FFI in Action: Turning Cross-Border Challenges into Global Solutions

Across four countries and sectors, the Framework for Financial Incentives (FFI) is transforming complex cross-border challenges and financing gaps into scalable solutions with global impact. From unlocking stranded hydropower in Angola and mobilizing private capital for clean energy in Indonesia, to incentivizing forest protection in the Brazilian Amazon and strengthening pandemic preparedness in Tunisia, the FFI aligns incentives so that global benefits translate into national priorities. The result: catalytic investments that crowd in private finance, deliver measurable climate and health gains, and offer replicable models for impact at scale.

Unleashing Private Investment and Clean Energy: Angola's Cross-Border Transmission Project

The Angola-Namibia Inter-connection Project (ANNA)

The challenge:

Angola has 1.8 gigawatts of clean hydropower sitting idle in the north-enough to power millions of homes-while communities in the south and neighboring Namibia rely on expensive, polluting diesel generators. A 10.5 MW diesel plant in Ondjiva alone burns through 5.3 million liters of of fuel annually, spewing emissions and costing far more than hydropower would.

The solution seems obvious: build a transmission line connecting north to south and across the border to Namibia, plugging Angola into the Southern African Power Pool (SAPP). But this costs $460 million to build, and the initial revenue won't cover the cost.

The solution:

The ANNA Interconnector will be Angola's first-ever Public-Private Partnership for transmission infrastructure-and one of the first cross-border transmission PPPs in Sub-Saharan Africa. The project will:

• Connect the country: Link Angola's northern hydropower to the south, replacing diesel generation and expanding electricity access in southern provinces

• Integrate the region: Plug Angola into the Southern African Power Pool, enabling market-based clean energy exports while using its hydro-based storage to enable the solar and wind projects in neighboring countries

• Unlock stranded capacity: Transform 1.8 GW of idle hydropower into productive energy serving Angola, Namibia, and the wider SAPP market

• Demonstrate a model: Prove that private capital can finance regional transmission when markets are integrated.

For the first time, Angola will participate in regional energy trading, transforming from an isolated power system into a clean energy supplier for Southern Africa. The ultimate goal? Replace high-carbon diesel and coal generation across the region with Angola's abundant hydropower, reduce emissions by 1.1 million tons of CO₂ annually, and create a replicable financing model for transmission infrastructure across Sub-Saharan Africa.

How FFI is making it possible:

The private sector won't invest in a transmission line that loses money in the early years. Angola can't afford to subsidize it. Namibia won't commit to investments before the line is confirmed. This is the classic viability gap that kills cross-border infrastructure projects.

FFI's $16 million price incentive includes a $10 million viability gap grant, which reduces the project's upfront capital costs, lowering the annual payments Angola must make to the private developer to match the revenues.

FFI's volume and tenor incentives provide $167 million in additional financing with 5 extra years for repayment. Given that transmission service agreements typically span 20-30 years, the extended timeline aligns repayment with actual revenue generation.

The counterfactual is stark: Without FFI, Angola builds only the domestic transmission line. The cross-border connection dies. Namibia fails to benefit from alternate sources of imports. Over 20 years, that's 20+ million tons of CO₂ in foregone reductions-representing a social cost of $1.2-2.0 billion.

And so, FFI's $16 million unlocks climate benefits worth 75-125 times the investment.

Life Support: Amazonas Commits to Forest Protection in the Brazilian Amazon

Amazonas (AM) Pro-Sustainability: Fiscal, Economic, Social and Environmental Sustainability Program of the State of AM Project

The challenge:

Amazonas State is the largest state in the Brazilian Amazon and encompasses a significant portion of the Amazon Basin, especially within Brazil. It's home to critical rainforest - nearly 96% of its land remains covered by native forest- that the world depends on for climate stability. However, the State is facing mounting pressures: illegal logging, mining, forest fires, severe droughts, limited institutional capacity, scarce financing, and limited economic opportunities pushing communities toward deforestation.

Positioning net-zero deforestation as a central pillar of its long-term climate ambition, the state has enacted a Climate Change Law committing to carbon neutrality and adopted the Amazonas 2030 Program - a strategic framework for state-wide decarbonization and climate adaptation. To achieve this, Amazonas built the policy framework needed, strengthened enforcement agencies and created bioeconomy jobs that will offer incentives to generate income for the local population.

But maintaining this commitment costs money: the state's Environmental agencies need approximately $4.5 million each per year for core operations alone, plus millions more for staffing and joint enforcement operations. Without financial incentives to sustain these reforms, fiscal constraints could force cuts to environmental budgets, undoing years of progress.

The solution:

This program locks in Amazonas State's ambitious environmental reforms through a comprehensive policy package that includes:

• The Amazonas 2030 Program with net-zero deforestation targets

• Strengthening key environmental agencies by adding key environmental technical professionals to support environmental management, control, and enforcement.

• New bioeconomy policies to generate jobs and sustainable income for forest communities

• Climate risk preparedness and emergency response

• Environmental performance criteria for municipal fiscal transfers

• Reinforcing accountability with increased efficiency and better targeting environmental infractions

• A jurisdictional framework to monetize carbon credits

This is momentous: a Brazilian state is tying its entire environmental governance system together with measurable targets, adequate funding mechanisms, and long-term political commitment.

The ultimate goal is to protect the Amazon and improve livelihoods, while showcasing a replicable model for sustainable, inclusive development across the Amazon region.

