The International Monetary Fund has warned Botswana to carefully consider its interest in buying De Beers, a diamond mining company.

The country already owns 15% and supplies around 70% of the world’s rough diamonds through Debswana, a joint venture with De Beers. It is now seeking to buy Anglo American’s 85% shareholding in De Beers.

Botswana’s President Duma Boko in November announced plans for the government to acquire a majority stake in De Beers, intensifying a regional showdown with Angola, which has also signalled interest in buying a controlling share of the 137-year-old diamond company in October this year.

During his State of the Nation Address last month, Boko said Botswana had taken “concrete steps” towards purchasing Anglo American’s 85% holding in De Beers.

Anglo American plans to exit De Beers as part of a strategic refocus on copper and other energy-transition metals. The company values De Beers at about $4.9 billion, significantly lower than past valuations, as natural diamond prices face ongoing pressure from synthetic alternatives.

Angola’s mines ministry confirmed that it had held discussions in Gaborone with Botswana’s mining officials about acquiring De Beers shares, signalling a potential regional contest for the asset.

For Botswana, De Beers is more than a business; it is a strategic national asset. Diamonds account for roughly 80% of the country’s export earnings and around one-third of government revenue. Declining natural diamond prices have already taken a toll: Debswana’s sales fell 46% last year, and production dropped another 26% in the first half of 2025. The slump contributed to a public health emergency in August, when shortages hit government clinics and hospitals.

Analysts say Botswana’s bid is motivated by fears that an external buyer could reshape De Beers or dilute the country’s influence over the diamond supply chain. The government has also indicated interest in increasing its role in marketing and sales.

However, the International Monetary Fund (IMF) has recently warned Botswana against increasing its stake. In a statement, the Washington-based institution said the country’s economy is struggling with weak diamond demand and fiscal pressures.

Raising its share beyond the current 15% could deepen exposure to a sector facing persistent uncertainty and increase public debt. The IMF noted that, “Botswana’s economic outlook has deteriorated markedly over the last 12 months as the decline in the demand for natural diamonds has been sharper – and is expected to be more persistent – than anticipated.”

While the IMF has no power to block the purchase, its warning carries weight with investors, lenders, and rating agencies, particularly as the government explores financing options for a multibillion-dollar acquisition. So far, there has been no official response to the IMF caution from Botswana’s government.

Some analysts also question the wisdom of doubling down on a sector under long-term pressure. Frans Cronje of Frans Cronje Private Clients, an advisory firm, warned that the government is “trying to catch a falling knife”. He suggested Botswana could instead leverage its strengths in governance, security, and natural resources to create a new economic model.

“Botswana could become the Guernsey of Southern Africa,” Cronje said. “Eliminate estate duty, capital gains, inheritance, and wealth taxes, slash corporate tax to 10%, and position the country as a stable, well-governed financial hub for South Africans. With its wildlife, security, and governance, it could thrive far more sustainably than by doubling down on a declining industry.”

Boko’s push for majority ownership underscores the political and economic weight of diamonds in Botswana. Yet critics argue that the country risks tying its future too tightly to an asset with uncertain global demand and which is increasingly threatened by synthetics and changing consumer preferences.

The outcome of this regional bid will shape Southern Africa’s diamond sector for years to come and could redefine the role of sovereign involvement in major extractive industries. Botswana’s choice highlights a broader challenge facing resource-dependent economies: balancing national control with market realities, fiscal prudence, and long-term diversification strategies.