BLESEDI (not her real name), a promising entrepreneur in Gaborone, the capital city of Botswana, sounds very dejected as she reflects on her garment manufacturing business.
“We haven’t had any orders since October last year, I think. They were going through a transition, trying to cut down costs,” she says.
There have been indications that this could change for the better in the near future, but expectations are not high.
“They had a meeting with us that they are done with the transition and promised that orders should start coming through.
“But I don’t think it will be like before, as you know the diamond sales have gone down,” she added. Botswana has long been regarded as one of the world’s most stable democracies, and Lesedi’s story is one of the reasons the sparsely populated country is often celebrated as one of Africa’s greatest success stories in natural resource management.
She had managed to build a thriving business supplying personal protective equipment to the diamond mines under an agreement brokered by the government for local suppliers.
Yet this strong reputation has tended to obscure deeper concerns about how much of the country’s natural resource wealth truly benefits its people.
Botswana has not sold any diamonds for months, and the ensuing economic fallout has begun to strip away the veneer of stability, revealing deep-seated structural cracks.
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Lab-grown gems are now more sought after, and Anglo American is offloading De Beers.
The decision follows a series of value hits triggered by Anglo American itself: a USUS$2.3 billion write down, coming on the heels of a US$3 billion reduction reported the previous year, both of which significantly impacted the company’s valuation.
The country had been locked in negotiations spanning different administrations with Anglo American’s majority-owned miner, De Beers, for a greater share of the diamonds.
Negotiations over the deal started in 2018, but an agreement announced in 2023 under former President Mokgweetsi Masisi was never formally signed.
Only after the appointment of Masisi’s successor, Duma Boko, was the agreement sealed.
Among the provisions of the deal, during the first five years, the state-owned Okavango Diamond Company (ODC) will sell 30% of Debswana’s output, up from 25% previously, with the remainder going to Anglo American.
The provisional agreement reached with Botswana’s previous government had ODC’s allocation from Debswana—Botswana’s joint venture with De Beers—reaching 50% at the end of the 10-year pact.
The allocation will now reach 40% after the same period. The deal was seen as critical for the southern African country since its economy is largely dependent on the export of diamonds.
As of early 2026, the Botswana government, under President Duma Boko, is actively working to take advantage of Anglo American’s disinvestment and increase its 15% stake in De Beers to a controlling share of over 50%.
This move aims to secure economic sovereignty and greater control over the diamond value chain, with potential financing secured from partners like the Oman sovereign wealth fund.
However, with the write-downs, the economic viability of any potential deal is still in question. Context: Botswana supplies roughly 70% of De Beers’ rough diamond production, making the company a strategic asset.
Timeline & Status: Following announcements in late 2025, the government is proceeding with acquisition steps despite a challenging, low-demand diamond market.
Botswana’s move is driven by the need to have a stronger voice in the diamond industry as Anglo American divests its stake.
Diversification efforts: The government is urgently seeking to diversify by exploring for other critical minerals, such as copper and cobalt, and investing in renewable energy, technology, and agriculture.
Exploration push: Roughly 70% of unexplored territory is being targeted for new mineral development to replace lost diamond revenue.
Slow recovery: Projections suggest only a modest economic recovery, with growth potentially returning to around 1.9% in 2026, assuming successful structural reforms.
As a result, Botswana is at a critical juncture, needing to swiftly pivot away from its 50-year reliance on diamonds to avoid deeper economic hardship.
The falling diamond revenues have already begun to reshape national economic policy.
Botswana’s economy contracted by 1% in 2025, prompting intensified efforts to diversify the mining sector and support the government’s target of 3.1% GDP growth in 2026.
According to the country’s statistics agency, gross domestic product decreased 5.3% on a year-on-year basis, the steepest quarterly contraction since the Covid-19 pandemic.
Botswana’s economy is forecast to rebound in 2026 after two years of decline, although increasing fiscal deficits are likely to drive public debt above the government’s legal ceiling, Finance minister Ndaba Gaolathe has also said.
Speaking during the national budget presentation on Monday, Gaolathe projected 3.1% economic growth for 2026, following estimated contractions of 0.4% in 2025 and 2.8% in 2024.
Diamonds continue to underpin the economy, accounting for roughly one-third of government revenue and about three-quarters of foreign-exchange earnings, official figures show.
Even with a projected economic rebound, public finances remain strained. The budget deficit for the fiscal year beginning in April is expected to reach 26.35 billion pula (US$1.91 billion), or 8.9% of GDP, up from a projected 25.48 billion pula (US$1.9 billion) deficit in the current fiscal year.
