Mbeki told party members at an ANC fundraising dinner in Bloemfontein that there was a lot of "commotion" over the question of leadership within the ANC to the point that it seemed the "ANC was established to elect leaders" at its national conference.
Mbeki said the national conference would have to answer critical questions such as what the country must do about its poverty and equality challenges.
"What are the tasks of the ANC? We cannot say it is to elect leaders."
The country had obtained major achievements in the last 13 years, something envied by many other countries in Africa and further afield.
However, Mbeki told the gathering, "serious challenges" still faced South Africa that would need party members' attention during the conference.
These included how to deal with the country's growth in terms of infrastructure, the people's needs, the skills shortage and challenges in education and health.
Mbeki made his first "public apology" for the country's power problems related to Eskom's load shedding.
"Eskom was right and government was wrong," Mbeki said, after indicating that government was asked earlier to invest more in electricity to keep-up with the country's growth.
Returning to ANC matters, Mbeki said the party had a serious challenge in that a lot of people who were card carrying members of the ANC knew nothing about the ANC.
"Joining the ANC is good for the pocket. It is quite clear for some people it's a passport to personal power and wealth."
Mbeki said the party must expect this and discuss what to do about the political "mercenaries" who used ANC membership cards for their own power.
He said he hoped the conference would decide how to deal with these kinds of local councillors who were part of the ANC for "mercenary purposes".
Restoring the ANC to what it promised to be would also be one of the challenges facing delegates during the national conference next week.
"The ANC cannot behave in a way that betrays and disappoints the expectations of the people," said Mbeki.
He said the party had never taken a decision which was characterised by dishonesty and deception.
Mbeki urged party members to unite around the sound principles and moral values which had characterised the ANC in the past.