Over the past year, many of us working in international development have watched changes unfold at a speed and scale that would have seemed unlikely even two years ago. For organisations operating in low- and middle-income countries (LMICs), the mounting fiscal pressures on aid budgets were already having visible impacts in the preceding years. But since early 2025, the retreat or realignment of major aid actors, including the dismantling of USAID, has rapidly increased those pressures and thoroughly reshaped the development landscape.
Entrepreneurship support across LMICs has not been immune, as much of this work has historically been financed through donor- and publicly funded programmes. In many cases, these shifts have not introduced entirely new challenges so much as made more visible — and more consequential — the underlying support functions on which many entrepreneurship ecosystems depend in order to operate.
As consultants, both of us have worked extensively in support of entrepreneurship support organisations (ESOs) and wider business environment reform initiatives across Africa, including through our advisory work with the EU’s Investment Climate Reform Facility. Consulting rarely offers foresight, but it does offer early signals, since the work changes as demand shifts. For us, those signals have provided some stark insights into how entrepreneurship ecosystem-building work is being reshaped in emerging markets. That vantage point has offered a view of how these ecosystems are adjusting to the new fiscal reality — and where strain is beginning to show.
The article that follows is not a set of predictions or prescriptions. Rather, it reflects on what sustained uncertainty is revealing about what entrepreneurship ecosystems now rely on, and about the functions ESOs are increasingly being required to sustain if those ecosystems are to function.
Uncertainty has become structural for ESOs in emerging markets
ESOs routinely operate in volatile conditions, particularly in emerging markets. In many of these countries, uncertainty is a common condition rather than an exception. For a long time, however, that volatility was at least partially buffered. Even fragile ecosystems had some predictability, including donor funding cycles, policy signals and institutional backstops that allowed organisations to plan, adapt and recover.
What feels different now is that those buffers have thinned.
The effects of 2025 have been less a drastic change of course, and more an acceleration of the changes we had already been witnessing. Rather than a single disruption, recent years have surfaced a gradual change in ecosystem operating conditions which 2025 amplified: Funding is more uncertain, priorities are less clearly signalled, regulatory environments are less predictable. Likewise, market and venture cycles have become harder to anticipate, while political and platform-related risks (for example, issues with payment platforms, online marketplaces and other digital intermediaries) have become more pronounced for founders.
Together, these shifts have shortened planning horizons and made uncertainty a more persistent, structural condition.
Ecosystem performance depends on collective functions increasingly handled by ESOs
When entrepreneurship ecosystems perform well, it is rarely because of any single programme or intervention. This has always been true. An ecosystem’s performance depends on collective functions such as coordination across founders, funders and support organisations; trust and legitimacy between actors; shared standards around venture quality and investment readiness; effective information flows; and a collective voice to engage governments, regulators and platforms.
These functions generate benefits that spill across organisations and actors. They are difficult to price, own or attribute to a single implementer or funder. In economic terms, they behave like collective goods: Everyone benefits from them, but no single actor can easily sustain them alone.
What the past year has shown is not the importance of these functions — that was already understood — but the extent to which they are now being absorbed and carried by ESOs.
In practice, these functions have rarely been funded as standalone activities. Instead, they have typically been sustained through long-term donor programmes, ecosystem convening platforms, intermediary organisations, and the flexibility within grants that allowed coordination, trust-building and information-sharing to take place alongside formal service delivery.
The functions themselves have not disappeared, but they have become harder to sustain in the ways they were previously supported across the ecosystem. As a result, they are becoming more concentrated within ESOs — not because this is efficient or intended, but because these organisations sit closest to entrepreneurs’ operational gaps and face high reputational and mission costs if they step away.
Many ESOs have long carried elements of this work alongside their programmes, but they are now doing so more extensively. Along with their usual activities, they act as intermediaries between founders, funders, markets and governments — interpreting unevenly applied rules, brokering credibility where formal signals are weak, and smoothing disputes where no reliable mechanisms exist.
These are not peripheral activities; they are essential to keeping entrepreneurship systems operating under sustained uncertainty. Yet this institutional role — now being held by many ESOs — is rarely named, formally mandated or priced into ESO funding.
Amplifying entrepreneurs’ collective voice is key to ecosystem maintenance
One area where this shift has become particularly visible is in how the collective voice of entrepreneurs — often channelled through ESOs — now functions within ecosystems.
Even before 2025, ESOs were increasingly drawn into policy and regulatory engagement in response to recurring issues like licensing, taxation, digital regulation and platform rules that individual entrepreneurs could not easily address alone. Donor programme requirements around “enabling environments” also codified and legitimised this work, formalising a function that was already emerging in practice.
What 2025 has changed is the optionality of this role for ESOs: Engagement with policy, regulation and platforms has shifted from an occasional intervention to an ongoing system service. This is not advocacy in the narrow sense. It is operating environment maintenance: the continuous work of keeping rules intelligible, risks manageable and feedback loops open as conditions change. This role is becoming more explicit in practice, with initiatives such as Youth Business International’s new Strategic Advocacy and Influencing for ESOs course pointing to a more deliberate focus on ESOs’ role in policy and system-level engagement.
When that work is less consistently sustained, the effects are cumulative rather than dramatic. Rules drift away from operational reality, uncertainty builds and the cost of doing business rises across the ecosystem. This work has always been difficult to fund directly, and has typically been sustained within broader programmes and more flexible funding arrangements. As those arrangements tighten, that equilibrium begins to break down, even as the need for this work grows.
