Modern banking in Eritrea started with the arrival of the Italian colonizers. However, from 1974 on (due to the nationalization decided by the Ethiopian Government of

Mengistu Haile Mariam Mengistu Haile Mariam (, pronunciation: ; born 21 May 1937) is an Ethiopian former politician, revolutionary, and military officer who served as the head of state of Ethiopia from 1977 to 1991. He was General Secretary of the Workers' Party o ...

), the banking sector became a government monopoly. This situation continued after Eritrea achieved its independence. The

Bank of Eritrea The Bank of Eritrea is the central bank of Eritrea. The bank is located in Asmara, the capital. The central bank is interested in encouraging foreign investment and in importing capital goods such as industrial machinery and agricultural equipmen ...

is the

central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...

of Eritrea. At present there are three commercial banks in operation in Eritrea - The Commercial Bank, The Housing and Commercial Bank, and the Eritrean Investment and Development Bank. All banks with the exception of the Housing and Commercial Bank are under state ownership, while the Housing and Commercial Banks is owned by the ruling party, the PFDJ.

History

In 1914, the Italian government authorized the

Banca d'Italia The Bank of Italy (Italian language, Italian: ''Banca d'Italia'', , informally referred to as ''Bankitalia'') is the National central bank (Eurosystem), national central bank for Italy within the Eurosystem. It was the Italian central bank from ...

, the Italian central bank, to operate under special regime and therefore to carry out in the colonies operations not allowed in Italy, including commercial banking. Banca d'Italia then established its first two branches in

Asmara Asmara ( ), or Asmera (), is the capital and most populous city of Eritrea, in the country's Central Region (Eritrea), Central Region. It sits at an elevation of , making it the List of capital cities by altitude, sixth highest capital in the wo ...

and

Massawa Massawa or Mitsiwa ( ) is a port city in the Northern Red Sea Region, Northern Red Sea region of Eritrea, located on the Red Sea at the northern end of the Gulf of Zula beside the Dahlak Archipelago. It has been a historically important port for ...

. Two more banks followed: ''Banca Cooperativa Popolare Eritrea'' with its headquarters in Asmara was established in 1915, the Banca per l'Africa Orientale was established in 1917, with its head office in Massawa and a branch in Mogadishu (Somalia). These two private banks however collapsed just few years later. By the end of the Italian colonial period in 1941, there were four banks and one credit union operating in Eritrea. These banks were:

Banco di Napoli Banco di Napoli S.p.A., among the oldest banks in the world, was an Italian banking subsidiary of Intesa Sanpaolo group, as one of the 6 retail brands other than "Intesa Sanpaolo". It was acquired by the Italian banking group Sanpaolo IMI (the ...

Banco di Roma Banco di Roma was an Italian bank based in Rome, established on 9 March 1880. In the early 20th century, it was one of Italy's four dominant universal banks, together with Banca Commerciale Italiana, Credito Italiano, and Società Bancaria Ita ...

Banca Nazionale del Lavoro Banca Nazionale del Lavoro S.p.A. (BNL) is an Italian bank headquartered in Rome. Established in 1913, the bank has been a subsidiary of BNP Paribas since 2006. Integration process was concluded in 2008, BNL with its group oversees the commercial ...

and Cassa di Credito Agrario e Minerario. These banks had 13 branches in six Eritrean cities: Asmara, Massawa, Keren, Adikeyh, Decamahare and Assab. However, the banks mostly served the Italians and foreign businessmen (Armenians, Egyptians, Greeks, Indians, Yemenis) living in the colony. The arrival of the British military administration in Eritrea in 1941 started to change this situation.

Barclays Bank Barclays PLC (, occasionally ) is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services ...

established two branches in Eritrea, Asmara in 1941 and Massawa in 1942. In 1943, the British authorities permitted Banco di Napoli and Banco di Roma to reopen their branches. Commercial banking continued in Eritrea during the federation with Ethiopia. In this period the

Commercial Bank of Ethiopia The Commercial Bank of Ethiopia (CBE) is the largest commercial bank in Ethiopia. As of June 2021, it had about 1.1 trillion birr in assets and held approximately 67% of deposits and about 53% of all bank loans in the country. The bank has aroun ...

had branches in Asmara (two offices), Massawa and Assab. Banco di Roma had branches in Asmara, Massawa, and Assab and Banco di Napoli had one branch in Asmara. However, Barclays Bank left the country. In 1974, when the Dergue came to power, it nationalized all private sector establishments, including the banks. All banking services were merged under the

, which monopolized the banking service. After independence, the Commercial Bank of Ethiopia's branch in Eritrea became the

Commercial Bank of Eritrea The Commercial Bank of Eritrea is the only banking institution in Eritrea with full retail commercial banking services. It is a government-owned bank, with 17 branches throughout the country. The Bank has arrangements with Citibank for internationa ...

. The Eritrean government also established the

as its central bank.

Banking Services in Eritrea today

Banking is the dominant sector in the financial system of Eritrea. The balance of the financial system is made up by the insurance industry. At present there are no privately owned banks in Eritrea. The Augaro Bank was short-lived. The Bank of Eritrea (BoE) is responsible for regulating lending and deposit interest rates while keeping a handle on inflation and other macroeconomic indicators. The BoE has not been able to control inflation, which is now up to 23% per annum. The

is the dominant bank in the country. It owns nearly 80% of all banking sector assets in the country and is a state-owned bank. It has branches in the larger cities and towns of every Eritrean region. Housing and Commercial Bank of Eritrea is the second biggest bank in current operation. The Bank was established in 1994 to provide banking service to residential buildings. Later, in 1996 it extended its services to full commercial services. It too has branches throughout the country. The third bank is the

Eritrean Investment and Development Bank The Eritrean Investment and Development Bank (EIDB) is a bank in Eritrea. It was established on 28 October 1996. It did not effectively begin operations until 1998 from its single office in Asmara, Eritrea. The bank was fully financed by the Minist ...

. Primarily the bank was established to provide agricultural and commercial loans to investors. The Eritrean Investment and Development Bank and the Agricultural and Industrial Bank of Eritrea also have branches in the major cities of the regions.

References

{{DEFAULTSORT:Banking In Eritrea Economy of Eritrea