Currently we are in the process of getting ready for the actual fieldwork portion of the trip. We chose an interview office site behind a well-known chinese grocery store in Mikocheni, which we pay monthly rent for (including electricity for the air conditioner, etc.). We asked them if we could pay the monthly rent via direct deposit into their banking accounts. The owner refused, telling us that no one here trusts the banks - they only use cash. I found it very interesting that even an owner of a small business refuses to deposit money into the bank. Given that robbery is a relatively non-trivial threat (not only in Tanzania but anywhere), I wonder why people think that cash is the more secure form of transaction and savings.
Another option to pay for stuff here is via cell phones, which is really popular. People can open an "m-pesa" account with each cell phone sim card they purchase, and can use this account to pay for pretty much everything - utility, groceries, paying back friends, etc. We asked a chinese girl who lives here whether or not she uses m-pesa, and she has never even heard of it - from what she knows about her network, people only use cash. Of the Chinese people who own businesses, they apparently send the money in cash form directly back to China. I have no idea how they think this is less risky than saving money in a bank.
This led me to wonder if the fear of banking institutions and other forms of electronic payment is warranted or overinflated. There are certainly presumably legitimate international banks that operate in Tanzania, such as Standard Chartered. The downside to international banks such as Standard Chartered and HSBC are the monthly fees - Standard Chartered charges $10 per month. This does seem a bit prohibitively expensive for personal accounts, but probably not terribly so for business owners.
From a quick Google search, I couldn't really find any article about perspectives of migrants in Africa towards banking institutions here. I did come across an Economist article (link) that gives a brief overview about banking in the developing world. Not surprisingly, the overall percentage of people with banking accounts in Sub-Saharan Africa is very low: about 27% of men and 22% of women have banking accounts. It also seems like banking levels are drastically different between people with a college education and those with only a primary education or lower. The common sense conclusion from these statistics is that more informed people are more likely to have bank accounts (other factors must be taken into account, of course, such as amount of income).
While migrant deposits probably make a very minuscule portion of the financial industry, it did make me wonder more about the nature of trusting banks in developing nations, which is a huge topic. Chinese small business owners who choose to come to Tanzania are strange: not in the need-to-stay-ten-feet-away-probably-will-drink-your-leftover-beer strange, but strange in their risk preferences. They are abnormal in the way they seek business opportunities; by the fact that they choose to live longterm in Tanzania to make money, they are likely to be more risk-loving than the median small business owner in China. Yet, their perceived risk of saving money in a bank account is higher than the risk they are willing to take, which is already likely to be higher than average. This makes me want to learn a bit more about banking regulations in Tanzania and how to use policy to increase trust in financial institutions in developing nations. More later as I learn more about this topic.