Gaolathe noted that the growing deficit stems from a persistent gap between spending obligations and realistically available resources. Consequently, the debt load is set to climb.
The debt-to-GDP ratio was projected to reach 38.7% by March 2026 and rise further to 44.6% by March 2027, surpassing the current statutory limit of 40%.
The minister recognised that breaching the debt ceiling could raise short-term concerns among investors and markets.
However, he argued that the economic harm from drastic spending cuts needed to stay within the limit would be even greater.
Botswana’s challenge in achieving economic balance from its natural resources reflects a common pattern across much of Africa, where economies continue to rely heavily on primary resource-based industries.
This pattern is evident throughout the continent, and as global powers once again scramble for access to Africa’s critical mineral resources, concerns are growing that Africans could be left empty-handed once the minerals are depleted.
This is critical because mining continues to be a major source of investment for a large number of African countries.
In Zimbabwe, for example, an official report shows that for the final quarter of 2025, the mining sector had the highest projected investment value of US$461.79 million, accounting for approximately 39.13% of the total projected investment value for the period.
“This was followed by the manufacturing sector, with a projected investment value of US$349.44 million, representing around 29.61% of total projections,” the Zimbabwe Investment and Development Agency (ZIDA) said in its 2025 Q4 report.
From January 2022 to December 2025, a total of 2,444 new projects were licensed in Zimbabwe with a cumulative projected investment of US$39.958 billion.
Of these, 471 were monitored as at the end of the period, representing a 19% monitoring coverage and constituting US$5.058 billion in projected investment
Actual investment inflows from the monitored projects totalled US$1.547 billion, indicating a 31%
investment realization to date against the total projections for monitored projects and 4% progress against the total projections for all licensed projects from January 2022 to December 2025.
An analysis of the sectoral distribution of actual investment inflows shows that Manufacturing recorded the highest contribution, amounting to US$685 million, which represents 47% of the total actual investment value.
Mining followed with US$490 million (32%), and Agriculture contributed US$205 million (13%), making these three sectors the dominant drivers of investment activity.
Economic analyst Persistence Gwanyanya said the concern that Africans may not benefit as much as expected from their resources was genuine.
“For this reason, African countries must be careful and strategic in how they manage their resources.
“They should avoid being so desperate for investment that they end up losing control of their minerals to countries that historically benefited from Africa’s resources.
“Many of these countries used Africa’s primary minerals and raw materials to build their own economies, and they continue to wield significant power and influence to benefit from Africa’s resources,” Gwanyanya said.
He said Africa should wake up and ensure that its mineral wealth contributes meaningfully to the development of its own economies.
“There is increasing pressure, particularly from Western and developed economies, seeking access to Africa’s rare and strategic minerals.
“However, there is some encouragement in the response from a new generation of leadership in countries such as Zimbabwe, Botswana, and Zambia,” Gwanyanya said.
“These governments are critically reviewing contracts and demands from developed economies with the aim of protecting their minerals and ensuring greater national benefit.”
Zimbabwe recently wielded its authority, imposing a temporary ban on the exportation of raw minerals to curb irregularities in export processes and encourage value addition.
“We have… banned the export of raw minerals and the exportation of lithium concentrates. One of the many reasons was that the industry was not declaring fully the composition of the export consignment.
“So, going forward, Government will be checking every export consignment to see the mineral composition. We have also called the industry to voluntarily declare the composition of their deposits, their mines, and also to declare voluntarily the composition of their export consignments,” Mines and Mining Development minister, Polite Kambamura told Parliament recently.
This development directly impacted Chinese battery manufacturers, who rely heavily on Zimbabwe, which supplies nearly a fifth of China’s lithium concentrate imports.
Lithium prices surged immediately after the announcement, raising concerns over tighter supply and higher production costs for China’s battery industry.
Analysts point out that companies with investments in Zimbabwean lithium projects may need to accelerate local refining to align with Zimbabwe’s resource nationalism policies
According to the Chamber of Mines’ The State of the Mining Industry Survey Report for 2026, submissions from parliament and other key stakeholders show that they are of the view that the levels of beneficiation in the country are still low, and there is scope for further beneficiation specifically in the following mineral subsectors: lithium, platinum, diamonds, and chrome.
“Respondent mining executives indicated that they are supportive of the government’s thrust of full beneficiation of mineral resources in-country,” the report says.
The report adds that government and other key stakeholders are also of the view that the levels of local content in the mining industry are still low despite the government publishing the local content strategy.
