Khune, 29, has been selected as an over-age player by coach Owen da Gama along with another Kaizer Chiefs player, defender Erick Mathoho.
Khune and Ajax Cape Town's Jody February will battle for the number one jersey at the sporting showpiece in Brazil.
"With no disrespect to Itu I don't understand what the plan is and why he has been selected in the squad," says Bidvest Wits shot-stopper Josephs.
"We say we are building for the future and a kid like Jody, who practically took us to the Olympics with a great display of goalkeeping in the tournament and oozes confidence, must now suddenly play second fiddle. Can this be right?
"Why on earth would they want to kill his confidence like this by sidelining him now? I mean he's been there through the whole journey with team and where was Itu?
"Jody was the one who got us on the biggest stage on the African football calendar when he saved those penalties. Where was Itu? What message are we sending out, not just to him but to any aspiring youngster?"
The 36-year-old believes the country must show more faith in its young talent.
"Look at the old adage: 'If you good enough you're old enough.' This is what other countries are doing around the world. Even smaller countries in Africa are implementing this and they are catching up with us.
"They will say Jody is not experienced enough but how else will he gain that experience if he doesn't play? For me this would be the perfect occasion for Jody to make him realise that he is ready for the next step in his career. Imagine what that will mean to him. He will know that he plays for that team and our nation.
"I firmly believe he is ready and the timing is perfect for the young man. I believe he is potentially our match winner at the Olympics," Josephs concludes.