Cyprus to Finalize National AI Strategy by Year’s End, Joins European AI Factory Network
Cyprus is rapidly positioning itself as a regional player in artificial intelligence (AI), committing to finalize a National AI Strategy by the end of 2025. As part of this strategic vision, Cyprus will join the European AI Factories Network, a collaborative EU initiative designed to support member states with infrastructure, research support, and funding to fast-track responsible AI development and deployment.
This national push comes amid rising investment in digital transformation across the public and private sectors. According to government officials at the 2nd TechIsland Summit 2025, Cyprus aims to become a “testbed for responsible AI”, combining a small but agile tech ecosystem with supportive regulatory and educational frameworks.
A central pillar of this strategy involves modernizing public sector IT infrastructure, integrating cloud services, and expanding citizen-facing digital services like electronic identity, digital signatures, e-invoicing, and a government chatbot that provides automated tax guidance, already live and scheduled to expand into wider domains.
The government is also addressing workforce issues. Through programs like "Minds in Cyprus", officials aim to reverse the tech brain drain by attracting skilled Cypriots working abroad and offering incentives to young tech entrepreneurs. They’re also working with universities to introduce more specialized AI programs and data science tracks.
Key goals of the strategy include:
Creating ethical AI policy and governance frameworks aligned with the EU’s AI Act.
Incentivizing private-public partnerships via dedicated innovation funds.
Enabling businesses to integrate AI tools with financial and advisory support.
Launching pilot programs in sectors like health, education, and public administration.
Additionally, Cyprus’ participation in the Pharos AI initiative will enable access to supercomputing resources, cross-border data sets, and collaborative EU-wide experimentation labs. These resources are vital for AI model training and testing, especially for smaller countries lacking the infrastructure of larger EU economies.
While the strategic direction is ambitious and outward-looking, officials acknowledge significant challenges, particularly in talent availability and cross-sector collaboration. The AI Factories model depends heavily on local innovation ecosystems, and Cyprus must foster deep coordination among academia, industry, and government to avoid fragmentation.
In my Opinion: A Smart Move, But Only If Execution Matches Vision
Cyprus’ determination to craft a modern, AI-ready economy is both timely and strategic. With the European Union fast-tracking regulatory and infrastructural support for AI development, Cyprus has correctly identified a window of opportunity to leapfrog into relevance in the digital age. The country’s small size can be a strength, policy changes can be enacted faster, and pilot projects scaled across the national system with relatively low friction.
But ambition must be matched with deep execution capability. The shortage of advanced tech professionals remains a critical vulnerability. Efforts to re-skill the domestic workforce and attract diaspora professionals are helpful but may not scale fast enough to meet the demands of AI growth across sectors like healthcare, education, law, and business.
Additionally, while Cyprus rightly touts its AI strategy as "ethical" and "responsible," the details of governance, transparency, and safeguards will matter immensely. With AI comes the risk of bias, surveillance overreach, or policy lock-in via automation. Ensuring these systems are inclusive, equitable, and democratically overseen will be key to public trust.
One underplayed area is regional leadership. Cyprus has a unique geographic and political position that allows it to serve as a digital bridge between the EU, the Middle East, and North Africa. If it leverages this strategically, by exporting AI solutions or collaborating with neighbors on digital public goods, it could become not just a domestic success, but a regional hub of innovation.
In short, Cyprus has the roadmap, the regulatory backing, and now the EU infrastructure to take bold steps in AI. But the path forward will demand sustained investment, transparent governance, and above all, cross-sector commitment. If it can deliver on these fronts, Cyprus may well earn its place on the digital map of Europe.