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Under the leadership of the Supreme Being Olurun or Olodumare, who created the universe, Obatala is the god who created humanity and the world in the Yoruba religion in Nigeria. Obatala, who is also known as Oxalâ, Orixalâ, and Orishanla, is the oldest of all Orishas. Some of Obatala's praise names include Oluwa Aiye (Lord of the Earth), Alabalase (he who has divine authority), Baba Arugbo (old man), Alamo Re Re (the one who turns blood into children), O Ho Ho (the father of laughter), and Baba Araye (father of humanity).

Obatala descended from Heaven on a chain to mold the first humans and now molds every child in the womb, according to the Yoruba. Obatala created the world and humanity, whereas Olurun breathed life into humanity. Obatala is therefore considered the father of humanity and owner of all the heads where human souls reside. Other Orishas may claim individuals, but Obatala still owns the head or soul of individuals until those individuals are initiated into the priesthood of that Orisha.

One day, as Obatala was creating humanity, he started drinking too much palm wine, the Yoruba creation story goes. As a result, some of the people he created became physically or mentally handicapped. Olurun chastised and forbade him from drinking palm wine while doing his work. Full of remorse and shame, Obatala vowed to be the deity or father of people who have defects, as they are called “eni orisa” or “people of Obatala.” Making fun of these people became totally prohibited. Obatala is also considered the father of albino people. Furthermore, Obatala can never be worshipped by anyone with palm wine, oil, or salt. Also, palm wine is prohibited among his worshippers. However, they can ingest palm oil and salt.

Obatala formed the first humans out of clay in Ilé-Ifè, the home of the Yoruba, where the world originated, according to Yoruba cosmology. Soon after, a dynamic personality and leader emerged on the scene by the name of Odudua. There are at least two stories about where Odudua came from. One story says that when Obatala got tired of the hard work of making people and from drinking palm wine, Odudua stepped in and finished the task. Another story has it that Odudua came to Ilé-Ifè from the east.

After Odudua emerged and Ilé-Ifè had an adequate amount of people, Odudua instructed that a constitution needed to be drafted and a government to be created with Odudua as the leader. Obatala challenged this order because of his special role from Olodumare of creating the Earth that made him proud, and tradition said that he was stronger than Odudua, who is regularly identified as his brother. Obatala felt that he should at least share the leadership and at the most have a higher position than Odudua. A struggle for leadership ensued between the two spiritual entities. They both sought out allies—Obatala teamed with Obawinni and Odudua partnered with Obameri. Because Odudua and his allies eventually won the battle, he became the leader and the first king of the Ilé-Ifè. Subsequently, all the kingdoms of the Yoruba have traced their lineage back to Odudua, as the first kings of all of their kingdoms are regarded as the sons of Odudua. According to some stories, after Obatala was driven from Ilé-Ifè after being defeated, he went to live in exile with his ally, Obawinni. Obatala still challenged Odudua's kingship through raids at night, legend has it, with the Igbo who had masks that made them look like evil spirits. Peace was eventually restored when Moremi, a woman in Ilé-Ifè, discovered the secret of the masks.

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