This paper discusses innovation in low and middle-income countries, focusing on the role it has played in local and national responses to the COVID-19 pandemic, and the lessons from this effort for how innovation might be harnessed to address wider development and humanitarian challenges by mobilising resources, improving processes, catalysing collaboration and encouraging creative and contextually grounded approaches. The paper also examines how international development and humanitarian organisations can improve their support for local and national innovation efforts.

One-fifth of the innovative solutions to fight the Covid-19 pandemic have emerged from low and middle-income countries, and these responses offer promising insights for how we think about, manage, and enable innovation. As the international community now faces the historic challenge of vaccinating the world, more attention and resources must be directed to the innovators who are developing technically novel, contextually relevant, and socially inclusive alternatives to mainstream innovation management practices.

Addressing 21st century development challenges requires investments in innovation, including the use of new approaches and technologies. Currently, many development organisations prioritise investments in isolated innovation pilots that leverage a specific approach or technology rather than pursuing a strategic approach to expand the organisation's toolbox with innovations that have proven their comparative advantage over what is currently used.

How do innovations move from the edges to the core of what an organization does? For maximum impact, innovations must cease to be innovative and become institutionalized and normalized.

Innovation portfolio management enables not only commercial actors but also public sector organisations to systematically manage and prioritise innovation activities according to concurrent and diverse purposes and priorities. It is a core component of a comprehensive approach to innovation management and a condition to assess the social return of investment across an entire portfolio. The OECD Observatory of Public Sector Innovation (OPSI) has worked in this space for a number of years.

For most development organisations and funders, innovation remains a sprawling collection of activities, often energetic, but largely uncoordinated. To a dregree, this has also been the case for Iceland's development co-operation. Iceland, a comparatively small but energetic player in the international development co-operation system, provided the equivalent of 0.28% (roughly 67 million Euro) of it 2021 gross national income towards Official Development Assistance.

The OECD InDeF team developed a portfolio approach to innovation. A portfolio approach takes a balcony view on innovation which helps organizations align innovation processes, resources and performance with organizational objectives and enables them to track innovation with a view to scaling. Coached by the OECD team, Enabel colleagues in Benin, Morocco and Palestine piloted this portfolio approach by reviewing their current innovation supporting activities and investments against a set of key criteria.

In the face of the climate emergency, around 140 countries, which emit close to 90% of the global greenhouse gas emissions, are planning to reduce their emissions to as close to zero as possible (known as net zero) in the upcoming decades. Around a third of these are low- and middle-income countries (LMICs), the countries most affected by climate change. So how can countries in the Global South achieve a socially-just transition? One key element is innovation, and potentially mission-oriented innovation.