Funding for Botswana Diamond Trade

Funding for Botswana Diamond Trade |Diamond mining has fueled much of the expansion |

The World Factbook – CIA

Botswana has maintained one of the world’s highest economic growth rates since independence in 1966. Diamond mining has fueled much of the expansion and currently accounts for one quarter of GDP, approximately 85% of export earnings, and about one-third of the government’s revenues.

Tourism is the secondary earner of foreign exchange and many Botswana engage in subsistence farming and cattle raising. Through fiscal discipline and sound management, Botswana transformed itself from one of the poorest countries in the world to a middle-income country with a per capita GDP of $17,700 in 2015. Two major investment services rank Botswana as the best credit risk in Africa.

Botswana’s economy is highly correlated with global economic trends because of its heavy reliance on a single luxury export. According to official government statistics, unemployment is 19.5%, but unofficial estimates run much higher. De Beers, a major international diamond company, signed a 10-year deal with Botswana in 2012 and moved its rough stone sorting and trading division from London to Gaborone in 2013. The move was geared to support the development of Botswana’s nascent downstream diamond industry.

Following the 2008 global recession Botswana’s economy recovered in 2010. However, the Government of Botswana estimates the economy grew by only 1% in 2015. This was primarily due to the downturn in the global diamond market; water and power shortages also played a role. In October 2015 President Ian KHAMA announced a stimulus plan to boost the economy through projects in agricultural production, construction, manufacturing, and tourism development. In 2016, Botswana entered its fourth year of drought, detrimental to Botswana’s small, but vital agriculture sector.

The prevalence of HIV/AIDS is second highest in the world and threatens the country’s impressive economic gains.


The U.S. government has agreed to guarantee a $125 million loan to Botswana’s diamond manufacturing industry to promote local job creation and strengthen the nation’s economic growth.

funding for botswana

The loan, provided by Barclays Bank of Botswana, will help keep activities such as diamond sorting, marketing and manufacturing processes within Botswana, according to the Overseas Private Investment Corporation (OPIC), the U.S. government’s development finance institution.

The $125 million is the first tranche of a broader $250 million OPIC loan-guaranty program for Botswana’s diamond industry. Barclays Bank of Botswana, a subsidiary of Barclays Africa Group, is the first lender and additional lenders may join the program in the future, OPIC said.

OPIC signed the loan guaranty July 25 with Barclays together with New York-based diamond manufacturer Lazare Kaplan International through its subsidiary Botswana Finance. The agreement will establish a revolving facility in which OPIC will share the credit risk.

“This project will provide critical support to an industry that is central to Botswana’s economy and a key source of job creation,” said James Polan, OPIC’s vice-president of small and medium-sized enterprise finance (pictured). “Bringing the larger supply chain into Botswana will have a huge impact in local communities across the country.”

The project also aims to facilitate further lending to diamond manufacturing and polishing companies with operations in Botswana, giving them access to long-term financing and developing the nation’s financial sector.