Inequalities between South Africans in the first world economy and those living in the underdeveloped economy will remain a source of tension, African National Congress (ANC) secretary-general Gwede Mantashe said on Thursday.

"The transformation of our economy remains a key challenge," he said, according to a copy of an address he delivered at the Nelson Mandela Memorial Lecture gala dinner at the University of KwaZulu-Natal.

The ruling party started addressing this situation through legislation and policies, however, Mantashe said the party was "painfully aware" most South Africans still lived in severe poverty.

"Our commitment to accelerate basic service delivery to all the citizens of this country may in itself create new challenges as we share the existing budget in an equitable manner."

The ANC was determined to audit councillors at municipal level and the capacity of municipalities to deliver within their budgets.

"This is not a punitive action, it is an action to ensure an improvement in our overall capacity to hold true to our commitment for better service delivery and a better life for all."

He expressed concerns about the state of public hospitals, saying the party demanded the health department improve conditions.

Mantashe reiterated the ruling party's commitment to a National Health Insurance (NHI) scheme, to be phased in over five years and which would see healthcare provided free of charge.

"The NHI will be publicly funded and administered and provide the right for all to access quality health care."

While acknowledging that the state bore "overall responsibility" for tackling crime, he said this would only happen if it worked with "every single member of every single community".

He welcomed the appointment of a "no-nonsense" National Police Commissioner, Bheki Cele, who had "extensive experience" in dealing with safety and security. Cele's appointment was announced on Wednesday.

"The ANC is determined to eradicate crime and corruption."

Mantashe hailed former President Nelson Mandela, whose example should continue to be followed.

"Madiba sought no glory and no accolades. He has been the epitome of one who is selfless, forgiving, yet clear and resolute about what must be done to improve the lives of the people of our country.

"We must continue to follow his example in every way, every day."

He also paid tribute to late struggle veteran Anton "Mfenendala" Xaba, who died this week.

Mfenendala spent 23 years on Robben Island for his political beliefs and his stance against apartheid.

"Comrade Mfenendala will be remembered for his courage and dedication to our struggle... He was an excellent organiser and dedicated freedom fighter."