Botswana’s pursuit of a larger stake in De Beers has become a test of how much financial risk the diamond-producing nation can take to gain more control over its most important industry.
Botswana is seeking a larger stake in De Beers as weak diamond revenues put pressure on government finances and raise concerns about borrowing. Jwaneng diamond mine, Botswana [Peter Prokosch/Flickr]
- Moody’s downgraded Botswana’s credit rating to Baa2, warning against debt-funded investment in De Beers.
- Botswana wants to increase its 15% stake as Anglo American seeks to sell its 85% holding.
- Weak diamond prices and falling revenues continue to strain Botswana’s finances.
- The country must balance greater control of its diamond industry against rising debt risks.
On Friday, 25 September, Moody’s lowered Botswana’s domestic and foreign currency long-term issuer ratings from Baa1 to Baa2, its second downgrade in less than a year.
According to Reuters’ account of the rating decision, the agency also warned that it could cut the rating again if Botswana substantially increased its investment in De Beers through debt-financed transactions.
That is a conditional warning, not a rejection of Botswana’s plans. Moody’s changed the outlook on the new rating from negative to stable, recognising the government’s stronger fiscal response and the possibility that a sustained recovery in diamond revenue could slow debt growth.
Botswana remains investment grade, though Baa2 is only two rating steps above speculative grade.
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Falling diamond prices have strained De Beers’ earnings, complicating Botswana’s plans to increase its ownership of the company. [Stock Photo/Getty Images]
An opportunity created by a difficult market
Anglo American is seeking to sell its 85% stake in De Beers, while Botswana owns the remaining 15%.
In July, a Botswana government official told Reuters that Anglo had identified a preferred bidder and that Botswana was assessing whether to exercise its right of first refusal alone, alongside that bidder, or with another partner. No completed sale or agreed Botswana purchase has been announced.
For Botswana, this is more than a chance to buy shares. De Beers operates across several diamond-producing countries and sits at the centre of an industry that has long supplied roughly a third of Botswana’s government revenue and three-quarters of its foreign exchange earnings.
A larger stake could give Gaborone more influence over the company’s direction at a moment when ownership is changing. It would also commit more public resources to the sector whose downturn is already straining the budget.
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Vice President and Finance Minister Ndaba Gaolathe has signalled both sides of that calculation. “ Whatever the number is, it is more than 15%,” he told Bloomberg in an interview published on 21 September .
He also said Botswana could no longer afford to spend on an investment without regard to its cost. The government has expressed its ambition; it has not publicly settled the size or financing of an additional stake.
More diamonds have yet to mean more revenue
In De Beers’ first-half 2026 results , production in Botswana rose 43% to 10.3 million carats compared with the same period a year earlier.
Yet De Beers’ group-wide revenue fell to $1.6 billion from $2.0 billion, while its average realised rough-diamond price dropped 32% to $105 a carat.
Higher Botswana production and lower group revenue measure different parts of the business, but together they show why recovering output alone cannot settle the country’s fiscal problem.
Anglo American is seeking to sell its 85% stake in De Beers, giving Botswana an opportunity to expand its existing 15% holding. REUTERS/Andrew Winning Reuters
De Beers said smaller and lower-quality natural diamonds continued to face pressure from laboratory-grown alternatives, while demand in mainland China remained weak. It reported a $113 million underlying earnings loss before interest, tax, depreciation and amortisation for the half-year, an improvement from the $189 million loss a year earlier.
A buyer would therefore be investing in a company with a valuable global position and an uncertain near-term recovery.
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The deficit improved. The underlying risk did not disappear
Botswana has gained some budget room since its February forecasts. On 22 September, Gaolathe revised the projected deficit for the year ending March 2027 to 9.26 billion pula, or 3.1% of GDP, from 26.35 billion pula, or 8.9%. Reuters reported that a larger-than-expected transfer from the central bank contributed to the revenue improvement, alongside efforts to contain spending.
Gaolathe cautioned that the improvement “ does not remove the structural fiscal pressures we still have to address.”
That distinction matters for a potential acquisition: a better forecast for one financial year does not, by itself, establish how much Botswana can borrow safely for a long-term investment.
Moody’s is not the first institution to raise the concentration risk. In its 2025 assessment of Botswana , the International Monetary Fund cautioned against increasing the country’s De Beers stake given its fiscal position and existing reliance on diamonds.
That warning preceded this week’s downgrade, but it identifies the same underlying problem: buying more of De Beers could increase Botswana’s exposure just when weak diamond income is limiting the money available to pay for it.
Botswana’s decision now turns on how much it acquires, what it pays and who finances the purchase. Bringing in partners could reduce the amount the state must fund, though the resulting ownership arrangement would determine how much additional influence it gains.
Borrowing heavily to take a larger stake would bring it closer to the scenario Moody’s explicitly flagged. Those are possible deal structures, not decisions the government has announced.
