When the 2008 global financial crisis struck, its effects were swift and far-reaching.
Major financial institutions—banks, insurers, and investment firms—suffered massive losses, owing to regulatory void. At the core of this were complex financial instruments that were created and traded with little oversight, as well as weak risk management practices. The result: A systemic collapse that reverberated across the globe.
Fast forward to today, and it seems the hard-earned lessons of that crisis have been forgotten. The current US administration has renewed calls for deregulation, arguing that excessive rules stifle innovation, growth, and economic dynamism.
This stance has piqued interest among various stakeholders and consequently reignited a global debate: should we embrace deregulation or resist it?
The answer isn’t binary.
Around the world, policymakers and regulators are responding in varied ways. The European Union, known for its robust regulatory frameworks, is exploring strategic simplification—streamlining rules without compromising stability.
Meanwhile, the Governor of the Central Bank of France has warned that broad deregulation could heighten the risk of another financial crisis, though he too acknowledges the value of thoughtful reform.
In Africa, while the immediate impact of US policy shifts has been limited, African leaders are increasingly engaging in proactive discussions about how best to respond.
A positive move, it signals increased recognition that while Africa must chart its own course, it cannot ignore the ripple effects of US policy, especially given America’s significant role in the global financial system.
For instance, looking at the supremacy of the dollar, the US dollar remains the dominant currency in international trade, with over half of cross-border payments routed through US financial infrastructure.
This structural dependency means that any regulatory changes in the US that affect global payment systems or financial markets can have far-reaching consequences, as evidenced by the 2008 crisis.
Yet, while global interdependence is real, so too is the need for national sovereignty in regulatory design. Each country has its own economic realities, development priorities, and institutional capacities and regulatory frameworks must be tailored to these unique contexts to ensure financial stability, foster innovation, and support inclusive growth.
Take climate risk as an example. Many African nations are still in the early stages of industrialisation and need to harness their natural resources to improve livelihoods. As such, imposing the same stringent climate regulations used in developed economies could hinder progress. It is against this backdrop that the concept of a “Just Transition” has gained traction.
This is also true for Africa’s financial services sector, where regulatory maturity varies widely. Some countries have advanced, adaptive frameworks that support innovation and market integrity, while others lag, resulting in reactive policymaking, unclear guidance, and barriers to financial inclusion.
In this case, it could be argued that introducing deregulation in immature economies could exacerbate existing weaknesses while for mature economies targeted deregulation can enhance efficiency and competitiveness.
Ultimately, deregulation is neither inherently good nor bad. Its impact depends on how, where, and why it is pursued. For some countries, greater flexibility and simplification may unlock growth. For others, stronger, risk-based oversight is essential to safeguard stability.
The challenge for regulators and policymakers is to strike the right balance. This means reviewing existing frameworks, identifying areas for reform, and ensuring that regulation is fit for purpose—responsive to innovation, supportive of inclusion, and resilient to shocks. As global dynamics evolve, Africa and other regions must remain vigilant.
Sovereignty in regulatory design is not just a right—it’s a necessity. But so is awareness of the broader forces at play.
The objective, therefore, should not be to mimic or reject US policy wholesale, but to craft frameworks that serve local needs while remaining attuned to global realities.
The writer is Eastern Region Head of Compliance, Stanbic Bank.
