The Diamond Tide Recedes, Is Your Bank Swimming Naked?

Botswana’s diamond money is drying up, and that’s putting pressure on the government’s budget. Most people with bank loans rely on government salaries to pay them back. But if the government runs low on cash and delays salaries, people can’t pay their loans, and banks suffer. It’s like Warren Buffett said: “You only see who’s swimming naked when the tide goes out.” Right now, the diamond tide is going out. Is your bank ready?

If Botswana’s economy were a big three-legged pot, one leg would be diamond money. Another is government spending. The third? You, the average Motswana with a bank loan, mostly backed by your salary.

But what happens when that first leg, diamond revenue, starts to shake, as it is now?

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