Origins and Early Development of Banking in Ethiopia

Abstract

This paper highlights development of Ethiopian banking from the beginning of XX century to 1936. In fact, the history of banking in Ethiopia dates back to the turn of the century, when, in 1905, the Bank of Abyssinia was established in Addis Ababa, under the reign of Menelek II. This event marked the introduction of banking in the country. National Bank of Egypt having been entrusted of the project, the new institution was chartered in Cairo and its shares were subscribed in a number of countries besides Ethiopia The Bank of Abyssinia was given a 50-years concession and was engaged in issuing notes, collecting deposits and granting loans, but its clients were mostly foreign businessmen and wealthy Ethiopians. A few years later, disappointed by the behaviour of this bank, mainly devoted to profit-making rather than promoting economic development, the Emperor supported the establishment of a wholly Ethiopian bank, the Societe Nationale d'Ethiopie pour le Developpement de l'Agriculture et du Commerce. Haile Sellassie, after acceding to the throne in 1930, could not accept that the country's issuing bank was foreign-owned and, in agreement with National Bank of Egypt, decided liquidation of the Bank of Abyssinia. A new bank, the Bank of Ethiopia, under Government control, was established in 1931 and retained management, staff, premises and clients of the old bank. Italian occupation in 1936 brought the liquidation of the Bank.