Allexer Namundjembo
The diamond industry continues to struggle as global prices decline amid weaker consumer demand and growing competition from lab-grown diamonds.
High inventory levels in major markets have added further pressure on the sector.
According to the latest monetary policy presentation by Bank of Namibia (BoN) governor Johannes !Gawaxab on Wednesday, the natural diamond sector has been declining since 2022 and the downward trend is expected to continue in the coming years.
The Paul Zimnisky Diamond Index shows prices have been falling steadily over the past three years.
!Gawaxab said the slump is being caused by both structural and cyclical challenges, including the rapid growth of lab-grown diamonds, weak demand in key economies like the United States and China and oversupply from some producers selling at lower prices.
“High levels of inventories in the midstream and tariff-related uncertainties continue to exert pressure on the diamond trading environment,” he said.
Namibia’s diamond industry is feeling the same pressure. Rough diamond production is projected to fall by 4.5% in 2025 and is expected to fall by 5.7% in 2026, following a 3.7% contraction this year.
Rough diamond export earnings have dropped by 19.4% to N$6 billion, while polished diamond exports fell by 23.2% to N$2.7 billion.
The decline has affected government revenue, as corporate tax, royalties, and dividends from diamond companies have decreased.
“Domestic diamond companies remain cash-constrained due to debt service obligations, falling revenue and key investments to enhance efficiency,” !Gawaxab noted.
Diamonds have long been one of the country’s biggest export earners, and the continued global price slump could weigh on the country’s overall economic growth.
The downturn comes as Namibia works to diversify its economy through new investments in green hydrogen, oil exploration, and gold accumulation to strengthen its foreign reserves.
The World Diamond Council estimates that the diamond industry contributes between 7 and 8% to Namibia’s Gross Domestic Product (GDP).
The mining and quarrying sector, which includes uranium and other minerals, makes up about 12 to 13% of the national economy, according to data from the Namibia Statistics Agency (NSA).
