Southern Africa races for alternatives as lab-grown diamonds hit economies

JOHANNESBURG — 14 November 2023

Botswana, South Africa and neighbouring countries are urgently seeking new income sources as lab-grown diamonds threaten economies built on natural stones, with Botswana launching a sovereign wealth fund this week to build a “foundation for a more resilient, sustainable and diversified future beyond diamonds”.

Diamond-dependent nations are exploring alternatives like luxury wildlife tourism, medicinal cannabis and solar power industries. Botswana’s President Duma Boko has suggested taking a majority stake in De Beers and selling diamonds independently.

“Countries such as Angola, Namibia and South Africa are all exposed but not to the same degree as Botswana,” said economist Brendon Verster at Oxford Economics Africa. Diamonds account for 30% of Botswana’s GDP and 80% of exports according to the International Monetary Fund.

Lab-grown diamonds from China and India have driven prices down: a one-carat natural diamond averaged $6,819 in May 2022 but dropped to $4,997 by December 2024 (World Diamond Council). Botswana faces declining foreign reserves and mounting debt, with its health system nearly collapsing in August.

“If left unaddressed, there is a real risk of the situation becoming not just an economic challenge but a social time bomb,” President Boko said in July. Ratings agency S&P downgraded Botswana on Friday, citing lab-made diamonds now comprising “approximately 20 percent of the global market by value”.

South Africa, Angola, Namibia, Botswana and DR Congo pledged in June to spend 1% of diamond revenues marketing natural stones. De Beers told AFP: “We see a significant opportunity to engage consumers in the story of responsibly sourced diamonds from Botswana,” while exploring synthetic diamonds for tech applications.

In Johannesburg’s diamond market, contrast highlights the split: a $50,000 natural diamond behind security gates, while a $115 lab-grown stone sat unguarded nearby. “We each have our target,” one jeweller said. “So long as everyone is happy.”