September 4, 2025 • 15 mins
Botswana became one of the richest countries in Africa because it's the world's biggest producer of diamonds by value -- but with lab-grown gems soaring in popularity, the sparsely-populated desert nation is facing a social and economic existential crisis
President Boko has pledged to diversify the economy away from its over-reliance on a single resource, but the changes may have come too late.
On this week’s episode, Bloomberg’s Matthew Hill and Botswana-based reporter Mbongeni Mguni join Jennifer Zabasajja to discuss their latest reporting from the region, and what the impact of the diamond slump looks like on the ground in Botswana.
For more stories from the region, subscribe to the Next Africa newsletter here
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Diamonds once propelled Botswana
to become the richest Sub Saharan nation per capita, but
that boom could be turning to bust. We now offer
lab grown dream diamonds.
Speaker 2 (00:20):
You can actually afford discover real brilliance at fabulous prices.
Speaker 3 (00:25):
It's time to upgrade your own engagement ring with a
lab grown diamond. They cost seventy five percent list.
Speaker 1 (00:31):
Lab grown diamonds are flooding the market, leaving demand for
natural diamonds in crisis and Botswana's economy in decline.
Speaker 4 (00:40):
For too long, Botana's economy has leaned and relied heavily
on diamonds. The limitations of this reliance are increasingly becoming unbearable.
If left unaddressed, there's a real risk of the situation
becoming not just an economic challenge but social time bline.
Speaker 1 (01:02):
On today's episode of The Next Africa Podcast, we'll look
at what's gone wrong in Botswana's economy and where Botswana
turns if the diamonds in the ground become worth little
more than just rocks. I'm Jennifer Zabasaja and this is
the Next Africa Podcast, bringing you one story each week
(01:23):
from the continent, driving the future of global growth with
the context only Bloomberg can provide. Joining me this week
is Bloomberg's Matthew Hill and Botswana based reporter Bongani Mungumi.
They're also both the co authors of a report out
on Bloomberg right now about this guys, thank you both
for being here and really fascinating story that you've put out. Matthew,
(01:44):
maybe we can start with you and you can give
us a bit of context as to how important diamonds
have been to Botswana's economy. You talk about this sort
of in the historical sense in your story, but share
a bit about that with us.
Speaker 3 (02:00):
I've got a question for you. Picture the scenario, all right.
You walking into a jewelry store. You want to buy
a diamond ring. You see two rings look exactly the same.
You pick them up, they feel exactly the same. One
costs one thousand dollars, the other costs five thousand dollars.
(02:21):
Which do you buy?
Speaker 1 (02:23):
I mean, you're probably talking to the wrong girl. I'd
probably go with the cheaper option. I don't know if
that's necessarily a good thing, But so.
Speaker 3 (02:31):
Gen Z, I know that you call yourself that on
your ex handle you are making the same choice as
two out of three US based buyers of engagement rings
that are from gen Z. That's according to the data
(02:52):
that jewelry insurance company Brighton Coke put out last month,
and that's basically what's helped to put Botswana in this
incredibly tight position. The diamond market has gone into an
incredibly deep slump, but started out after a spike in
(03:15):
twenty twenty one post COVID where everybody was essentially buying
everything and the price of everything went up. Then demand slumped.
There was a slowdown in demand in the US and
China because of difficult economic conditions inflation, etc. But then
in the years after that, this phenomenon of lab grown
(03:38):
diamonds rarely came to the fore. So for Botswana, a
small African economy, what this means is that eighty percent
of its exports diamonds are now taking a really, really
big hit. It also accounts for thirty three percent of
(03:59):
government revenues and makes up for a quarter of the
total economy. They've gone into contraction last year and are
likely to again this year. That means the first two
years of the economy shrinking since the country got independence
from the UK in nineteen sixty six. And also it
(04:23):
means that the budget shortfall that the government has is
the highest basically in Africa this year eleven percent of
gross domestic product.
