The Nairobi Securities Exchange (NSE) is pushing to grow the share of revenues it gets from alternative sources to reduce its over-reliance on traded shares and bonds.

The bourse reported a marginal (0.98 per cent) drop in profit after tax of Ksh84.78 million ($985,498) for the year ended December 2012 compared with Ksh85.62 million ($1 million) for the period ended December 2011, in its financial data released last week.

The Nairobi bourse along with the other three in East Africa have embarked on reforms that have seen them launch new segments and are at various stages of developing new products that will boost their revenues from alternative channels.

“The exchange strategically aims to diversify income away from the traditional transaction levies and listing fees. Total income got a significant boost from alternative revenue sources,” said chief executive officer of the Nairobi Stock Exchange Peter Mwangi in a commentary of the bourse’s performance.

Other income doubled to Ksh33.18 million ($385,732) during the year ended December 2012 from Ksh16.54 million ($194,432) during the year ended 2011.

Operating income, which includes its traditional sources of revenue such as transaction levies, annual and listing fees, however rose by 9.28 per cent to Ksh329.96 million ($3.8 million) last year from Ksh301.94 million ($3.5 million) the previous year.

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The Nairobi bourse relocated to its own building in Westlands mid this year, slashing commitments related to rental expenses to Ksh6.04 million ($70,232) from Ksh71.38 million ($839,139) the previous year.

As at the end of December 2012, the NSE was also expecting to receive Ksh122.58 million ($1.4 million) over a five-year period from the building it bought for Ksh383.03 ($4.4 million), which was financed using a Ksh300 million ($3.4 million) loan from KCB Group that it got at a 15 per cent annual interest rate.

The Dar es Salaam Stock Exchange (DSE) in its annual report for the period ended June 2012 disclosed that during the 12-month period it acquired its own building in a remote location for use as a disaster recovery site.

The Dar bourse said that even though it also moved offices that provide for more space for planned activities and that also lift its corporate image, part of its long-term plan is to acquire another building, a move that will help cut expenses and boost income. 

“The move was a medium-term measure as the DSE vision is to have its own office,” said Gabriel Kitua, DSE’s former chief executive officer in disclosures contained in the annual report that was released this year. 

Apart from saving on rent, the two bourses, the Uganda Securities Exchange (USE) and the Rwanda Stock Exchange (RSE) are all looking to introduce products such as the trading of derivatives and real estate investment trusts.

NSE last year began to charge fees for provision of services through the Broker Back Office generating revenues of Ksh12.36 million ($143,673).

Data vending, sale of publications, subscription fees and other sources earned the bourse an additional Ksh20.84 million ($242,059) last year compared with Ksh16.54 million ($194,432) the previous year.

Earlier this year the NSE launched the Growth Enterprise Market Segment, which is aimed at attracting companies that want to sell shares but are not able to meet the requirements of the main boards and saw its first listing — Home Afrika — in July.

The DSE is also expecting to see the listing of Maendeleo Bank, whose initial public offer closed last week and Mwanza Community Bank whose IPO closes at the end of this year.

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New listings translate to higher trading volumes for bourses whose main income comes from commissions derived from the buying and selling of securities.