news | 30 April 2018 | EY Cyprus

EY: Is Higher Education an underappreciated engine of growth for the Cypriot economy?

The study was performed through cooperation with and based on data and information from a group of nine leading local Universities and research institutes (listed at the bottom). Collectively, these institutions were responsible for approximately €625 - €830m of economic contribution in 2016, which translates to ~85% of the total estimated contribution of the entire local HE sector.

  • Over the last decade, the Higher Education (“HE”) sector has grown by more than 80% in student numbers, exceeding 44,000 total students during 2016/2017
  • In 2016 alone it is estimated to have contributed €739 million - €979 million to the local economy and was responsible for approximately 9,500 jobs in the HE sector and its supporting industries
  • Interestingly, HE has also contributed to the country’s export revenue, with international students constituting 47% of the total in the 2016/2017 intake, having grown at a compounded annual growth rate of 13.5% over the last decade
  • Looking ahead, the sector’s annual contribution could increase a further 50% by 2023 and create 1,500 new jobs
  • The online higher education market presents a significant opportunity for Cyprus as the potentially addressable market has been estimated at ~€1 billion - €4billion, for which Cyprus will be competing against anglophone countries such as Australia, Singapore, Ireland, etc.
HE contributes to social and economic progress through developing human capital, as well as building, maintaining, and disseminating a valuable knowledge base. According to our estimates, roughly two thirds of the contribution is derived from indirect or ‘knock-on effects’ of the sector’s activity, the largest component of which are the economic benefits arising from the up-skilling of the workforce.

The market for anglophone HE Internationally Mobile Students is estimated to be up to ~€50 billion, growing at ~5% p.a.  Over the next decade, there is a unique opportunity for English-speaking countries like Cyprus to earn a seat in this sector globally, as tertiary enrolment rates are expected to soar around the world, driven by the coming-of-age of large developing countries such as China and India.

We estimate that, by 2023, if the current level of HE activity in Cyprus is sustained and complemented by a moderate growth in international students and research expenditure, then the sector’s economic contribution will grow by ~€400m. Currently, expenditure in HE research in Cyprus is relatively low, (2015: 0.24% of GDP compared to 0.47% for the EU-28, according to Eurostat) and relies mostly on government funding (57% of total research expenditure in 2015, compared to 32% for the EU-28, according to Eurostat).

Our study has looked at key international best practices that Cyprus may need to consider in order to adequately exploit the abovementioned opportunity. These include:

  • A national sector strategy that combines (i) strong information provision (ii) welcoming visa policy (iii) attractive student financing and (iv) a co-ordinated marketing strategy
  • Improvement of migration procedures to facilitate growth in international students
  • Ensuring that the quality assurance regime focuses on quality, innovation and appropriate speed to market
  • Domestic reforms to incentivise growth in scale, quality and infrastructure, as well as foster collaboration between the industry & academia, and to facilitate the commercialisation of Intellectual Property
Matt Robb, Managing Director of EY-Parthenon in the UK and leader of its work in European education, says:

“There is a once-in-history growth in the global Higher Education market taking place, particularly of internationally-mobile students. Cyprus, where HE courses are widely taught in English, is a prime candidate to capitalise on this opportunity.”

Stelios Demetriou, Partner in EY Cyprus and leader of its Transaction Advisory Services, says:

“Looking at the importance of the education sector, but also the way it interacts with other sectors of the economy, now, more than ever, given the favourable economic prospects for Cyprus, we need to work together to help our educational institutions to improve and succeed”

The nine HE institutions that commissioned the study are (in alphabetical order): Cyprus International Institute of Management, Cyprus Institute of Neurology and Genetics, Cyprus University of Technology, European University Cyprus, Frederick University, Neapolis University, UCLan Cyprus, University of Cyprus and University of Nicosia.

The main results of the study were announced to government officials, policy makers, academics and other stakeholders, during a presentation at the EY Nicosia office, on 26th April 2018, followed by a networking cocktail.

Cooperation Partners
  • Logo for Association of Cyprus Banks
  • Logo for Cyprus Chamber of Commerce and Industry
  • Logo for Ministry of Energy, Commerce, Industry and Tourism
  • Logo for Invest Cyprus
  • Logo for Cyprus International Businesses Association
  • Logo for CYFA Cyprus
  • Logo for Cyprus Shipping Chamber
  • Logo for Cyprus Investment Funds Association
  • Logo for Love Cyprus Deputy Ministry of Tourism