Belgium: EIB and Walloon Region partner up to grow the Walloon space sector

A memorandum of understanding was signed this morning by the Walloon Region, represented by Minister-President Elio Di Rupo, Vice-President and Minister for the Economy Willy Borsus, and Budget Minister Adrien Dolimont; and the European Investment Bank (EIB), represented by Vice-President Kris Peeters. The two sides seek to use the transformation potential of the space technology sector to serve the region and position it as a sector leader in Europe.

The memorandum of understanding (MoU) signed today sets out a framework for close cooperation between the EIB and the Walloon Region intended to support the development of the Walloon space sector. The goal: to help the Walloon Region identify the projects where EIB support could be provided, in the form of financing and technical or financial advisory assistance. The MoU also enables the EIB to provide financing arrangements for projects promoted by the Walloon Region in the space sector. Furthermore, it aims to create the necessary conditions to attract private sector investment. It also grants scope to explore setting up a specific financial platform for regional space companies.

Developing the space economy requires large investments, and space projects need to find adequate financing to scale up in the European Union and at regional level.  As the biggest financier of the European space sector, the EIB supports both established operators launching new initiatives and up-and-coming companies scaling up.

These large investments go to finance industrial and scientific research and innovation, including by developing innovative materials and processes; embedded technology and communication systems, and cybersecurity in particular; as well as the data and service economy built on Earth observation data. There are many sectors impacted and challenges to meet.

This MoU further strengthens the already thriving relations between the EIB and the Walloon Region in terms of loans and guarantees for large-scale projects in the region.

EIB Vice-President Kris Peeters explained, “With this cooperation agreement, our joint ambition is to accelerate Walloon aerospace investment, especially by providing the EIB’s expertise in complex co-financing structures to help fund the expansion of the Walloon space sector. Wallonia has a long aerospace tradition, and this memorandum of understanding will allow the EIB to effectively support the dynamism of this ecosystem, which is a driver of economic and societal progress.”

Elio Di Rupo, Minister-President of Wallonia, stated, “I am very pleased about this new cooperation agreement between the EIB and the Walloon Region, which will further strengthen this sector’s competitiveness for Wallonia. Space is a vector for economic growth and an extremely promising sector of the future. For years, our region has been building deep expertise in this area. As part of its recovery plan, the Walloon government has approved financing for several projects to develop a space value chain in Wallonia, like designing double-sided solar panels for microsatellites in the field of Earth observation, or the project for integrated, intelligent actuation systems for reusable launch vehicles. It is important to continue on this path and position the sector on the European stage!”

Vice-President and Minister for the Economy Willy Borsus added, “This agreement is another step in the structural development of our space sector. Growing the space economy requires significant investment, and space projects need adequate funding to develop in Europe. Wallonia has a strong space sector, with around 40 robust industrial and scientific players, generating annual turnover of over €300 million and employing more than 2 000 people in Wallonia. Our goal is to continue fuelling its growth, and to become a space sector leader in Europe.”

According to Budget Minister Adrien Dolimont, “Space has been a strategic sector for Wallonia for more than 50 years. Historically, our region has been home to firms with expertise recognised worldwide, and in the last decade it has seen newer companies emerge that show exponential growth. The sector is going through a big change, with new applications developing, especially to serve the climate transition. New Space is breaking the mould. That means enormous opportunities for Wallonia in this dynamic. That is why I, as Budget Minister, welcome the addition of this EIB support to our private sector and public instruments.”

Recall that in 2022, EU leaders identified space as a strategic area and called for a space strategy for the European Union’s security and defence capabilities. Building on this political momentum, the European Commission and the High Representative have developed the first ever EU Space Strategy for Security and Defence. This MoU could thus serve as the foundation for new financing operations in the Walloon Region, in particular as part of the EIB's Strategic European Security Initiative (SESI).

Of immediate interest for Walloon companies are the two themes to be prioritised under this agreement: Earth observation and reusable launch vehicles. These two areas are also included in the Walloon Region’s recovery plan.

Skywin, Wallonia's aerospace cluster, has developed a roadmap for each of these themes.

