IMF: "Bottlenecks" Hindering Botswana's Post-Diamond Future
January 12, 26
(IDEX Online) - Botswana's reliance on diamond revenue has contributed to the "bottlenecks" that are now hindering private sector growth and diversification, says the IMF.
In a newly-published report, Addressing Growth Bottlenecks in Botswana, the International Monetary Fund concludes that the country stands "at a critical juncture in its development trajectory".
The bottlenecks it references include limited access to finance (cited by 25 per cent of firms), land tenure inefficiencies, governance issues, and infrastructure gaps such as unreliable electricity, alongside excessive rigidity in employment rules.
The diamond industry is at an "inflection point", it says, as a result of lab growns, sanctions on Russian and what it calls a cyclical downturn in demand, especially from China.
"The country must now address persistent structural impediments that constrain the economy's ability to realize its growth potential and diversify," it says.
Botswana discovered its first major diamond deposit in 1967, just months after gaining independence from Britain1. They quickly became the backbone of its economy, transforming it from one of Africa's poorest nations into a middle-income economy sustained by diamond wealth.
But its economy contracted by 3% in 2024 amid diamond production halts and demand slumps, slashing fiscal buffers and pushing youth unemployment higher, while exposing over-reliance on a faltering sector.
Last month the IMF cautioned Botswana's authorities against increasing its stake in De Beers, noting that such a move would deepen its exposure to a sector that is facing significant uncertainty and could well increase public debt.
Botswana's president Duma Boko dismissed IMF concerns and vowed to press ahead regardless.
Pic shows Orapa, Botswana's first diamond mine.