Speaker 1 (04:33):
Wow, and I mean you mentioned Matt, Botswana is a
small economy, but of course, as you were just pointing
out there clearly very resource rich, which brings me to
Umbongani because you are there on the ground. Can you,
as Matt was just pointing out there, can you talk
a bit about the diamond money and how it's affected
(04:53):
Botswana over the past few decades. How did it translate
into growth of infrastructure projects, public services. What's been the
transformation over the past few decades.
Speaker 2 (05:05):
As Matt mentioned, from independence in nineteen sixty six, So
if you look at the Bosona economy at the time,
it was largely agrarian and that was subsistence farmers or
communal farmers. And then it was the budget was largely
don't led so from the former United Kingdom authority. And
so what diamonds did the revenues from those built up
primary and secondary infrastructure throughout the country. It's a very
(05:28):
expansive country, but with the sparse population so there was
are high costs and low returns for any kind of investment.
So diamonds allowed state led primary secondary infrastructure. Today we
have tertiary level infrastructure. It also allowed for the subsidized
rollout of services such as health education. More importantly, though,
(05:49):
beyond that, diamonds anchored the growth of the financial sector,
and it's through that financial sector that the broader development
and sophistication of the enemy has come about over the years.
The diamond industry is self employees about five thousand people.
Total employment in Botswana is anyway up to one hundred
and fifty thousand people on a full time basis. So
(06:11):
diamonds enabled the growth of these other sectors that are
now I wouldn't say tittering, but they're now unsteady because
of the impact on the anchor of the economy.
Speaker 1 (06:23):
And that's sort of come at the foot of the
new President Dumaboko, who's not only having to deal with
the economic situation but also the negotiating happening with the
government and some of the diamond companies in the country. Matthew,
can you talk about what we've heard from Dumaboko and
what he's said publicly about the financial and the economic
(06:46):
situation that the country's in right now.
Speaker 3 (06:48):
Yeah, that's an important question. I know. Before the Botswani elections,
when I interviewed Dumaboko, he mentioned that he had a
plan if he won the elections that happened at the
end of last year, his new government would want to
take a majority stake in the Beers, which is the
(07:11):
world's biggest diamond producer by value, against the vast majority
of its stones from Botswana, where it already has a
fifty to fifty joint venture with the Botswana government. That
might seem counterintuitive, because when your economy is absolutely bleeding
(07:32):
because of an over dependence on diamonds, it seems strange
to want to actually become even more dependent on diamonds.
But Bokor has said in the interview last year that
the perfect time to buy is during a crisis. His
(07:54):
government's also been trying to together with other diamond producing nations,
including neighboring Namibia and also Angola, to resuscitate demand for
natural diamonds over the much cheaper lab grown gems. These
(08:16):
countries have pledged to spend one percent of their diamond
revenues on marketing and promoting natural diamonds. But I mean,
we don't know how effective this is going to be
and how long it might take to win consumers back.
Speaker 1 (08:35):
And hold that thought, Matthew. When we come back from
the break, we'll talk about what more the Botswana government
is trying to do to reinvigorate the economy and whether
or not it's actually going to work. We'll be right back.
Welcome back today and the podcast. We're talking about Botswana
and how the rise of lab grown diamonds is leaving
(08:58):
the economy in big trouble. We have Matthew Hill and
Bonganygouni joining us. So Bongany, before we went to the break,
Matthew was saying that the economy is bleeding. Talk about
what it's like on the ground there for Botswanans today.
Give us some color if you can.