“Suppliers of mining companies reported that they are facing challenges in servicing the mining industry, including the following: preference for foreign products, poor payment turnaround, and poor stock management by some mining companies.”
Economist Tapiwa Mashakada believes the mining sector is vital to Africa but also acknowledges that despite the ongoing benefits, there is still a great need for value addition.
“Mining is contributing the highest amount of export revenues and probably the highest sector in terms of employment.
“So the boom is already benefitting the people. Apart from exports and jobs, look at the value chain created by mining.
“The elephant in the living room is lack of beneficiation and value addition,” Mashakada said.
Gwanyanya emphasizes just how important it is for the continent to ensure greater value from its mineral resources, as he points to the assaying of minerals, one of the issues Zimbabwe is grappling with.
“If minerals are exported in raw form without proper testing and verification, there is a risk that more valuable minerals could be smuggled out under the label of less valuable raw materials.
“Assaying is therefore critical for a country like Zimbabwe, which is rich in mineral resources, to ensure that it does not unknowingly lose valuable wealth and later find itself with nothing to show for it,” Gwanyanya said.
He said Africa must exercise due diligence on all potential investment partners.
“Regardless of whether partners come from China, Europe, the United States, or even within the region, African countries must carefully evaluate their intentions and actions,” Gwanyanya said.
“Ultimately, Africa must guard its resources closely and ensure they are used to create the greatest possible value for its own people.”
Thus if managed correctly, the opportunity for Africa lies in:
- moving up the value chain
- localising manufacturing
- building supply chain industries
- capturing more mineral revenue 5. using resources to industrialise
Key takeaways: As BGFI, we believe diamond markets are entering a structural downturn underpinned by broader and fundamental changes in the global diamond industry.
What are the Investor implications?
- Diamond mining is becoming a higher-risk commodity sector
- Countries dependent on diamonds (like Botswana) face revenue volatility
- Diamond equities and upstream projects may see lower long-term growth expectations.
However, we sense there is scope for acquisition opportunities in the sector.
Across Africa, governments are shifting toward resource nationalism and strategic industrial policy.
Examples include: • Zimbabwe banning exports of raw lithium concentrate
- Botswana negotiating a larger share of diamond sales
- New beneficiation policies requiring local mineral processing This trend reflects a broader shift toward capturing more value domestically.
For investors, we believe this means: We believe this points to higher regulatory risk and policy uncertainty that could affect project economics.
For example, Zimbabwe’s lithium export ban directly impacts battery manufacturers reliant on supply from Zimbabwe.
The Upside We believe that this presents new investment mandates. Mining companies may now need to invest in:
- refineries
- smelters
- battery materials processing
- industrial infrastructure
This raises capital requirements but expands investment opportunities.
The real opportunity is in the critical minerals supply chain. Although diamonds face declining demand, Africa holds large reserves of minerals critical to the global energy transition.
These include:
- lithium
- cobalt
- copper
- platinum group metals
- rare earth elements
Countries such as Zimbabwe, Zambia, and Botswana are now positioning themselves as suppliers to the electric vehicle and battery industries.
This creates opportunities in several areas: 1. Upstream mining. New exploration projects targeting critical minerals.
- Midstream processing Local refining and mineral beneficiation — a major gap in Africa’s value chain.
- Manufacturing Battery precursor materials, cathodes, and industrial components.
- Supply chain services Logistics, engineering services, equipment manufacturing, and mineral testing.
Governments increasingly want investors to support:
- local processing
- local procurement
- industrial clusters around mining
This creates opportunities in sectors adjacent to mining, such as:
- manufacturing
- engineering services
- renewable energy
- infrastructure
- Investment capital will increasingly shape the transition
Many African governments want to move up the mineral value chain but face constraints:
- limited infrastructure
- high capital costs
- technology gaps
This, we believe means foreign investment will remain key and essential
. Potential capital providers include:
- mining companies
- sovereign wealth funds
- development finance institutions
- battery manufacturers seeking supply security
- Bottom line for investors Africa’s mineral sector is entering a structural transition.
- Risks
- Commodity volatility (diamonds in particular)
- Policy changes and resource nationalism • infrastructure and governance constraints
- Opportunities
- Critical minerals linked to energy transition
- mineral processing and beneficiation
- supply chain industrialisation
- strategic resource partnerships with governments Investors who focus only on raw extraction may face increasing regulatory friction.
Those who participate in value addition, processing, and manufacturing are likely to be better aligned with the direction of policy across much of the continent.
*This article is taken from Finance Africa quarterly, a Bard Global Finance Institute publication. BGFI is a newly-formed local economic and finance research organisation.