Fragmentation of services as a rational response
Highly specialised, bespoke support has long been a strength of ESOs in emerging markets. That has not changed. What has changed is the feasibility of sustaining the joint work that allows specialisation to extend to the ecosystem level.
For specialisation to work across organisations, coordination is required — not as something that can be sustained through goodwill alone, but as ongoing, practical effort. Maintaining activities such as shared referral pathways between ESOs, and the handoff of relevant information to founders and funders, takes time and resources. These investments reduce friction for founders and benefit the ecosystem as a whole, but they only deliver limited (and often uncertain) returns to any single organisation.
Under tighter funding conditions, it is therefore rational for ESOs to prioritise activities with clear ownership — those that are explicitly assigned or attributable to them — and more immediate payoff in terms of results they can demonstrate. Fragmentation, in this sense, is not accidental: It is a predictable response to the incentives now in play.
As a result, the costs of this shift are surfacing at the system level: Founders face higher search costs, ESOs duplicate efforts, and knowledge travels less easily across the ecosystem as coordination across specialised services weakens.
What needs to change to build stronger entrepreneur ecosystems in LMICs
If the diagnosis above is correct, the next phase of entrepreneur ecosystem building in LMICs cannot be about adding more programmes. It needs to focus on deliberately stabilising these ecosystems — addressing the binding constraints that now determine whether markets function under uncertainty.
For ecosystem builders and ESOs, this requires a shift from “doing more” to “doing what holds” — i.e., sustaining the functions and relationships that allow ecosystems to operate.
First, ecosystem work needs to move away from building ecosystems in the abstract, and toward managing the interdependencies that determine whether markets function effectively. In emerging markets, failures do not remain local: They cascade across capital providers, regulations and markets — and the platforms and infrastructure through which they operate. The focus therefore needs to be on identifying where these failures propagate, such as procurement and compliance bottlenecks, dependence on digital platforms for payments or market access, and areas of heightened founder exposure to regulatory, platform and market risks. The aim is to contain how disruptions spread, preventing small shocks from becoming wider system failures.
Second, broad-based ecosystem coordination efforts need to be grounded in more selective, rule-bound commitments. Open-ended convening and alignment exercises — such as multi-stakeholder workshops, ecosystem mapping initiatives or donor-led coordination forums that do not result in binding commitments — are increasingly costly and fragile. What reduces uncertainty now are smaller agreements, typically agreed and implemented jointly by ESOs, funders and relevant public partners, that consolidate activity and that actors can rely on. This might include, among other strategies, procurement compacts, referral recognition rules or compliance fast tracks. These commitments help introduce greater predictability into uncertain markets, allowing business and investment activity to continue even as trust and resources thin.
Third, ecosystem builders need to ensure that, under sustained uncertainty, the actors and processes others rely on remain credible and consistent — recognising that this uncertainty impacts not just new entrepreneurial pilots or programmes, but the ability of actors to make decisions and act with confidence within the ecosystem. Ecosystems rarely fail for lack of ideas. They begin to struggle when actors can no longer reliably assess how decisions are made, who can be trusted to convene and broker, or what counts as credible within the system. That matters because ESOs’ ability to play these roles depends on being seen as consistent, independent and reliable in how they operate. When that weakens, even well-designed interventions become harder to sustain when conditions change.
Fourth, the way much ecosystem work is currently funded has not kept pace with what ecosystems now require to function. Much of this remaining funding is organised around discrete services and outputs, even as ESOs are increasingly holding together the coordination, intermediation and risk management that allow ecosystems to operate. The question is therefore not only who pays for services, but whether funding is reaching the parts of the system that need to hold as conditions change. In practice, this points toward a need for funding that supports continuity — helping to maintain market access, limit how much risk is pushed onto founders, and keep these core functions running alongside programme delivery.
Finally, the collective voice of entrepreneurs — often amplified through ESOs — is taking on a different role within ecosystems. In ecosystem work, this role was often framed primarily as advocacy, e.g., influencing rules or securing reforms. Under today’s sustained uncertainty, that framing is no longer sufficient. This work increasingly functions as part of the system’s feedback and stabilisation structure — helping to surface risks, interpret shifting conditions and reduce entrepreneurs’ exposure as policy, regulatory and platform environments evolve. Success is therefore measured less by whether an entrepreneur mobilisation or regulatory reform effort was successful, and more by how effectively ecosystems reduce entrepreneurs’ exposure to sudden shifts. This, in turn, depends on maintaining continuous channels of communication with regulators, policymakers and platform operators, so that emerging risks can be identified and managed before they become wider constraints.
In conclusion: As funding dries up and uncertainty becomes structural, entrepreneurship ecosystems increasingly rely on collective functions that are hard to finance, govern and sustain — but that are also essential to businesses’ performance. ESOs have absorbed much of this burden in practice, holding systems together informally under growing strain. The question for the coming years is not whether this work continues, but whether it remains implicit and under-funded — or becomes deliberately shaped, financed and governed as part of ecosystem infrastructure.
Authors’ note: The views expressed in this article are those of the authors and do not necessarily reflect the views of the EU Investment Climate Reform Facility.
Stephen Hunt is a senior consultant with nearly 15 years’ experience working on entrepreneurship development, inclusive economic reform and start-up ecosystems across Africa, Asia and the UK.
Nelson Okwonna is a strategy and development advisor with over 15 years’ experience delivering MSME competitiveness, access-to-finance, transaction advisory and enterprise cluster programmes across Nigeria and Africa.
Photo credit: ilkercelik
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