Understanding The Different Ways People Come Into Wealth

I have a few Whatsapp contacts who flood me with regular broadcast messages, from how BBNaija was making millions from SMS voting to the new tactics armed robbers use. The latest I have been getting is about how in the 1960s and 1970s the people at the helm of affairs in Nigeria were youths in their 20s and 30s but now people of that age group are still stuck in their father's house living off their parents.

There are many ways people come into wealth and most of them can be classified into two main categories:

1. Rent (being a gatekeeper or by inheritance) and
2. Being innovative (ahead of your time)

Our political system is a clear example of how people become wealthy by rent. They use their office to extract value from others; they collect rent like the Agbero at the bus-stop. It is a no brainer system. Just get yourself into a position where you can abuse your office to get others to drop something for you. I hear some police officers and LASTMA officials make their entire monthly salary in one day of extracting money from people. 

If you are born into a rich family where your parents have left you income generating properties and assets, you benefit from rent. Earning money from something you did not sweat for. It is not a bad thing and it is the very dream we all have for our children.

If you are close to government and can get juicy deals that give you nice cuts, like supply the state government ministries diesel, you are again benefiting from rent. Using a closed advantage to get be the gatekeeper/middleman between the diesel sellers and government houses.

The unique thing about rent wealth is that it is limited and often non-merit based. So it is not the type you expect everyone to pursue. There can only be one President of Nigeria, only few people are born into a wealthy family, only few people can work themselves into every government contract and, hopefully, not everyone should try to abuse their office for illicit gain.

The other main path to wealth is by pure merit and being very innovative, I call it being ahead of your time. It is when you position yourself above the competition and create avenues to wealth that is purely merit based. Like growing your professional career, starting a genuine business (not a shell one to launder money) and selling, without any undue advantage, services and products. This is the path available to everyone and also a much tougher path. You will have to do what other people are not willing to do -- either because it is too difficult or too risky. And that is why I call it being ahead of your time. You have to make moves that position you for the future, things not obvious to other people in the present time.

The second path is what many of the bank billionaires followed in the 1990s when they saw the future others weren't seeing and took the risk of starting a bank. Many of the banks flourishing now were founded in the late 1980s and early 1990s. Access bank, 1989. Diamond bank, 1990, Ecobank, 1986. Fidelity bank, 1988. FCMB, 1982. GTBank, 1990. Heritage bank, 1989. Stanbic IBTC, 1989. Zenith Bank, 1990. The exceptions are First Bank, Union bank, Standard Chartered Bank and UBA.

Other notable example of the second path is the Nigerian musicians of the late 1990s and early 2000s. They positioned themselves for the Nigerian market shift from both foreign music and live band music. The rise of the Plantashun Boiz, Daddy Showkey, Baba Fryo, Idris Abdulkareem, Tony Tetuila, Sound Sultan and the Kennis Music label. 

The hallmark of the second path is that you see people doing what is difficult and doesn't look very rewarding, but they keep at and then they encounter a breakthrough -- either they create a product that captures the market or their industry explodes skyrocketing the incumbents. And that is the type of wealth accumulation you would want everyone to pursue -- one gotten from pure merit and diligence.

So when you compare people who suddenly went from being soldiers to political leaders because of exceptional circumstances, many of whom never planned or expected the uplift, with people who are on the hard labour path to wealth, you are doing an apple to coconut comparison. All the people who were suddenly thrust into political power due to the 1960s and 1970s turmoil cannot replicate the same if they were reborn today. If one takes out the unplanned (chance events) they will just be regular soldiers like the they should have been. But if you take a proper business man who worked hard for his money and strip him of everything, he can replicate his success. If you take 2face and those other musicians who worked their own ways to stardom and have them reborn in another generation penniless, they will blossom again.

Which path is better?

It is the path more easily accessible to you. If I have a billionaire father or very politically connected parents I won't disown them and try to start my wealth building from scratch. I will gladly use the rent income/access they afford me and try to multiply it. But if I have no one to leech on then I better roll up my sleeves and get to work, it would be a hard uphill task and the earlier the better.