*Photo: Femi Otedola*
Introduction
Femi Otedola’s recently released memoir, “Making It Big: Lessons from a Life in Business*, has already climbed into Amazon’s bestseller lists. It is a story of discipline, audacity, and ambition, yet also of privilege and politics. His tale is not just about one man’s rise but about a system that rewards connections over competition, where fortunes are shaped as much by the corridors of power as by the mechanics of markets.
Oluwatobi Ojabello’s BusinessDay editorial of August 22, 2025, “The Price of Privilege in a Poor Nation, captures the paradox: Nigeria, one of the world’s “billionaire factories,” is simultaneously one of its poverty capitals. This paradox cannot be explained by laziness or lack of entrepreneurial energy. Instead, it points to something more profound: the nature of institutions.
As Nobel Laureates Professors Daron Acemoglu and James Robinson argue in their seminal book “Why Nations Fail”, prosperity and poverty are not accidents of geography or culture. They are the direct result of the incentives created by political and economic institutions. Where institutions are “inclusive,” people prosper; where they are “extractive,” wealth pools at the top while the majority languish. Nigeria, like many postcolonial states, has yet to escape the grip of extractive institutions.
This essay explores the Otedola paradox through the lens of institutional economics. It examines how privilege shapes fortunes in fragile states, why extractive leadership perpetuates poverty, and what lessons can be drawn for Nigeria’s path forward.
I. Institutions as the Engine of Prosperity or Poverty
Acemoglu and Robinson are unambiguous: “Nations fail today because their extractive economic institutions do not create the incentives needed for people to save, invest, and innovate. Instead, they allocate power and wealth narrowly, stifling growth and condemning their citizens to poverty.”
In contrast, inclusive institutions, those that provide secure property rights, level playing fields, and fair opportunities, fuel broad-based prosperity. They enable creativity, encourage innovation, and channel the energies of citizens toward productive rather than rent-seeking ends.
Nigeria’s story is one of extractive persistence. Since independence, its political economy has been defined by access rather than merit, with oil wealth entrenching patronage rather than fostering industry. In such an environment, billionaires emerge not because markets are competitive, but because they are tilted.
The Otedola case illustrates this with surgical clarity. His rise in the diesel sector coincided with deregulation reforms that dismantled one monopoly but installed new gatekeepers. As he himself acknowledges, success often came less from perfecting a product than from securing early approvals, privileged access, and the blessing of powerful patrons.
This is precisely what Acemoglu and Robinson warn about: “Extractive institutions are structured to extract resources from the many by the few, and fail to protect the property rights of the majority. They erect barriers to entry and suppress markets so that only a privileged elite can benefit.”
II. Wealth in a Sea of Poverty
The paradox of Nigerian billionaires alongside widespread poverty is not a statistical fluke. In 2023, Forbes and IMF data ranked Nigeria 17th in the world for billionaire wealth as a share of GDP, higher than the United States, Germany, or Japan. Egypt, another state with extractive tendencies, ranked even higher at 14th.
Yet cross-country data compiled in 2025 showed that nine of the world’s ten poorest nations were African, with Nigeria consistently near the bottom in human development indicators. The country has produced wealth at the top but not prosperity across society.
Why? Because extractive systems distribute wealth narrowly and socialize losses broadly. When Otedola’s $500 million diesel gamble collapsed in 2008, it was not just his fortune at risk. The Asset Management Corporation of Nigeria (AMCON) absorbed his debts, effectively transferring the burden to taxpayers and the banking system. Meanwhile, small businesses and households bore the brunt of high diesel margins, often paying up to N50 extra per litre to keep generators running in a country with failing public electricity.
Herein lies the stark contrast between inclusive and extractive leadership. In inclusive systems, institutions discipline failure. Bad bets force companies to restructure or collapse, clearing the way for new entrants. In extractive systems, failure is cushioned by political rescue, ensuring that elites retain their foothold while the public bears the bill.
III. Privilege as a Pathway, Not Just Ambition
Otedola’s memoir is candid in ways few Nigerian business accounts have been. He admits that Zenon thrived not because Nigeria “was functioning well,” but precisely because it wasn’t. Queues could be jumped. Ships could be cleared early. Rivals could be bought out with excess cash.
His story, in this sense, is less an individual indictment than a systemic revelation. It shows that in extractive settings, privilege is not incidental; it is constitutive. The ability to “make it big” is directly tied to proximity to power.
This is why, despite the brilliance of many Nigerian entrepreneurs, the broader economy remains stagnant. Innovation is discouraged when entry barriers are steep and markets are cornered. Talent migrates abroad when opportunities at home are captured by a few. As Acemoglu and Robinson write: “When the economic institutions of a nation are extractive, only a small group of individuals benefit. They gain wealth not by creating new technologies or businesses, but by expropriating and controlling existing ones.”
IV. The Fragility of Privilege
The volatility of privilege is another recurring theme in Otedola’s life. His rise was meteoric, but his crash was equally swift. Extractive systems are unstable because they tie fortunes to politics rather than productivity. A policy change, a dip in oil prices, or a shift in elite alliances can unravel empires overnight.
In Otedola’s case, his overleveraged diesel bet left him exposed, and it took state intervention to salvage his holdings. His rebound by 2013 was less a triumph of resilience than a testament to the state’s willingness to underwrite elite risk.
But what of the ordinary Nigerian? For them, there is no AMCON. A failed harvest, an unpaid salary, or a spike in fuel prices can plunge households into destitution. Extractive systems magnify inequality not just by rewarding privilege, but by insulating elites from the risks borne by everyone else.
