This persistence rarely makes the headlines. Conflict and fragility cause deep economic damage, but they rarely destroy markets. Businesses adapt, banks keep lending, investors keep looking for opportunities, and local actors often find ways to keep essential market functions running, albeit more cautiously and under great pressure.
Across more than five decades of working in complex and fragile economies, Chemonics’ experience points to a clear lesson for private sector development: start with what is still working. Rather than assuming economies need to be rebuilt from scratch, we need to identify the businesses, institutions, infrastructure and relationships that have survived, understand what is holding them back, and strengthen their ability do more. This approach also requires programmes to adapt as constraints, opportunities and market behaviours change.
Surviving is not the same as resilience
Trading through conflict is evidence of survival, but is not long-term resilience on its own. Short-term informal arrangements and temporary fixes help keep the lights on, sometimes literally, but businesses often operate on significantly constrained terms. These arrangements help preserve activity, but they don’t make businesses or the systems around them more productive, inclusive or resilient enough to withstand the next shock.
The challenge for private sector development is distinguishing between which constraints require an immediate response, and which require systemic change. Emergency support can keep a business operating today, but it cannot alone resolve weaknesses in finance, skills or the institutions around it. Private sector development programmes should be able to connect urgent support to a longer-term goal, while retaining the flexibility to adapt as conditions shift.
Moving from survival towards resilience requires focus on three priorities: building from what has survived; supporting the network, not just the business, and reducing the friction to investment. Chemonics’ experience in Yemen, Ukraine and the Democratic Republic of Congo (DRC) shows what each can look like in practice.
Build from what has survived: Yemen
In Yemen, economic activity continued despite a period of political transition, deepening instability and falling confidence in the formal financial system. Access to conventional banking was limited, yet businesses continued to operate under increasingly difficult conditions. One of those functioning services was mobile connectivity. Eight million mobile phone subscribers far outnumbered less than one million bank accounts, creating an opportunity to use existing telecommunications infrastructure to reach people outside of the reach of conventional banking.
Extending financial services through mobile networks required rules governing how branchless banking and electronic money could operate. Chemonics worked with the Central Bank of Yemen and other market actors to develop the policy framework and providing technical and legal support and training. That work contributed to the Central Bank’s issuance of revised branchless banking regulations. Rather than creating new systems, this work built on existing financial and telecommunications infrastructure to increase financial inclusion
In this example, mobile connectivity created an opportunity, but policy and institutional capacity were also needed to make the most of it. It means recognising where functioning assets and institutions create an opportunity for recovery, then addressing the constraints preventing them from doing more. These opportunities are difficult to know in advance, which is why private sector development programmes need the flexibility to recognise and respond as they emerge.
Support the network, not just the business: Ukraine
A business can only be as resilient as the system around it. Its ability to operate depends on a network of workers, suppliers, financial institutions, logistics providers, public authorities and customers.
Russia’s invasion on Ukraine created multiple, rapidly changing pressures for local businesses. Partnership Fund for a Resilient Ukraine (PFRU) provided direct support to frontline Nova Poshta franchises, including supplying critical infrastructure, like generators, solar equipment and IT hardware, to maintain essential services. Keeping Nova Poshta operating does more than sustain one business, it preserves a piece of critical infrastructure that many other businesses and local people rely on and helps the wider economy continue to function through disruption.
Longer-term resilience depends on strengthening the wider system and putting into place structural policy support. PFRU worked with local communities, hromadas, and regional institutions to strengthen SME engagement, local economic development planning and connections to national programmes, helping local businesses better understand constraints and connect firms to available support. Through five local business support organisations, around 500 MSMEs received training and services such as legal and tax advice, and access to capital and national programmes. Workforce interventions addressed skills and employment constraints. Evidence from this work helped inform policy analysis for the Ministry of Economy, creating a route for the challenges faced by local businesses to influence national policy discussions.
At the same time, Chemonics was also partnering with local organisations, international suppliers, and finance providers to address financing constraints impacting the agriculture and food processing sector. When conventional lending contracted, farmers needed support to purchase essential inputs and keep operational. Chemonics developed blended finance mechanisms that shared risk and enabled farmers to purchase inputs on credit, with more flexible repayment arrangements. Rather than replacing existing lenders or suppliers, Chemonics worked with existing market actors so they could continue serving businesses that might otherwise have been excluded. This approach proved successful when adapted to machinery and engineering, textiles, furniture, construction, logistics, technology, and a variety of other sectors. This helped sustain economic activity while preserving the relationships and capabilities businesses would need for longer-term recovery.
The experience in Ukraine shows why resilience needs to look beyond the immediate needs of individual businesses to the system around it. In fragile settings, businesses require rapid response to solve today’s problem but long term resilience needs finance to flow, workers to have the right skills, local institutions being able to function and national policy addressing the constraints businesses face.
Reduce the friction to investment: DRC
Investor interest alone doesn’t remove the barriers to investment. Conflict and fragility do not necessarily eliminate investor appetite, but in the DRC, potential investors face incomplete market information and uncertainty on businesses’ investment readiness that make opportunities more difficult to assess and price. The additional time and cost to originate, due diligence and structure transactions create further barriers to completing a deal.
In the DRC, Chemonics reduced the friction transaction by transaction. It screened businesses against defined investment criteria, identified organisational and financial gaps and helped promising firms become opportunities that investors could realistically assess. Support was tailored to what was preventing each transaction from progressing, from strengthening financial models and investment memoranda to addressing regulatory or due-diligence requirements. In one example, the programme developed detailed tariff structures, coordinated with energy regulators and helped secure the regulatory approval required for a development finance institution to engage. By 2024, the programme had facilitated 15 transactions and over $30 million in investment.
Shortage of capital and perceived risk is only part of the challenge in unlocking investment in complex settings. An investor may be interested and an opportunity commercially viable, yet a transaction may not happen if the time, information and cost required to assess and structure is too high. Effective investment facilitation can not only reduce risk, but also lower the friction that can prevent available capital from reaching a viable business.
From survival to a stronger starting point
These examples show that survival can provide a foundation for resilience, but it is not the same thing. Markets under pressure adapt, fragment and reform but the test is what endures. Can local actors continue performing essential functions, can businesses access finances, skills and services needed, and can the system survive the next shock?
Programmes need to adapt too, as the constraints identified at design may not be the same six months later. Effective programmes use live evidence and relationships on the ground to understand what is changing and decide what to continue, change or stop and then redirect support accordingly.
This means looking beyond the immediate needs of individual businesses to the system around them. Businesses need to keep operating, but long-term resilience also depends on the wider system around them. Access to finance and skills, enabling polices, functioning institutions, reliable information and commercial relationships that markets depend on need to endure. Working through and strengthening local actors help to ensure that external support builds lasting capability rather than displace it.
When this works, the results compound and there is a stronger starting point for recovery. If support keeps businesses productive, retains jobs and skills, preserves institutional capabilities and relationships, and connects investors to opportunities, when conditions improve, recovery can begin, not from zero, but from an existing and more resilient base.
Fragile economies do not wait for stability, and neither should private sector development. For those funding and designing programmes, the test is not simply whether support keeps a business operating today, but whether it strengthens the businesses, institutions and networks that can carry recovery forward, while retaining the flexibility to change course when the constraints change.
