Botswana is staging an unexpected diamond auction to help cover gaps in government revenue. The state-owned Okavango Diamond Co. is putting up about one million carats of rough stones in a short notice “closed” tender. This marks a departure from its usual auction schedule, which is typically announced well in advance for registered buyers only.
The diamond sector is central to Botswana’s economy. Rough diamonds account for roughly 80 percent of its export earnings and make up about one third of total government revenue. However, the industry is reeling. Revenues plunged nearly 50 percent in 2024 as global demand slipped, synthetic alternatives gained traction, and top diamond markets softened.
With the government facing a fiscal squeeze, this surprise auction is intended to generate cash quickly. Officials say there will be at least two more such tenders before year end. The plan also aligns with a broader push: Botswana is negotiating to gain a controlling stake in De Beers as Anglo American moves to divest.
The risks are real. A sudden influx of supply into the market could further depress prices, hurting returns. Buyers may also be wary of participating in auctions with limited notice. And the structural issues facing the diamond trade—oversupply, changing consumer preferences, competition from lab-grown gems, and external demand weakness—are not solved by one isolated sale.
For Botswana, the move reflects both desperation and opportunity. On one hand it reveals how dependent the country remains on diamonds and how exposed it is to market shifts. On the other hand, it may signal a willingness to be more aggressive in monetizing its resource base and negotiating stronger terms in the global value chain.
The success of this auction and the two more planned will be a test of investor confidence in Botswana’s diamond prospects. If the government manages to raise meaningful sums without undercutting its own value, it could stabilize public finances in the short term. But long term, Botswana must diversify its economy, build resilience in revenue sources, and manage its diamond strategy with care.