Ascent Capital is a leading small and medium-sized enterprise (SME) fund manager that invests in businesses across Eastern Africa, including Kenya, Ethiopia, and Uganda. BII invested in Ascent’s first fund (Ascent Rift Valley Fund) in 2014 and has since worked with Ascent to introduce good international industry practice on E&S standards.

BII has played an important role in defining Ascent’s ESG approach. Since our investment, both the Ascent team and representatives from the fund’s portfolio companies have attended BII ESG training workshops in Kenya. This formed the basis for how Ascent now incorporates ESG considerations into its investment process.

From the outset, Ascent has been very much aligned with BII’s strategic priorities. This has been particularly impactful because many of the SMEs that Ascent’s fund invests in are family-owned and often have less experience with and capacity for ESG.

Today Ascent is proactively integrating job quality considerations into its portfolio, such as transitioning temporary and informal workers into permanent jobs and developing HR policies that incorporate fair recruitment, promotions, personal development, and dismissal, with evident benefits for job security and working conditions.

The fund has worked with ESG and HR managers at its portfolio companies to establish more effective communication channels between senior management and the workforce. The establishment of monthly worker forums and annual third-party employee satisfaction surveys in several companies has enabled employees to discuss key issues affecting them. This has led to:

• Decision-making processes that are informed by employees’ experience, resulting in better solutions that are easier to implement.
• Previously unknown challenges surfacing, including instances of discrimination in recruitment and promotion. This has allowed senior management to understand and resolve these challenges, which has improved morale and increased productivity.
• Changes in company culture, as employees gain more ownership of what happens in their workplaces.
• The empowerment of employees to improve business processes, which has generated a range of practical and effective ideas from workers on how to improve business practices, grow revenue and increase productivity.

At one portfolio company, Ascent established a system to collect feedback and grievances through the ESG function. The company’s ESG manager is now able to anonymously analyse the data and identify trends, which are shared and discussed with employees. The analysis is also shared with the company’s Board, which enables management to agree on initiatives that aim to reduce absenteeism and improve productivity and morale in the workplace.

Nephat Njengwa, CEO of Auto Springs, an Ascent Fund portfolio company, says: “Ascent has supported us to institutionalise best practices in human resource management and labour relations. By setting up clear policies, building communication channels, improving workplace health and safety, and developing skills and capabilities, this has improved our relationship with our employees.”

With BII’s support, Ascent has continued to build ESG capacity at the portfolio level by designing management systems and recruiting ESG and HR managers directly. This has changed business practices and created the opportunity for more sustainable businesses in the SME sector.

Looking forward, Ascent is providing further ESG support to its portfolio companies and disseminating best practices across its portfolio. In particular, they are focused on improving the gender balance in portfolio companies’ workforces, especially in the manufacturing sector, and building technical and soft skills across all staff levels.