Increased usage of the internet has contributed immensely to the growth of software development practice in East Africa. This paper investigates the existence of formal KM (Knowledge Management) initiatives in the Software industry such as creation of virtual communities (Communities of practice and communities of interest); expert localization and establishment of knowledge taxonomies in these communities; the knowledge transfer and sharing processes; incubation and Mentorship; collaborative software development and their role in creating entrepreneurship initiatives and providing a building block towards the knowledge economies. We propose a hybrid framework for use in KM initiative focusing on Software Development in East Africa. 16 pages and five figures,Africa Casebook - Synergies in African Business and Management Practices,ISBN 978-9966-1570-0-3. from 1st African International Business and Management Conference (AIBUMA) on Knowledge and Innovation Leadership for Competitiveness Nairobi, Kenya 25-27th August 2010