THE Dar es Salaam Stock Exchange (DSE) is an integral part of Tanzania’s financial landscape, playing a pivotal role in the country’s capital markets since its establishment in 1996.
As the country’s sole stock exchange, the DSE enjoys a monopolistic position, which it has leveraged to become a cornerstone of the nation’s investment ecosystem.
Over the years, the DSE has evolved significantly, going public itself in 2016 at an initial public offering (IPO) price of 500/- per share. Today, its stock trades at 2,400/-, representing remarkable growth over its history.
In the third quarter of 2024, the DSE Plc experienced a mixed financial performance. Total revenues declined by 5.4 per cent, from 8.90bn/- in 2023 to 8.42bn/- in 2024, primarily due to a notable 14.2 per cent drop-in listing fees and a 20.4 per cent reduction in registry fees. These challenges reflect broader market dynamics, including fewer new listings and a contraction in high-margin revenue streams.
However, not all was bleak. Investment income rose by nearly 7.0 per cent, supported by strategic allocations to government securities, which grew by an impressive 41.2 per cent year-to-date. This helped offset declines in other revenue categories.
Additionally, transaction fees remained stable, showcasing the steady base of market activity. Yet, rising operational costs, particularly in staff and administrative expenses, constrained the bottom line, with profit after tax (PAT) falling by 25.1 per cent to 3.36bn/- in 2024.
The DSE’s broader market performance has been encouraging. The All-Share Index (DSEI) surged by 24 per cent in 2024, driven by robust gains in the banking sector and cross-listed stocks like KCB Group and EABL.
Domestically, the Tanzania Share Index (TSI) rose by 7.0 per cent, propelled by strong performances from financial giants like CRDB and NMB. However, the TSI’s gains were somewhat tempered by retracements, underscoring the nuanced nature of market movements.
Technological innovations are at the heart of DSE’s strategy for growth. The introduction of “Hisa Kiganjani,” a mobile trading platform, has democratised market access, enabling retail investors to participate more actively in the equity markets.
Integration with payment systems like M-PESA, Visa, and Mastercard has further enhanced accessibility, making investing seamless for both domestic users and the Tanzanian diaspora.
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Despite its dominant position, the DSE faces challenges in attracting new listings. Rising costs, coupled with declining revenues in certain segments, have put pressure on margins.
Nonetheless, the exchange’s commitment to innovation and expansion offers a pathway to revitalisation. Strategic partnerships, aggressive marketing campaigns and regulatory adjustments to enhance liquidity could rejuvenate investor interest and drive growth.
A promising trend is the rise in unit trust schemes, which doubled from 8 to 15 in 2024. These institutional investment vehicles have the potential to significantly boost market activity and transaction revenue. The growing corporate bond market also represents a lucrative avenue, diversifying the exchange’s income streams.
For investors, the DSE offers a compelling blend of stability and growth potential. While its current price of 2,400/- may appear overvalued compared to its fair price of approximately 1,506/- per share, the exchange’s monopolistic position, combined with its emphasis on long-term, stable investments and technological innovation, highlights its strategic importance.
The DSE is more than just a stock; it serves as a gauge of the country’s financial health and a catalyst for the nation’s economic progress.
As the exchange continues to innovate and expand, its role as a driver of financial inclusion and market growth will only strengthen. For investors willing to take a long-term view, the DSE offers a unique opportunity to be part of Tanzania’s evolving financial story.
