Is Botswana Getting A Raw Deal From De Beers Diamonds - The World News

On the other hand, some arguments suggest that Botswana is not getting a raw deal:

Critics who argue that Botswana is getting a raw deal point to the broader value chain of the diamond industry.

On paper, the numbers are staggering. Botswana produces roughly 20% of the world’s diamonds by value, including those legendary, massive stones that fetch millions at auction. Through Debswana (the 50/50 joint venture), everything is split down the middle—production, profits, and debt.

Historical context and the genesis of the partnership At independence Botswana was economically fragile, with limited infrastructure, human capital, and administrative capacity. The discovery of diamonds presented both opportunity and risk. The government’s initial negotiating position was weak—lacking technical expertise and facing a global industry dominated by De Beers’ marketing and distribution systems. In that context, the government negotiated a 50/50 joint venture (Debswana) rather than attempting unilateral extraction or an immediate nationalized industry. The deal offered Botswana immediate access to De Beers’ technical know-how, marketing channels, and investment capacity, and it guaranteed steady royalties and dividends.

De Beers committed to investing up to $750 million over the next decade into a fund designed to diversify Botswana's economy, focusing on non-diamond sectors like agriculture, tourism, and technology. On the other hand, some arguments suggest that

If Botswana seizes a larger share of production to sell independently on the open market, they inherit the risk of market downturns. Without De Beers’ ability to stockpile diamonds during market slumps to stabilize prices, Botswana’s economy—which relies on diamonds for over 80% of export earnings—could become dangerously volatile.

Currently, diamonds from Botswana are often mixed with stones from South Africa, Canada, and Namibia before being sold. Botswana wants the right to sell its own stones independently—specifically through the state-owned Okavango Diamond Company (ODC) . De Beers is resisting, arguing that aggregation allows for better pricing consistency.

However, critics argue that the economic benefits of this move have not trickled down as expected. While the diamonds are now sorted in Gaborone, the most lucrative parts of the diamond pipeline—cutting, polishing, and jewelry manufacturing—remain largely elsewhere. Furthermore, the sheer volume of diamonds moving through Botswana has not translated into a corresponding diversification of the local economy.

More significantly, the has explicitly warned Botswana against increasing its stake in De Beers. The IMF points to Botswana's precarious fiscal position—a projected budget deficit of 11% of GDP, rising public debt, and an economy already dangerously over-dependent on a single, declining industry. The argument is simple: taking on billions in debt to buy a majority share of a struggling diamond company in a shrinking market is a gamble the country cannot afford. Through Debswana (the 50/50 joint venture), everything is

To understand the current tension, one must acknowledge the history. Unlike many African nations that fell victim to the "resource curse"—where mineral wealth fuels corruption and conflict—Botswana utilized diamond revenues to build infrastructure, fund free education, and develop a thriving tourism sector. The partnership was formalized through Debswana , a 50/50 joint venture between the government and De Beers.

But beneath the surface of this success story, long-standing grievances have festered. Critics have always pointed to a fundamental imbalance: Botswana supplies an astonishing 70% of De Beers' rough diamonds, yet until recently, it only owned 15% of the diamond giant itself. For many in Botswana, it was a partnership of unequals, where the country took the geological risk while the majority of the value flowed back to London and the Anglo-American shareholders.

Historically, the deal was highly lucrative in terms of cash generation but restrictive in terms of economic evolution. It kept Botswana dependent, structurally vulnerable, and confined to the bottom rung of the diamond value chain.

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While the new agreement is a political and economic triumph for President Masisi, it introduces significant vulnerabilities that critics argue could backfire, turning a hard-won victory into a logistical raw deal. The Challenge of Selling 50% of Output

When diamonds were discovered in Botswana in 1967, just a year after independence from Britain, the nation was one of the poorest in the world. The subsequent formation of —a 50:50 joint venture between the government of Botswana and De Beers Group —transformed the country into an upper-middle-income economy.

Botswana and De Beers recently renegotiated their agreement. Key wins for Botswana include:

: Some investigations have suggested "revenue leakage" where diamond values "miraculously increase" once they cross Botswana's borders, potentially reducing the country's tax take. The Improved 2025 Deal