The present level of unemployment in the nation is worrisome, to say the least. Graduates of tertiary institutions are roaming the streets in search of never-to-come jobs. There can be no real economic empowerment in any developing economy until certain fundamental issues have been put right. The growth and development of Small and Medium Enterprises (SMEs) present a way out of this doldrums. Aggressive efforts are needed to bring about the sustenance and survival of these SMEs paramount of which is a peaceful environment. This paper highlighted the significance of SME subsector in developing economies, challenges and prospects of SMEs in Nigeria as a developing economy in order to enhance economic empowerment by sustaining the growth and development of SMEs with a view to reducing unemployment and decisively address security challenges that has been a source of serious concern to potential foreign and indigenous investors alike, thereby setting in motion an unprecedented growth and development in this all-important sub-sector.