Zuma, whose reign has been marred by graft scandals, spoke at a party conference that will elect his successor as head of the ANC, though he will remain as head of state ahead of 2019 elections.
The two front-runners in the divisive party leadership race are his ex-wife and former African Union head Nkosazana Dlamini-Zuma, and Deputy President Cyril Ramaphosa, a wealthy businessman.
Zuma said that the African National Congress's poor local election results last year "were a stark reminder that our people are not happy with the state of the ANC".
The ANC is still South Africa's biggest party by far, but the 54 per cent it won in local elections last year was its worst poll result since the 1994 elections that marked the end of white-minority rule.
Opposition parties the Democratic Alliance and Economic Freedom Fighters are both hoping to exploit the ANC's woes in the 2019 election, with one possible outcome being a coalition government.
The five-day ANC meeting outside Johannesburg to elect a new leader is widely seen as a pivotal moment in the country's post-apartheid history.
The battle between Dlamini-Zuma, backed by Zuma, and Ramaphosa could even split the party.
The conference started seven hours late after an acrimonious dispute over which delegates will be qualified to vote. The day of the vote remains uncertain.
Dlamini-Zuma, 68, headed the African Union commission until earlier this year and is a former interior, foreign affairs and health minister.
The couple had four children together before divorcing in 1998.
Ramaphosa, 65, a former trade union leader, led the historic negotiations in the 1990s to end apartheid before launching a business career that made him one of the country's wealthiest men.
He is often accused of failing to confront Zuma while serving as his deputy since 2014.
Zuma's speech was greeted with sparse applause after rival delegates danced and sang songs in support of their chosen candidate to succeed him.
"That lady will protect Zuma," he said, referring to Dlamini-Zuma.
But Matthew Tsepang, one of her supporters, said: "We cannot judge a person by her previous life. She can be a former wife but have her independence. She is a capable leader."
Other leadership hopefuls include parliament speaker Baleka Mbete, presidency minister Jeff Radebe and Zweli Mkhize, the party treasurer.
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