The objective of this paper is to analyze the security aspects of Internet service delivery to SMEs, and the policy and regulatory implications of cyber-security in the “fragmented” structural environment in a developing economy. The ubiquitous interconnectivity provides the primary conduit for exploiting vulnerabilities on a widespread basis. Small & Medium Enterprises (SMEs) sector is crucial to attaining long term and sustainable economic growth in developing economies. The ubiquitous Internet permeates every facet of human endeavor, not only to the technologically developed countries, but also increasingly prevalent in developing countries. Whereas some argue that the pace of the growth of the cyberspace should continue without governmental restrictions, others, from another perspective, argue that these interconnectivities should be actively regulated through domestic and international laws. The latter thinks that non-regulation of the cyberspace could have grave cyber-security concerns and that is likely to inhibit the current growth and development gains. This research analyzed the various policies and frameworks in respect of secured interconnectivity, adherence to governance, risk and compliance issues in a best-practice fashion. Inferential analysis reveals that there are some cyber-security implications on SMEs in a fragmented policy and regulatory environment. The findings are discussed and interpreted to provide highlights of these policy and regulatory challenges.