Details

Until 2007, both service providers and the consumers of public and private services in the Kingdom of Saudi Arabia (KSA) faced a daunting task paying their bills. The traditional, cash-based bill payment method for services like water, electricity, passport, and telecommunication was an equally heavy burden on both the government and the public. The obsolete payment system was costing the government a loss of around 10 to 15 percent of its overall revenues due to human errors, fraud, corruption; it also led to significant delays in the processing of payments and thus frequent interruption of basic

services. Customers incurred a substantial loss of time as they had to wait for hours in long queues at government agencies providing services or at banks collecting payments on behalf of public and private service providers. According to a study conducted by the Saudi Arabian Monetary Agency (SAMA1, the Saudi central bank of the Kingdom of Saudi Arabia), customers wasted a total of 12-15 million man-hours annually in this process.

The situation was therefore, a cause of significant financial loss for the government and of continuous frustration and resentment for the public. Since the 1980s, the government initiated several attempts to fix the system, but all failed to achieve their desired outcomes. In 2007, a team of technocrats at SAMA made radical changes in the bill payment culture in the Kingdom, and substantially transformed it from being chronically dysfunctional into one of the best operating models in the region. Mohammed Al-Jasser (the governor of SAMA2) and Abdulmalik Al-Sheikh3 (head of SAMA’s Banking Technology) were in charge of the government’s team to introduce a government-led innovation in service delivery.

This case study describes the process of reforming the process of bill payment in KSA, and how the SADAD system was conceived and implemented. It starts by providing an introduction to the political, economic and e-government contexts surrounding the payment system in the Kingdom. Then the case proceeds to identify the roots of the problems associated with the bill payment; it outlines previous solutions that were proposed by the government but which failed to achieve the government’s goals. The creation of SADAD and the steps taken to implement it are then presented in detail. The case ends with a short conclusion and lessons learned.