Through this MoU, the EIB commits to discussing the investment and financing aspects of projects related to the Earth Observation 2025 roadmap and the Reusable Launchers 2025 roadmap. The Walloon Region will work to calibrate potential investment schemes to funding sources, and will discuss co-financing alternatives with the EIB.

With the Bank’s expertise, Wallonia will maximise its opportunities for developing space sector projects.

Background information

The EIB is devoted around €2.3 billion to projects in Belgium in 2022. The EIB is a key partner in the development of various sectors in Belgium, including energy efficiency and renewable energy, environment, health and education, digital connectivity and research, development and innovation. It has provided finance to the Walloon Region, particularly for transport infrastructure, healthcare, water management and the electricity distribution network, as well as for schools.

The EIB states its intention, on a non-binding basis, to:

• Exchange information and knowledge on the space sector to create a common understanding of the challenges and key issues for financing;
• Engage in discussions on the investment and financing aspects of projects related to the Earth Observation 2025 roadmap and the Reusable Launchers 2025 target and roadmap, calibrate potential investment schemes to funding sources and discuss EIB co-financing alternatives;
• Assess capital investment projects (expected to fuel the long-term growth potential of the Walloon economy) in order to determine their compliance with the requirements and priorities of the EIB, with a view to extend new financing to projects in Wallonia, subject to, inter alia, satisfactory results of due diligence by the EIB in respect of each project, approval of corresponding individual loan proposals by the competent bodies of the EIB and agreement on appropriate documentation by relevant project counterparts;
• Work with the Walloon Government in defining market needs/gaps and a programme of projects eligible, prima facie, for potential EIB advisory support and financing, provided that the financing of such projects shall be in any case subject to approval by the EIB’s competent governing bodies;
• If requested by the Walloon Government, assess the possibility to provide technical assistance and financial advisory support to projects, in any case subject to the EIB’s competent governing bodies’ approval, as relevant, to improve the identification of priority investments and the definition of spending plans of specific projects, thereby facilitating the submission of applications for financing and/or measures drawing on EIB funds or regional and/or EU resources;
• Define suitable methods of financing for the projects, in view of the individual characteristics of each of them, evaluating the possibility of support from the EIB;
• Make available its know-how and explore more complex financing structures, which may contribute to accelerating the implementation of investments in the sector;
• Assist the Walloon authorities in using the existing EU Funds co-financing framework loan (to the extent within the EIB’s control) and envisage new, general or special-purpose framework loans with the Walloon Region, in each case in compliance with any applicable requirements;
• Help in identifying how European initiatives (including the Recovery and Resilience Facility and the Innovation Fund) could support the space market development and the setup of potential instruments in combination with EIB financing;
• Contribute to the implementation of sizeable investments in Wallonia and reinforce the importance and promotion of economic, social and territorial cohesion in the EU; and
• Play a significant role in the further development of the space sector by assessing the financing of space projects in Wallonia.

The Walloon Region states its interest to:

• Create the conditions to accelerate the implementation of projects and initiatives set out in the Earth Observation 2025 roadmap and the Reusable Launchers 2025 target and roadmap;
• Further enhance an active two-way cooperation with the EIB, to provide the financial support and technical assistance required to accelerate investments in the sector;
• Help identifying projects that are deemed strategic by the Walloon Government and which may benefit from advisory support or technical assistance from the EIB and/or be eligible for EIB finance in accordance with the EIB’s rules;
• Allow the necessary conditions to attract private sector investment minimizing the usage of public funding through support mechanisms that allow project bankability required to accelerate project implementation and deployment
• Invite the EIB to participate in the financing of relevant projects that go beyond the capacity of the Walloon regional budget;
• Discuss with the EIB national and regional funding programmes, the use of the existing EU funds, co-financing framework loans and the possible arrangement of new resources to finance projects of particular strategic importance and falling within the scope of the EIB Group’s activities; and
• Explore ways of blending further EIB finance with regional funds and with EU funds, including under the Recovery and Resilience Facility and InvestEU to set up a dedicated financial platform for space companies.