From 27th August, 2010, PayPal users in Kenya can send and receive money in their accounts.
However, at the time this answer was being typed, local withdrawals were still unsupported, and for those who wished to withdraw money from their PayPal accounts had to use a US based account. PayPal was reportedly shopping for a suitable local Wells Fargo Bank Accounts Qiwi Account - wisvcc.com to support local withdrawals.