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EIB Cyprus study highlights barriers to business investment and mixed investment ahead of Nicosia economic conference


EIB Cyprus study highlights barriers to business investment and mixed investment ahead of Nicosia economic conference

  •  Release date: 30 May 2018
  •  Reference: 2018-132-EN

Tomorrow the European Investment Bank (EIB) will publish the Cyprus findings of a pan-European investment survey and host a major economic conference in Nicosia, in cooperation with the Nicosia Chamber of Commerce and Industry.

Over the last decade the European Investment Bank has provided EUR 2.7 billion for long-term investment in education, energy, transport and water infrastructure and small business lending with leading local banks. The EIB is the world’s largest international public bank and supported business and infrastructure investment in Cyprus since 1981.

Harris Georgiades, Minister of Finance of the Republic of Cyprus and Governor of the European Investment Bank will provide the keynote address and more than 200 business leaders, government officials, policy makers, economists and academics will attend the European Investment Bank’s first ever investment finance conference in Cyprus.

“Across Europe investment barriers are preventing small businesses from reaching their full potential and identifying and tackling specific investment barriers is crucial to unlock economic growth and job creation. The 2017 EIB Investment Report highlights the key impact of investment uncertainty and energy costs in Cyprus. This week’s Nicosia conference provides a valuable opportunity to discuss successful lessons from elsewhere in Europe and how best to focus future EIB engagement in Cyprus.” said Jonathan Taylor, European Investment Bank Vice President responsible for lending operations in Cyprus.

“Small businesses are the driving force in the Cypriot economy and encouraging investment is crucial for the country. The European Investment Bank has a unique experience helping companies across Europe to invest, alongside a strong track record of supporting both infrastructure in Cyprus and improving access to finance by Cypriot firms in partnership with local banks. This week’s timely conference will bring together economic actors and the Cypriot business community and identify key issues essential for future economic and employment growth”, said the Director of the Chamber, Mr. Socrates Heracleous.

Cyprus through the lens of the EIB Investment Survey

In Cyprus, the 2017 EIB Investment Survey examined investment by 150 firms and identified a marked improvement in access to external financing. Only 6% of firms surveyed were “financially constrained”, which is slightly under the EU average.

“While investment slowly recovers, there is still evidence of 20% of firms having no investment plans for the next 3 years, as a sign of some remaining legacy and need of transformation.
Uncertainty, energy costs business regulations and availability of skills are major impediments to investment. Availability of finance is an issue for some firms in some sectors, with cost and collateral requirement being main impediments.” highlighted, Debora Revoltella, Director of Economics at the European Investment Bank.

Investment by companies in Cyprus increased in the last 12 months. Approximately 79% of the firms surveyed in Cyprus invested in the last financial year, modestly below the EU average but higher than last year’s result in Cyprus (73%). Investment intensity, investment per employee, has also increased modestly and this positive outlook is expected to continue overall.

Firms in the services sector are the most optimistic, where a large share of firms expected 2017 investment to be below that in 2016. However, 28% of firms in Cyprus reported investing too little over the last three years, well above the EU average of 15%.

Barriers to investment in Cyprus

Future uncertainty and high energy costs remain the most commonly cited perceived barriers to long-term investment (90% and 89% of the firms reported these obstacles, respectively). Public investment in hospital/care infrastructure was also a notable priority for firms in Cyprus, while the particular figure is above the levels reported in any other EU country. Going forward, dealing with the obstacles affecting the country’s long-term competitiveness, including the adoption of innovations, will be key for Cypriot corporates.






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