Botswana, the world’s leading producer of diamonds by value, is facing a deepening economic challenge as its national diamond stockpile continues to swell. Reports from the Ministry of Minerals and Energy today, Tuesday, 20 January 2026, indicate that inventory levels have reached their highest point in years due to a persistent slump in global gem prices.
The buildup is primarily driven by a sharp decline in demand for natural diamonds in key markets like China and the United States, coupled with aggressive competition from laboratory-grown alternatives.
Several factors have converged to create the current oversupply in Botswana’s vaults as cooling luxury spending in major economies has led to a significant drop in “rough” diamond purchases by international cutters and polishers.
The increasing market share of synthetic diamonds has put downward pressure on the prices of smaller, commercial-grade natural stones.
Rough diamond prices have reportedly dropped by an additional 12% to 15% in the first quarter of 2026, following a sluggish performance throughout 2025.
Diamonds account for approximately 80% of Botswana’s export earnings and a third of its fiscal revenue, a current situation that is putting immense pressure on the national budget.
Consequently, rather than selling gems at “distressed prices,” the Botswana government and its partner, De Beers (through their joint venture, Debswana), have opted to stockpile high-quality stones.
Debswana has reportedly reduced production targets for the 2026 fiscal year to prevent further saturating the market.
Plans are underway for a massive “Natural Diamond” marketing campaign to differentiate mined stones from lab-grown ones.
The government is pushing for more “downstream” activities, such as local cutting and polishing, to capture more value from the stones they do sell.
Kagiso Moloi, a regional commodities analyst, noted:
“Botswana is playing a long game. By stockpiling, they are trying to protect the long-term value of their resources. However, if the slump lasts another 12 to 18 months, the fiscal strain might become unbearable, forcing a rethink of their social spending programs.”
Investors are closely watching the upcoming Sight (diamond sale) in Gaborone scheduled for next month. The level of “buy-backs” and the willingness of sight holders to take on new inventory will be the ultimate litmus test for the industry’s recovery in 2026.
