Siege of Saïo the Italian dictator, Benito Mussolini, proclaimed the colony of "Africa Orientale Italiana" (AOI, Italian East Africa), formed from Ethiopia (after the Italian victory in the Second Italo-Ethiopian War, fought 3 October 1935 – May 1936) and the existing Italian possessions of Italian Eritrea and Italian Somaliland. On 10 June 1940, Mussolini declared war on Britain and France, which made Italian military forces in Libya a threat to Egypt and those in Italian East Africa a danger to the British and French colonies in East Africa. Italian belligerence also closed the Mediterranean to Allied merchant ships and endangered British supply routes
Italian East Africa that was the only one in all Africa. However Ethiopia and Africa Orientale Italiana (AOI) proved to be extremely expensive to maintain, as the budget for the fiscal year 1936-37 had been set at 19.136 billion lira to create the necessary infrastructure for the colony. At the time, Italy's entire yearly revenue was only 18.581 billion lira. The architects of the Fascist regime had drafted grandiose urbanistic projects for the enlargement of Addis Ababa, in order to build a state-of-the-art capital of the "Africa Orientale Italiana", but these architectural plans -like all the other developments- were stopped by World War