Debswana, the world’s largest diamond mine by value, plans to cut production to 15 million carats in 2025. The company is also under pressure to reduce its workforce by 1,000 jobs, though through voluntary separation, while slowing down selected capital projects.
Market Pressures And Cost Drivers
Debswana says the cost-cutting measures are a response to tough market conditions, including declining demand for diamonds and U.S.-imposed tariffs.
Deputy Managing Director Koolatotse Koolatotse said the company has been hit hard by complex market dynamics that have confused customers and led to weaker demand.
“Debswana’s cost drivers make up 94 percent of its total budget,” Koolatotse said. “Labor accounts for 42 percent, spare parts 22 percent, and fuel 18 percent.” He added that the company consumes about 120 million liters of diesel annually.
He warned that continuing business as usual in a suppressed market could severely affect Botswana’s financial position.
“There is no difference between mining and manufacturing a brick,” he said. “When input costs rise, you may have to raise prices or stop manufacturing altogether.”
While Debswana is mandated to generate revenue for the country, Koolatotse said the company also has a responsibility to protect livelihoods.
“It costs P600 to mine a single carat. Then you add insurance—P32 per carat,” he said. “A single truck tire costs P500,000, excluding the rim.”
Koolatotse said halting production would help save billions of pula, funds that could be redirected to support the national budget.
Voluntary Separation and Employment
“To protect jobs, we’ve introduced voluntary separation, not involuntary,” Koolatotse said. He explained that those who opt for voluntary separation are often prepared to start new ventures, potentially creating employment for others.
“Involuntary separation is like ambushing workers—it sends them straight to the streets and increases poverty,” he said. “We agreed with our partners, the mine workers’ union, that no one should be forced to leave the company.”
So far, nearly 560 workers have left through voluntary separation—about half the total needed to reach the 1,000 target for efficient operations.
Despite the downturn, Koolatotse remains hopeful.
“Natural diamond demand in 2025 will range from 85 million to 96 million carats,” he said. “Debswana’s production has been between 18 and 22 million carats, so we must meet a significant portion of that demand.”
He said his optimism stems from confidence in the long-term appeal of natural diamonds.
“We’ll introduce measures to ensure that, for consumers, Botswana diamonds are the top choice,” he said. “My confidence comes from those global demand numbers.”
He urged calm from stakeholders and promised ongoing community engagement in Debswana’s areas of influence.
Austerity Measures Detailed
Production will be scaled down to 15 million carats through temporary pauses at Jwaneng Cut 9 and Orapa Mine Pit and Plant, with extended maintenance shutdowns.
According to Senior Corporate Affairs Manager – Brand & Stakeholder Agatha Sejoe, these measures aim to reduce costs and align operations with lower revenue.
She said that while some capital projects will slow down, critical initiatives like the Jwaneng Underground Project will continue.
Debswana is also optimizing its operating model to address excess capacity resulting from a decade of falling sales volumes. Historically, the company was structured to support over 25 million carats of production annually.
The company has reviewed its organizational structure to better respond to cyclical market fluctuations. Voluntary separation options have been offered, and the Botswana Mine Workers Union (BMWU) has been consulted.
Employee Assistance Programmes (EAP) are in place to support affected staff with emotional, psychological, and financial guidance.
“These actions are meant to sustain long-term business viability and strengthen operational resilience,” Debswana said in a statement.
Despite the current turbulence, the company said it remains confident in the long-term fundamentals of the diamond market and is committed to supporting shareholders, employees, and communities.
“The Board and Management are committed to due diligence and full compliance with all relevant laws, policies, and procedures,” Sejoe said.
“We continue to engage constructively with employees, business partners, and other stakeholders, with a comprehensive engagement plan in place.”
Gov’t Constraints
Tshokologo Kganetsano, permanent secretary in the Ministry of Finance, recently issued a stark warning: the government may be unable to meet its financial obligations this June, including civil servant salaries, due to a deepening liquidity crunch.
With just P700 million in its account, far short of monthly requirements, public concern has focused largely on the wage bill. But the impact reaches beyond government workers, hitting private sector service providers — many of them citizen-owned SMEs — who rely heavily on government contracts.
Adding to the crisis, the government is reportedly sitting on a backlog of P7 billion in unpaid invoices for goods and services already delivered. Much of the delay has been attributed to inefficiencies in the Government Accounting and Budgeting System (GABS).
Impact on Businesses
For small businesses, the consequences are severe: cash flow is tightening, and many are turning to borrowing to bridge the gaps caused by payment delays.
Speaking at the recent launch of Swiftly Finance, a purchase order financing platform, economist Keith Jefferis warned that businesses dependent on government and Debswana procurement contracts are especially vulnerable in the current downturn. He noted that the business environment is tough, with intense competition, narrow margins, and shrinking profitability.
Jefferis urged businesses to prioritise cost control and operational efficiency.
“Being too dependent on government exposes a business to a high level of vulnerability. Over the years, many businesses have become overly reliant on government procurement,” he said, calling on companies to diversify their customer base to reduce exposure to public sector risk.
He emphasised that innovation and competitiveness are more critical than ever, and encouraged export development as a strategy for diversifying both revenue and clients.
“In the current economic climate, businesses with foreign currency revenue streams are in a more advantageous position,” he added.
Jefferis also advised firms to manage debt carefully and build financial buffers to withstand economic shocks like the ongoing liquidity crisis.
“Manage your cash flow. When you are dealing with delayed payments, cash flow becomes critical. A business might not be insolvent on paper, but if it is illiquid, it can still be pushed into insolvency,” he warned.
Chronic Payment Delays
The private sector is also feeling the pinch and often passes the pressure onto SMEs. Speaking at the same event, Odirile Kenny of Smart Paper — Botswana’s only thermal roll manufacturer — and Samuel Ramakoba of local chemical producer Volkschem voiced concern about chronic payment delays. They warned that slow payment cycles are increasingly suffocating small, citizen-owned businesses.
Kenny, whose company supplies retailers and service providers such as banks, said clients often delay payments intentionally to ease their own cash flow pressures, at the expense of SMEs.
“They take their time to pay small businesses because it works for them. But for us, it’s a disaster,” he said.
He explained that typical payment terms range from 30 to 60 days, forcing SMEs to operate on thin margins.
“During that time, we still need to operate; sourcing raw materials, paying suppliers, and meeting overheads. That often forces us to borrow just to stay afloat. By the time the invoice is paid, profits have already been depleted,” Kenny lamented.
Ramakoba echoed the frustration. He said payment delays create liquidity gaps that often push small business owners to use personal funds or rely on purchase order financiers, who charge high interest rates.
“SMEs have no choice but to rely on them, because commercial banks are generally reluctant to finance small businesses,” he said.
He also criticised the structural flaws in Botswana’s business environment, noting that expenses tend to outpace revenue collection.
“You spend money faster than you collect it. Over time, that puts a big dent in your business. It becomes unsustainable to operate for 30, 60, or even 90 days without getting paid,” he said.
Private Sector Calls For Fiscal Reform
Meanwhile, Business Botswana, the country’s private sector advocacy body, has called for urgent fiscal reform. In a recent statement, the organisation acknowledged the financial and spending pressures facing the government, warning that these are harming public operations, household livelihoods, and private sector confidence, ultimately impacting investment, growth, and employment.
“This situation calls for swift fiscal responsibility, transparent communication, and strategic collaboration,” the statement reads.
Business Botswana urged the government to adopt policies that foster a stable, predictable economic environment. It also called for improved efficiency and accountability in public agencies, encouraging them to operate within their budgets, as private businesses must.
