Lab-Grown Diamonds Are Threatening Botswana’s Economy 

Botswana spent nearly sixty years proving that natural resources need not be a curse. Diamonds financed free education, universal healthcare, modern roads, and one of Africa’s most stable democracies, turning a landlocked nation with few obvious advantages into a global development case study. But that success rested on one assumption: that the world would always value natural diamonds enough to sustain the bargain. Laboratory-grown gems are dismantling that assumption, by stripping away the scarcity that made Botswana’s stones so valuable. As consumers embrace cheaper alternatives that are chemically indistinguishable from mined gems, Botswana is confronting a question with consequences far beyond the jewelry industry: what happens when an entire national development model is disrupted?

In August 2025, Botswana’s president declared a public health emergency after government hospitals ran out of medicine. The proximate cause was a budget shortfall. The root cause, traced back far enough, was a shift in what people want on their fingers when they get engaged.

For almost sixty years, diamonds pulled from the Kalahari sand made Botswana one of the rare African success stories, a country the Harvard International Review has called a model of the pragmatic path to prosperity. Today that same dependency is Botswana’s greatest vulnerability, as laboratory-grown diamonds, chemically identical to mined stones and priced at a fraction of the cost, reshape global demand.

When Botswana won independence from Britain in 1966, it had almost no paved roads, a handful of university graduates, and a GDP per capita of roughly $59, among the lowest in the world, according to World Bank data compiled by Statbase. A year later, De Beers geologists discovered diamonds at Orapa. The government and De Beers formed Debswana, a 50-50 joint venture, and the country’s fortunes changed almost overnight.

By 2021, GDP per capita had reached $6,805, an increase of more than 8,000 percent in nominal terms since 1965, according to a 2023 conference paper presented at the Diamonds Source to Use conference in Johannesburg. Diamonds came to account for roughly a quarter of GDP, a third of fiscal revenue, and 80 percent of exports, per the Natural Diamond Council. Under the terms of the Debswana partnership, De Beers has estimated that for every dollar earned in Botswana, 80 cents flows to the government, a structure the Harvard International Review credits with financing public hospitals, universities, and roads without the corruption that has plagued other resource-rich African states.

The lab-grown shock

The threat Botswana now faces was visible as early as 2018, when De Beers itself launched Lightbox, a lab-grown diamond brand, through its Element Six division, a move the same 2023 conference paper described as raising alarm across the natural diamond industry. What followed was a collapse in production costs that few in the trade anticipated.

A one-carat lab-grown diamond that retailed for roughly $3,410 in 2020 cost around $855 by 2025, a decline of nearly 76 percent, according to Statista. Wholesale prices fell even further. Diamond analyst Edahn Golan has estimated wholesale prices for one- and two-carat lab-grown stones dropped by as much as 96 percent since 2018, a figure reported by industry trade coverage, as a more than 300 percent expansion in global production capacity, concentrated among Indian diamond-cutting firms, flooded the market.

Natural diamonds followed the price down. A one-carat natural stone that averaged about $6,000 in 2021 sold for around $4,200 in 2025, according to BriteCo’s Lab-Grown vs. Natural Diamond Report. 

Industry analyst Paul Zimnisky has calculated that rough, mined diamond prices fell 34 percent from their 2022 peak through late 2024. Lab-grown stones captured more than 45 percent of United States engagement ring purchases by 2024, up from 5.2 percent of jewelry sales in 2019.

Diamonds account for around 80% of exports, one third of fiscal revenues, and one quarter of GDP. The country is the world’s largest diamond producer, by value. But the economy is small, hence diamonds have a very large macroeconomic and fiscal impact.
— International Monetary Fund, Public Financial Management Blog

Recession in the Kalahari

The consumer shift has already reached Botswana’s balance sheet. The economy contracted an estimated 3 percent in 2024 and continued shrinking into 2025, driven by a 24 percent fall in mining output. 

Debswana cut its 2024 production target by 25 percent and its 2025 target by a further 40 percent from 2023 levels, operating at roughly 60 percent of capacity, the same analysis found.

De Beers’ rough diamond sales fell from $6 billion in 2022 to $2.7 billion in 2024, and Debswana announced plans in May to lay off 1,000 employees, nearly 20 percent of its staff, in a country where unemployment already exceeded 27 percent. Botswana’s fiscal deficit was projected at more than 9 percent of GDP for the 2025-26 fiscal year, among the widest in sub-Saharan Africa. Public debt is projected to roughly double as a share of GDP by 2027.

The pain is visible on the ground. In Jwaneng, the town built beside the world’s richest diamond mine, Debswana has offered buyouts across its mines aimed at shedding roughly 10 percent of its workforce, with the local economy contracting alongside it.

The downturn, quarter by quarter

Q1 2024: GDP contracts 5.3%

Q2 2024: GDP contracts 0.5%

Q3 2025: GDP grows 8.2%, first expansion after six straight quarterly declines

Q4 2025: GDP contracts 5.4%, as diamond production falls 54.6%

Source: Statistics Botswana

There have been flickers of recovery. Botswana’s economy expanded 8.2 percent year over year in the third quarter of 2025, driven by an 88 percent jump in diamond trading. The rebound proved fragile. By the fourth quarter, mining output had fallen 47 percent and diamond production had plunged 54.6 percent, pulling GDP back into contraction.

Renegotiating the deal, and looking past diamonds

Botswana’s government has responded on two fronts. First, it has pressed De Beers for better terms. A new ten-year sales agreement, signed after President Duma Boko took office following an election that ended 58 years of single-party rule, raises the government’s share of Debswana’s sales from 25 percent to 30 percent immediately, rising to 40 percent within five years and potentially 50 percent after that. In exchange, De Beers secured a 25-year extension of its Botswana mining licenses, through 2054.

Second, Botswana is trying to diversify an economy that has never needed to. The government has turned to copper and uranium mining, agro-industry, and regional trade under the African Continental Free Trade Area, according to the Ecofin Agency. It has also leaned on tourism, an industry that has hovered at around 5 percent of GDP for three decades, a small base being asked to help fill a hole left by an industry that was a quarter of the economy.

Botswana’s dependence on diamonds could hurt long-term growth due to falling reserves, increased competition from synthetic diamonds, and the effects of Dutch disease.
— International Monetary Fund, 2024 Article IV Consultation

Botswana is frequently cited, including by the World Diamond Council, as proof that a single-commodity economy can avoid the resource curse when institutions are strong and revenue is managed transparently. That case study is not being overturned by corruption or mismanagement. It is being tested by a substitute product that did not exist at commercial scale a decade ago and now competes directly with the resource the entire model was built on.

The rapid rise of laboratory-grown diamonds is eroding the premium that natural stones once commanded, shrinking government revenues and exposing the risks of depending on a commodity whose value increasingly exists in consumer perception rather than geological rarity.

Botswana’s challenge is now how to build prosperity in a world where the market may no longer pay a premium for what lies beneath its soil. As synthetic products become accepted across industries, Botswana offers an early warning of how countries built around a single natural resource may find themselves competing against technology itself.

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