Speaker 2 (09:17):
I think what you can tell is that there's a
great appreciation just through public debate, through a lot of
engagements that we have with both the public and the
private sector, there's a lot of appreciation that diamonds can
no longer anchor the economy and that the attempts from
decades ago to diversify the equoding away from its reliance
on diamonds have become an urgency. I think the President's
(09:39):
Book of us an existential threat, and so you're seeing
a lot of efforts. And what's really quite evident is
the fact that it's the highest level of engagement between
the government and the private sector that we've seen in
years around transformation. It's quite clear that the new government's
openness to engage the private sector and infrastructure development is
(10:00):
something that was previously I would say it was lesser
regarded by the prior administrations because those efforts winters urgent
when the revenues from diamonds are coming in. So just
in terms of the picture on the ground, that's what
we're seeing. We're seeing that the private sector has risen
to the fore they've always been asking for government to
open the door and reduce its size in the economy
(10:23):
in certain sectors so that the private sector could play
a much sharper role. I think that's what is quite
clear at the moment.
Speaker 1 (10:29):
Is there any sense whether or not these plans are
actually realistic? Are people hopeful this time around?
Speaker 2 (10:37):
Absolutely. One thing that has been said again and again
by analysts is that the coming in of the new
administration brings in people who don't own the architecture, the culture,
the systems and the attitudes of the old administration. So
they don't own it. They don't need to have the
same attitudes and approach that the previous administration had over
(10:59):
the is fifty eight years in power. So even as
President Boco works on his first National Development Plan, it's
going to run for about five years, there is the
sense of optimism and as I said, the private sector
which has they've become tired of promises of public private
participation in the kind of thing. But this time around
they're actually leading the conversations and they're holding these engagements.
(11:21):
So the plan that has been developed is called the
Economic Transformation Plan. President Boco put this together with some
advisors from Malaysia. They've gone around the country collating, testing,
costing projects that they believe are transformational projects that are
going to be leading to diversification. Just this Tuesday, some
of these projects that the banko Botswana, there was an
(11:44):
investor road show. So these projects were set before asset managers,
before insurance funds, before pension funds for potential investments. And
you could see from the engagements that were taking place
there were people are talking about potential yields, potential returns packed.
This has never been seen before in Boswana. Infrastructure development
(12:04):
and transformational projects have always been under the purview of
the government. The government has got its own agenda that
it develops and it says this is what we're going
to do. And so boco's new administration has come at
a point when this crisis is enabling that faster transformation
and there's a lot of injection of hope in the economy.
Speaker 1 (12:22):
That is an optimistic point there. Mangani Matt, if you
could just wrap things up for us here, because the
story that you both worked on really sort of culminates
in a tail right for economies that are focused on
a single commodity. I wonder if there's a lesson you
think to be learned when we look at some of
(12:43):
the other African economies that are potentially reliant on a
single commodity. Are we seeing a change? Are there different
perspectives that you think we'll see going forward?
Speaker 3 (12:56):
This is one hundred percent coutiary tale to other countries
that are too heavily reliant on any single commodity. I mean,
bots one has always been held up as this real
African success story where a government has avoided the resource curse,
but for decades the government became incredibly complacent in not
(13:21):
pushing these diversification efforts. But what's one is still a
country with massive promise. It's got some of the best
tourism assets in Africa. Its nature parts are favorites among
celebrities like Prince Harry and Megan Merkel. It's got a
nascent copper mining industry. But yet if the government had
(13:45):
promoted and pushed for the growth of these industries years ago,
or even decades ago, preferably, then the outcome could have
been far better for the country. Other countries that are
benefiting from booms in commodities right now, you've got Congo
and Zambia really riding the copper wave. This is really
(14:08):
a lesson to them not to grow complacent and make
sure that you do diversify into other industries.
Speaker 1 (14:15):
To you and you can read all of Bongeny and
Matthew's reporting from Botswana and elsewhere around the region on
Bloomberg platforms. Now here's some of the other stories we've
been following across the region this week. The National Bank
of Ethiopia governor has resigned after serving the role for
two and a half years, during which he helped implement
(14:37):
extensive reforms to overhaul the nation's economy and oil giant
Shell is returning to Angola after a twenty year hiatus,
highlighting a shift in sentiment towards the nation's oil sector
as reforms aimed at attracting global capital start to show results.
