"... Africa will overcome the challenges of poverty, underdevelopment and global marginalisation not because of its wealth in natural resources, but because of its intellectual ability to properly manage and utilise these resources for the benefit of the peoples of our continent," Mbeki said at the All Africa Students' Union conference at the University of Cape Town.
"In this sense the resources embedded in earth Africa may turn into a curse if Africa does not develop the intellectual capital to empower the African masses and the governments they elect to exploit these resources for the greater good of the citizen.
"The regenerated African university must be the principal driver of that intellectual awakening, which awakening will empower the peoples of Africa to remake our societies and our continent."
He told the students that they were tasked with leading the drive toward the new African university.
Mbeki bemoaned the "parlous state" of the African university plagued by inadequate infrastructure, understaffing, inadequate libraries and outdated books, underpaid lecturers, staff attrition through the brain drain and a lack of even the basic services such as water, sanitation and electricity.
Further many sub-Saharan countries did not have significant student loan programmes.
"Thus the poor, despite their academic competence, are obliged to find the means to finance their access to higher education."
Of greater concern, Mbeki said, was the difficulty African universities faced to recruit and retain properly qualified teaching staff.
"This is further compounded by the declining numbers of post-graduate and doctoral students, which means that our universities are not producing the adequate numbers of graduates empowered to serve as lecturers, replacing those lost through retirement."
The enormous brain drain added to the problem. Citing Ghana as an example, Mbeki said by 2000 that country lost 42.9% of its total educated labour force.
In 1998 South Africans numbered the largest group of foreign dentists in the United Kingdom, he said.
"Only 50 out of 600 doctors trained in Zambia since independence were still practising in Zambia. More Malawi doctors were practising in the city of Manchester in the UK than in the whole of Malawi.
"One estimate says that Africa lost $1.2bn of investment on the 60 000 professionals who left the continent between 1985 and 1990.
"All this tells the truly frightening story that even as we are confronted by a weakening capacity of our universities to generate the new intellectual capital Africa needs, our continent continues to lose much of this capital through the brain drain caused by the emigration of our university and higher education graduates to the developed countries of the north."
Mbeki said the African student community was well-placed to rescue African universities from its position as a "neglected institution, a crumbling edifice housing impoverished students and lecturers".
"Our continent arrived at this position not by accident, but by design.
"It was the joint outcome of the structural adjustment programmes of the International Financial Institutions which, among other things, insisted on the reduction of the role of the African state in higher education," he said.
This transformed education into a "commodity" sold by private capital for profit.
He urged students at the summit to look into what needed to be done to position the African university to where it should be, "given its centrality to the task of achieving the renaissance of Africa".