Cyprus sets up national business development body to drive SME growth

The Cabinet on Wednesday brought into force the law establishing the Cyprus Business Development Organisation and appointed the new body’s first board of directors, marking a key milestone in efforts to improve access to finance for businesses across the island.

Speaking after the first Cabinet meeting following the government’s reshuffle, Finance Minister Makis Keravnos said the organisation’s mission is to improve access to financing for small and medium-sized enterprises, startups and self-employed professionals, while addressing financing gaps in the market.

“The government continues consistently and decisively to implement its programme and the commitments it has announced,” Keravnos said.

He recalled that the legislation was approved by the House of Representatives on July 14, with Wednesday’s Cabinet decision formally setting the law’s commencement date.

The minister also announced the appointment of the organisation’s seven-member board of directors.

The board comprises five members appointed by the Cabinet following his recommendation, including the chairperson and vice-chairperson, along with two ex officio members representing the Finance Ministry and the Deputy Ministry of Research, Innovation and Digital Policy.

Michalis Kammas was appointed chairperson, while Stelios Theophanous will serve as vice-chairperson.

The remaining appointed board members are Philippos Hadjizacharias, Marinos Lambrianides and Andreas Isodiou.

The ex officio members are Aliki Sergi, representing the Finance Ministry, and Konstantinos Kleovoulou, representing the Deputy Ministry of Research, Innovation and Digital Policy.

Keravnos said the newly appointed board faces a substantial task in establishing the organisation’s operational structures and appointing the heads of its various departments.

“The board has important work ahead of it, preparing the organisation’s structures and appointing the heads of its various departments,” Keravnos said.

The establishment of the Cyprus Business Development Organisation forms part of Cyprus’ Recovery and Resilience Plan and represents one of the final milestones required for the release of the plan’s ninth and final payment from the European Union.

The organisation will operate as Cyprus’ national business development institution, with responsibility for designing financing schemes, providing loans and carrying out studies to identify weaknesses in the financing market.

It will operate under the supervision of the Finance Minister, while oversight of anti-money laundering matters will be exercised by the Central Bank of Cyprus (CBC).

The Republic of Cyprus will provide €60 million in initial capital to establish and launch the organisation.

Thereafter, the organisation will be able to finance its activities through its own operations, borrowing from European and international institutions, and state guarantees linked to approved strategic priorities.

The legislation also introduces enhanced corporate governance safeguards, including stricter suitability criteria for board members, measures to prevent conflicts of interest and the exclusion of politically exposed persons and public officials from serving on the board.

Additional provisions require consultation with the State Aid Commissioner before financing schemes are introduced, the submission of annual reports to the House of Representatives and the establishment of performance indicators and borrowing limits.

Last month, the Cyprus Chamber of Commerce (Keve) welcomed Parliament’s approval of the legislation, describing the creation of the organisation as a major reform for the Cypriot economy.

“The creation of the Cyprus Business Development Organisation constitutes a substantial reform for the Cypriot economy,” Keve said.

The chamber said the new body would help close financing gaps, strengthen entrepreneurship, improve business competitiveness, promote innovation and support Cyprus’ green and digital transition.

Keve also said businesses’ heavy reliance on bank financing has long restricted access to capital for investment, expansion and innovation, adding that the new organisation is expected to broaden the country’s financing ecosystem.

The chamber added that it had actively contributed to shaping the reform through the public consultation process and pledged to continue working closely with the Finance Ministry and the organisation’s management to help achieve its objectives.