39,8% of Cypriots believe that there are opportunities to start a business in Cyprus, while 60,5% believe they have the skills to do so, but 53,3% fear failure, according to the findings of the National Entrepreneurship Report in Cyprus 2023/2024, by the Entrepreneurship Center of the University of Cyprus, which was presented on Tuesday.
Cyprus is participating for the 8th year in the Global Entrepreneurship Monitor (GEM), within the framework of which the report was made, and which is a tool for a reliable perspective on a country's business activity.
The presentation of the findings was welcomed by the Minister of Energy, Commerce and Industry, George Papanastasiou, who said that the GEM has proven to be a particularly useful tool for the Ministry and the government, since its findings guide on entrepreneurship issues and strengthen the effort to promote Cyprus as an attractive destination for business activity.
In Cyprus, he said, there are approximately 125.000 businesses operating, which employ around 500.000 people. Of these, 119.000 are very small and employ less than 10 people, contributing to the employment of approximately 190.000 people. In addition, there are 5.400 small businesses that employ from 10 to 49 people, providing jobs to approximately 100.600 people. In the category of medium-sized businesses, which employ from 50 to 249 people, there are 858 businesses, which employ approximately 82.500 people, while 155 businesses in Cyprus employ more than 249 employees and provide jobs to approximately 125.500 people.
"These numbers demonstrate the important role that businesses play in our country," he said, underlining the Ministry's goal of supporting them, as they play a crucial role in achieving the government's goals regarding the development and strengthening of the competitiveness of the Cypriot economy.
Referring to the findings of the report, he said that it is the significant increase in the percentage of adults in Cyprus who believe that there are good opportunities to start a business to 39,8%. Furthermore, he noted that the ownership of new businesses in Cyprus also recorded an increase, reaching 4,7% from 3,9% in 2020-2023. He added that Cyprus ranks sixth in Europe in terms of established ownership, which further strengthens the positive image of its business environment.
"Cyprus is showing positive signs with Cypriots now more optimistic about the business opportunities they have. Among other things, the increase recorded in the number of new businesses indicates that the market is being activated, while compared to other European countries, Cyprus is approaching the average and maintains a good position in the entrepreneurship sector, presenting a mature and stable business environment," he said.
Mr. Papanastasiou added that the Ministry of Energy, Commerce and Industry understands the importance of businesses for the economy and the constant need to support and strengthen entrepreneurship, which is why it is implementing specific actions and policies. He referred, in particular, to the priority of promoting the policy document for the competitiveness and internationalization of Cypriot industry 2025-2030, noting that this policy aims to shape a land of flexible and technologically innovative industry, which will substantially contribute to the development of the competitiveness of the Cypriot economy.
He also referred to grant schemes to facilitate access to financing and improve the liquidity of businesses. "Our goal is to provide incentives to our business community to implement investments that lead to the further strengthening of the competitiveness of Cypriot businesses, leveraging technology, as well as the opportunities arising from the green and digital transition, by absorbing and utilizing as many resources as possible from European funds, including the Recovery and Resilience Facility."
Specifically, he said that the competent Service for Industry and Technology has secured a total of 362 million euros for the current programming period until 2027, which will be allocated through almost targeted grants. Particularly with regard to the new entrepreneurship grant plans, he said that the Ministry has secured 40 million euros compared to 21,7 million euros in the previous period. "This specific plan has already been announced for the second time with a total budget of 20 million euros," he said.
Referring to the report's finding that Cypriots, while seeing many business opportunities, seem afraid to take the next step, he said that those who usually fail are either those who are not ready to take risks or those who take too much risk, underlining the importance of taking manageable, calculated risks for the success of a business.
The findings of the report
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The research in Cyprus was conducted with the participation of a representative sample of 2.000 adults aged 18-64 and 36 experts, between May-June 2023. The findings of the report were presented by Dr. Ariana Polyviou, Lecturer at the Technical University of Cyprus.
According to the findings, in 2023-24 the percentage of adults who believed that there were good opportunities for starting a business increased significantly to 39,8% from 26,8% in 2022-23. At the same time, the percentage of those who said they had the skills to start a business rose to 60,5% from 52,7%, significantly higher than the European average, which is 51,8%.
At the same time, according to the survey, the percentage of those who expressed a fear of failure increased to 53,3% compared to 51,7% in the previous period. The percentage is significantly higher than the European average of 45,1%.
The percentage of people who answered that they know an entrepreneur was considerably higher than in Europe. In Cyprus, the percentage reached 66,9%, when the European average was 52,1%.
According to the survey, compared to Europe, in Cyprus the percentage of the population that believes that starting a business is easy is smaller over time.
An important indicator for the survey is the TEA index, which refers to early-stage entrepreneurship. In Cyprus, the percentage of the population starting or running a new business is 11%, up from 8,3% in 2022-23 and the European average of 9,2%.
The findings of the survey regarding gender equality are also indicative. As Dr. Polyviou said, men who are in the initial stages of a business activity amount to 14,5% while women to 4,9%, with the ratio being 0,6. That is, for every 10 men, only 6 women are in the process of starting a business. The ratio is increased from 0,4 in 2022-23, but is still behind the European average of 0,7.
According to the findings, the age group that starts a business the most is people aged 18-34 at a rate of 14,4%, while only 5,8% of people aged 35-64 do the same. The corresponding rates in Europe are 12.% and 7,9% respectively.
When asked about their motivation for starting a new business, 85,4% answered "to acquire great wealth", 65,5% "to earn a living", 39,7% "to make a difference" and 27,1% "to continue the family tradition".
Cyprus ranks sixth in the advanced stage business activity index, i.e. businesses operating for more than 42 months, with a rate of 8,2%, with the EU average at 7,6%.
Regarding the National Business Ecosystem Index (NECI), this has decreased compared to the previous year. Asked about the biggest advantages of Cyprus’ business ecosystem, respondents indicated physical infrastructure as the first, while trade infrastructure, government policies (taxes and bureaucracy) and ease of market entry have received lower scores compared to the previous year. Compared to other countries, Cyprus lags behind in government programs for entrepreneurship, according to the survey.
Based on the findings, the Entrepreneurship Center of the University of Cyprus made recommendations, such as the integration of financial literacy into the curriculum, the training of teachers in entrepreneurial pedagogical methods in various subjects, the creation of programs to guide students in the creation and development of start-ups, and the offering of short courses to higher education graduates in the development of new businesses or the transformation of existing ones.
Regarding government processes and policies, it suggests the creation of regional entrepreneurship councils with the participation of active entrepreneurs and the provision of incentives for the development of synergies between universities and new businesses, as well as the provision of grants and advisory support to women and vulnerable groups.
Furthermore, the Center proposes, among other things, the provision of incentives to existing businesses for investments in start-up businesses, the creation of tax incentives for the participation of global investment funds in business investments in Cyprus and the creation of innovation funds linked to the needs of the public sector.
It is also proposed to create services that offer guidance on digital strategy and access to digital tools, provide grants for technology upgrades, develop physical infrastructure, and create a national network of mentors with experienced entrepreneurs in important sectors.
Source: KYPE