How FFI is making it possible:

FFI provides an interest rate buydown worth up to $22 million -but only if Amazonas hits its deforestation reduction and institutional strengthening targets. Miss the targets, lose the financial benefit. Hit them, and the state saves millions that can be reinvested in environmental protection.

FFI helps to provide the essential incentives to not only maintain the policy reforms over time but also to staff the institutions and allocate resources for implementing policies.

The payment schedule ties directly to verified results:

By end-2025:

• Limit cumulative deforestation (2023-2025) to 5,305 km² , and

• Publish the public call for recruitment of at least 306 new environmental civil servants. This is an increase of over 1100% for SEMA, and nearly 100% for IPAAM, the two environmental agencies of the Amazonas State → Earn $3.5 million

By end-2026: Further reduce cumulative deforestation (2024-2026) to 4,254 km² → Earn another $2 million

By end-2027: Further reduce cumulative deforestation (2025-2027) to 3,403 km² → Earn $2 million

Post-2027: Targets to be defined in line with net-zero deforestation → Continue earning benefits

The incoming administration won't just inherit environmental policies; they'll inherit financial incentives that make sustained environmental action fiscally rewarding. The operational budgets for environmental agencies become financially justified rather than politically negotiable.

Powering Up Indonesia's Islands with Private Capital and Clean Energy

Indonesia Sustainable Least-cost Electrification-2 (ISLE-2) Operation

The challenge:

Eighty million people live across Indonesia's islands of Kalimantan and Sumatra-regions that contribute 30% of the country's GDP but remain heavily dependent on expensive, polluting fossil fuels. Most isolated grids run entirely on diesel or coal.

Indonesia wants to shift to clean energy, but the numbers don't work. Government regulations for solar projects with battery storage cap prices at around 6 cents per kilowatt-hour in these regions to keep power affordable for citizens. That's good for consumers but makes renewable energy projects with battery storage financially impossible without help-returns are too low to attract the private investment needed to build at scale.

Without financial incentives, Indonesia's 80 million island residents would stay locked into polluting, expensive energy. PLN, the state utility, wants to change this but faces a viability gap.

The solution: ISLE-2 aims to bring 540 megawatts of solar power with battery storage to Kalimantan and Sumatra while financing connecting grid of 3.5 million people to the grid, with clean, reliable electricity for the first time. The project comprises $1.55 billion to create the infrastructure and enabling conditions these regions need.

The ultimate goal is to shift the energy mix in these regions from 77% fossil fuels to 62% by 2032, reduce energy generation costs by 8-10%, and prove that clean energy can work in Indonesia's most challenging contexts-creating a model for other island nations worldwide.

How FFI is making it possible:

Solar plus battery storage is expensive. Without FFI's $12 million grant focusing on battery equipment, the renewable energy project's return on investment would be below the threshold that private investors require in Indonesia.

FFI's support changes the math:

• Makes renewables with battery storage cost-competitive with subsidized coal under Indonesia's strict price regulations
• Boosts returns from 9% to 11%-crossing the viability threshold for private investors and independent power producers
• Unlocks at least $345 million in private investments for solar, wind, and battery storage projects

An Ounce of Prevention: Tunisia Strengthens Health Systems for Cross-Border Protection

Tunisia Health System Strengthening Project

The challenge:

When a disease outbreak happens, speed matters. Tunisia sits at a critical crossroads-geographically positioned where health threats can quickly spread across borders to Europe, the Middle East, and North Africa. Yet only 54% of Tunisia's population can be reached by emergency services within 30 minutes. Disease surveillance systems lack the digital integration to catch threats early. Emergency departments are overwhelmed, lacking the capacity to handle surges from outbreaks or climate emergencies.

These aren't just Tunisia's problems. When one country's health system is vulnerable, neighboring countries and regions face greater risk. The world learned this lesson the hard way with COVID-19. Tunisia wants to make sure it doesn't happen again.

The solution:

This project seeks to transform Tunisia's health system into a model of resilience and preparedness-protecting Tunisians while creating a safer region for everyone.

This would also mean that for the first time, every Tunisian will be reachable by emergency services within 30 minutes. The ultimate goal? Create a health system that doesn't just respond to crises but prevents them from becoming regional or global emergencies.

The program focuses on two critical fronts:

Pandemic Preparedness ($25 million): To bolster Tunisia's integrated "One Health" surveillance system that monitors human, animal, and environmental health data in real-time through a digital platform. The SHOCROOM-Tunisia's public health emergency operations center and its 6 regional satellites-will coordinate rapid response across the country. Lab capacity, border health screening, and early warning systems will catch threats before they spread.

Emergency Response ($48 million): From the moment someone calls for help to intensive care treatment, Tunisia is building an end-to-end emergency care system. Better ambulance dispatch, upgraded triage systems, strengthened emergency departments, and expanded intensive care capacity mean the health system can handle surges from disease outbreaks, climate emergencies, or accidents.

How FFI is making it possible:

Building resilient health systems requires significant investment. Comprehensive surveillance systems, emergency operations centers with regional satellites, universal ambulance coverage, and upgraded hospital capacity all require substantial financing beyond what Tunisia can typically access through standard lending. FFI's $28 million volume incentive rewards the government with crucial additional financing in recognition of the significant cross-border benefits, thereby reducing trade-offs with competing domestic development needs.

The cross-border calculation is that when Tunisia invests in pandemic preparedness, the benefits ripple across the Mediterranean and North Africa. These are investments that protect everyone. FFI recognizes this reality by making the financing work for investments that deliver global health security, not just national health improvements.