And you can follow these stories across Bloomberg platforms now,
(14:57):
including the Next African Newsletter. Put a link to that
in the show notes. This program was produced by Adrian
Bradley and tiwa Adebayo. Don't forget to follow and review
this show wherever you usually get your podcasts. I'm Jennifer's Abasaga.
Thanks as always for listening.
Bloomberg Audio Studios, podcasts, radio news. Diamonds once propelled Botswana
to become the richest Sub Saharan nation per capita, but
that boom could be turning to bust. We now offer
lab grown dream diamonds.
Speaker 2 (00:20):
You can actually afford discover real brilliance at fabulous prices.
Speaker 3 (00:25):
It's time to upgrade your own engagement ring with a
lab grown diamond. They cost seventy five percent list.
Speaker 1 (00:31):
Lab grown diamonds are flooding the market, leaving demand for
natural diamonds in crisis and Botswana's economy in decline.
Speaker 4 (00:40):
For too long, Botana's economy has leaned and relied heavily
on diamonds. The limitations of this reliance are increasingly becoming unbearable.
If left unaddressed, there's a real risk of the situation
becoming not just an economic challenge but social time bline.
Speaker 1 (01:02):
On today's episode of The Next Africa Podcast, we'll look
at what's gone wrong in Botswana's economy and where Botswana
turns if the diamonds in the ground become worth little
more than just rocks. I'm Jennifer Zabasaja and this is
the Next Africa Podcast, bringing you one story each week
(01:23):
from the continent, driving the future of global growth with
the context only Bloomberg can provide. Joining me this week
is Bloomberg's Matthew Hill and Botswana based reporter Bongani Mungumi.
They're also both the co authors of a report out
on Bloomberg right now about this guys, thank you both
for being here and really fascinating story that you've put out. Matthew,
(01:44):
maybe we can start with you and you can give
us a bit of context as to how important diamonds
have been to Botswana's economy. You talk about this sort
of in the historical sense in your story, but share
a bit about that with us.
Speaker 3 (02:00):
I've got a question for you. Picture the scenario, all right.
You walking into a jewelry store. You want to buy
a diamond ring. You see two rings look exactly the same.
You pick them up, they feel exactly the same. One
costs one thousand dollars, the other costs five thousand dollars.
(02:21):
Which do you buy?
Speaker 1 (02:23):
I mean, you're probably talking to the wrong girl. I'd
probably go with the cheaper option. I don't know if
that's necessarily a good thing, But so.
Speaker 3 (02:31):
Gen Z, I know that you call yourself that on
your ex handle you are making the same choice as
two out of three US based buyers of engagement rings
that are from gen Z. That's according to the data
(02:52):
that jewelry insurance company Brighton Coke put out last month,
and that's basically what's helped to put Botswana in this
incredibly tight position. The diamond market has gone into an
incredibly deep slump, but started out after a spike in
(03:15):
twenty twenty one post COVID where everybody was essentially buying
everything and the price of everything went up. Then demand slumped.
There was a slowdown in demand in the US and
China because of difficult economic conditions inflation, etc. But then
in the years after that, this phenomenon of lab grown
(03:38):
diamonds rarely came to the fore. So for Botswana, a
small African economy, what this means is that eighty percent
of its exports diamonds are now taking a really, really
big hit. It also accounts for thirty three percent of
(03:59):
government revenues and makes up for a quarter of the
total economy. They've gone into contraction last year and are
likely to again this year. That means the first two
years of the economy shrinking since the country got independence
from the UK in nineteen sixty six. And also it
(04:23):
means that the budget shortfall that the government has is
the highest basically in Africa this year eleven percent of
gross domestic product.
Speaker 1 (04:33):
Wow, and I mean you mentioned Matt, Botswana is a
small economy, but of course, as you were just pointing
out there clearly very resource rich, which brings me to
Umbongani because you are there on the ground. Can you,
as Matt was just pointing out there, can you talk
a bit about the diamond money and how it's affected
(04:53):
Botswana over the past few decades. How did it translate
into growth of infrastructure projects, public services. What's been the
transformation over the past few decades.
