Italian East Africa, also known as Africa Orientale Italiana (AOI), was a colony established by Italy in the Horn of Africa in 1936. It was comprised of Italian Somalia, Italian Eritrea, and the Ethiopian Empire. The colony was divided into six governorates, including Eritrea, Somalia, Harar, Galla-Sidamo, Amhara, and Scioa. Italian East Africa's colonial policy aimed to divide and weaken the ruling Amharas by favoring other ethnic groups such as the Oromos and Somalis.
During World War II, British-led forces occupied the colony in 1941. After the war, Somalia and Eritrea came under British administration, while Ethiopia regained its independence. Somalia became the United Nations Trust Territory of Somaliland, and Eritrea became an autonomous region before being annexed by Ethiopi
The Italians, upon occupying Massawa in 1885, aimed to replace the widely used Austrian Maria Theresa thaler (MTT) with a currency they could control in their colonies. However, their attempts to introduce the tallero eritreo and the tallero d'Italia as replacement coins were unsuccessful. These coins were overvalued and failed to gain acceptance beyond the borders of the Italian colonies.
To protect the circulation of the lira, the Italians aimed to separate the colonial monetary system from the national one, similar to British currency boards in Africa. Banknotes for the Italian East African Empire were printed in 1938 but never used due to World War II. The Italian defeat in East Africa ended the project in 1941.
After the war, Italian monetary policies continued, and the Trust Territory of Somaliland was established under Italian administration until 1960. The introduction of the somalo, issued by the Bank of Italy and managed by the Cassa per la Circolazione Monetaria della Somalia, aimed to strengthen economic ties with Italy. However, the somalo's design did not involve its intended users in its creation.