Seven leading construction companies in South Africa will collectively contribute 1.5 billion Rand (about 108.5 million US dollars) over 12 years to a fund to be set up to promote socio-economic development, says Economic Development Minister Ebrahim Patel.

"The objective of the fund will be the development, enhancement and transformation of the industry, as well as the promotion of social infrastructure for all South Africans," he said here Tuesday.

The fund will support initiatives to provide financial support for young trainee artisans and engineers from disadvantaged backgrounds and also provide support for the teaching of mathematics and science at public schools.

Other initiatives include funding for social infrastructure and the development and promotion of construction companies owned and managed by black people.

"It also includes funding the appointment of professionals to provide government with engineering, project management and other services to strengthen its capacity to deliver the public infrastructure so desperately needed through, among others, the secondment to State departments, municipalities and entities of skilled personnel from organisations operating in South Africa," Patel said.

The agreement was reached with the companies with a combined annual construction revenue of about 45 billion Rand, comprising WBHO, Aveng, Murray & Roberts, Group Five, Basil Read, Raubex and Stefanutti Stocks. Six of the companies signed the agreement on Tuesday, while the seventh will advise within the next week on when it will do so.

According to Patel, each of the companies will undertake further transformation initiatives using two models.

"First, companies will become fully transformed, with at least 40 per cent of equity in the hands of black South Africans or secondly, they commit to initiatives that will result in each of the construction companies mentoring up to three emerging black-owned enterprises so that they develop the necessary skills, systems, status and quantity of work to be able to sustain a cumulative combined annual revenue equal to at least 25 per cent of each of the mentor companies' annual revenue by 2023," he said.

As part of the agreement, each company has signed a declaration to promote ethical and legal operations, free of collusion or corruption and to confirm that they will expose, confront and eradicate any sign of wrongdoing in the industry.

The Executive Director of the South African Federation of Civil Engineering Contractors (SAFCEC), Webster Mfebe, said the industry was committed to strengthen its partnership with the government for the benefit of the country.

"This arrangement also demonstrates the commitment to a transformed, transparent and ethical industry, which has a major role to play in delivering much needed infrastructure to the economy of South Africa," he added.

"We believe this partnership will reinforce the framework for a more sustainable and competitive industry and is set to advance the social and economic welfare of all South Africans."

The fund is expected to be launched in the next fiscal year.