South Africa is being de-industrialised and turned into a welfare state because of an alliance between the black political elite and the poor, political economist Moeletsi Mbeki said on Thursday.

"There is an alliance between the black middle class and the poor, this tells you how the poor are being bought off... they are grant recipients," said Mbeki, who is former president Thabo Mbeki's brother.

He was delivering a lecture: "What has the ANC achieved in nearly two decades?" at the University of the Witwatersrand.

"There are two primary political controllers of South Africa. The under-class are the single largest voting block of South Africa," he said.

Political power rested between the black political elite and the black poor.

Mbeki said there was something wrong with the way the political elite was managing South Africa. It was the political elite which determined how the country developed.

"There is something very wrong with South Africa... with how the political elite are managing South Africa," he said.

Under the ANC, three social groups had emerged.

They were: the capitalists or bourgeoisie, the political elite or bureaucratic bourgeoisie, and the under-class or unemployed.

"We have a unique political system in South Africa. It's controlled by the black middle class [political elite], but it has an alliance with the poor or the under-class," Mbeki said.

The objective of the political elite was to maximise consumption of the black middle class and to retain the monopoly on political power.

However, its weakness was that it depended on the vote of the under-class, which did not own productive assets, he said.

"The ANC has been driving a consumer revolution at the expense of production."

Mbeki said the political elite's private consumption was being funded by state revenue and had become a burden on taxpayers.

"It's becoming clear where the bottleneck sits and where the problems are," he said.

"The consumption of the black elite is unsustainable and has to be reversed."

The capitalists needed to be brought into the loop. This group of society was defending itself by moving capital out of South Africa, said Mbeki.

"We need a new politics in South Africa, a more inclusive politics, not just a black elite and a black poor."

"As long as they [capitalists] are out of the political loop, we'll never have economic growth. They control the productive assets of the country," he said.

In 2007, more than US20 billion (about R166.7bn), which was 20 percent of the gross domestic product (GDP), was moved out of South Africa by these capitalists.

"When you moving 20 percent of the GDP out of the country there is no way of developing your country," he said.

Mbeki said the solution for South Africa was to develop entrepreneurs who were productive, and to develop science, maths, engineering and management education.

"Without that, we're going nowhere."