SECURITY CHALLENGES AND SUSTAINABILITY OF SMALL AND MEDIUM ENTERPRISES IN ANAMBRA STATE, NIGERIA

Abstract

This study investigated the effect of security challenges on the sustainability of Small and Medium Enterprises (SMEs) in Anambra State, Nigeria, using business longevity as a proxy for sustainability. A total of 250 respondents were drawn from the major economic hubs of the State. Using a Vector Error Correction (VEC) regression model, the study identified the short and long-term relationships between security challenges (crime rates, armed robbery, kidnapping, political instability, communal conflicts, lack of effective law enforcement, and cybersecurity threats) and business sustainability proxied by business longevity. The VEC model results indicate that all seven security challenges significantly affect business longevity of SMEs in both the short and long term. Crime rates (β = -0.342, p < 0.01), armed robbery (β = -0.268, p < 0.05), Kidnapping (β = -0.299, p < 0.05), communal conflicts (β = -0.214, p < 0.05) and lack of effective law enforcement (β = -0.287, p < 0.01) all exhibited a negative and statistically significant effect on business longevity, while political instability (β = -0.135, p < 0.10) showed a weaker but still negative effect on business longevity. Cybersecurity threat (β = -0.172, p < 0.05) proved an important factor especially for businesses engaging in digital operations. Error correction term (ECT) of -0.692 (p < 0.01) indicated that approximately 69.2% of the previous year's disequilibrium was corrected within the current year, showing the need to address security challenges to ensure the long-term sustainability of SMEs. The study , as a result, made recommendations for improving law enforcement, political stability, and digital security measures.