Namibia’s diamond industry, responsible for 7.2% of GDP and more than 8 000 jobs, is stagnating.

Faced with falling revenues, the governor of the Bank of Namibia, the country’s central bank, last week urged the government to extend royalty relief for Namdeb, the Namibian government’s joint venture with the global diamond company, De Beers.

Namibia first cut royalties from 10% to 5% in 2021, and now officials want that relief extended to 2039 to keep mines viable.

Namibia’s move underlines an existential problem in the diamond industry, and the cause is no mystery. Lab-grown diamonds have reshaped the market in just five years. Synthetic stones now make up around 50% of engagement ring sales in the United States (US) by volume and 14% of all jewellery sales.

They sell at discounts of up to 90% compared to natural diamonds, a gap that was just 10% in 2018. No producer, no matter how historic, can price against chemistry.

The hardest-hit player is De Beers, the same company that, in 1947, convinced the world that “A Diamond Is Forever.” That slogan helped fuel a global boom in natural diamonds; by the 1980s, De Beers controlled nearly 90% of the rough-diamond trade.

Today, its share is below 30%. In 2024, De Beers’ rough-diamond sales value reportedly fell by 25%. This year, De Beers deliberately scaled back mining by 23% to avoid stockpiles.

Its parent company, Anglo American, is now trying to sell its 85% stake in De Beers. Up to six bidders are in talks, including Angola, which wants a 25% minority stake as part of a consortium of African diamond producers. But the sale process is being complicated by Botswana, the company’s most important partner, and now its biggest political risk.

Botswana holds 15% of De Beers and, through Debswana (a joint venture between De Beers and the Botswana government), controls around 70% of De Beers’s diamond supply. Diamonds make up 80% of Botswana’s export earnings and 30% of government revenue.

Like Namibia, Botswana is facing mounting economic pressures due to the faltering diamond industry, with Debswana’s sales revenue falling 46% in 2024.

Botswana’s President Duma Boko has declared the diamond downturn a national emergency and has adopted a noticeably more forceful stance towards Anglo American. He has criticised the company for a: “lack of transparency” in the planned divestment of De Beers and has made it clear that Botswana wants full control over what it sees as a strategic national asset, not just extraction, but also marketing and sales.

This is not mere political theatre. Botswana is already reshaping its partnership with De Beers. Under the new sales agreement, the state-owned Okavango Diamond Company will market 40%, up from 30%, of Debswana’s rough diamonds independently, bypassing De Beers’s traditional, centralised sales system.

As lab-grown diamonds claim the future, Southern Africa is fighting not just for market share, but for relevance. Charlie Robertson, author of The Time Travelling Economist, a book on industrialisation in developing economies, warned that diamond prices are unlikely to recover. “The diamond-based economic model, which once stood out as one of Africa’s brightest success stories, is at risk of fading for good.” Robertson says.