De Beers: Namibia optimistic, Botswana warned by IMF
Not a bad idea
Namibia’s planned purchase of a minority stake in diamond miner De Beers has been met with optimism. It aligns with the country’s long-term beneficiation goals, aimed at growing the diamond sector locally and boosting employment, according to former diamond commissioner and founding Namdia CEO Kennedy Hamutenya.This follows a recent caution from the International Monetary Fund (IMF), which advised diamond-rich Botswana against proceeding with its planned acquisition of De Beers. The IMF cited that country’s over-reliance on the sector for growth.
“The IMF’s caution is specific to Botswana’s higher fiscal dependence on diamonds,” Hamutenya said.
Namibia’s finances within acceptable limits
Namibia’s exposure, Hamutenya reasoned, would be limited and carry significantly less balance-sheet risk than Botswana’s.
Balance-sheet risk for a country arises when the total value of its assets is vulnerable to sudden changes relative to its liabilities. While most people focus on a country’s deficit—the annual difference between spending and tax revenue—balance-sheet risk examines the total stock of wealth and debt. If mismatched, a small economic shock can spiral into a national crisis.
“Namibia’s ambition is different in scale and intention,” Hamutenya said. “We are exploring a minority, strategic stake that carries far less balance-sheet risk and aligns with our long-term beneficiation and governance goals.”
Were Botswana to heed the IMF’s advice, Hamutenya added, it would open De Beers to a wider shareholder base beyond the originally envisaged tripartite deal involving Angola and the two southern African nations.
“If Botswana pauses its bid, it does not constrain Namibia; it may actually widen the space for a diversified shareholder base in De Beers,” he said. “A well-structured minority stake for Namibia remains both viable and strategically sound.”
IMF weighs in
The IMF has warned Botswana’s government against increasing its stake in De Beers, citing the country’s economic woes and dependence on diamonds, according to a recent Rapaport report.
The challenging diamond market creates considerable uncertainty for Botswana, the IMF said in a review of the African mining nation’s fiscal situation, published on 8 December.
“This risk is compounded by the fact that the government has expressed interest in increasing its 15% participation in De Beers,” stated the annual IMF report on its Article IV consultation, written by institution staff after visiting the country and assessing its economy.
Botswana is at a “critical juncture” due to weak demand for natural diamonds and the need to diversify growth sources, the document noted. The IMF expects the country’s economic activity to contract further this year, reflecting declines in diamond production and activities outside the mineral sector.
“The decline in demand for natural diamonds has been sharper—and is expected to be more persistent—than anticipated,” it continued. “It has contributed to a sharp economic contraction in 2024, persistent high unemployment (particularly among youth), and sizable increases in fiscal and current-account deficits.”
Angola, Botswana, Namibia Announce bold move
Meanwhile, Namibian Sun reported last month that Cabinet has, in principle, approved Namibia’s participation alongside neighbouring Angola and Botswana in acquiring shares in De Beers—a deal that could require Namibia alone to invest N$14.8 billion.
Anglo American, the British multinational mining company, has put De Beers—one of the world’s leading diamond producers—up for sale. The firm values its 85% stake at about US$4.9 billion (roughly N$84 billion) as it shifts focus to other business areas. Botswana holds the remaining 15%.
Namibia is reportedly considering a 10% to 15% stake, costing N$9.8 billion to N$14.8 billion respectively.
De Beers is the parent of local producers Namdeb and Debmarine Namibia, in which the Namibian government owns 50%. Botswana, which supplies about 70% of its annual rough diamond output to De Beers, views the company as a strategic national asset despite the global diamond price slump affecting its economy, Reuters reports.
Angola initially expressed interest in a minority stake but has since raised its ambitions, submitting a bid for a majority share—potentially sparking a contest with its regional peers.
Banking on Luanda Accord
Senior government officials told Namibian Sun that Cabinet’s decision aligns with the Luanda Accord, an agreement by key diamond-producing nations and industry players to jointly promote natural diamonds against synthetic competition.
“We are interested, but concerns remain about our financial capacity,” one official said. “We are talking to Angola and Botswana to join forces. All three countries recognise that none alone can secure a significant share.”
He added: “The idea is for the three countries to jointly own a majority in De Beers. Through the Luanda Accord, we aim to strengthen the market for natural diamonds and ensure we remain key decision-makers in the global diamond trade.”
Namibia’s goal, the official emphasised, is to “be around the [De Beers] table” and participate in strategic decision-making. “We have superior, high-quality diamonds. We cannot afford to be left out.”