Speaker 2 (05:05):
As Matt mentioned, from independence in nineteen sixty six, So
if you look at the Bosona economy at the time,
it was largely agrarian and that was subsistence farmers or
communal farmers. And then it was the budget was largely
don't led so from the former United Kingdom authority. And
so what diamonds did the revenues from those built up
primary and secondary infrastructure throughout the country. It's a very
(05:28):
expansive country, but with the sparse population so there was
are high costs and low returns for any kind of investment.
So diamonds allowed state led primary secondary infrastructure. Today we
have tertiary level infrastructure. It also allowed for the subsidized
rollout of services such as health education. More importantly, though,
(05:49):
beyond that, diamonds anchored the growth of the financial sector,
and it's through that financial sector that the broader development
and sophistication of the enemy has come about over the years.
The diamond industry is self employees about five thousand people.
Total employment in Botswana is anyway up to one hundred
and fifty thousand people on a full time basis. So
(06:11):
diamonds enabled the growth of these other sectors that are
now I wouldn't say tittering, but they're now unsteady because
of the impact on the anchor of the economy.
Speaker 1 (06:23):
And that's sort of come at the foot of the
new President Dumaboko, who's not only having to deal with
the economic situation but also the negotiating happening with the
government and some of the diamond companies in the country. Matthew,
can you talk about what we've heard from Dumaboko and
what he's said publicly about the financial and the economic
(06:46):
situation that the country's in right now.
Speaker 3 (06:48):
Yeah, that's an important question. I know. Before the Botswani elections,
when I interviewed Dumaboko, he mentioned that he had a
plan if he won the elections that happened at the
end of last year, his new government would want to
take a majority stake in the Beers, which is the
(07:11):
world's biggest diamond producer by value, against the vast majority
of its stones from Botswana, where it already has a
fifty to fifty joint venture with the Botswana government. That
might seem counterintuitive, because when your economy is absolutely bleeding
(07:32):
because of an over dependence on diamonds, it seems strange
to want to actually become even more dependent on diamonds.
But Bokor has said in the interview last year that
the perfect time to buy is during a crisis. His
(07:54):
government's also been trying to together with other diamond producing nations,
including neighboring Namibia and also Angola, to resuscitate demand for
natural diamonds over the much cheaper lab grown gems. These
(08:16):
countries have pledged to spend one percent of their diamond
revenues on marketing and promoting natural diamonds. But I mean,
we don't know how effective this is going to be
and how long it might take to win consumers back.
Speaker 1 (08:35):
And hold that thought, Matthew. When we come back from
the break, we'll talk about what more the Botswana government
is trying to do to reinvigorate the economy and whether
or not it's actually going to work. We'll be right back.
Welcome back today and the podcast. We're talking about Botswana
and how the rise of lab grown diamonds is leaving
(08:58):
the economy in big trouble. We have Matthew Hill and
Bonganygouni joining us. So Bongany, before we went to the break,
Matthew was saying that the economy is bleeding. Talk about
what it's like on the ground there for Botswanans today.
Give us some color if you can.
Speaker 2 (09:17):
I think what you can tell is that there's a
great appreciation just through public debate, through a lot of
engagements that we have with both the public and the
private sector, there's a lot of appreciation that diamonds can
no longer anchor the economy and that the attempts from
decades ago to diversify the equoding away from its reliance
on diamonds have become an urgency. I think the President's
(09:39):
Book of us an existential threat, and so you're seeing
a lot of efforts. And what's really quite evident is
the fact that it's the highest level of engagement between
the government and the private sector that we've seen in
years around transformation. It's quite clear that the new government's
openness to engage the private sector and infrastructure development is
(10:00):
something that was previously I would say it was lesser
regarded by the prior administrations because those efforts winters urgent
when the revenues from diamonds are coming in. So just
in terms of the picture on the ground, that's what
we're seeing. We're seeing that the private sector has risen
to the fore they've always been asking for government to
open the door and reduce its size in the economy
(10:23):
in certain sectors so that the private sector could play
a much sharper role. I think that's what is quite
clear at the moment.
