"Australia have been playing pretty well and South Africa are always difficult to beat at home," he told a news conference in Johannesburg ahead of the Sept. 11 to 24 tournament.
"I see them as the favourites, but I don't discount ourselves."
Australia have dominated international cricket for more than a decade, winning the last three World Cups and losing just 38 of 215 tests since losing the Ashes to England in January 1987.
South Africa have challenged Australia's superiority at times, but they have often been accused of choking under pressure against them.
All-rounder Shaun Pollock did not believe that charge would stick this time.
"There's no time to choke in Twenty20," he told a news conference in Johannesburg.
"Pressure and expectation are self-inflicted and we're just looking at the Twenty20 as another opportunity to walk away with a world title."
He said South Africa might feel less pressure to perform because of the imminent Rugby World Cup in France.
"Everything in the country is focused on the Rugby World Cup and I think the Springboks are the team that's feeling the pressure," Pollock said.
Australia have won three of the five matches they have played in the fledging 20-over format, while South Africa have two wins from five games.
England should prove competitive as their players have built up the most experience in the format, which was pioneered there at domestic level in 2003.
Pakistan could be a threat considering they have won three of their four T20 games.
Any discussion of likely favourites is complicated by the absence of several leading players.
Notable absentees are Sri Lanka off-spinner Muttiah Muralitharan with an elbow injury, all-rounder Jacques Kallis who has been left out by South Africa, and Australian express bowler Shaun Tait after complications following elbow surgery.
New Zealand Test captain Stephen Fleming was left out of their squad and Indian trio Rahul Dravid, Sachin Tendulkar and Sourav Ganguly opted out of playing in the tournament.
Australia captain Ricky Ponting has not travelled to South Africa with their squad because of what the Australian Cricket Board has described as "private family reasons".
England all-rounder Andrew Flintoff is doubtful because his long-standing ankle injury has flared up again.
South Africa play West Indies in the tournament's opening match in Johannesburg on Sept. 11.