The Botswanan government has long recognised the urgency of diversifying the economy, but this has proved problematic for the world's largest diamond producer, a landlocked nation overshadowed by regional heavyweight South Africa.

Experts predict diamond reserves in Botswana will run out in 20 years, a blow for Africa's most successful economy and stable democracy for which diamonds provide 30 percent of gross domestic product.

"We have always appreciated that our dependence on diamonds as a major revenue earner does leave us vulnerable and therefore the need to diversify is very important," President Ian Khama told reporter in an interview last week.

Botswana, which produces 22 percent of the world's diamonds, bringing in 50 percent of government revenue, halved output and suspended much of its diamond activities in 2009 as the economic crisis hit its mines.

"The economy has been hard hit by diamonds. The forecast deficit for 2009/2010 is 13 percent," said Suwareh Darbo, Botswana country economist with the African Development Bank (ADB).

A GDP of 26 billion dollars in 2008 is forecast to shrink 11.5 percent in 2009, but is recovering slowly.

To assist Botswana with the fallout from the financial crisis, the ADB in August made a rare loan of 1.5 billion dollars to the country which has consistently had one of the world's highest growth rates - averaging nine percent since independence in 1966 until 2004.

A record of sound macro-economic policy will make recovery from the crisis easier, but key challenges to long-term sustainability remain.

"We have put in a number of measures to try to open up to be able to grow, our agricultural sector, our tourism sector," said Khama.

In the gem industry itself, the government is trying to turn the country into a global diamond center and not just a producer.

The Diamond Trading Company Botswana was launched last year to have sorting and mixing of diamonds done in Botswana, a process which has been delayed until early 2010 due to the economic crisis.

To finance this expansion, the world's top diamond bank, the Dutch bank ABN-AMRO recently opened a branch in Botswana.