[kictanet] Vendors go online to enhance data service

[Bill Kagai]

Written by Emmanuel Were
*December 24, 2008: *
http://www.bdafrica.com/index.php?option=com_content&task=view&id=5053&Itemid=5844

>From the comfort of his office, Mr George Njoroge, a stocks agent, follows
the "live" proceedings of trading at the Nairobi Stock Exchange (NSE),
thanks to the data vending services introduced early this year.

"I can follow the proceedings of the trading from my office," says Mr
Njoroge. Sometimes when the Internet is slow  he is forced to visit the NSE
auditorium, where the public are updated by the minute via a projector
screen.

His experience sums up the development of data vending where some gains have
been made albeit with several challenges as the service took shape this
year. Before its introduction, the public had to wait until the close of
trade to obtain the price list.

All these developments have  been brought about by the resurgence in the
stock market evidenced by a series of Initial Public Offers (IPOs). The
landmark listing of Safaricom, East Africa's most profitable company, is
expected to shift stock market activity into top gear next year.

Six data vendors were licensed by the NSE as trading metamorphosed from the
open outcry system to the Automated Trading System (ATS). The introduction
of the Wide Area Network (WAN) sets it a step away from full integration of
online trading.

Shareholders in towns such as  Embu, Meru, Nakuru, Eldoret and Kisumu can
follow live, the trading from the Nairobi Stock Exchange, the epicentre of
the stock market. Stockbrokers who opened branches in these towns benefit as
well.  Not to be left behind also are Kenyans in the diaspora. "The
excitement at the beginning was excellent and we managed to get good numbers
of subscribers who have sustained our business up to date," says Mr Bildad
Kagai, Managing Director, MediaCorp Limited one of the licensed data
vendors.

Data vendors have to invest a one- off sum of Sh170, 000 (US$ 2,700 at the
current exchange rate) payable to the NSE, for a licence. Other costs
include an Internet connection costing about Sh50,000 a month while running
costs are estimated at about Sh350, 000 bringing total monthly costs to
about Sh400, 000.
"We have  spent a lot of money in the last nine  months but with poor
returns," said Mr Kagai in an interview, putting the estimated costs in that
period at Sh4 million.
The cost element was one of the challenges that beset the data vendors in
what initially appeared as a quick return avenue.

Aly Satchu of Rich Management, another data vendor says: "My greatest
challenge as that of drowning out the propaganda and elevating the debate
and finally creating a platform for us all to make consistently superior
returns."

He adds that there is a need to educate the public about investing. In
October, this year, there was uproar from some of the retail investors who
read mischief as the NSE auditorium was closed for a day in what the
exchange authorities attributed to ongoing renovations, only for them to
succumb to pressure to reopen it the following day.

Many retail investors want live streaming of data and information, few
neither understand it nor put it to use.  The live data has three main
boards: Normal, Prompt and Odd boards. An Investor can tell the number of
shares of the listed companies being sold and what is available for sale.
Retail investors form the largest base of subscribers to the live data with
an annual subscription of Sh6, 000.

In an earlier interview, Mr Robert Maoga, CEO of Eight Limited, said   there
was limited appreciation of data vending services because  many investors
are still speculative in nature and are yet to grasp the fundamentals.

"We've received a better response from the corporates so we're gearing our
products toward that market segment," Mr Maoga said. "Responsibility has
been left to us to build an acceptable product for the customer," he says.
To break the cost barrier, the data vendors have had to be innovative in
their approach and maximise and capture a large part of the crowd.

"Users of our services have different levels of sophistication and varying
investment objectives. Diverse products will add more value to our
customers," said Mr Symon Ndirangu , chief executive Information Convergence
Technologies, a data vending service provider in an earlier interview.

While contending that many people were not aware of data vending services ,
Mr Ndirangu told the Business Daily that the responses his firm had received
from current users had led them to structure new products that suit varying
investor objectives and needs.

Data vendors, in a bid to lure the retail market have broken down the
charges with daily, monthly and yearly subscription. For a low as Sh100, one
can have access to some of the data vending sites.

The start of the NSE's Wide Area Network comes with a promise of increased
online trading as the transactions will now be online. The extension of the
trading hours for three extra hours, as trading commences at 09:00 and
closes at 15:00hrs during weekdays is likely to bring increased
participation.

Work on the submarine cables which will enable cheaper and faster Internet
connectivity is set to step into top gear next year and come to a conclusion
in 2009 hence broadening the clientele base for the vendors as more people
get online.

Digital villages which are to be set up, by the Ministry of Information and
Communication in 2008 will provide an opportunity for the data vendors to
provide service.  "We expect to make a good profit in the next 12 months now
that Kenyans have realised the value of data and information when investing
in the Nairobi Stock Exchange," says Mr Kagai.

But he adds that this will only be possible if the number of vendors remains
at 6 data vendors servicing clients from 18 brokers.
"The numbers look workable" says Mr Kagai.


-- 
--
Bildad Kagai
MD - MediaCorp Limited
Nairobi Stock Exchange [NSE] - Authorised Information Vendor
Suite B2 Tetu Apartments StateHouse Avenue
P. O. Box 20311-00200
Tel. 254 20 272 8332
Fax. Rendered Obsolete
URL. www.mediacorpafrica.com
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