NEWS & POLITICS
Botswana to accelerate currency devaluation as diamond sales shrink
Botswana, Africa's leading diamond producer, has devalued its currency, the Pula, by 2.76% over the next 12 months in response to falling global diamond prices and a sharp economic downturn that has prompted the government to adopt austerity measures.
Michael Oduor
Currency devaluation is often used to stimulate exports by making goods more competitive on the international market through a lower exchange rate.
Despite its reputation as one of Africa's most stable economies, Botswana's economy contracted by 3% in 2024, largely due to a steep decline in diamond exports.
The devalued Pula is expected to increase competitiveness while also increasing the cost of imports.
According to the Botswana Ministry of Finance, increased pressure has been placed on the country's exchange rate due to shrinking foreign reserves, which can now cover only five months of imports, down from the usual ten. Officials warn that the exchange rate system might destabilize if this trend continues unchecked.
Diamonds account for approximately 80% of Botswana's exports; however, declining demand has significantly reduced the country's earnings. The diamond industry is jointly owned by the government and De Beers, with each holding a 50% stake in the company.
Unemployment has climbed to 27.6% in 2025, up from 25.9% in 2023, adding pressure to an already strained economy.
President Duma Boko, who recently took office, campaigned on promises to combat corruption, introduce a minimum wage of 4,000 Pula ($302) per month, provide unemployment benefits, increase support for the elderly, and invest in new enterprises to stimulate economic growth.
