Malala Yousafzai has drawn global attention to the Taliban’s attacks on education. But education in Pakistan may have an even worse enemy: the government itself. Kevin Watkins, former director of the Education for All Global Monitoring Report and now director of the Overseas Development Institute, says Pakistan’s failure to tax the wealthy elite is directly linked to its failure to spend enough on education.

Malala Yousafzai, the 16-year-old Pakistani schoolgirl who was shot in the head by a Taliban gunman for the “crime” of going to school, gave a speech to the United Nations Youth Assembly last week that was a defiant, inspiring and passionate defence of the right to education. “Let us pick up our books and our pens,” she said. “They are our most powerful weapons. One child, one teacher, one book and one pen can change the world.”

Instead of silencing a critic, the Taliban have created an icon and a global champion for girls’ education. With 31 million girls still out of school, we need one. Malala’s speech was a challenge to the Western governments who applauded her speech but have been cutting back on aid for education. But it was an even starker challenge to Pakistan’s political elite. Successive governments have failed to address an education crisis that is locking millions of children into poverty, and the country into a future of economic stagnation, mass unemployment and political instability.

The attack on Malala galvanized moderate opinion in Pakistan. Then President Asif Ali Zardari condemned the Taliban’s actions as ‘an attack on education’ and civilization. Nawaz Sharif, opposition leader at the time of the shooting and now prime minister, proudly declared Malala ‘the daughter of the nation’. In a tragicomic episode, even the Taliban has made a half-hearted effort at an apology for the shooting.

Malala’s shooting was one episode in a brutal war of attrition. Having ordered the closure of all girls’ schools in the Swat Valley, a local Taliban commander was outraged by Malala’s public condemnation of his three-pronged approach to enforcement of the edict: blowing up schools, murdering teachers and intimidating children.

There is no question that the Taliban and other militant Islamic groups represent a formidable barrier to education in Pakistan. In areas such as the North West Frontier Province and tribal areas along the border with Afghanistan, the threats against girls attending school continue. Harmful as the Taliban’s presence may be, however, the destructive force of government inertia is even greater.

To describe Pakistan as an under-performer in education would be an exercise in epic understatement. One in every four primary school age children – 5 million in total – are out of school, and around half of the children who do get into school drop out before completing grade 3. Not that being in a classroom is any guarantee of learning: after three years of schooling, a bare majority of children have mastered the grade 1 curriculum.

Behind the national data are some of the world’s deepest inequalities in education. While children from the richest 20 per cent of Pakistan’s households get almost 10 years in school, those from the poorest get two years, on average. Poor rural girls are at the bottom of the opportunity pyramid. They average less than one year of schooling.

Comparisons with regional neighbours make for painful reading. While Pakistan has hurtled down the world league table for education, Bangladesh has eliminated gender inequalities, India has dramatically expanded access to schooling, and even Nepal is leaving Pakistan in its slipstream. Today, Pakistan is a middle-income country with education indicators that compare unfavourably with those in far poorer countries, such as Ethiopia and Tanzania.

What has gone wrong? Pakistan’s education system suffers from a wider malaise. It is riddled with corruption, bureaucratic inefficiency and political infighting – and it is starved of resources. The country invests less than 2 per cent of GDP in education, one of the lowest levels in the world – and less than half the average for sub-Saharan Africa.

You don’t have to look very hard to see the symptoms of sustained under-investment. One third of the country’s schools lack toilets, clean water and decent classrooms. There are chronic shortages of textbooks. Bad governance and poor morale has produced an epidemic of teacher absenteeism. And while the state ‘guarantees’ free education, the lack of public finance leaves parents to foot the bill for schooling – and millions are too poor to pay.

It’s not all bad news. The past decade has seen a wave of education reforms. State governments in Punjab and Sindh have established education foundations that support innovative public-private partnerships. Sindh, in particular, has targeted poor rural areas by working through local non-government organizations. Local governments in the North West Frontier Province and tribal areas have worked through local communities to undercut Taliban influence. Progress has been painstakingly slow and erratic, but enrolment rates and learning levels are edging upwards.

International aid has played an important role. Donors like the World Bank and USAID have invested heavily in state-level reform programmes. Pakistan is about to become the biggest recipient of development assistance from the United Kingdom, and education will take half of the £446 budget planned for 2014.

Some wildly exaggerated claims have been made for the impact of international aid. Sir Michael Barber, a former advisor to Tony Blair and more recently special representative of the UK Department for International Development, has led an initiative in the Punjab which, he claims, put an additional 1.5 million children into school over the past three years, partly through support for an education voucher scheme. Close scrutiny suggests that Sir Michael’s data is out by a factor of four and that his flagship program has had a minimal impact. Implausible claims do not help to inform public debate.

More efficient public finances would make a much bigger difference. When it comes to tax payments, Pakistan’s elite makes Google and Starbucks look like amateurs. The tax-to-GDP ratio is less than 10 per cent, one of the lowest in the world. The reason:  tax codes have been designed minimize liabilities (for example, there is no tax on large-scale land holdings and urban properties) and maximize opportunities for tax evasion. On one estimate, the country loses in excess of $3 billion annually through tax loopholes, according to the Planning Commission – roughly double the education budget.

As a recent report by the UK’s Select Committee on Development concluded, it’s difficult to justify increased aid when Pakistan’s elite treat tax evasion as a national sport. Few politicians, including cabinet members, even trouble themselves to file tax returns. To her credit, Justine Greening, Britain’s international development minister, has how signalled a tougher stance. She has backed an aid programme aimed at increasing tax collection with a call on Nawaz Sharif’s government to raise the tax-to-GDP ratio to 15 per cent. But the prime minister himself, the fifth richest person in Pakistan (net worth $1.1 billion), has a less than stellar record on taxation.

Public expenditure patterns are wasteful and inefficient. Pakistan spends more than twice as much subsidizing loss-making industries – including the national airline – as it invests in education. It’s tough to think of a more wrong-headed sense of priorities.

There are compelling reasons for Pakistan’s leaders to read Malala’s speech at the UN – and to act on it. Education lies at the heart of the country’s greatest challenges. Today, Pakistan has one of the world’s youngest, fastest-growing and most rapidly urbanizing populations. Half the population is under 20 and the working-age population will double in the next 20 years.

If the education system equips the country’s youth with the skills they need to drive the 7 per cent economic growth needed to generate another 2-3 million jobs annually, Pakistan stands to reap a demographic dividend. Failure will see a growing stream of frustrated youth facing a future without hope in a country gripped by economic stagnation, with attendant threats to national security.

Fixing Pakistan’s education system will take political leadership at home and sustained support from aid donors. It won’t be easy. But a 16-year-old schoolgirl has shown the world the face of what Pakistan’s future could look like. Perhaps her country’s government could take a leaf out of her book and demonstrate the resolve and ambition needed to make education a right for all of Pakistan’s children.

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An abridged version of this article was published in The Independent.