V. Why Nations Fail: Lessons from Nigeria
Acemoglu and Robinson devote an entire chapter to “The Making of Prosperity and Poverty,” emphasizing that political choices, rather than geography or culture, determine economic outcomes. Nigeria exemplifies this thesis.
1. Inclusive institutions create prosperity by broadening opportunity. South Korea, for example, transformed itself from a war-torn agrarian economy in the 1950s to a global industrial power by investing in education, infrastructure, and open markets.
2. Extractive institutions, by contrast, concentrate wealth in narrow elites. Nigeria’s oil-fueled system has trapped it in a cycle of corruption, rent-seeking, and poverty despite its vast natural resources.
As the authors put it: “The success of a nation depends on whether its political institutions are inclusive enough to allow creative destruction, the process by which new innovations replace the old. Without it, economies stagnate, and nations fail.”
Nigeria’s reluctance to allow creative destruction is evident in sectors from oil to telecommunications. Policies often shield incumbents rather than encourage competition. Patronage networks pick winners, while ordinary citizens see rising costs without corresponding improvements in services.
VI. The Human Cost of Extractive Systems
It is easy to talk about billionaires and policy in abstract terms, but the consequences are profoundly human. High energy costs stifle small businesses that employ the majority of the workforce. Inflation erodes household incomes. Youth unemployment fuels frustration and, at times, insecurity.
While Otedola recounts paying N20 million for brand rights on the spot, millions of Nigerians struggle to pay N20,000 in school fees. The disparity is not just economic, it is institutional. Inclusive systems ensure that the gains of growth are widely shared; extractive ones entrench inequality.
VII. Can Nigeria Break the Cycle?
The pressing question is whether Nigeria can pivot from extractive to inclusive leadership. History shows that transitions are possible. Nations such as Botswana broke the extractive mold by strengthening property rights, curbing corruption, and investing diamond revenues in health and education. East Asian economies moved from oligarchic capture to broad-based development through land reforms, industrial policies, and inclusive state capacity.
Nigeria’s challenge is not a lack of talent or ambition. It is a lack of institutions that reward merit over privilege. Until institutions are reformed to broaden access, whether in finance, energy, or politics, the paradox of billionaires in a poor nation will persist.
At this juncture, let us review a few comparative case studies for global context and elucidation:
1. South Korea vs. North Korea: Same People, Different Institutions
Acemoglu and Robinson use the Korean peninsula as perhaps their most vivid illustration of the power of institutions. Both South and North Korea shared the same geography, culture, and history until 1945. Yet their fates could not be more different. South Korea embraced inclusive institutions, investing in mass education, fostering competitive markets, and creating political structures that increasingly allowed for accountability. North Korea entrenched extractive rule under a single dynasty.
As the authors note, “North Korea is one of the poorest nations in the world. South Korea is one of the richest. Geography and culture cannot explain this. Only institutions can.”
This comparison is particularly relevant for Nigeria. The question is not whether Nigerians are capable of prosperity; the diaspora already demonstrates this across the globe. The question is whether the domestic institutions enable or stifle the talent that exists.
2. Botswana vs. Sierra Leone: Managing Resources vs. Squandering Them
Africa itself provides striking contrasts. Botswana, upon discovering diamonds in the 1960s, chose a path of inclusive governance. Leaders like Seretse Khama worked to build transparent institutions, reinvest resource revenues in infrastructure and education, and maintain the rule of law. Today, Botswana is one of Africa’s most stable and prosperous countries.
Sierra Leone, by contrast, illustrates the extractive trap. Rich in diamonds, its elites used those resources to entrench patronage, fund conflict, and enrich a narrow few. The result was decades of poverty and civil war.
As Acemoglu and Robinson argue, “Natural resources are not a curse in themselves. They become a curse only when captured by extractive institutions.”
Nigeria’s oil wealth has followed the Sierra Leone path more than the Botswana one—benefiting elites while leaving basic services like electricity, health, and education underdeveloped.
3. United States vs. Latin America: Inclusive Innovation vs. Colonial Legacies
The United States built much of its prosperity on inclusive institutions that rewarded innovation. Property rights, patent laws, and competitive markets enabled inventors like Edison, Ford, and later Silicon Valley entrepreneurs to thrive. The result was sustained technological revolutions and rising living standards.
Many Latin American countries, by contrast, inherited extractive colonial systems designed to enrich elites. Land and wealth remained concentrated, and political systems limited broad participation. This explains why nations with similar or greater natural resource wealth than the U.S. often failed to achieve comparable prosperity.
For Nigeria, the lesson is clear: without inclusive systems that foster innovation and empower the majority, natural endowments or entrepreneurial brilliance will not translate into broad-based prosperity.
Conclusion
Femi Otedola’s memoir is both an inspiration and an indictment. It reveals the grit of an entrepreneur but also the grip of a system that allows fortunes to be made in ways ordinary citizens cannot replicate. Nigeria’s tragedy is not that it lacks billionaires, but that it produces wealth without prosperity.
As Acemoglu and Robinson remind us: “Nations fail not because of ignorance, but because those who control power design institutions to enrich themselves at the expense of society.”
The path forward lies not in lamenting privilege but in restructuring institutions. Nigeria must build systems where success comes not from connections but from competition, where failure disciplines the elite as much as it does the poor, and where the ladder of opportunity is not broken halfway up. Only then can the price of privilege give way to the promise of prosperity.
*_Oyewole Sarumi is the Chief Strategic Officer, LMS Consulting, and a professor of leadership and digital transformation, and writes from Lagos, Nigeria. He is also a consultant in TVET and indigenous education systems, affiliated with the Global Adaptive Apprenticeship Model (GAAM) research consortium. Tel. 234 803 304 1421, Email: leadershipmgtservice@gmail.com_