Archbishop Desmond Tutu has warned that South Africa is sitting on a "powder keg" because millions are living in "dehumanising poverty".
Tutu says poverty is the biggest threat to South African security
The Nobel Peace laureate said attempts to boost black economic ownership were only benefiting an elite minority.
And he cautioned that political "kowtowing" within the ruling ANC was hampering democracy.
The archbishop was speaking at the Nelson Mandela annual lecture in Johannesburg on Tuesday.
He attacked the black economic empowerment programme for further enriching already wealthy blacks.
"What is black empowerment when it seems to benefit not the vast majority but an elite that tends to be recycled?" he asked.
He warned the system could be "building up much resentment which we may rue later."
"Gruelling, demeaning, dehumanising poverty" experienced by millions of South Africans was the biggest threat to the country's security, he said.
"We are sitting on a powder keg."
The archbishop criticised politicians for debating whether to give the poor an income grant of $16 (£12) a month and said the idea should be seriously considered.
"We cannot glibly on full stomachs speak about handouts to those who often go to bed hungry," he said.
"It is cynical in the extreme to speak about handouts when people can become very rich at the stroke of a pen."
He called on ordinary citizens to "adopt" a poor family by giving them $16 to $32 a month or to pay their school fees.
While listing South Africa's successes since the end of apartheid, he warned against a tendency towards stifling political debate.
"Truth cannot suffer by being examined or challenged," he said.
"Unthinking, uncritical, kowtowing party line-toeing is fatal to a vibrant democracy," the archbishop added.