Facing the future: Law in a globalized economy

Ogunsakin Mustapha
17 Min Read
Late Dr Herbert Wigwe

By Dr Herbert Wigwe

The current era of globalization should not have come as a surprise to anyone. It did not happen overnight. In fact, the signs began to point in this direction 263 years ago to be precise.

In 1760, Europe was undergoing many changes but the change relevant to my topic today is the beginning of the industrial revolution that set us on the path towards achieving a worldwide economy.

How did this happen so quickly? 263 years is not a very long time to go from subsisting on a farm and bartering with others for what we couldn’t produce ourselves to modern life today. Advances in transport and telecommunications had a huge impact. With increasing trade and communication, more and more companies began extending their reach beyond their own nation.

Simultaneously, over the course of the 20th century, capitalism preserved its momentum, by exposing the ordinary person through advertising, to an enticing array of products and marketing became a thing to manage.

The consumer was created with an unquenchable thirst for more stuff. For manufacturing, the availability of the most basic communication technologies enabled corporations to establish production facilities globally, helping them to significantly reduce costs.

Later, the shift to digital in manufacturing impacted the way companies were able to communicate with each other. Worldwide locations meant access to new markets as well as shortening supply chains. Keeping manufacturing and production flexible and incorporating automated technologies cut production times and allowed companies to respond faster, increasing their competitive advantage.

Therefore, for 263 years industrialization opened up the world for international business. From this time on, the world economy began to integrate, and regions became more dependent on each other. Yet, despite these exciting few hundred years of development and opportunity, for people like you and me Globalization has created a highly complex world.

The theme of your conference this week is similar to a theme which many conferences this year, and I suspect, for years to come, will tackle. You are asking the important question, “What are the implications for the Law in a Globalized Economy? ”Isn’t that another way of saying, “are the laws that existed 263 years ago still valid today?”OR “has the law kept up with the light year progress of technology and its resultant international opportunities for business transactions? I think we would all say, “probably not.”

There are many who think the US constitution, signed 236 years ago, is outdated. The Statute of Marlborough was passed by the Parliament of England during the reign of Henry III in 1267. These laws comprised 29 chapters, of which four are the oldest piece of statute law in the United Kingdom still in force in 2023.

And what of the billions of international transactions occurring daily across borders in our world that 263 years ago were not even thought of? The challenge for the law is to stay relevant in a remarkably fast-changing world. And your challenge, is to modify or replace laws that no longer serve whilst operating in a legal system not known for being nimble. Your task, as lawyers, is indeed a mammoth one.

There is not a single industry unaffected by globalization and there is not a single industry not grappling with the same challenges. We in banking and finance, constantly ask the same question. We ask, “what are the implications for banking in a Globalized Economy?”

For banks, a globalized economy opens new market opportunities. Banks can expand their customer base across borders and diversify their revenue streams, thereby reduce reliance on specific domestic markets.

Globalization fosters increased cross-border transactions, trade, and investment flows. Banks can tap into international capital markets for funding and expansion. Coupled with technological advancements, globalization has accelerated digital transformation in banking. 

However, the challenges include navigation of complex regulations, and compliance with international standards. The interconnectedness of global financial systems increases the potential for systemic risks and financial contagion.

The speed of technological change and industrial globalization are not isolated phenomena. All dimensions are affected, including economic, political, social, and cultural aspects. We are all now living in a completely globalized world, and we are seeking new mechanisms and values to deal with this new world.

Our new reality is global interconnectivity and an interdependence of countries, economies, cultures, and societies worldwide. Let me touch on each of these.

Economically, the integration of national economies into a global network is characterized by the free flow of goods, capital, and labor across borders, facilitated by trade liberalization, the establishment of global corporations, and the growth of global financial markets.

Politically, globalization has led to increased cooperation and intergovernmental relations. International institutions like the United Nations, World Trade Organization, and the International Monetary Fund, to name only a few, play pivotal roles in promoting global governance, setting standards and resolving disputes between nations. And as with most things, Globalization brings advantages and challenges. On the positive side, it has facilitated economic growth, increased access to goods and services, and fostered innovation and technological advancements. It has opened up opportunities for international trade and investment, creating jobs and raising living standards in many parts of the world.

It has enabled the sharing of knowledge, expertise, and best practices across borders, leading to advancements in various fields. It has facilitated the resolution of global challenges  such as climate change, terrorism, and pandemics through collaborative efforts.

Socially and culturally, globalization has brought people from diverse backgrounds closer, facilitating the exchange of ideas, values, and cultural practices.  However, globalization has also posed challenges and risks.

Dr Herbert Wigwe

Economic globalization has led to income inequalities and disparities between nations, with some regions benefiting more than others. It has contributed to the outsourcing of jobs, the erosion of domestic industries, and the concentration of economic power in the hands of multinational corporations.

It has raised concerns about environmental degradation, exploitation of resources, and the impact on local communities and cultures. And of course, the increase in international trade has also created a host of opportunities for illegal and shady practices.

The legal implications for a global world are vast and I would like to comment on a number of these through the eyes of Access Bank.

Many of you will know that Access Bank started as a small national institution. Our path to becoming the international powerhouse we are today means we expanded our operations into multiple jurisdictions, all with different regulatory frameworks.

Let me go through a sample of the legal challenges we faced. Each country we enter has its own banking regulations, licensing requirements, and compliance standards. As we expanded, it became critical that we navigate the complex web of regulatory requirements and ensure compliance with multiple jurisdictions. It was necessary for us to understand and adhere to anti-money laundering laws, customer due diligence requirements, capital adequacy regulations, data protection laws, and consumer protection regulations, among others.

