South Africa scraped through to the knockout phase as one of the four best third-placed teams despite having struggled in Group D, recording two defeats and one win.
"South Africa have underperformed at that level of expectations," Kerr told Goal.
"But qualifying for the knockout stages means the coach [Stuart Baxter] can hopefully get the players to play quicker with more energy and beat Egypt, who no doubt everyone fancies to win."
Egypt eased into the knockout phase having won their three Group A matches - defeating Zimbabwe, Democratic Republic of Congo and Uganda.
The Pharaohs are widely considered to be one of the favourites to win the tournament as they eye a record-extending eighth Afcon title.
"They qualified so they have a chance like all the others," the Englishman, who is currently unattached after leaving South African club Leopards two months ago, continued.
"Against Egypt, they have to play with no fear and be solid at the back be patient and when they have a chance to attack, attack at pace and create chances more."
Bafana, who are hoping to go all the way and clinch their second Afcon title this year, will be buoyed by their good record against the Pharaohs.
The two teams have meet 11 times with South Africa recording six victories compared to Egypt's four wins and one game ended in a stalemate.
Their last competitive encounter ended in a 0-0 draw in September 2011, a 2012 Afcon qualifier in Cairo.
South Africa will be without winger Themba Zwane, who is expected to serve a suspension against the North African giants.