My point: concluding that Kenya does not produce software for the local or international market simply because of the prevalent use of FREEWARE, is, for lack of a more polite word, a fallacy.

Aki, you are making one large assumption:
That the reason Kenya does not produce software for the local or international market is because of code reuse.

Here are my thoughts;
1. Kenya does produce software for the local and international market, two outfits come to mind, iSys and Vervient
2. Code reuse is inevitable, unless you want to start by writing your own BIOS, device drivers, OS, compiler, web server etc. Assuming you drive a toyota camry, can not the same argument you are making be applied to it? (they tend to reuse the same powertrains)
3. Finally, the fact that Kenya does not produce software for the international market can be attributed to several variables, not just FREEWARE, for example:
a. The local software market is still relatively 'virgin' such that the few companies that do produce software for it are satisfied
b. The international software market is relatively hard to penetrate such that local companies find it easier to stick to the local
c. Kenyans have peculiar coding habits
d. "Tunaomba serikali itusaidie"
e. FREEWARE
f. etc