As a global banking institution, our business involves billions of cross-border transactions, such as international transfers, foreign currency exchanges, and trade finance. It is critical that we comply with laws governing these transactions, such as foreign exchange regulations, international trade laws, and sanctions regimes. We constantly navigate the intricacies of cross-border regulations.

Operating globally means dealing with different legal systems, contractual laws, and dispute resolution mechanisms. We must be well-versed in the legal nuances of each jurisdiction we operate in and ensure contracts, agreements, and practices align with local laws. Global banks handle vast amounts of sensitive customer data. Today we have over 55 million customers and the data and information that come with that number is phenomenal. We are required to comply with data protection and privacy laws in each jurisdiction to safeguard customer information and maintain regulatory compliance.

A globalized banking environment means regulatory coordination and cooperation among jurisdictions are crucial. Banks can face challenges in managing regulatory expectations and coordinating compliance efforts across multiple jurisdictions. Developing effective relationships with regulatory authorities and staying updated with global regulatory changes is essential for successful expansion.

Banks going global must address cybersecurity risks and comply with evolving technology regulations. Protecting customer information, preventing data breaches, and implementing robust cybersecurity measures are critical. We must navigate regulations related to

  • electronic banking, 
  • online transactions, 
  • digital identity, 
  • and electronic signatures, 

ensuring compliance with local laws that govern technology use in the financial sector. Banks are constantly at risk of being used for money laundering, terrorism financing, and other financial crimes.

Global banks must have strong AML and financial crime prevention frameworks in place, including robust Know Your Customer procedures, transaction monitoring systems, and reporting mechanisms. Adhering to AML laws across jurisdictions is crucial to mitigate legal and reputational risks.

Banks operating globally may encounter disputes with customers, counterparties, or regulatory authorities across borders. Dealing with cross-border disputes involves understanding international dispute resolution mechanisms, and navigating the legal complexities that arise from differences in legal systems, jurisdictional rules, and enforcement of judgments.

It’s enough to make your head spin, isn’t it? Needless to say, addressing these legal challenges requires comprehensive legal expertise, a strong compliance culture, and effective risk management strategies.

At Access Bank, we dedicate resources to understanding and complying with the legal and regulatory requirements of each jurisdiction we operate in and work closely with legal and compliance professionals to ensure adherence to international standards and best practices. In this era of rapid change and increasing complexity, your roles as lawyers extend far beyond traditional boundaries.

As well as the examples I have given that affect bankers, you must also understand the economic forces that drive globalization, including the impact of technological innovations, evolving business models, and shifting market dynamics.

We all have a responsibility to leverage our legal expertise and engage with key stakeholders, governments, international organizations, businesses, and civil society to shape the legal frameworks that govern the globalized economy.

By fostering collaboration, promoting legal certainty, and advocating for justice and fairness, we can ensure that the rule of law remains the cornerstone of a sustainable and inclusive globalized economy.

So what does all this mean for the future role of the law in a globalized economy? Obviously It means a lot!

In a globalized economy, few, if any, areas of the law are not affected. With diverse legal systems in each country, the standardization of laws are imperative to facilitate international trade and investment. If we are to encourage engagement in cross-border trade and investment a globalized economy needs legal systems that offer certainty and predictability to businesses.

Parties need to know they can rely on the law to resolve cross-border disputes and protect their rights, therefore robust legal frameworks and effective enforcement mechanisms are needed. In a globalized economy driven by innovation and technology, protecting intellectual property rights is crucial.

The harmonization of IP laws and effective enforcement mechanisms are essential to combat infringement and piracy, providing confidence for the exchange of ideas and knowledge across borders.

The digital age has introduced new challenges concerning data privacy and cybersecurity. Laws and regulations that address data protection, privacy rights, and cybersecurity are essential to build trust among individuals and businesses engaging in cross-border data transfers.

Legal frameworks that encourage corporate social responsibility, environmental protection, and ethical business practices are needed to promote sustainable development and long-term economic viability. Laws and regulations that address issues such as

  • climate change, 
  • human rights, 
  • labor standards, 
  • and anti-corruption 

play a crucial role in shaping the behavior of businesses operating globally. In summary, the key imperatives of the law in a globalized economy are many.

I am proud to say that recently, I completed my Master’s degree in law from the University of London.  I will be honest with you, and I’m certain you will all relate, the program was extremely exhausting. There were definitely times when I wished I never started!  But today, I am glad I did. The program provided me with a deeper insight into the complexities of law in a globalized economy.

As a banker, who has led the expansion of an institution across Africa, Asia, Europe, and the Middle East, I have witnessed firsthand, the impact of globalization on businesses and economies across continents.

I have seen how legal systems must adapt to accommodate the rapid pace of technological advancements, the challenges of cross-border transactions, and the complexities of international regulations. Globalization is our new reality. But it really shouldn’t be a surprise to any of us.

The signs began 263 years ago. The rule of law has been traced to exist as far back as 4th century BC in Athens. 

In 2023, to help us tackle the threats we face as we negotiate a successful future in a global world, to help us seize the opportunities as we build a safer, just, and more sustainable world, the rule of law is still the foundation we desperately need and rely on.

Thank you!

Dr Wigwe the Group CEO, Access Holdings Plc delivered this keynote address today Monday June 19, 2023 at the NBA, Lagos Branch Law Week.

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