Speaker 1 (10:29):
Is there any sense whether or not these plans are
actually realistic? Are people hopeful this time around?
Speaker 2 (10:37):
Absolutely. One thing that has been said again and again
by analysts is that the coming in of the new
administration brings in people who don't own the architecture, the culture,
the systems and the attitudes of the old administration. So
they don't own it. They don't need to have the
same attitudes and approach that the previous administration had over
(10:59):
the is fifty eight years in power. So even as
President Boco works on his first National Development Plan, it's
going to run for about five years, there is the
sense of optimism and as I said, the private sector
which has they've become tired of promises of public private
participation in the kind of thing. But this time around
they're actually leading the conversations and they're holding these engagements.
(11:21):
So the plan that has been developed is called the
Economic Transformation Plan. President Boco put this together with some
advisors from Malaysia. They've gone around the country collating, testing,
costing projects that they believe are transformational projects that are
going to be leading to diversification. Just this Tuesday, some
of these projects that the banko Botswana, there was an
(11:44):
investor road show. So these projects were set before asset managers,
before insurance funds, before pension funds for potential investments. And
you could see from the engagements that were taking place
there were people are talking about potential yields, potential returns packed.
This has never been seen before in Boswana. Infrastructure development
(12:04):
and transformational projects have always been under the purview of
the government. The government has got its own agenda that
it develops and it says this is what we're going
to do. And so boco's new administration has come at
a point when this crisis is enabling that faster transformation
and there's a lot of injection of hope in the economy.
Speaker 1 (12:22):
That is an optimistic point there. Mangani Matt, if you
could just wrap things up for us here, because the
story that you both worked on really sort of culminates
in a tail right for economies that are focused on
a single commodity. I wonder if there's a lesson you
think to be learned when we look at some of
(12:43):
the other African economies that are potentially reliant on a
single commodity. Are we seeing a change? Are there different
perspectives that you think we'll see going forward?
Speaker 3 (12:56):
This is one hundred percent coutiary tale to other countries
that are too heavily reliant on any single commodity. I mean,
bots one has always been held up as this real
African success story where a government has avoided the resource curse,
but for decades the government became incredibly complacent in not
(13:21):
pushing these diversification efforts. But what's one is still a
country with massive promise. It's got some of the best
tourism assets in Africa. Its nature parts are favorites among
celebrities like Prince Harry and Megan Merkel. It's got a
nascent copper mining industry. But yet if the government had
(13:45):
promoted and pushed for the growth of these industries years ago,
or even decades ago, preferably, then the outcome could have
been far better for the country. Other countries that are
benefiting from booms in commodities right now, you've got Congo
and Zambia really riding the copper wave. This is really
(14:08):
a lesson to them not to grow complacent and make
sure that you do diversify into other industries.
Speaker 1 (14:15):
To you and you can read all of Bongeny and
Matthew's reporting from Botswana and elsewhere around the region on
Bloomberg platforms. Now here's some of the other stories we've
been following across the region this week. The National Bank
of Ethiopia governor has resigned after serving the role for
two and a half years, during which he helped implement
(14:37):
extensive reforms to overhaul the nation's economy and oil giant
Shell is returning to Angola after a twenty year hiatus,
highlighting a shift in sentiment towards the nation's oil sector
as reforms aimed at attracting global capital start to show results.
And you can follow these stories across Bloomberg platforms now,
(14:57):
including the Next African Newsletter. Put a link to that
in the show notes. This program was produced by Adrian
Bradley and tiwa Adebayo. Don't forget to follow and review
this show wherever you usually get your podcasts. I'm Jennifer's Abasaga.
Thanks as always for listening.
Host
Jennifer Zabasajja
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