Why is it worth building roads in Africa? Everything you need to know about the GED Africa project

Duna Group has published a detailed report on the company’s activities in Africa. The GED Africa project, which our newspaper has also been following, is presented by the group on its website as its largest international investment to date, serving to realise a trade corridor of key importance in Africa. Among other things, the project involves the construction of 184 kilometres of public roads and a border bridge in the Democratic Republic of the Congo and Zambia.

They emphasise that the financing and operation of a development project of this scale, involving several countries and financial stakeholders, is highly complex. In addition to the key facts about the project, the summary also outlines the most important aspects of its financial, operational and economic framework.

The two state-owned banks have requested a state guarantee for the financing

The report reveals that EXIM Bank and MFB, which were involved in the process, approved the project’s financing following nearly ten months of financial, legal and risk due diligence.

In order to implement the financing arrangement, the two state-owned banks requested a state guarantee, which the Hungarian state provided to them. „This guarantee was not intended for Duna Aszfalt Zrt., but served as security for the financing banks to facilitate the bond issue,” they emphasise.

„The decision to provide the guarantee was taken by the Hungarian Government and the relevant state bodies within their own remit; Duna Group had neither any influence over this nor any decision-making authority.”

They add that, following the provision of the guarantee, the Hungarian State receives a guarantee fee, which is paid by the company.

A guarantee does not replace the company’s liability

The document also emphasises that the banks providing the financing granted the loan not to the African project company, but to Duna Aszfalt Zrt.; consequently, Duna Aszfalt Zrt. is primarily liable for the repayment of the loan with its own assets. The beneficiary of the state guarantee is not Duna Group, but the financing banks.

They explain that the guarantee serves as security solely in the event that Duna Aszfalt Zrt. is unable to meet its payment obligations despite utilising all the assets and resources at its disposal.

A guarantee therefore does not replace the company’s liability, but reduces the risk for the financing banks.

It provides the government with interest income that is higher than the market average

The report goes on to explain why it is in the Hungarian state’s interest to fund the project, and how Hungarian taxpayers will benefit from it. „The project’s financing structure is advantageous in several respects for the Hungarian state and, indirectly, for Hungarian citizens,” the summary points out. It notes that Duna Aszfalt Zrt. pays a guarantee fee for the state guarantee, which represents direct revenue for the state.

Furthermore, the bonds issued to finance the project carry interest rates that include a significant risk premium, higher than the market average. As the bonds were subscribed to by Hungarian state-owned financial institutions, the interest income also flows into the state financial system. „This means that the successful operation of this scheme not only facilitates the implementation of the project but also generates revenue for the state, which indirectly benefits the Hungarian community and taxpayers,” the statement reads.

The group’s stability is bolstered by projects underway in several countries

In addition to all this, they also point out that the security of the funding is further strengthened by the diversified nature of the Duna Group project. The group is not reliant on a single project: through Duna Aszfalt Zrt., subsidiaries in Poland, the Czech Republic, Slovakia and Romania, as well as the Hungarian subsidiary, carry out construction work, meaning that the group’s financial stability is underpinned by projects in several countries and revenue generated across multiple markets.

As a result, the risk to the financing banks does not depend solely on the success of the African project.

In this regard, they emphasise that the company has so far met all its interest and debt service obligations relating to the bonds issued in full, and intends to continue to do so in the future.

The more successful the project is, the faster the liability decreases

The document goes on to set out the project’s economic model, under which 184 kilometres of public roads and a border bridge will be built. It states that the revenue for project Duna Group will come from tolls collected during the operation of the completed infrastructure.

Under the financing structure, these revenues are primarily used to make early repayments on the bond; thus, the successful operation of the project contributes directly to the faster repayment of the financing and a reduction in the term. The more successful the project’s operation, the faster the outstanding financing obligation is reduced, and with it, the risk to the financing banks.

It cannot be compared either with road-building projects in Africa or with motorway developments in Hungary

With regard to the factors determining the cost of the investment, they explain that comparing the costs of international infrastructure development projects solely on the basis of construction costs per kilometre does not provide an accurate picture.

It is emphasised that the Kasomeno–Mwenda project is not a motorway, but involves the construction and operation of an approximately 184-kilometre-long, two-lane public road, the technical specifications of which differ significantly from those of a motorway project in Hungary. The soil and geological conditions in Africa necessitate different technical solutions.

The project also includes a 362-metre-long border bridge, two state-of-the-art single-stop border stations, and the full roll-out of the electronic toll collection and operational infrastructure. For this reason, no professionally sound comparison can be made with the per-kilometre costs of other African projects comprising solely road-construction elements, nor with those of domestic motorway developments.

They also emphasise that the construction costs were determined by market competition. International and local partners, as well as subcontractors, were selected through an open tender process in which all eligible market participants were able to take part.

This is included in the project

Finally, the summary also outlines the details of the GED Africa project, which is being implemented in the Democratic Republic of the Congo and the Republic of Zambia. As part of the project,

• a public road nearly 184 kilometres long,
• a 362-metre-long border bridge,
• two state-of-the-art border posts
• and the infrastructure required to operate them is being developed.

The three-year construction phase will be followed by 22 years of operation and maintenance

The new route shortens the transport route between the mining area in Haut-Katanga province and the port of Dar es Salaam in Tanzania by some 500 kilometres, thereby significantly reducing transport times and logistics costs. The two new, state-of-the-art border posts will also significantly speed up border crossings between the two countries, further improving the efficiency of transport and trade.

The project is being implemented under a 25-year PPP (Public–Private Partnership) arrangement. The three-year construction phase, which began in 2024, will be followed by 22 years of operation and maintenance. The project is being carried out by international and local contractors under the technical supervision of Duna Group.

Many international companies opt for this project structure

The project is being implemented by GED Africa Ltd., a project company registered in Mauritius under the reference Duna Group. Mauritius is one of the most important financial and business centres for international investment in Africa. Many international companies opt for this structure as it offers a well-developed financial services environment and has double taxation avoidance agreements with several African countries, whereas Hungary does not have such agreements with the countries concerned.

In an international ranking of corporate tax systems, Mauritius was ranked 15th in 2024, whilst Switzerland was 4th and Hungary 22nd. In the 2025 rankings, Mauritius moved up to 16th place, Hungary to 21st, and Switzerland to 3rd.