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Botswana devalues currency twice in eight months as diamond revenue collapse threatens economic stability

Financial analysts note that interest rate increases, could further constrain domestic economic activity while the country struggles with reduced export earnings.

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The Bank of Botswana’s decision to allow the pula to weaken by up to 2.76% this year marks the second currency devaluation in eight months, highlighting the severe economic pressures facing the world’s second-largest diamond producer as global demand for natural diamonds continues to deteriorate.

The latest devaluation follows a 1.51% depreciation implemented in December 2024, with leading financial analysts at Citigroup predicting another devaluation before the end of 2025. The unprecedented currency adjustments reflect the devastating impact of collapsing diamond revenues on Botswana’s export-dependent economy.

Diamond revenue plummeted by 50% in 2024, with production for 2025 expected to decline by at least 25%. This represents a catastrophic blow to an economy where diamonds account for 25% of total GDP and a staggering 75% of foreign exchange earnings.

While the Bank of Botswana’s managed devaluation approach demonstrates technical competence in crisis management, economists warn that monetary policy alone cannot address the underlying structural problems. The central bank’s cautious approach has prevented free-fall currency collapse but cannot restore diamond market fundamentals.

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DiamondBuzz

Botswana Looks Beyond Rough Diamond Sales, Eyes U.S. Jewelry Market

The Duty Exemption By US Presents An Opportunity For Domestic Jewelry Manufacturers In Gaborone To Bypass Traditional Middle-Market Hubs and Establish A Direct Pipeline To American Consumers

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Grappling with a painful downturn in global rough-diamond demand, Botswana is pivoting its economic strategy: expanding up the supply chain directly into American retail shelves while leveraging its resource wealth to fund conservation and diversification.

Speaking on the sidelines of New York Climate Week, Bogolo Joy Kenewendo, Botswana’s Minister of Minerals and Energy, highlighted the southern African nation’s plan to capitalize on a 0% import-tariff rate to the U.S. market. The duty exemption presents an opportunity for domestic jewelry manufacturers in Gaborone to bypass traditional middle-market hubs and establish a direct pipeline to American consumers.

shift The push into value-added manufacturing comes as the world’s top diamond producer by value navigates a broader structural Diamond revenues have long formed the bedrock of Botswana’s post-independence balance sheet, underwriting universal secondary education and tuition-free university funding. However, recent market volatility has underscored the vulnerabilities of a mono-sectoral economy.

Under the Botswana Economic Transformation Programme (BETP)—an initiative spearheaded directly by President Duma Boko and his vice president—the government is directing resources toward manufacturing, agriculture, and broader mining sectors to reduce its heavy reliance on rough diamond sales.

To support its luxury exports, Botswana is recalibrating its brand narrative around origin, environmental stewardship, and social impact. The country recently announced a five-year extension of the “Okavango Eternal” partnership alongside De Beers Group and the National Geographic Society. The initiative aims to protect the ecological integrity of the Okavango River Basin while tying diamond purchases to conservation efforts.

With De Beers currently facing an impending ownership change, officials remain optimistic that any capital restructuring could bring additional funds into Botswana to accelerate its domestic economic transition.

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JewelBuzz is Asia’s First Digital Jewellery Media & India’s No.1 B2B Jewellery Magazine, published by AM Media House. Since 2016, we’ve been the trusted source for jewellery news, market trends, trade insights, exhibitions, podcasts, and brand stories, connecting jewellers, retailers, and industry professionals worldwide.

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