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Banco di Roma’s Role in Eritrea’s Economy

In the late 1950s and early 1960s, the Italian bank Banco di Roma played a significant role in Eritrea’s economy. The bank’s presence was valued by the Eritrean ruling class, who sought access to mortgage loans that were denied to African clients by the State Bank of Ethiopia.

Informal Payments and Bribes

The Asmara branch of Banco di Roma began to provide loans under the counter to prominent members of the Eritrean administration and their relatives. These transactions were essentially bribes in return for political protection, which was crucial for securing the support of the local ruling class.

Speculation in Property and Informal Payments

The loans provided by Banco di Roma were also used for speculation in property to generate rent, rather than fostering long-term productive investments. Alongside informal payments to the local ruling class, the bank granted small loans to Eritrean clients working in wholesale trade, retail, livestock, and artisanal industries.

Impact of Ethiopian Empire Incorporation

In 1962, Eritrea was incorporated into the Ethiopian Empire, which meant that Banco di Roma was operating in a juridical limbo. The dissolution of the federation deprived the Italian group of international protection granted by the UN resolution. A new banking law (Proclamation 206) introduced in 1963 split the State Bank of Ethiopia between the National Bank and the Commercial Bank.

Semi-Independent Financial Enclave

The new arrangement created a semi-independent financial enclave for Banco di Roma, which was placed in a direct relationship with the Crown, bypassing the formal hierarchy that submitted commercial banks to the sole authority of the National Bank of Ethiopia. The bank’s status depended on an imperial decree rather than being regulated by Proclamation 206.

Informal Payments and Tribute

In return, the Italian bank would make informal payments disguised as commercial loans to the Crown and its local associates. From the perspective of the Ethiopian ruling class, however, these levies were not dissimilar to the traditional tribute placed on other semi-independent enclaves across the country.

References

• Befekadu Degefe & Bekele (1995). Banking sector in Ethiopia: Problems and prospects. Addis Ababa: Ethiopian Economic Association
• De Rosa, G. (1982). Banco di Roma and Eritrea. In A. Perfetti & R. Ungari (Eds.), The Italian colonial empire (pp. 281-293). Rome: Societa editrice internazionale.
• Monzali, R., Perfetti, A., & Ungari, R. (2011). L’impero coloniale italiano: storia e documenti. Bologna: Il mulino.
• Puddu, G. (2016). The Ethiopian Monarchy and the Italian colonial empire. Journal of Modern African Studies, 54(2), 155-177.
• Meckelburg, P., Mbah, E., & Falola, T. (Eds.). (2017). The land of fixed tribute: A study of the k’urt gibr ager in Ethiopia. Addis Ababa: Ethiopian Economic Association