THE HUNNY SCHOOL, a private institution occupying two cramped buildings in Rawalpindi's back streets, seems a happy place. The boys and girls packed into its little classrooms look pleased to be there. Some look much older than their classmates. They have a lot of catching up to do. Many were street children whose parents could not afford to send them to school. A future of illiteracy and perhaps crime and drugs beckoned. Of the school's 900 students, over 400 are financed by the Punjab Education Foundation (PEF), a statutory body under the provincial government which in turn receives aid from donors such as Britain. It provides vouchers to pay the fees of approved schools such as Hunny, which range from 200 to 350 rupees a month. It is an attempt to tackle one of Pakistan's worst problems: the huge number of children who receive no education at all. One-tenth of the world's primary-age children who are not in school live in Pakistan - 7m of them, thanks to a net enrolment rate (after allowing for dropouts) of just 57%. According to UNICEF, the United Nations" children's agency, 30% of Pakistanis have received less than two years" education. More than half of its women have never attended school. Literacy rates are low by any standards: 57% overall, and just 33% among women in the countryside. It has not been plain sailing for Hunny. When it joined the PEF scheme two years ago it suffered an exodus of fee-paying pupils whose parents worried about their children mixing with the wrong sort, and about falling standards (justifiably at first, test results showed). And though it seems a nice place, the headmaster concedes that every single one of his teachers would leave if offered a job in a government school. Pay is better there, and teachers do not always turn up. Optimistic Pakistanis speak of their country's "demographic dividend" of a youthful population in which over two-thirds are under 30, nearly a third are under 14 and 25m are of school age (6-16). But it is a dividend only if the economy provides opportunities for a workforce growing at 3% a year, and if children are educated enough to take advantage of them.