreign direct investment (FDI), particularly in the mining sector, including diamond mining, which remains a cornerstone of the economy,’ Webber Wentzel partner Nomsa Mbere writes in a briefing note. ‘The UDC’s proposed reforms in this sector could have far-reaching implications. The party seeks to capture more value domestically, reflecting regional trends in Southern Africa, where governments aim to renegotiate mining terms to ensure greater benefits for local communities and national economies. For foreign investors, this could mean potential renegotiations of existing agreements and heightened expectations for transparency and social responsibility.

‘The government’s vision includes enhancing value addition through local processing industries and encouraging sustainable practices. While these reforms could increase value creation in Botswana, transitional risks may emerge as the government re-evaluates mining policies. The UDC’s stance may introduce short-term instability, with investors delaying major commitments until regulatory changes are clarified. However, if the UDC strikes a balance between reform and a transparent regulatory framework, the long-term outlook could be promising, with opportunities for foreign investors to engage in an equitable, sustainable mining sector.’

She writes that the UDC has ‘outlined an ambitious agenda to restructure Botswana’s economy, foster trust in governance and attract FDI by introducing measures to simplify bureaucracy and update laws to create a business-friendly environment. The introduction of financial and forensic audits, alongside digital platforms for tracking public spending, aims to bolster transparency and accountability, creating a trustworthy foundation for investment. To incentivise FDI, the UDC plans to offer sector-specific packages targeting renewable energy, agriculture, tourism and technology. The administration is also prioritising infrastructure development, including transport, energy and digital projects, to support long-term economic growth. Furthermore, proactive global engagement will position Botswana as a prime investment destination. The emphasis on economic diversification remains central, reducing Botswana’s dependency on diamonds while expanding opportunities in other industries’.

The public service will be overhauled, she writes, and the UDC plans reforms in education, healthcare, and tourism. ‘By prioritising science, technology, engineering and mathematics as well as vocational training aligned with the Fourth Industrial Revolution, Botswana could create a workforce equipped to meet the demands of modern industries, including mining and high-tech sectors.

‘A globally competitive healthcare system is also being developed, further improving quality of life and investment appeal. In tourism, the UDC’s proposed Tourism Equity Fund aims to expand citizen participation, potentially creating opportunities for investors interested in sustainable tourism models. By fostering a more inclusive tourism economy, the UDC could attract investors seeking a blend of profitability and social impact,’ Mbere writes.

In the latest set of developments, the new government launched the Botswana Economic Transformation Programme (BETP) in July in an effort to create a more globally integrated and diversified economy. Boko said at a press conference it was designed to ‘broaden the country’s economic base, reduce its reliance on diamond exports and build a more resilient economic future’, according to a report by Further Africa.

‘This programme is about addressing our structural economic challenges, encouraging greater investment and supporting sectors beyond mining to ensure our economy is fit for purpose in the twenty-first century,’ said the president.

The BETP aims to address this challenge by harnessing and expanding the untapped opportunities within diverse sectors including financial services, tourism, manufacturing and agriculture.

‘We will attract local and international investors with precision, purpose and a world-class execution framework,’ said Boko.

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