They should just close down countries without active managers until those countries have at least one user.
In response to this, there is one issue. The issue is that once the new user becomes uninterested in the game then it would revert back to a "closed down country", making the game less smooth. For example, Saudi Arabia currently have no users which forces their U21 team to forfeit all their games. Now say they were a "closed down country" at the start of the season, but a user plays the game mid season. It would be a disadvantage to them as other nations have already played games and had the chance of winning them. It would also affect the strategic planning of managers at the start of the season as a new team would have to be considered due to this suggestion, whereby a "closed down country" suddenly joins the tournament because of a new user.
My suggestion to this is to have players in bot teams fill in the positions of a team so that they at least have the chance to compete.
A suggestion that I'd like to add since were talking about micronation teams is to have a micronation U21 world tournament (in place of our continental tournament). As the NZ U21 coach, I dont see us winning the Asian U21 tournament anytime soon because of the bigger nations such as China, Taiwan and Australia. Thus, a micronation U21 world tournament would allow these nations to compete against nations that are on their level, as well as give them the chance to win some trophies.