From Risk to Growth: How a Plateau Bank Strengthened Agricultural Lending
When Alexander Tampi, Managing Director and CEO of Light Microfinance Bank (MFB) in Jos, Plateau State, looks back on the bank’s journey in agricultural lending, he began with hesitation.
“In the past, agriculture was important to us, but it was also our biggest concern.We were lending to farmers, but not always in a way that truly reflected how farming works.” he recalls.
Like many microfinance institutions, Light MFB once offered a standard agricultural loan product to a highly diverse clientele. The structure rarely accounted for differences in value chains, production cycles, or local climatic conditions. At the same time, many farmers lacked structured financial planning skills, making repayment patterns difficult to predict. Agriculture was therefore perceived as a high-risk segment, limiting the bank’s enthusiasm to expand in a sector that is central to Plateau State’s economy.
The collaboration with the German funded project Promotion of Agricultural Finance for Agri-Based Enterprises in Rural Areas (GP AgFin), implemented by GIZ on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), marked a strategic turning point. Through the Agricultural Value Chain Finance and Product Development training, the bank began rethinking its approach from the ground up.
Rather than designing products around internal banking routines, Light MFB started designing them around farmers’ realities.
Specialised loan products were developed for specific value chains, including an Irish potato loan tailored to the distinct climatic zones and harvest cycles across Plateau State. A Business Model Analysis for Irish potato production informed the product design and supported the bank’s structured expansion into this agrarian segment.
A decisive innovation was the integration of the Farmer Financial Cycle (FFC) into the bank’s agricultural lending policy. Access to finance is now linked to the completion of FFC training, with trained clients benefiting from more favourable loan conditions. Through a Training-of-Trainers approach, bank staff were capacitated to deliver financial literacy modules directly to farmers. By strengthening budgeting, record-keeping, and cash-flow planning skills, the FFC evolved into a practical de-risking instrument for the institution.
As the bank refined its agricultural products, it also recognised the need to improve efficiency and outreach. With technical guidance and targeted capacity building by GP AgFin, Light MFB accelerated its digitalisation journey, streamlining internal loan processes and introducing digital channels that made transactions and repayments easier for clients, including in rural areas.
Digital tools reduced paperwork, improved turnaround times, and strengthened loan monitoring. They also enabled customers to access services and repay loans more conveniently, reinforcing portfolio quality and operational sustainability. Digitalisation thus became an important enabler of scale – supporting the bank’s transition from cautious agricultural lending to structured and growth-oriented agribusiness financing.
Together, these reforms – from tailored product design to strengthened borrower capacity and digital process improvements – fundamentally changed the bank’s agricultural portfolio. The results are tangible. Between 2021 and 2025, Light MFB increased its agricultural loan portfolio from ₦600 million to over ₦1.7 billion. Agriculture now accounts for more than half of the bank’s total lending. At the same time, portfolio quality improved significantly: the Portfolio at Risk declined from 18.81% in 2021 to a single-digit 7.14% by December 2025. The number of active borrowing clients nearly doubled. After a GP AgFin training on inclusive finance strategies, outreach to women and youth also expanded through partnerships with community and church networks, reflecting a deliberate strategy to deliver more inclusive financial services.
Today, agriculture is no longer viewed primarily as a risk segment within the bank. It has become a structured, knowledge-based business area with clear growth potential. By institutionalising proven methodologies and aligning financial products with agricultural cycles, Light MFB demonstrates how targeted capacity building and product innovation can strengthen both financial performance and rural economic resilience.
The transformation is visible not only in the bank’s balance sheet, but also in the confidence of farmers who now approach the institution with clearer business plans and a stronger understanding of their own financial cycles.
Another story on how farmers benefit from tailored financial services: story of Lydia, a farmer from South-West of Nigeria.
Author: Ritter Rose