THE African National Congress (ANC) was driving economic policies that would lead to more poverty, prominent political economist Moeletsi Mbeki said last night.

Mr Mbeki was speaking at a seminar at Wits University on the ruling party's policy documents, to be discussed at a conference next month.

He said that instead of a productive class, the ANC was creating an administrative class, made up mainly of the black elite, which was part of a household-consumption-dependent economy.

On the other hand, the large size of welfare payments - made to 15,3million out of a population of about 50-million - bought off the poor, but worsened their poverty. Last year Mr Mbeki, who has become a strong critic of the ANC, caused an uproar in the party when he said the ANC would face a "Tunisia Day" civil revolt around 2020.

"We are a country that is deindustralising, yet the welfare state is growing," he said yesterday.

The increasing welfare expenditure was an "effort to buy off the vote of the black poor".

The country needed new politics, with labour and business firmly at the centre of political decision making, he said. "As long as they are out, there will never be economic growth that is meaningful . these two groups control productive assets."

A class of indigenous entrepreneurs was also needed, he said.

Mr Mbeki said public servants were drawing huge salaries, which meant that resources were not going to a productive sector of the economy. "The ANC government is about consumption, not production. Production is secondary to them."

Even the infrastructure drive meant to boost economic growth and create jobs was doomed, he said, because there were no domestic savings to pay for it.