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Khan was born on 15 July 1914 in Agra. He was among the four sons and three daughters of Khansaahib Ameer Ahmed Khan and Mehmoodah Begum. His father, a police inspector, was inspired by the reformist thinking of Syed Ahmed Khan. In his early age, Khan's mother introduced him to the poetry of Maulana Hali and Muhammad Iqbal, the sermons of Abul Kalam Azad, and the Sufist philosophy of Rumi.

The Orangi poverty alleviation project (known as the Orangi Pilot Project, or OPP) was initiated by Khan as an NGO in 1980. Orangi is located on the northwest periphery of Karachi. At that time, it was the largest of the city's approximately 650 low-income squatter settlements (known as katchi abadi). The locality was first developed in 1963 as a government township of 5 square kilometres (1,236 acres). The influx of migrants after the creation of Bangladesh swelled the settlement to about one million people crowded over an area of more than 32 square kilometres (7,907 acres). The working class multi-ethnic population was predominantly composed of day labourers, skilled workers, artisans, small shopkeepers, peddlers and low-income white collar workers. The project proved an impetus to the socio-economic development of the population of the area. As the project director, Khan proved to be a dynamic and innovative leader. The project initially focused on creating a system of underground sewers, using local materials and labour, and succeeded in laying hundreds of kilometres of drainage pipes along with auxiliary facilities. Within a decade of the initiative, local residents had established schools, health clinics, women's work centres, cooperative stores and a credit organisation to finance enterprise projects. By 1993, OPP had managed to provide low-cost sewers to more than 72,000 houses. The project subsequently diversified into a number of programmes, including a people's financed and managed low-cost sanitation programme; a housing programme; a basic health and family planning programme; a programme of supervised credit for small family enterprise units; an education programme; and a rural development programme in the nearby villages.  Comparing the OPP with Comilla project, Akhter Hameed Khan once commented:  The Orangi Pilot Project was very different from the Comilla Academy. OPP was a private body, dependent for its small fixed budget on another NGO. The vast resources and support of the government, Harvard advisors, MSU, and Ford Foundation was missing. OPP possessed no authority, no sanctions. It may observe and investigate but it could only advise, not enforce.  The successful OPP model became an inspiration for other municipalities around the country. In 1999, Khan helped to create Lodhran Pilot Project (LPP) to collaborate with Lodhran municipal committee. Learning from past experiences, the project extended its scope to the whole town instead of concentrating on low-income settlements only. The municipal partnership was itself a new initiative that ensured wider civic co-operation.  The success of OPP did come at a cost for Dr Khan as his liberal views and self-help initiatives were questioned and criticised by certain interest groups. At two occasions, he was accused of blasphemy. However, all allegations against him were acquitted by the courts of law and cleared by independent religious scholars.
Akhtar Hameed Khan