Botswana’s economy, heavily reliant on the diamond sector, is showing signs of recovery after a significant downturn. The slump, largely attributed to challenges in the diamond industry that began in late 2023, seems to be reversing. This year, fiscal authorities have revised the economic growth projection to 3.8%, up from an initial 3.1%, thanks to stronger diamond production in the first half of the year.
Minister Kenewendo expressed cautious optimism regarding the diamond industry’s recovery. After a period of negative growth, the U.S. market has seen a resurgence to positive figures, with improvements reaching double digits in July. Similarly, in India and the Far East, the demand for natural diamonds overtakes synthetics, supporting the industry’s momentum.
- Diamond Production: As of the current year, production has reached 15.1 million carats, a 14% increase from the 13.3 million carats produced in 2025.
- Growth in Markets: The U.S. market has reported growth rates of 5% to 6%, and even higher in some months.
While diamonds drive much of the economic recovery, other sectors, particularly copper mining, are also contributing to growth. MMG’s expansion of the Khoemacau mine, which is set to become one of the largest copper producers in the region, exemplifies this trend.
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- Khoemacau Mine Expansion: A US$900 million investment is underway, positioning the mine as the largest in Botswana by next year.
- Employment Impact: The expansion is expected to employ 7,000 people.
The Exploration Investment Company Botswana (EICB) is spearheading efforts to explore and secure new mineral assets. The agency aims to de-risk early-stage exploration, providing government oversight in the mineral sector. The focus is on untapped resources such as chrome, lithium, platinum, and more, in a country where 70% of land remains unexplored.
Despite the positive developments, challenges remain. The anticipated recovery is largely driven by the mining sector rebound, with limited direct impact on poverty reduction. Employment creation is slow, and inflation remains high, affecting disposable incomes.
- Inflation Forecast: The central bank projects an average inflation rate of 8.1% for the year, up from 5.9% in August.
- Contributing Factors: Higher domestic fuel prices, electricity tariffs, and global trade tensions are key drivers of inflation.
Botswana’s economic recovery led by the diamond sector shows promise. However, the benefits are yet to fully translate into broader economic improvements for ordinary citizens. As the government and industry leaders continue to address these challenges, a balanced approach to growth and equitable distribution of benefits remains crucial.
The country’s most economically important sector is recovering after a two-year slump largely caused by the downturn in diamonds that began in the third quarter of 2023. This year, fiscal authorities have revised economic growth to 3.8%, from an initial forecast of 3.1%, due largely to the stronger diamond production in the first half of the year. Kenewendo said that she was cautiously optimistic about the direction of the diamonds, which appear to have hit rock-bottom and started bouncing back. From the squeeze of synthetic diamonds, to global economic uncertainty and the “Trump tariffs,” natural diamonds are mounting a global fightback led by producers that include Botswana and companies such as De Beers, using nuanced marketing across strategic platforms.
“What we have seen is growth from negative 3.3% or so last year and two years ago, to now being positive in the U.S. market at about five percent, 6% and even double digits in July,” she said. “These are comforting. We are cautiously optimistic about the industry.”
She added: “We are seeing similar growth in India. We are, again, cautiously optimistic because the intent to purchase natural in India and the Far East is far greater and it’s about 25%, 26% versus 17% for synthetics. “So, that is helping us really build on that momentum and we think that the consumer is indeed hearing our message, is seeing our efforts and they are slowly gravitating back to the natural diamond industry.”
According to Ministry data, local diamond production in the year to date reached 15.1 million carats, compared with 13.3 million carats in the comparative period in 2025, representing a 14% increase.
The news around diamonds is part of the green shoots government is seeing, as an economically difficult year draws towards a close. The non-diamond part of the mining industry is experiencing bright spots of growth.
Excitement is particularly building around MMG’s US$900 million expansion of Khoemacau’s which will make the mine one of the largest copper producers in the region. Khoemacau is one of the main drivers of the growth in exports of copper from zero in 2016 when the major mines closed, to P11.1 billion in 2025. As at July this year, exports had reached P8.5 billion, or 27% higher than the corresponding period last year.
“MMG has announced that they will be ramping up production, employing 7,000 people, making it the largest mine to ever exist in Botswana,” Kenewendo said. “I think sometimes we miss that point that MMG by next year will be the largest copper mine and the largest mine to ever exist, even by employment here in the country.”
The Minister is also driving the activation of the Exploration Investment Company Botswana (EICB), the state minerals exploration agency established specifically to de-risk early-stage exploration and ensure the government’s hand in more sectors of the minerals industry.
The firm is mounting a massive exploration campaign to secure copper assets, as well as the development of four belts around the country that promise chrome, lithium, platinum, manganese, uranium, limestone, nickel and others in a country where 70% of the land is unexplored for minerals.
While activity is warming up with the Ministry of Finance now forecasting growth of 3.8% this year from the original forecast of 3.1%, analysts are warning that much of this growth is from the rebound in mining and not contributing directly to poverty reduction.
“The anticipated recovery reflects stronger-than-anticipated economic performance in the first half of 2026, underpinned by higher diamond production,” the Bank of Botswana (BoB) said on Thursday. “Meanwhile, growth in other sectors varied, but overall continues to be modest.”
Critics have noted that the pass-through of growth in key sectors to ordinary Batswana remains impeded by slow employment creation and high inflation, the two major factors crippling citizen’s aspirations.
The central bank now expects inflation to average 8.1% this year, from a forecast of 5.9% in August, eating into disposable incomes at a time when wages remain stagnant and unemployment continues stubbornly high.
“Overall, risks to the inflation outlook are tilted to the upside mainly due to potential second-round effects stemming from the relatively higher domestic fuel prices and electricity tariffs, as well as the under-recovery in domestic fuel prices,” BoB governor, Lesego Moseki said in an update. “Moreover, El Niño effects including below-normal rainfall, droughts, heatwaves, crop failure and livestock deaths present an additional upside risk to the inflation outlook. “Externally, elevated prices for oil, gas, fertilisers and industrial inputs, resulting from the ongoing conflict in the Middle East, are expected to continue exerting upward pressure on inflation. “Additionally, the increased global trade tensions and tariff measures are expected to heighten inflationary pressures.”
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