Botswana's diamond industry has begun to stir after a punishing slump, with the economy expanding 3.5 percent year-on-year in the first quarter of 2026. Rough-diamond output surged in the second quarter, with De Beers reporting an 88 percent increase in global rough output. The rebound has brought relief to the government and businesses, but also resurrected concerns about the country's reliance on diamonds.
The Finance and Investment Pitso in Gaborone highlighted the need for Botswana to harness the coming upswing to build a more diversified economy. Acting President and Finance Minister Ndaba Gaolathe called the recovery encouraging but cautioned against mistaking a reprieve for a transformation. He emphasized the need to steer capital toward productive enterprise rather than waiting for the diamond market to mend the economy.
The first-quarter expansion was driven largely by diamond-linked activity, including a 60.5 percent growth among diamond traders. However, analysts at BMI judged the rebound narrow, citing anemic domestic demand and enduring external fragility. This has raised concerns that the recovery may not generate enough new businesses, durable tax revenue, or jobs.
The second-quarter surge in diamond production was equally striking, with Botswana's production through Debswana, the partnership between the government and De Beers, climbing to roughly 5.5 million carats. However, producers can extract diamonds faster than consumers buy them, swelling inventories and depressing prices. In January, Reuters reported that Botswana was wrestling with a mounting stockpile amid persistent price weakness.
The rebound may signal returning momentum, but it is not yet proof of restored demand. The cost of the difficult year that Botswana has endured is still being felt. The International Monetary Fund expected activity to contract about 1 percent in 2025, chiefly because of another decline in diamond production. The World Bank estimated a 0.9 percent contraction before forecasting 2.7 percent growth in 2026.
Diamonds have been both the foundation of modern Botswana and the wellspring of its fragility. They account for roughly 80 percent of exports, about a third of fiscal revenue, and a quarter of output. This has made diversification a pressing issue, with the government seeking to build exporters and import-substituters in agriculture, manufacturing, tourism, and financial services.
The Botswana Economic Transformation Programme, or B.E.T.P., places these sectors at the center of the effort to reduce dependence on diamonds. The 2026-27 budget formally inaugurated the Twelfth National Development Plan, binding public spending to that agenda. However, diversification cannot be counted by the sectors named in a strategy; it will be measured by firms that survive, products that cross borders, and workers no longer tethered to gemstone sales.
Key points
- Botswana's economy expanded 3.5 percent year-on-year in the first quarter of 2026.
- Rough-diamond output surged in the second quarter, with De Beers reporting an 88 percent increase in global rough output.
- Diamonds account for roughly 80 percent of Botswana's exports, about a third of fiscal revenue, and a quarter of output.
