Big companies taking capital out of South Africa is a bigger threat to economic freedom than ANC Youth League leader Julius Malema, analyst Moeletsi Mbeki said on Monday.

"Capital flight means there is no capital for entrepreneurs in South Africa," he said at a Democratic Alliance conference in Johannesburg on economic freedom.

There had never been an explanation for why companies like Anglo American Corporation and Old Mutual had been allowed to list in London.

Companies in South Africa had a strong record of opposing economic freedom by blocking entry to new players through monopolies and cartels.

Mbeki defined economic freedom as the freedom of individuals to make choices that improved their economic welfare.

Turning to a policy of nationalisation, driven by Malema, Mbeki said this should not be completely excluded as a route to this economic freedom. This did not apply to mines. They were the largest earners of foreign exchange in the country, enabling entrepreneurs to import needed equipment.

The ANCYL's example of South Korea's nationalisation of banks for a period illustrated how it could serve a purpose.

In the 1960s, entrepreneurs were unable to get money from banks, so banks became State owned and the funders of industrialisation.

Mbeki, however, opposed the rate at which social grants were increasing, saying South Africa was creating a runaway welfare state. The money would be better spent creating jobs, doing more to support needy adults in the long term.

On the controversial deal for Walmart to merge with Massmart, Mbeki said the government, and not labour unions, were obstacles to the deal.

When the Chinese opted to open their markets, they decided they had to modernise and re-equip factories and get managers retrained first.

"In South Africa we think we will just open the doors and everything will be hunky dory. Of course it won't."

Mbeki encouraged the DA to "actively support" the league's campaign on economic freedom, as "ironically there isn't such a big gap between the DA and the [ANC] Youth League".

Mbeki, the brother of former president Thabo Mbeki, joked that never in his "wildest dreams" had he imagined himself addressing a DA conference.

"But I think this really shows that we are making headway in this country."