DANA HUGHES, ABC News Digital Reporter, Nairobi
With consumer spending down across America, luxury goods have been one of the hardest hit sectors, and diamonds are on the top of that list. The gem industry reports that Christmas sales of the popular jewels were down more than 25 percent last year. While slower sales meant fewer shiny bobbles under the tree for Americans, for Botswanans it could spell economic disaster.
Debswana, a joint mining company consisting of DeBeers, the world’s largest diamond mining company, and the government of Botswana, this week announced it was shutting down all its mines. Two of the mines will stay closed until the end of the year, and its largest won’t reopen until April, at the earliest. Seventy percent of the southern African country’s exports are diamonds. The trade accounts for 30 percent of the government’s revenues, and analysts warn that the shutdown will be a devastating blow to the country’s economy. Botswana is considered one of the most stable countries in sub-Saharan Africa, much of that reputation resulting from its relatively successful handling of the country’s diamond mines, which produce one-fifth of the world’s diamonds. That industry is in jeopardy of entering a downward spiral, and taking Botswana’s stable economy with it.
Unfortunately, Botswana is not the only country in sub-Saharan Africa feeling the sting from the global financial crisis. A recent World Bank report, forecasting global economic growth, paints a bleak future for the subcontinent.
"Declines in demand in key external markets will take a toll on exports, and the contribution of trade to gross domestic product growth is likely to be negative in 2009," the report says. "Export revenues will be affected by markedly lower commodity prices next year, eroding government and corporate finances."
Countries like Kenya, which are not resource-rich in the traditional sense but rely on tourism as a major contributor to their GDPs, are also likely to have trouble weathering the crisis. Unlike the United States and other Western nations, no country in sub-Saharan Africa (with the exceptions of Zimbabwe, Liberia and Somalia — for which there are no reliable stats) is expected to experience negative growth in the next two years. But growth is expected to slow for the first time in five years. And in this part of the world where political stability is fragile and poverty and disease are rampant, any economic slowdown at all could come at a price too high.