I'm Kenyan. The scene mostly revolves around the incubators in Nairobi, the iHub, Nailabs and the 88mph Garage being the most vibrant. The iHub is closer to a typical hackerspace than the others, which are more concerned with startups actively seeking investment than meetups and such. I'd wager that half of all Kenyan startups are building mobile apps of some sort. The stack is quite varied. SMS is king here, but J2ME, Symbian and Android are also fairly popular. Some of the more interesting startups I've interacted with:

http://wezatele.com - I interned there early this year. http://mfarm.co.ke http://kopokopo.com http://frontlinesms.com - I did some work there last year. http://ushahidi.com - nonprofit, so I'm not sure it qualifies, but one of our better known exports. http://pesapal.com - I dislike the obvious play on PayPal, but they're an awesome team

There are many more, but those are the ones that immediately came to mind.

There's something of a running joke that every second startup is an M-something, presumably due to the runaway success of mpesa, a mobile money service by one of the telcos, Safaricom.

Some more established players, not startups in any sense, are Craft Silicon and Seven Seas technologies.

Kenyan startup guy here. In three years, my company has developed two top Kenyan websites. In 2009, we developed the largest lyrics site in Kenya, and now we run the largest blog in Kenya: http://ghafla.co.ke with close to 500,000 monthly uniques.

On consumer-facing startups, which are my expertise, I can say that the problems currently facing Kenyans online are basic content issues(online news, classifieds, downloads etc). If you stick to the basics, it's really easy to get some traction going. Revenue-wise, HNers would love Kenya. The absolute best internet revenue model in Kenya is to charge your users one-time monthly subscriptions. Paid classifieds like cheki.co.ke and eatout.co.ke are making hundreds of thousands of dollars annually with this model. Ad-based revenue follows an extreme power-law. The digital budgets flow mainly to Google and Facebook. E-commerce is there, mainly in the tourism and daily deals spaces. Skimming commissions off the top of transactions is not very lucrative right now, haven't seen any success stories. All in all, the online space is more of a land-grab right now, than a gold-rush. On acquisitions, there are VERY few. Most big companies would rather partner or compete. Most acquisitions are done by private equity companies or high net-worth individuals, and they only buy startups that absolutely kill it on each and every front(user growth, revenue growth, profit growth, brand awareness etc).

PS: My company shares the same investors with the M-Farm team.

I'm not Kenyan, but I've been based in East Africa for the last two years and have been living in Nairobi and running a startup there since March. Happy to answer questions. (I'll be on and offline today because of the holdiay)

It's fantastic to see Sue and M-Farm getting this kind of exposure.