According to Cape Town-based Alumni Energy Investments (AEI), South Africa has shifted from coal to locally-extracted hydrocarbons on its way to renewable, sustainable energy. In a report published by the Financial Times, AEI states that the combination of the electricity sector running out of coal, local energy giant Sasol needing natural gas, and gas company Mossgas needing more feedstock clearly indicates the nation's urgent national imperative to focus on renewables.

The report focuses on innovation in South Africa. Africa editor David Pilling in his lead article writes that “homegrown innovators are fighting the brain drain and finding ways past a funding squeeze”. The six-page edition casts a bright light on South African technology, research, energy industry, white space television, and water solutions – one of the most positive indications of a forward-moving economic environment since President Cyril Ramaphosa assumed office.

AEI features in the report as a result of the algorithm it has invented. The algorithm can account for the country's full energy needs, the company says.

A group of young mathematicians at the company came up with a new method of locating undiscovered hydrocarbons at moderate cost and with limited environmental impact. Their method is three-times more likely to result in a discovery than traditional techniques.

Shakes Motsilili, a co-founder of AEI, says that the company invests in South African start-ups with a particular focus on the energy sector. Using a 2009 tax law, AEI and other investors are able to reclaim nearly half of their investments in tax credits, enabling innovative ideas to gain momentum, he says.

“The income tax act from 2009 means, in essence, that South African taxpayers who invest in AEI can deduct their full investment amount against their taxable income. AEI in turn invests in South African start-ups with a particular focus on the energy sector. Assuming the highest individual tax rate in South Africa of 45 per cent, the government is effectively paying R45 for every R100 ($7.30) invested in AEI and other approved venture capital companies. I believe it to be one of the most progressive pieces of legislation on the planet, mitigating the risk to investors supporting small to medium-sized businesses,” he says.

“Speaking at the World Economic Forum in Davos, President Ramaphosa affirmed that his ‘Team South Africa’ had brought ‘a bit of sunshine’ to what has been a lackluster moment in global economic news. And he hadn't yet read the FT report on South Africa,” Motsilili adds.

He says that while South Africa has taken steps to assist small businesses and create much needed jobs, the country must develop more ways to support entrepreneurs and improve their likelihood of success. “Most developed countries that reported an unemployment rate as high as South Africa’s 27.5 per cent — or 6.2m people actively seeking work — would consider the situation a state of emergency. Nearly a quarter of a century has passed since the oppressive and discriminatory system of apartheid was abolished, but efforts to improve the living conditions and employment prospects for black South Africans clearly have further to go. Although there will have to be a multi-pronged approach to correcting the wrongs of the past, I believe that nurturing entrepreneurship in South Africa should be one of the main tools to create jobs and counter unemployment.”


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